This is the second of a two-part series about the origins, triumphs and burdens of student loans. In the second part, we look at the negative impact of student debt, causes and what can be done to prevent student loan culture from stalling future generations.  

In 1969, America finally landed on the moon, roughly a decade after a massive investment in education. Today we are still riding on the triumphs of early development of science and technology. Tools we use today including smart phones, CAT scans, LEDs, even freeze dried foods and Air Jordan’s are here because of aerospace engineering and the competition to land on the moon. GPS, satellite radio and Tv? Thank NASA and its allied research institutions.

College campuses are beautiful, institutions, rich in resources design and tradition. More and more these attributes come through the juxtaposition of school wealth and student debt. Over 100 schools currently boast endowments of over $1 billion. In 1988 Harvard boasted and endowment of $4.1 billion. In 1998, Harvard’s endowment was near $13 billion increasing to around $41 billion in 2020. Tuition? A year at Harvard in 1998 including books, living and fees was $31,132. In 2019-20 it totaled $72,391. From Harvard, arguably America’s first institution of higher learning, a private institution established in 1636, to the University of North Carolina-Chapel Hill, arguably the first public university, the ratio is similar. In 1998 North Carolina resident tuition was $1,428. By 2016-17 it was $6,882 and in 2019-20 it was $24,228 including all expenses for the year. Out of state students could expect to pay $51,407 for the academic year. Initially for the wealthy, higher education campuses have maintained a prestige that has been the launching pad for all levels of leadership and industry. But the role and enrollment of higher education would change in the middle of the 20th Century. Opportunity for working class Americans was here, but it would cost, if not now, later. College has become unaffordable. It wasn’t always that way.

While there were a few private student loan programs in place, it wasn’t until the World War II era, that government, through the United States Army installed the G.I. Bill in 1944. As the advanced through urbanization, and the integration of the workforce with African Americans and women, new criteria was set in place to ensure, that employees were fit for certain jobs. College enrollment went up as the college degree became encouraged and even required. On November 8, The Higher Education Act of 1965 was established, signed by President Lyndon Johnson, at his alma mater, Texas State University (then Southwest Texas State College). What was initially focused on technology, science, and space was now open to future doctors, lawyers, teachers, communicators and the many new majors created since. Students that may not have considered attending a college campus were now, due to competition pressured to, whether they were compelled or not. The triumphs and legacy of student loans had run their course. Americans didn’t get the memo.

It takes students an average of 20 years to pay back student loans. Who do we thank for the debt? After inflation plagued 1970’s, the first administration to meet student loan smoke was the Ronald Reagan administration. The administration was in favor of pulling support for government backed loans, the 1981 Tax Reform cutting millions of dollars in student aid. Reagan defended it, calling the act “prudent and just.” Former Reagan Secretary of Education, Bill Bennett, hypothesized that tuition increased as student loans increased, both in number of students and dollar amount; it would only be a matter of time before the reality of a student loan bubble was evident to all factions. As students filled out Federal Application For Student Aid (FAFSAs) colleges increased tuition, erected new buildings and created what has been called the educational industrial complex. Each administration played a significant role in the meandering legislation that culminated with President Barack Obama. Some blame the Obama administration for the most vulnerable state of student loans. When Obama began his first term in 2009, student debt was around $450 billion, when he left in 2017, it was a wildfire of nearly $1.6 trillion burning hopes and dreams of millions. His goal after the financial crisis was to make it easier for borrowers to pay. Few have been able to take advantage of his income based repayment plan. Along with private financiers handling the formerly government debt, it was truly the end – too little, too, late.

Similar to the wealth loss due to segregation, student loan debt has and will continue to put some Americans behind for generations to come. That includes black Americans, who, have accrued significantly more student loan debt since the early 1990s, compared to other ethnicities.

As the 4-year college-to-student loan engine runs out of gas, it’s worth considering; should such a strong leaning toward college remain? From Silicon Valley in California and Huntsville, Alabama to North Carolina’s Research Triangle Park, modern technology billionaires and winners of the economy were jump started by the rise in technology and engineering, anchored by the college and university. But were massive student loans and its adjustments worth it, even if scientific advancement was inevitable? With a full picture, few would argue against the fruit of investment in student loans and tech. Yet, the economics of it all, wage gap and debt, is proving to be unsustainable, at least for most Americans. The COVID pandemic is putting the literal cost of education into perspective as campuses cut programs and reset as we prepare for a new era.

Ultimately, we have the freedom to make decisions, to dive into debt or find other ways to pay for career training. These other ways, such paying cash, are becoming difficult to access, in part, due to student loans. A worthwhile education system will enable students to make better decisions prior to college. We are all learning. We need college, we need education, and we need career training. One enhancement would be to establish stronger career education systems in high schools. Instead of having students pay junior college, and the first 1 or 2 years of a 4-year college, invest in the high schools. Let students attend college for careers. We could also re-establish strong apprenticeships programs in place of certain college majors and disciplines. Let higher education remain for those in the licensed and specialized programs where a dedicated campus is necessary. This may take away from the college culture we have known. The Greek letter societies, socialization and even sports may suffer. Students may still continue to benefit from financial aid for fields like education, medicine and law. But it must be done in a practical and affordable way. A more informed public will make better decisions as they enter and depart our learning institutions.

Americans or more educated than ever. The current high school graduation rate is at 96%. As we matriculate through life which may include higher education, one lesson has to be ingrained in our highly educated minds. If it takes many more years to pay off student loan debt than it took to accumulate, then we have failed a foundational lesson as students, as educators and as a nation.

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