College Guide


September 08, 2010 4:39 PM The Triumph of Student Loans

By Daniel Luzer

Student loan payments are a huge burden on many young professionals. Despite recent efforts to help reduce education debt, it’s hard for most people in the United States to remember how we got to this place.

Student debt isn’t really normal, is it?

But just in time for the start of the academic year Origins, a publication of Ohio State University, this month features a fascinating article by Lawrence Bowdish about the history and current status of American student loans. As Bowdish explains:

Despite the social and economic importance of a university education, the U.S. federal government—unlike many other parts of the developed world—has not attempted to make university affordable by stepping in to control costs. Instead, they have focused on offering assistance to pay whatever those costs might be.
As larger numbers of people enrolled in colleges, the consumer credit market also grew and more people became comfortable using credit. However, without much precedent for lending to young adults with no collateral, most private lenders in the credit market were slow to enter the student loan market. They did so only after the federal government set up frameworks and guarantees to protect them. In this way, credit became a principal way students paid for college.

Before World War II most Americans didn’t attend, or even think of attending, college. Until 1950, less than 5 percent of adults had bachelor’s degrees. Today it’s almost 30 percent. But despite rising incomes, virtually all of this increase in bachelor’s degrees came from debt, debt guaranteed by the federal government.

And not only do more people get loans to pay for college, they also get bigger loans. As the article explains, “the level of student loan debt per graduate grew from $6,449 in 1993, to $15,375 in 2000, to $21,000 in 2008.”

Student loans, of course, help students pay for college. But they don’t help students pay for college very easily. As Bowdish puts it, the 18 million university students “all assume—by and large correctly—that the benefits they will receive from attending college, be they economic, social, or cultural, will outweigh the costs.” The problem, however, is that the cost is now borne by students over 20 or 30 years.

Is it “worth it”? Well sure it is. But students, and the country, would be a whole hell of a lot better off if no one needed to make that sort of calculation.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer


  • ceilidth on September 08, 2010 6:31 PM:

    I went to college from 1964-68 and until the very end, I don't remember college loans. They may have been available, but it seemed to me there were two options: pay for it yourself by working or having your parents pay for it. My best friend came from a family that didn't believe that she needed a college education and so she worked to pay for it. Her summer jobs paid for her tuition and part time jobs paid for food and rent. We went to a private university that is now one of the country's most expensive. We got a good solid education. What I wonder now is whether students who currently attend the same school get that much better of an education than we got? I don't need to wonder if someone could pay the tuition there with a combination of summer jobs and part time school year jobs. There's no way it can be done.

  • LarryB on September 08, 2010 8:56 PM:

    I've got an MBA as well as a BA, and a correspondingly large student loan balance to go with them. What does all this debt do? It limits the choices of graduates and reduces entrepreneurship and community service. When you've got a $1,000+/month loan payment hanging over your head for the next 20 years, it's hard to take the leap and start a business and even harder to take a low-paying job in the non-profit or public sectors.

    We really do need to look at the cost side of higher education, and whether or not lots of jobs *really* require a 4-year degree.