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July 25, 2013 1:01 PM Why Are College Students Contributing Less Money for College? It Might Be the Internships

By Daniel Luzer

The rise in student debt is closely connected to the increasing cost of college. But is increasing cost entirely responsible for increasing debt?

There might be something else going on here. According to a piece by Jordan Weissmann at the Atlantic:

In a recent report, the Hamilton Project’s Michael Greenstone and Adam Looney argue that the student-loan boom is, in fact, a bit more more mysterious than journalists and student advocates tend to acknowledge. It’s not that tuition hikes and growing class rolls aren’t playing a part — they certainly are. But there’s something else going on, too. In time, it seems, the average student has started paying less out of pocket towards her own education.

This graph illustrates the change:

OutOfPocket

(The green area shows the portion of college costs paid by students.)

Adjusted for inflation, in the early 1990s students spent about $4,000 a year on their own education. Now they contribute about $2,125.

So what’s going on here?

Weissmann points out that one possible explanation is that American colleges are enrolling fewer poor students and more rich ones (as a percentage of the total, not as absolute numbers). Richer college students mean students aren’t expected to contribute as much money, and parents pay more.

That might be part of the explanation, but I don’t think it really captures the trend. The other thing that’s been happened since the 1990s is a change in the nature of college and work. Two decades ago it was normal to go directly from college into work. Today college students are increasingly expected to have some “experience” before they can apply for jobs. And that means they’re taking unpaid internships in the summer.

It used to be normal for college students to go home and work for the summer waiting tables or working on farms or serving as counselors at summer camps. This is still, common, of course, but there are a lot more college students interning in the summer. And that means they’ve got less money to contribute to their education.

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