Read almost any news publication for a few weeks and you’re bound to come across an article related to the student debt crisis; read it online, and you’ll find comments just as discouraging as the information relayed in the original article. Sometimes I find myself speeding to these opinion mines to see what people more removed from the situation than I—a 22-year-old, recent college grad who blogs about this stuff—have to say about student debt. What do I find? Blanket solutions and disparaging of millennials. I don’t place blame on one institution for the student debt crisis and therefore don’t expect one person to take responsibility for solving it. However, I believe it's important to clear up some common misconceptions or "student debt urban myths" in order to create a foundation to build viable solutions.
Student Debt Myth I:
Exorbitant Student Loans are Due to a Lack of Parental Foresight or Student Responsibility
Take shelter! This is going to be a Chicken Little blog post. Are you the plan-ahead parent who has saved for your child’s education since they were named and footprinted? According to National Center for Education Statistics (NCES) data you should probably be saving much, much more than you already are. Based on the most recent NCES statistics on the cost of college (the average undergraduate tuition+fees+room & board for full-time students in the 12-13 school year), a year of college costs $20,234. This would require an extra $4,500 budgeted annually from birth until a child's 18th birthday to save enough for a four-year college education. An 18-year-old entering school in the 12-13 school year was born in 1993 or 1994. In the 93-94 school year, college only cost $12,549 (in 12-13 dollars) or $7,931 at the time. It's difficult to plan for such a steep increase when looking into your financial crystal ball.
Maybe you haven’t been able to set money aside because you’re living paycheck to paycheck like many Americans. Or you believe your kid should be the one with skin in the game; after all, it’s their education. Either way, they won’t be able to cut it without financial aid. In 1993 and 1994, minimum wage was $4.25 and college cost an average $7,931 for the 93-94 school year. A college student could pay for college by manning the fryer. Working full-time at minimum wage for 47 weeks could cover college expenses. Today’s college student isn’t so lucky. With a $7.25 minimum wage and college costs of $20,234 in the 12-13 school year, they can’t pay for college as a full-time employee. It would take 1.34 years (70 40-hour work weeks) to pay for one year of school, and that’s before taking taxes out of their paychecks.
The disparity between the cost of college and the abilities of students and parents to pay for it is creating a dependence on financial aid. Financial aid is becoming a necessity for a college education. Everybody needs a scholarship but there isn’t one for everybody. When scholarships aren't there, grants aren't there, and savings aren't there, student loans are there—all leading to the creation of a more than 1 trillion dollar storm.
Statistics Used:
Average undergraduate tuition and fees and room and board rates charged for full-time students in degree-granting postsecondary institutions, by level and control of institution: 1963-64 through 2012-13
Historical Income Tables: Households
-Table H-3. Mean Household Income Received by Each Fifth and Top 5 Percent
Federal Minimum Wage Rates: 1955-2013
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