Eva Koczur

Professor Hamilton

English 137H

November 5, 2023

The Normalization of Life-Altering College Debt - A Deeper Issue Than “Just” Tuition Costs

Collegiate education has long been an opportunity reserved for those in the

upper classes or coming from more privileged backgrounds. In the past, it was not

completely uncommon for prospective students to take out loans for pursuing higher

education. However, in today’s day and age, it has become a norm for a majority of

American students to leave or graduate college with tens of thousands of dollars in

student loan debt. Some attribute this phenomenon to rising tuition costs, others to a

generational lack of work ethics and motivation, demographic disadvantages,

low-achieving students, or a lack of financial literacy, etc. In reality, the modern college

debt crisis and normalization of substantial student loans is the result of a plethora of

factors. From social to economical - the shifts spurring the crisis are much more

complex than meets the eye. This paper explores not only the existence of this shift, but

specifically the contributing factors and misconstrued notions surrounding it. While there

is extensive scholarship on the role of rising tuition and cut budgets in spurring the debt

crisis, this analysis explores the often-overlooked, misunderstood, and non-economic

factors deeper below the surface. It takes a unique approach, that with the increase in

college accessibility over the past few decades, social and financial gaps between the

privileged and minorities have actually become worsened.

 At its most surface level analysis, many contribute the debt crisis mainly, if not

solely, to rising tuition. “The cost of college has more than doubled over the past four

decades — and student loan borrowing has risen along with it. The student loan debt

balance in the U.S. has increased by 66% over the past decade, and it now totals more

than $1.77 trillion” (Safier, 2023). When higher education first started taking off in the

United States - from the mid 1600s to the late 1800s - college was a privilege reserved

for the elite of society and those white men in the highest class. In the early to mid

1900s, college started to become accessible to a wider variety of individuals and

demographics. Women and African-Americans were permitted access to these

institutions, and programs began to emerge for veterans and low-income individuals

helping with college finances. However, during Reagan's presidency and the Tax Revolt

in the 1980s, states began giving less educational aid to low-income students while

simultaneously raising tuition. This occurred as the result of state tax and expenditure

limitations, along with Reagan cutting national funds allocated to higher education and

student aid. Then, the 2008 recession hit hard. States cut more funding from public

universities, the labor market saw declines and thus more turned to education, and

for-profit colleges accepted a disproportionate number of students with high loans or

Pell Grants. After the recession in 2008, college debt skyrocketed, while funding for

higher education never and still remains to recover to its previous level (Hess, 2020).

Without substantial state and federal funding for public institutions, for-profit universities

take advantage of low-income students left with no other options. In previous decades,

these universities were not nearly as influential or commonplace. Only between 2000

and 2010, for-profit enrollment increased by 329% - largely due to the Bush
administration’s promotion of online education (Hess, 2020). While the goal of online

education is certainly to make school more accessible, it has in fact saddled students

with impossible debts in our modern age.

Oftentimes, people - and commonly those with higher class or age demographics

- have the misconception that snowballing debt is the result of the "laziness" and

"irresponsibility" of the modern college student. However, there are numerous reasons

why this claim can be refuted. In terms of tuition, “The College Board estimates that

during the 1980-1981 school year, on average, it cost students the modern equivalent of

$17,410 to attend a private college and $7,900 to attend a public college — including

tuition, fees, room and board. By 1990, those costs increased to $26,050 and $9,800,

respectively” (Hess, 2020). In the 1900s, tuition was at a rate where students could

work during the school year or summer and pay off their debt immediately, if not within a

small time frame. However in the past 40 years, the cost to attend college has more

than doubled (Safier, 2023). Thus, the cost of college has quickly increased at a rate

entirely disproportional to inflation. Meanwhile, more students than ever before have

been able to attend college and enrollment numbers have skyrocketed. In the

employment space, society has shifted as college degrees are becoming more of a

perceived necessity to pursue an honorable career. However, this shift isn’t simply a

perception, but rather a proven occurrence. According to experts, “Today, college

graduates earn 80% more than those with just a high school diploma, on average”

(Hess, 2020). Underprivileged students are not becoming lazier or choosing the wrong

path, but rather taking their only opportunity to achieve what they feel is needed to

succeed in life. Thus, the banks provide these students with hefty loans - knowing the
interest profits will become unimaginable. Today, now that college has become a

possibility for students outside of top percentiles, the system has not been adjusted to

accommodate these diverse students. Created to support higher privileged students

from the very beginning, the lack of university adaptation has caused this shift to

increased debt - not at all tied back to student work ethic whatsoever.

Today, a majority of college students find themselves with debt upon graduating

(Safier, 2023). Not only does this perpetuate the intergenerational wealth gap, but it

worsens the racial wealth gap as well. “The average Black household has about 1/13th

the wealth of the average white household. And if you view student loan debt as

negative wealth, as money that could have been used to save for wealth or to purchase

a home or to invest in the stock market to accumulate wealth, that potential wealth is

now used to repay loans” (Hess, 2020). In the US, black students owe more debt on

average and pay it at a slower rate (Hess, 2020). Nicole Smith - the researcher behind

these statistics - is the chief economist at Georgetown University Center on Education

and the Workforce. She explains with great evidence how this phenomenon perpetuates

a cruel cycle in which large demographics become more and more limited in their

pursuits at growing wealth - homeownership, stock investments, sending their family to

college, etc. In this way, the college debt crisis is a significant factor in ensuring the

division of our country, reducing equity, and building a more hierarchical society. Even in

terms of the gender pay gap, women are saddled with greater debt. It has been found

that “Women with master’s degrees make on average what a man with a bachelor’s

degree makes and a woman with a bachelor’s degree would make on average what a

man with an associate’s degree makes” (Hess, 2020). Ultimately, these demographics -
already working to offset the lasting impacts and gaps of past injustices - find

themselves so disproportionately impacted by the modern debt crisis. Ironically, this

pattern has only grown with the increased accessibility of college education to minorities

and the less-privileged of society.

A few schools boast their "full-ride" programs - an example being Stanford and

its largely commended policy waiving all expenses for students from lower-income

backgrounds. “The California university [Stanford] announced that beginning in the

upcoming 2023-24 school year, it will offer undergraduate families making under

$100,000 a year free tuition, room, and board” (Sheffrey, 2023). While largely applauded

for this charitable effort, the motivations behind this seemingly selfless policy reveal

deeper harsh realities. In 2023, it is a lot harder for students to earn a "full-ride" than

many in the adult generation believe. In the 2022-2023 school year, Stanford's

undergraduate class of 2026 consisted of 13.8% legacies and family donors, 12%

athletes, 66% of students in the wealthiest 20% of the US, and 17% of those students in

the wealthiest 1% (“Battle over Legacy and Donor Admissions Preferences to Heat up.

USC, Stanford Could Take Hit.”, 2023). Keeping those statistics and demographics in

mind, how much room does that leave for low-income families to even have a chance at

attending Stanford - disadvantaged from the moment they were born compared to the

resources available to the wealthy? From as young as preschool and elementary

school, students coming from lower-income backgrounds and under-resourced schools

fall into a nearly inescapable track that quickly becomes incomparable to their

collegiate-prepared counterparts. Students from lower incomes statistically test

significantly lower on standardized tests when compared with those of wealthier status
who utilize resources such as tutoring (Dwyer, 2017). From a young age, the children

have to prioritize working, which takes away focus from education - something there is

often little family emphasis on as well. When it comes time to apply to college and seek

out scholarships, lower-income students don’t have the same mentors to prepare them,

often don’t have the test scores to qualify, and are turned away by application and

testing prices and inequity. Lower-income students are not becoming “lazy” in paying off

their college tuition, but rather unable to both work jobs and keep up with school work.

This disadvantage, when directly compared to wealthier counterparts who had access

to elite pre-collegiate educations and have never had to work a job, only widens the

gap. Affirmative action - the process of prioritizing disadvantaged applicants to “even

the playing field” - has long been a controversial topic since its introduction in the late

1900s. Many individuals argue that it only divides our country further, directly

segregating through race or income. In reality, it is a necessary way of making college

more equally accessible to those who have been given less resources, less

opportunities from almost the moment they could talk or crawl. Affirmative action

embodies the idea of equity over equality, and has emerged in response to this shift to

never-ending education debt for the less-privileged.

It is the immense interest rates that make college loans so incredibly and quickly

debilitating. Especially for students attending graduate programs such as law or med

school, the original cost of a loan could easily be paid back in three or four-fold by the

time its debts are paid off. “If we look at a student who is attending a pharmacy program

that costs $20,000 per year and he or she takes out another $20,000 per year for cost

of living, that individual will have borrowed $160,000 in principal over four years… Let’s
assume a balance due of $180,000 (principal and interest) at the time graduation. If

these loans were at 6% interest and the student selected the 10-year standard

repayment plan, he or she will have a monthly loan repayment of $1,998 for 10 years

with a total payout of $239,804 in principal and interest” (Ulbrich & Kirk, 2017).

Specifically those terms apply for if the payments are all made on time, but what

happens if they aren’t? It is projected that less than half of Americans actually

understand the consequences of unpaid loans (Zafar et al., 2014). With inaccess to

resources such as college advisors and counselors, many misconceptions surround

student loan debt. For example, once the value exceeds around $5,000, loans must be

taken out in a parent or guardian’s name. Not only can these loans be denied for a poor

credit score, but they can dangerously affect those less affluent individuals who likely

have their own loans or perhaps may be trying to pay off a mortgage. Improper

education of college loans acts as a barrier to numerous demographics in terms of debt

severity. When individuals don’t understand the potential consequences of an unpaid

loan, the debts become catastrophic and few are even forgiven when bankruptcy is filed

(Zafar et al. 2014). In the past, guardians were not required to take loan responsibility,

and tuition costs were small enough to be reasonably paid off with work. Today, banks

have discovered the profit potential - sacrificing ethics and morals in the name of

financial gain and the expense of the less affluent, educated, or privileged.

As time goes on, this gap in opportunity and resources for the different

demographics of our country is only increasing. This gap exacerbates harmful

stereotypes, a lack of representation, and wealth gaps. When many draw conclusions

on the college debt crisis, they are quick to blame rising tuition or inadequate admits. In
reality, this paper supports the claims that the recent college debt crisis has just as

importantly been exacerbated through banks seeking profit through high interest for

individuals with poor credit scores, students having such vast differences in youth

educational funding and prioritization, and inadequate need-based aid and resources.
 Works Cited

“Battle over Legacy and Donor Admissions Preferences to Heat up. USC, Stanford Could Take

Hit.” Los Angeles Times, Los Angeles Times, 31 July 2023,

www.latimes.com/california/story/2023-07-31/usc-stanford-california-legacy-donor-colleg

e-admissions.

Dwyer, Kayla. “Low-Income Students Face Systemic Barriers to College Access.” The Ithacan,

27 Apr. 2017,

theithacan.org/25234/news/low-income-students-face-systemic-barriers-to-college-acces

s/.

Hess, Abigail J. “How Student Debt Became a $1.6 Trillion Crisis.” CNBC, CNBC, 12 June

2020, www.cnbc.com/2020/06/12/how-student-debt-became-a-1point6-trillion-crisis.html.

Safier, Rebecca. “Student Loan Debt: Averages and Other Statistics in 2023.” USA Today,

Gannett Satellite Information Network, 3 Oct. 2023,

www.usatoday.com/money/blueprint/student-loans/average-student-loan-debt-statistics/.

Sheffey, Ayelet. “Stanford Just Became the Latest School to Offer Free Tuition to Families

Making under $100,000 a Year.” Business Insider, Business Insider, 9 Feb. 2023,

www.businessinsider.com/stanford-offers-free-tuition-families-making-under-100k-studen

t-debt-2023-2.

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Student Debt Crisis beyond Rising Tuition Costs.” American Journal of Pharmaceutical

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www.ajpe.org/content/81/6/101.short.
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