The Student Debt Crisis

The student debt crisis began to rear its ugly head in the late 1980s. Although some may argue it started to occur earlier than this that is around the time things started to increase in scale. In the 1980s student debt reach $1 billion which is a tremendous amount of money in 2025 standards when adjusted for inflation. It was also around this time that achieving a college degree starting to become more of a societal norm with regards to labor force participation. Prior to this time period and even well into the 1990s, you really did not need a college degree to secure specialized levels of employment. A high school degree was more than often to get you into a majority of high earning fields/specializations.

Tuition costs really began to increase exponentially starting in the late 1980s and into the 1990s. Feel free to learn more statistical information about student loan debt here.

Is There a Solution in Sight?

The narrative was previously pointing towards student loan forgiveness as being the solution. Biden wanted to forgive $50,000 in student loan debt in a relatively unbiased way. However, that has long passed and there doesn’t appear to be a cemented narrative about the issue of student loan debt currently. There could be a government solution but there doesn’t appear to be one making headwinds lately.

What Can Really Be Done About Student Loans?

The government can use an approach that is not one size fits all and stop subsidizing extremely profitable schools. Receiving is a higher education isn’t something that is easily quantified. Did students graduating in 2020, receive a 50% better education than those in 2005? No, probably not. As with anything, when you begin to subsidize “highly profitable universities”, they began to misallocate funding. Many Americans love the institution they graduated from and had great times with their higher education experience, however that is not the case for everyone. College can be a rough patch for many and it’s costly when you consider the student loans they’re left with. The impact of attending an expensive school can weigh on students for years and it might not always leave them all the better in the job market, depending on which area they graduate in. Subsidizing private universities can have negative side effects. Relative to the price of other schools, it only causes more price increases and more spending and therefore higher tuition.

Viable Steps to Reducing the Student Debt Crisis

Student debt has had a tremendous impact on the economy. Repayment of student loans could be going towards investments, capital expenditure, entrepreneurial ventures, or just “consumer spending” and “GDP” in general. Billions upon billions of dollars are going towards student loan interest payments. The impact has been far reaching to say the least. The main solution is to hamper/limit tuition increases and reduce subsidies of unnecessary things. This is a complex issue, but the most basic answer is usually the correct one. It might not be the easiest solution to devise but it’s undoubtedly one of the steps that need to be taken in order to reduce the burdensome cost of higher educations for all Americans.

What Steps Can Students and Parents Take?

The best steps you can take are always to plan and “overprepare”. Planning is key with these things. You never want to borrow more money than you need to actually receive an education. Therefore, unless you properly account for what your expenses will be, odds are much more likely that you become a part of the student debt crisis. Borrowing more than you need is a surefire way to end up with student debt. Research applicable scholarships and grants. This may seem obvious but there are a multitude of students that do not utilize all available resources to them. Doing research and see what financial aid, scholarship, grant you qualify for is the extremely important! 3. Finally, make sure you understand the terms of any loans you take and are not getting “played” by your lender. It’s extremely important to the research your borrowing options and not taking the first one available to you, “just because it’s the easy thing to do”.