How Student Debt Is Affecting Our Economy

In today's age, many countries have adopted policies that'll send their students into higher education for free or a small tuition, such as an equivalent of about 150 dollars. However, in the United States, we have no such luxury. In a country that spends 600 billion dollars in defense and allows corporations to ship 2 trillion dollars in profits to offshore tax havens, we have 1.4 trillion dollars of student debt spread out among 44 million borrowers. The average graduate in the class of 2016 has $37,172 in debt coming right out of college.

As the price for college goes up and wages remain stagnant, loans become more and more of the only option for middle class families for their children can get the education they're told will get them a good job, a good house, a good car, and a good life.

These loans, however, become a leech onto students and hang on to them the longer they stay in school, such as for a masters or a PhD. The very people who will be our next doctors, lawyers, businessmen, and politicians will start their lives in debt that was necessary to follow their career path.

70% of the US GDP comes from the American's purchasing power. That means the buying and selling that Americans participate in every day produces 70% of our GDP. As a new generation graduates from college, this will be a detriment on the US economy that will likely put us in a slump as these debt riddled students graduate and come to the age of buying houses and cars and start having children.

How do we fix this? Politicians from across the aisle have neglected to look at the issue. In the 2016 presidential campaign, Hillary Clinton took on the position of making tuition for in-state four-year colleges free for those making less than $125,000 and refinancing loans for borrowers. Bernie Sanders has advocated for making public colleges free of tuition costs in total. Green Party candidate Jill Stein called for a bailout of the American people through quantitative easing to cancel all student debt on top of tuition-free public education, making her popular among millennials who are drowning in debt. No major GOP candidates called for any type of reform on student debt.

a graph showing student debt from 1995 to 2015

Going back in time

On June 22,1944, President Franklin Roosevelt signed the Montgomery GI Bill into law. This, among other things, provided assistance to higher education. For every dollar put into the program, the economy reaped 7 back. This contributed to the Golden Age of Economic Expansion, and contributed to the nation by investing in the knowledge of our citizens.

In 1971 the tuition for a public 4-year college was $428 ($2,499 adjusted for inflation) per year. The median income in 1971 for men was $6,903 ($36,036 adjusted for inflation) and for women was $2,408 ($12,571 adjusted for inflation), making tuition 7% of men’s median income and 20% of women’s median income per year. Compared to recent years, In 2015, the median income for men was $37,138 and $23,769 for women, making tuition 25% of men’s median income and 39% of women’s median income per year, and is only rising.

We must do something to turn this course or else the US economy will start to suffer from the debt put upon this generation. And as those in power with the idea to make college free for the citizens are in a very small minority, it won't be happening soon.