Sky Rocketing College Costs

By Gordon H. Wadsworth

Updated 8/6/2007  

            Economists predict the cost of attending state colleges will soar to $120,000 by 2015.  Currently over $40 billion in student loan debt has forced many former students into financial bondage or even bankruptcy. 

            In the 16 years that I have been directly involved with college financial aid, I have heard hundreds of students and parents ask the same question, “How do I pay back those expensive student loans?”  Just recently, a woman called asking for help.  She told me she has loans dating back to the early 1980’s.  All I could do was pray with her.  There are no easy fixes.  Having student loan debt is like owing money to the IRS.  Once caught in the snare, there is no way out. 

            College tuitions soar each year, advancing far in excess of the inflation rate.  The overall inflation rate since 1986 increased 92.32%, which is why we pay nearly double for everything we buy. On the other hand, during the same time, tuition increased a whopping 343.81%. See chart above right. 

     For example, if the cost of college tuition was $10,000 in 1986, it would now cost the same student over $43,000 or almost 2 ½ times the inflation rate.        

                  Many schools have increased tuition fees due to higher overhead costs.  Fuel and labor costs continue to rise.  Many older college buildings are in need of renovation or replacement.  The demand for expanded libraries and new research and computer labs is at an all-time high.  Some schools also need additional security measures. 

Yet, the main reason tuition continues to rise is a dramatic change that took place regarding the Federal Stafford Loan more than a decade ago.  When Uncle Sam opened the floodgates to government-backed student loans without parent income restrictions in 1992, colleges welcomed the news with open arms.  The sudden injection of millions of additional aid dollars only furthered tuition increases. Add to that the government’s continued promotion of the Stafford Loan as a low-cost program, and you have the formula for hyperinflationary costs.

When the government made it exceptionally easy for students to borrow massive amounts of money, the colleges followed the lead by increasing their tuition rates.  This combination led to record-level borrowing.  Today the average undergraduate student loan debt is nearing $20,000.  Those who go on to graduate school often end up with an additional $30,000. Law and medical students report an average accumulated debt from all years (undergraduate and graduate study) of $91,700. 

            Just recently I introduced The College Trap, a new book packed with Internet links to scholarships, grants and alternative ways to pay for college.   People have already questioned the title.  Some suggest that while many students are in financial bondage, it is not the fault of the higher education system. 

            True, there is more money available today for those wanting an advanced degree. The colleges talk in terms of big financial aid packages, but it is what makes up the aid package that is important. Often when students receive a multi-thousand dollar offer, it may be nothing more than a package of expensive student loans. The media refers to these as low-cost student loans, but they are not low cost when you face debt of $20,000 or $30,000 at graduation. 

For Tips from Gordon on how to save on education costs see his article Save on Education

The College Trap offers creative ways to pay for college and stay out of debt and is the first financial aid book to include hundreds of internet links activated via an exclusive website.  For more information, log onto www.thecollegetrap.com