Many folks blame rising tuition costs as the chief driving factor of massive student loan debt. According to the U.S. Department of Education, the inflation adjusted annual cost of undergraduate tuition, room, and board in 1980 was $7,685 and in 2010 it was $17,464. On average, tuition tends to increase about 8% per year - that means that the cost of college doubles every nine years.
But why are colleges and universities charging more for tuition?
Much of the credit belongs to the Department of Education, Federal grants, and government loans for college and university students. The government has taken on the role of subsidizing tuition costs, and as a result, universities are relieved from the market pressure of providing the best quality education at the lowest possible price. By the government trying to make college more affordable for everyone, they have actually driven prices through the roof while diminishing the quality of the product. They have also created incentives for students to take an obscene amount of government loans to finance their education in degrees that will do little to advance their careers or enrich their lives.
I am not saying college is not valuable. It certainly can be. But for those that go to college simply because it is what the rest of the herd is doing may be fleecing themselves without knowing it.
A $ A
Listen to Jason's 9min podcast on education and the student loan bubble:
The Higher-Education Bubble Has Popped - Doug French
The Student Loan Fiasco: Made in D.C. - Robert Murphy
The First Crack: $270 Billion In Student Loans Are At Least 30 Days Delinquent - Zero Hedge
"As of now, our dreams of owning a home and having a family are gone" - StudentLoanBubble.com