The Millennial Student Debt

This post will tie together my last two posts about income and education. There appears to be a relationship, according to data from the Bureau of Labor Statistics:

income by education.png

With the importance of a college degree mostly established, the next issue is one of funding. Before we get to the impact of funding, we have to establish what the tuition situation looks like. CollegeBoard published some data along with the following table:



We see that in 40 years, private nonprofit tuition tripled while public-four year degree costs increased even more.

Now look at the right side of the table, which includes tuition, fees, and room and board. $45,000 for the typical private school and $20,000 for the typical public degree.

According to the National Association of Colleges and Employers, the average starting salary for a college graduate in 2015 was $50,651. I’m not a fan of averages but finding median salary for college graduates is tough. (EDIT on 3/27/2017: You’ll notice, at the bottom, that there is a “thought” about this article. It’s a blog post I published here about averages. I go into detail about why I’m not “a fan of averages.”)

So we’re looking at 40% of first year earnings for public school students to fund their education. The same group, NACE, reports that the average starting salary in 1976 was $51,056 (in 2016 dollars). That’s 16%. So we’ve gone from 16% of starting salary to 40% in 40 years.

There’s a fascinating Reddit threat that I found through this Atlantic article. As such, a reply was generated in this blog post. It used to be that you could work one work day (8 hours) for minimum wage to cover the cost of one credit hour at MSU (and many other schools). That number rose to 60 work hours, or a week and a half. For one credit hour!


Lets take a broader look. In 1987, a student had to work about 400 hours to cover the cost of 1 year for the average public school tuition when working at minimum wage. That number has since risen over 900 hours. Considering there are about 2,000 work hours in a year, we’ve grown from 3 months of work (or one summer) to 6 months of work.

By the way, this only touches on the cost of tuition. It doesn’t say why. Most experts point to decreasing state funding. Between 2008 and 2016, only 4 states have increased funding. The other 46 have decreased funding.


Consider this graph as well:


So one year state funding increased. That’s a good sign. Many agree that more needs to be done. The next chart shows the student’s share of funding education.


There’s an argument to be made about whether or not taxpayers should fund or otherwise subsidize higher education. I think there is, but that’s a whole other topic of debate. The data is spread out and the time necessary to consolidate everything is far more than I can offer at the moment.

The following chart shows federal funding for higher education, which has risen as state funding has decreased.


So there are good signs, but most of the data points to this: State funding decreases have led to public state school tuition increases. This study tells us that the increases we have seen in federal loans have led to an increase in tuition. So which is it? Is it that decreasing state funding leads to higher tuition? Or is it because the federal government has worked to make loans more accessible that we see schools taking advantage of this?

Who knows?

What I am trying to say with this post is tuition is up, a lot. It’s becoming unmanageable and is discouraging students from attending college. Some, including myself, hold the opinion that “college isn’t for everyone.” But negative connotations around blue collar jobs (factories, lumber, etc.) and trade-based work (plumber, HVAC, etc.) steer students away from those careers.

Solutions are a tricky thing. But before you can come to a solution, you need to figure out what the problem is.


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