Ending the Debt-For-Diploma System

Student debt has skyrocketed over the past decade, quadrupling from just $240 billion in 2003 to more than $1 trillion today. If current borrowing patterns continue, student debt levels will reach $2 trillion in 2025. Average debt levels have risen rapidly as well: two-thirds (66 percent) of college seniors now graduate with an average of $26,600 in student loans, up from 41 percent in 1989. These trends are all part of the rise of the “debt-for-diploma” system.

How Did We Get Here? State Disinvestment

Until about the mid-1990s, state universities and colleges were affordable for middle-income households. Lower-income students could pay the bill with grants and part-time jobs. Debt was the exception, not the rule.

This current debt-for-diploma system is the result of overlapping trends, including the steady decline in public investment in state colleges and universities, down 25 percent per full-time equivalent student since 2000. State policy decisions are largely responsible for this major cost shift onto students and families (Figure 1).

Ending the Debt-For-Diploma System

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