The economy is a wondrous, maigcal thing. Nothing ever happens without a reason and sometimes exploring why thing occur can lead you to new, unexpected places.
Unless you’re a Keynesian, in which case everything bad that happens happens because the middle class is oppressed.
Actually, during my research I’ve found that the answer to this question is fairly interesting and involved- surprise!- the oppression of the middle class.
So student debt behaves just like any other kind of debt (duh): There can only be two reasons that the overall quantity of it can go up: Higher base cost of tuition or higher interest rate on student loans (also duh). As it happens, both of these have gone up. The interest rate on federal student loans has risen to over 12%. The rate on loan delinquency (the failure to make repayments on time) is the highest of any other major loan. That said, while interest rates continue to climb, it’s been tuition that’s been the biggest factor.
1980-Present Tuition Rises
Tuition is rising for a reason and that reason is not because colleges are assholes. Well, sort of. Tuition is just like any other price- it responds to changes in supply and demand and since 1980 there has been a huge increase in the demand for college degrees. As tuition increasingly became a seller’s market, colleges were able to raise tuitions massively in order to compete with other colleges to attract the best and brightest.
So tuition is high because demand is high, but why is demand high?
Because of the Great Manufacturing Shift
During the 1980s, but beginning in the 1970s, a few things began to happen globally and to the American economy. The entire world economy became more globalized- that is, pro-free market reforms were opening foreign markets and lowering tariffs worldwide. The cheapness of foreign labor coupled with amazing technological growth eliminated what were once considered middle-class jobs: manufacturing jobs.
As former middle-class workers flooded the service sector, competition for (largely non-union) jobs exploded and families who were once middle class were forced into lower-class wages. As a result, “the middle class” was forced into a two-earner household. It is no coincidence that this time period was also the revolution of women in the workplace and I would attribute the entry of women into the workplace to the depressed wages of men more than any sort of liberation of women from their gender roles.
But- offending trumblr aside- what does this have to do with tuition? Well most of the jobs that were lost to technology and other countries did not require a college degree- they were thoroughly blue-collar jobs. So the perception was that a high school diploma was no longer sufficient to get a job in the middle class and these former middle class families- in order to give their children the best life possible- rushed their kids into secondary education.
You can see this general college-fever in housing prices, actually. It’s always been the case that houses in good school districts have been more expensive than houses in the cities (voila Palo Alto) but the decades-long growth of that gap reflects a huge increase in the demand for good schools.
How to Fix It
In a civilized economy, it should never be the case that the only way to the middle class should be through higher education. Our economy just isn’t equipped to handle that and- let’s face it- funneling all kids through the same system (forcing kids from Palo Alto to compete with kids from Detroit for the same middle class lifestyle) puts a disproportionate amount of power and advantage in the hands of the very wealthy. The 1% if you will.
Education is important, but it isn’t nearly as important as shoring up the wages of those jobs which do not require a college degree because it has always been the case that these are the jobs which provide a middle class lifestyle. Because the fundamental problem of high tuition is caused by the overwhelming demand thereof, the best way to reduce tuition is to reduce the demand. In other words, make it possible again to earn a middle class lifestyle w/o going to college.
- Raise the minimum wage
- Expand the Earned Income Tax Credit (which lowers taxes on people who earn wages- so the middle/lower class)
- Expand benefits like paid sick leave and maternity leave
- Guarantee universal health care (Oh yeah, health costs have gone way up for the middle class due to reasons)
- Unionize the service sector
Brain Droppings 