To pay for a year’s worth of education at a four-year public institution, today’s students would need to work a full-time minimum-wage job for the whole year; 24 years ago they only had to work a summer to almost pay their way.

That’s the news from a new report titled Student Debt: Bigger and Bigger, from the Center for Economic and Policy Research (CEPR). The report also concludes that students from low-income families are one-third more likely to take on debt than students from higher-income families—with long-term implications for undergraduates who seek to pay their way through college and for their career and life choices after graduation.

Analyzing data from the College Board and National Center for Education Statistics “National Postsecondary Student Aid Survey,” the study found that in 2003-2004:

• Students graduated with an average of $17,600 in debt.
  • Graduates of public four-year institutions owed an average of $15,662.
  • Graduates of private four-year institutions owed an average of $22,581.
• Expenses at public four-year colleges have risen 59.4 percent since 1990.
• Expenses at private four-year colleges have risen 51.1 percent since 1990.

According to the report, loans now comprise more than half of financial aid packages, up from about one-fifth in the 1970’s.

Further results highlight the particular problem for students from lower-income families.

For public-school students graduating in 2003-2004:

• Those from families in the bottom quartile of income took out an average of $16,438 in loans, an increase of 116 percent from the year 1989-1990.
• Those from the highest quartile took out an average of $15,523 in loans, an increase of just 28 percent from 1989-1990.

To highlight the growing problem for students from lower-income families to meet college costs, the report cites this example:

• In 1981, a college student from a low-income family could work full-time all summer at a minimum wage job and earn about two-thirds of their annual college costs – the remaining $2,000 (in inflation-adjusted 2004 dollars) to be found from grants, loans, further work or their parents.
• Today, the same student will have to work all year at the same full-time minimum wage job to afford one year of education at a four-year public institution.

"American students are graduating with more debt than ever. We are handing college graduates a bill for more than $17,000 when they receive their diploma," said Heather Boushey, CEPR economist and author of the study. "Working your way through college is no longer possible with such a low minimum wage and few grants available to students."

The report also comments on how such indebtedness might affect students’ lives after graduation, including dictating that they take certain kinds of jobs to pay off their debts, or postpone marriage, buying a house or starting a family.

Student Debt: Bigger and Bigger (pdf) - Center for Economic and Policy Research

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