A new law was passed to reaffirm the radical American idea that anyone should be able to go to college -- and be able to pay for it. The Higher Education Act of 1965 (HEA) established the college grants and student loans on which today's system is largely based. Whereas the GI Bill focused on veterans, the HEA sought to ensure access to college for all individuals. As President Lyndon Johnson said when he signed the bill, "The Higher Education Act of 1965 means that a high school senior anywhere in this great land of ours can apply to any college or any university in any of the fifty states and not be turned away because his family is poor."
As a result of this landmark legislation, the number of -low--income students in American colleges and universities nearly doubled between 1965 and 1971.(12) For poor kids, grants were generous enough to cover the cost of going to college. For the middle class, tuition was low enough that most students could foot the bill with Mom and Dad's help and a part-time job.
Back in 1977, the largest high school graduating class in the nation's history, the Baby Boomers born in 1959, was headed for college. Their record numbers, in addition to the slumping economy, made it a particularly bad time to be entering the labor market. The good news, though, was that college was affordable. Average tuition in the late 1970s for a four-year state college was just over $1,900, in 2003 dollars.(13) Add in room and board, and the total cost was just over $6,000. For Boomers of more substantial means and grander expectations, the tuition at a private college was around $8,000, and with room and board the total cost was $12,000, again inflation-adjusted. High school graduates hoping to learn a trade after high school could easily fork over $900 for a year's tuition at a community college.
Borrowing one's way through college just wasn't the norm. In 1977, college students borrowed about $6 billion (2002 dollars) to help pay for college, compared to $28 billion borrowed by students in 1993.(14) By 2003, the amount of borrowing had doubled, to $56 billion. The rise in loan volume cannot be completely explained by increases in college enrollment. The number of students enrolled in college grew by 44 percent between 1977 and 2003, but student loan volume rose by 833 percent. Over the last decade, the average student loan per year rose from $2,713 per student to $4,903, in constant dollars.(15) The older Baby Boomers had it even easier than the younger tail because the 1960s marked the heyday of college affordability and generous financial aid. Both the youngest and oldest of the Baby Boomers (and their parents) made it through college without much financial struggle and certainly without the debt burden Gen Xers have on their shoulders.
The Debt-for-Diploma System