Young Americans Feel Cash-Strapped

To illustrate how nonexistent student loan debt was for previous generations, I conducted a simple Nexis search. When I typed in the words "student loan debt" for the years 1971 to 1980, the search yielded no articles; not a single article on this subject appeared in any newspaper or magazine in the entire country. The next decade brought only a handful of articles, only sixty-seven about student loan debt between 1981 and 1990, to be exact. It's worth noting that the first articles that appeared, in 1982, were exclusively devoted to the high rate of default on student loans by doctors. It wasn't until 1986 that there was a newspaper article voicing concern about rising student loan debt in general. Continuing the Nexis query, I searched "student loan debt" for the decade 1991 to 2000. The search was interrupted because it would yield more than 1,000 articles. The debt-for-diploma system had arrived.

The debt-for-diploma system is a pernicious beast. It stunts young adults' economic progress as they try to start their lives, draining precious dollars out of their paychecks for more than a decade. The evils of the debt-for-diploma system aren't restricted to those who take out student loans. Anytime a bright but lower-income student settles for a two-year institution or forgoes college altogether, the debt-for-diploma system has claimed another victim.

It shouldn't be surprising, then, that many of the gains made during the 1970s in expanding access to college have disappeared. In fact, the gap in college enrollment among whites, blacks, and Hispanic students has actually widened over the last thirty years: in 2000, the enrollment gap between white and black students was 11 percentage points, up from only 5 percentage points in 1972. The enrollment gap between white and Hispanic students was 13 percentage points in 2000, up from a 5-percentage-point gap in 1972.(16) One result of debt-for-diploma is that the highest-performing students from the lowest socioeconomic backgrounds enroll in college at the same rate as the lowest-performing students from the highest socioeconomic households. To put it more bluntly, the smartest poor kids attend college at the same rate as the dumbest rich kids.

And these days, there are more smart poor kids than ever before.

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