There's a lot of yelling going on in political and other circles about college loans and the cost of college. The cost of college has more than doubled since I was a student. For school year 1977-78, the year I graduated from it, UC Berkeley estimated annual total cost for an in-state student at $4203 and $6108 for an out of state student. (Berkeley is a state university: they subsidize taxpaying residents and their dependents, while out-of-state students are expected to bear their share of the true costs with a special fee) Today those numbers are $33,522 and $56,400. This is an inflation in cost by a factor of 8 and 9.2 respectively. Had the costs simply matched inflation (CPI) they would have gone up by only a factor of 3.8 ($16K and $22K).
Median household income in 1977 was $13579 and mostly came from a single earner. That income could pay off a 4 year degree in 15 or 24 months. It was entirely practical for a median income family to cover this, even without scholarships: the student might earn $1-2K during the summer and the family would pay the remaining $2-3K. This works: 100% of the student's and 20% of the family's income was a heavy burden but not intractable for a median income family in 1977, especially if they've been saving in advance.
Today, median household income is $52,762 and a lot of that comes from two earners. It would take 31 or 51 months to pay off the 4 year degree. Minimum wage and wages for the types of work students can do is lower today than then, but pretending the inflated equivalent $4-7K/yr, that still leaves $26-$29K to be covered, for the in-state student, and $50K for the out of state student. No median income family can bear to pay 50% of their income for a student, much less 90%.
This is a fundamental, qualitative change. In 1977, it was possible for a median family to send a student to college without debt. In 2013 it is not. What's changed?
Berkeley's operating budget is $2.29B. There are 36,000 students. Pretending student costs are the only expense (they are not--far from it) that's $63,600 per student. Even the out-of-staters are paying only $35,823, just over half their share. (the other costs are books, housing, etc). In fact, students are paying about 40%. In 1977, they were paying less than 4%. The state was paying 86%. Today the state is paying less than half, and the students are being asked to make up the difference. But they can't. So they're borrowing.
