Why Is College So Expensive?
The degree requirement is a toll booth. The debt can never be discharged.
TL;DR
Tuition rose 1,200% since 1980—five times faster than inflation. The mechanism: unlimited federal loans let universities raise prices knowing students could borrow. The NY Fed found for every dollar of loan eligibility, tuition rose 40 cents. Student loans became non-dischargeable through bipartisan amendments (1976-2005). $1.77 trillion outstanding.
The Same Job, Different Gate
1975 — Cleveland
Bank Teller Application
- ✓ High school diploma
- ✓ "Good with numbers"
- ✓ Interview on Tuesday
- ✓ Started Monday
Salary: $8,400/year
Could afford one-bedroom apartment
2020 — Same Bank
Bank Teller Application
- ✗ Bachelor's degree required
- ✗ 4 years of college
- ✗ $34,000 in student debt
- ✗ $380/month payments for 10 years
Salary: $32,000/year
Can't afford one-bedroom alone
The job is the same job. The gate in front of the work changed.
Bureau of Labor Statistics: Bank teller required education: "high school diploma or equivalent"
The Numbers
Tuition since 1980
+1,200%
Five times faster than inflation
Everything else (CPI)
+236%
Inflation over same period
Cost as Share of Income
1975
4%
of median household income
A summer job could cover it
2024
25%
of median household income
Years of debt required
The Subsidy That Was Captured
In 1965, Lyndon Johnson signed the Higher Education Act. The intention was to expand access. Students who couldn't afford tuition would borrow from the government and repay from their higher wages.
The logic contained an assumption: that colleges wouldn't simply raise prices to capture the borrowed money.
The assumption was wrong.
The NY Fed Finding
For every dollar of subsidized loan eligibility:
$0.40
tuition increase
The money flowed through students and into institutions. Students received the debt. Institutions received the cash.
Meanwhile, states withdrew. Between 2000 and 2020, per-student state appropriations for public universities fell by nearly 30% in inflation-adjusted terms.
Federal loans expanded. State funding contracted. The gap was filled by tuition increases that students borrowed to pay.
The subsidy was captured. The debt remained.
The Trap
American bankruptcy law rests on a principle from the founding: debts that cannot be paid should not destroy a person forever. The debtor should be able to start over.
This applies to nearly all debt. Credit cards. Medical bills. Business loans. Mortgages. Gambling debts.
Student loans are different.
1976
Non-dischargeable for 5 years
1978
Moved into Bankruptcy Code (permanent)
1990
Extended to 7 years
1998
Eliminated entirely for federal loans
2005
Extended to private loans (bipartisan)
43M
Americans with student debt
$1.77T
Total outstanding
Exceeds the GDP of Canada
The Premium Is a Penalty
The "college wage premium" is supposed to justify all of this. Workers with bachelor's degrees out-earn those with only high school diplomas.
1980
39%
College wage premium
2000
79%
College wage premium
The framing is wrong.
The premium didn't double because college graduates became dramatically more valuable. It doubled because workers without degrees were pushed out of jobs they had previously held.
2017 research finding:
65% of executive secretary job postings required a bachelor's degree.
Only 19% of people actually employed as executive secretaries had one.
The job hadn't changed. The barrier was erected after the people inside had entered.
The college wage premium has been essentially flat since 2000. It has not grown in a quarter century.
The premium is not a reward for learning. It is the cost of exclusion avoided. It measures what you must pay to not be filtered out.
Thomas Jefferson distinguished between a "natural aristocracy" based on virtue and talent and an "artificial aristocracy" founded on wealth and birth.
The natural aristocracy was "the most precious gift of nature." The artificial aristocracy was "a mischievous ingredient" that good government should prevent.
The credential has become the new title of the artificial aristocracy.
It does not measure virtue. It does not measure talent. It does not measure the ability to do the job.
It measures the ability to pay for permission.
This is not education. Education is the transmission of knowledge.
This is extraction. Positioning yourself at a bottleneck and charging for passage.
See the Education Solution →Frequently Asked Questions
Why is college tuition so expensive?
Since 1980, tuition increased 1,200%—five times faster than inflation. The mechanism: unlimited federal loans let universities raise prices knowing students could borrow. The NY Fed found for every dollar of loan eligibility, tuition rose 40 cents. The subsidy was captured. The debt remained.
Why can't student loans be discharged in bankruptcy?
Student loans became non-dischargeable through amendments: 1976, 1978, 1984, 1990, 1998, and 2005. The 2005 BAPCPA extended it to private loans with bipartisan support. A 22-year-old who borrowed for college is now treated by the law like a parent who abandoned a child.
Why do employers require degrees for jobs that don't need them?
2017 research found 65% of executive secretary job postings required a bachelor's degree, but only 19% of actual secretaries had one. The job didn't change—the barrier was erected after people inside had entered. It's not a skill requirement. It's a filter.
What is the college wage premium?
Workers with degrees out-earn those without by 79% (up from 39% in 1980). But the premium didn't double because graduates became more valuable—it doubled because non-degree workers were pushed out of jobs they previously held. The premium has been flat since 2000.
How much student debt is there?
$1.77 trillion outstanding across 43 million borrowers. That's larger than the entire GDP of Canada. Unlike credit cards, mortgages, or gambling debts—all dischargeable—student debt follows you forever.
