WThe backlash against the Biden administration’s announcement Wednesday of a plan to cancel 10,000 federal student loans for Americans earning less than $125,000 annually and $20,000 for Pell grant recipients with the same income, was expected. Many of the critics were older individuals who attended college in the 1980s. They called it a “gaveaway” for those with college degrees and unjust to those who have paid for their education.
As I was writing my book, The Ones We’ve Been Waiting For, I spent months researching why the student debt crisis has hit younger generations so hard— and why many older Americans don’t seem to understand the unique financial predicament of millennials and Gen Z. The key factor is the fact that college costs have drastically changed over the past 50 years. Many conservatives older than 50 who object to the possibility that student loans might be forgiven by taxpayers went to school in an era when higher education was greatly subsidised and tuition was significantly cheaper. For them, working their way through school without debt was feasible; for modern millennials and Gen Z, it’s often financially impossible.
Senate Minority Leader Mitch McConnell called Biden’s loan forgiveness plan “student loan socialism” and said it was a “slap in the face to every family who sacrificed to save for college.” But when McConnell graduated from the University of Louisville in 1964, annual tuition cost $330 (or roughly $2,500 when adjusted for inflation); today, it costs more than $12,000, a 380% increase. When House Minority Leader Kevin McCarthy, who called the policy a “debt transfer scam,” graduated from California State University, Bakersfield in 1989, tuition was less than $800; today, it’s more than $7,500, a 400% increase when adjusted for inflation. Nevada Senator Catherine Cortez Masto, a moderate Democrat who is running for re-election this year, told Axios she disagreed with the policy because “it doesn’t address the root problems” of college affordability; when Cortez Masto graduated from the University of Nevada in 1986, tuition was a little more than $1,000— today, it’s roughly three times as expensive.
And don’t forget Republican Senator Chuck Grassley, who called the policy “UNFAIR” on Twitter. The University of Northern Iowa was his graduation in 1955. In that year tuition averaged $159 or $40-$53 per quarter. It now costs $8,300. This is almost 500% more even after accounting for inflation.
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Due to state funding for higher education being cut in the 1980s/90s at precisely the time that college was essential for good-paying work and the participation in the global market, college costs have continued rising. According to an American Council on Education report, Colorado legislators cut 70% of state funding for education between 1980-2011. South Carolina and Arizona also cut education funding more than 66%. Arizona reduced 62%. More than half of Michigan State’s revenue came from state funding in 1987— by 2012, less than 20% did.
The Common App had partly facilitated a surge in college application, which meant that schools were forced to spend more to be able to offer the right students. As colleges and universities faced pressure to boost their “yield”—or the number of accepted students who enroll— they poured money into building fancy dorms and indoor pools, and hired thousands of administrators to handle everything from counseling to student life to athletic programs. Between 1987 and 2011, American colleges and universities hired more than 517,000 administrators and nonacademic staff— roughly 87 every day. The College Board reports that tuition costs at four-year universities increased by nearly two-thirds between the early 1990s and early 2020s due to this increase in spending. The bottom line is that more people were coming to higher education systems receiving less funding.
The result was that younger generations were responsible for the majority of these student loans. The average student loan balance for Generation X is more than $45,000, but the Education Data Initiative shows that student debt most directly affects the millennial generations. Nearly 15 million millennials are in student debt. 1/3 of all millennials also have student loans. Biden administration estimates that the new policy can provide debt relief for as many as 43 million Americans. It could also completely erase the balance of roughly 20 million Americans.
Younger generations might say what’s really “unfair” is that many Baby Boomers and the Silent Generation had access to highly subsidized higher education with affordable tuition, while some millennials and Gen Z get just $10,000 of student loan forgiveness. Those calling Biden’s new policy “socialism” would do well to remember this: In 1987, a student at the University of Kansas could pay her tuition with a part-time minimum wage job and still have some left over for books and food. An average student earning minimum wage in 2016 would make $38,000 less.
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