Student Debt Crisis: Something Has To Give

There was a time when a college education for most Americans was quite affordable. In-state tuition breaks for residents made attending local colleges and universities an easy decision. Some state-run systems like the diverse and extensive group of University of California schools used to cost students a whopping $4 per credit hour!

Today, the cost of a college education can be called exorbitant and out of control. Between 2008 and 2010, the cost of tuition at a four-year public university jumped by 15 percent. In some states, particularly Arizona, California, and Georgia these costs over the same period rose 40 percent.

Even tuition at private, "for-profit" universities has skyrocketed, and in many instances is more than twice as high as Harvard. A school like Full Sail University, and film and arts school in Florida, is $44,000 per year. Conversely, the most expensive public university is Penn State, with an average yearly cost of just under $20,000 for tuition, books, and other fees.

Historically, student loans and grants have been available to help students who don't have access to the cash they need to attend school. However, tuition has climbed so high in this country that they're affecting those students who, historically, have been able to attend school without incurring any debt, or so little that it has been easily managed.

The "Wall Street Journal" recently released Federal Reserve data from 2007 and 2010 showing families with incomes of between $94, 535 to $205,335 saw the biggest jump in the percentage of accrued student loan debt.

For many upper-middle-class families, this is forcing decisions previously eschewed: Do we accrue student debt, or do we apply to 2nd-tier schools where we can still pay the tuition in full?

You can well imagine what this is doing to middle- and lower-middle-class families who, for at least a couple of decades now, have never been able to pay cash at any school other than a local community college.

It has been estimated by FinAid.org that student debt in the form of subsidized loans will exceed $1 trillion sometime in 2012. This is real debt being incurred and accrued by the federal government, and stands a chance of making the housing bubble look like nothing more than the losses incurred over a long weekend in Las Vegas.

What becomes exponentially worse is the fact that none of these numbers reflect the costs of advanced degrees and focused programs like medicine. When students choose to go beyond the four-year mark and enroll in advanced programs, the costs skyrocket. According to Investopedia, the average cost of getting an MBA at a Top 10 business school is $95,000. These rates necessarily drive up the amount of borrowing necessary for school as more people strive for better financial opportunities for themselves and their families through education.

If a college education is escaping the grasps of those who have traditionally been able to pay cash for their education, like the upper-middle-class; does this spell impending doom for those who have always relied on loans and grants? Opinions vary, but one thing is certain: College graduates out-earn high school graduates by more than $20,000 per year, and have held their own when it comes to unemployment.

While unemployment rates for college grade age 25 and under is at nine percent. That's almost double the five percent rate from 2007, but compared to high school graduates it's hardly noticeable. In 2007, high school graduates were unemployed to the tune of 12 percent. Today, that rate has nearly doubled to just less than 23 percent.

There's no question the impact a college degree has an a person's ability to earn more money, but as education costs rise at more than three times the rate of inflation, it's not going to be too long before only the wealthiest Americans can enjoy a college education.

Can the federal government continue to subsidize and guarantee student loans and offer PELL grants? As state governments continue to trim public education budgets, and the national debt soars to more than $15 trillion, the answer will increasingly become no, which could have grave ramifications for a nation that has prided itself on being well-educated.