How Did College Education Become So Ridiculously Expensive?

By Bill Zimmerman

March 10, 2014  |  The student loan crisis is a new phenomenon. Despite its huge impact, as recently as the late 1980s there was no student loan crisis. Then, middle and working class students suffered from cutbacks and had difficulty financing their educations, but overall, while the system of paying for college was beginning to break down, it had not yet become the disaster it is today. The crisis came because in later years the cost of getting a higher education rose many times faster than the overall cost of living. To make matters worse, wages were stagnant and the real purchasing power of working Americans was in decline.

The crisis now centers on the inability of borrowers to repay their student loans, but those borrowers only needed loans in the first place because in the mid-1990s the cost of tuition escalated so dramatically. By the first decade of the new century, it virtually went through the roof. What drove this sudden and rapid increase?