The student debt crisis – currently the subject of executive orders, pending Senate legislation, protests and much boomer hand-wringing – is more accurately an education cost crisis. Tuitions have more than doubled since the early 1980s, but not because the quality of a college education has improved that much. Rather, it's because because policymakers and administrators have come to treat higher education as a commercial marketplace, rather than a public trust – and stop-gap student loan reforms like those "unveiled" by President Obama this week fail to confront this ethical dilemma underlying the debt pile.

According to University of California-Berkeley's Debt & Society project, rising higher education spending is in large part driven by factors that have little to do with the quality of instruction or academic resources: schools are pouring gobs of capital into material amenities like student lounges and sports arenas, and this spending in turn raises the cost of the debts schools incur to finance these projects. Much of this investment plays into the business of college – marketing the campus to students who foot the bill and bring in more revenue.

While private institutions become increasingly financialized, public institutions are also shifting toward a service-industry model. For the nearly three-quarters of US students enrolled in a public university or community college system, tuition more than doubled between 1990 and 2010, while state funding fell by about 25% on average, according to the Chronicle of Higher Education.

Students and their families have made up the difference, borrowing on the hopes that their degree will pay off one day. Those hopes are now crumbling as young adults face a volatile labor market and long-term economic stagnation. After years of being reassured that a college diploma was their key to a stable future, young people find themselves in the hole before they even collect their first paycheck.

Another driver of debt is the eroding value of Pell grants, which are targeted to low-income families. The maximum grant currently covers less than one third of the total tuition, room and board costs at a typical public four-year university.



The collapse of public support for higher education has left young people facing a grim economic horizon. Roughly two thirds of the class of 2011 graduated with an average debt of more than $27,000. More than 7m borrowers are now in default on public or private student loans.



Education debt constrains their entire economic futures: it might impact when they start a family and certainly limits their job choices – when they have any – to whatever pays enough to cover loan payments. The financial hardship may drive them to rely on credit cards to make ends meet, thus deepening the debt trap.

According to Pew Research Center, there is a roughly seven-fold difference in the net worth of households headed by a young college graduate with debt, versus a non-indebted one. Washington is financially imprisoning the rising generation of workers and community members – precisely the people government should be investing in, not indebting.



Now the White House seeks to remedy these inequities with piecemeal loan relief and "forgiveness".

The White House's plan for relieving the country’s student loan burden barely dents the mountain of $1.2tn in collective education debt. The executive order builds on an existing plan that caps student loan payments at 10% of borrower's income, offering relief to about 5m more people. In addition, many participating borrowers might qualify for loan forgiveness after 20 years.

The initiative is meant as a springboard for more expansive Senate legislation, spearheaded by Sen Elizabeth Warren, to allow some 25m borrowers to refinance their student loans at lower rates. While well-intentioned, both measures aim to restructure loans, but without restructuring the underlying system that punishes educational aspiration with financial ruin.

But while college is prohibitively costly for many students, and student loan reform merely papers over widening economic gap, full public funding for higher education is well within the government's financial reach. An analysis by the advocacy group Strike Debt, for example, shows that for less than $13bn in additional federal funds, the government could theoretically "make every single public two- and four-year college and university in the United States tuition free for all students". This would involve both straightforward changes to existing federal subsidy programs (particularly cutting support for notoriously substandard for-profit colleges) and a more fundamental political challenge: getting Washington to recognize that education is an entitlement, not a loan.



The state owes students a deeper debt than they owe the state – the cost of massive educational disinvestment and an economy broken by a generation of financial recklessness.



But for now, students must constantly wrestle with the dilemma of whether the benefits of a college education are worth the tremendous cost. Instead, it's time for policymakers rethink the way we, as a country, value higher education and what its purpose should be. When a university functions as a business, we rob a public trust and debase the country's intellectual assets.

Students might carry a student debt load today, but eventually, we'll all bear the social cost of their wasted opportunities.

