Attention Congress: Millennials Are Already Paying Your Debt


No more pencils. No more books. Lots of creditors' dirty looks.

This slightly altered nursery rhyme may be fitting for most college students graduating this spring. About two-thirds of this year's college students will graduate with debt. The average student loan is $28,720 — more than triple what it was 20 years ago.

With the recent debt-ceiling bill passed by the House, you're likely to hear legislators argue that we need to pay down our debt so we don't burden future generations with it.  Regardless of where you stand on the debt ceiling, the fact is that Millennials (Americans born between 1980-2000) are already burdened with debt — thanks in large part to the policy decisions made by previous generations. 

Since 1978, college tuition and fees have risen by 1,120%. College textbooks have increased by 812%. The price of a college education has increased faster than medical services and housing combined. No wonder college loans continue to soar.

Ironically, public university students can attribute much of their growing debt to their state legislators trying to avoid … debt or tax increases.  As states began facing budget deficits, they more often than not chose to cut funding for higher education to avoid taking on more debt or raising more revenues through tax increases. On average, state funding per public university student has declined by 26% in the last two decades, and this has only got worse since the economic recession hit. States are spending 28% less per student in 2013 than they did in 2008.

For example, in Kansas, state revenues accounted for 49% of its public universities' revenue in 1982.  It now makes up only 26%.  Universities made up for this loss of revenue by passing the costs along to students through increased tuition and fees. Students now contribute more to universities' operating budgets than the state does. And this trend is common in states across the country.

One could argue that they made the right choice.  For example, if they had opted for tax increases or more debt, all taxpayers would have been penalized. And since people choose whether or not they go to college, it's only fair that they take the brunt of the cost. Maybe that is fair, but here's what's not. People don't get to choose what generation they're born into and the fact of the matter is if you were born in a previous generation the cost of a college education was much cheaper because of taxpayers.  And just like in previous generations, it is still in a millennials' best economic interest to go to college.  On average, bachelor's-degree holders make 38% more than those with only a high school diploma. Thus, millennials were born into a time when earning a college degree is needed to be successful and at a time when attaining it is more costly than it was for their parents.

This shift of higher education costs from states to students has impacted millennials' economic opportunities in a variety of ways. According to studies done by and Millennial Branding, millennials are less entrepreneurial than their Baby Boomer parents. However, Millennial Branding founder Dan Schawbel says that is not necessarily because of a lack of aptitude for entrepreneurial endeavors; it may have more to do with millennials' financial situations.

"I think it's because of student loans, fear of unemployment," said Schawbel. "They're trying to find some sort of income that's somewhat stable so I think they're more risk-averse because their situation's risky right now."

If the average student loan is $28,720, that would make the average student loan payment around $330 a month for typical payment plan. Paying $330 a month plus living expenses would limit a person's ability to start a new business.

The need to find immediate employment in order to make student loan payments would also limit being able to take a low paying job or internship that might lead to better opportunities long-term.

Universities are also recognizing that they can't continue with their current business models. In Georgia, officials are preparing to consolidate eight of the state's 35 public universities and colleges. And a number of other states are considering mergers and consolidations.

Technology is also changing the industry. Recently, MIT and Harvard announced their collaboration to provide online courses through edX. These online courses will be free of charge and students will be able to earn certificates in mastery. This is an exciting venture that may be the start of a revolution for how higher education is provided and attained, and it could help reduce the financial burden placed on students trying to obtain a college education.

As online courses become more popular and better implemented, the landscape of higher education may look considerably different in a few decades.

In the mean time though, it would be helpful for more leaders to recognize that the political decisions of the last 25 years have already burdened a younger generation with debt. And like some millennials' student loan payments, a better strategy among universities and state legislators for how to provide higher education is also overdue.