Over the past 30 to 35 years the cost of higher education has increased four times faster than median household income and more than the cost of anything else — beating out even gasoline and health care. At the same time, college financing has shifted from direct government aid, such as Pell grants, to loans.
These changes have led to exploding college debt, which now exceeds $1 trillion. Graduates, on average, have nearly $30,000 in college loans; many owe more than twice this amount.
There are many negative macroeconomic consequences from enormous student debt. Last April, The Wall Street Journal bemoaned that this debt kept young people from buying homes, hurting the housing recovery. In addition, student debt slows economic growth because it reduces the spending of young Americans.
College debt is not a problem in other developed nations for one simple reason. Only 14 of 29 European Union countries charge students attending college. For the others, college is very cheap. Tuition in Germany is less than $1,300 per year.