The Student Loan Crisis–How Did We Get Here? Part I: The Purpose of Universities

By Briana FranklinUpdated May 29, 2018

If you don’t know by now, the student debt crisis is indeed real. More than 44 million Americans hold student loan debt, with over 71% of the most recent graduating class having an average educational debt of $39K. Over 63% of millennials with at least a 4-year degree have student loan debt of $10K or more, and more than one in 20 borrowers graduates with over $100K in student loans! Outstanding student debt comes out to a whopping $1.5 trillion, which is more than the GDP of many countries combined. But, it was not always this way, and there once was a time when college students could put themselves through school entirely on minimum wage jobs–which leaves many wondering, ‘How exactly did we get here?’ In this first segment, we’ll explore the evolution of the role of universities, which will be followed by a discussion on university funding and the origins of loan programs, the current state of student loans, and projections for the future.

The Formation of a Foundation

A view of Harvard Hall, Stoughton Hall, and Massachusetts Hall at Harvard College in Cambridge, Massachusetts.

In the olden days prior to America getting its start as an independent nation, the country’s oldest and arguably most famous institution of higher learning, what eventually became known as Harvard University in 1639, initially served the purpose of preparing men to join the ministry. This set a powerful precedent in the realm of higher education but was by no means the universal standard.

As other institutions came onto the scene, the scope of collegiate-level learning began to broaden. For example, the College of William & Mary, founded roughly half a century later, by contrast, served to educate politicians, lawyers, and planters. Yale University, founded in 1701, came to fruition after ministers of Connecticut opted to create a more conservative institution that broke away from Harvard’s more liberal ideologies–a twist of irony that is not lost on us. As this era progressed, additional schools were also created in a similar vein, each designed to cater to a specific philosophical approach. Schools like The Academy of Pennsylvania (what we know now as the University of Pennsylvania) steered away from the training of ministers, while Rutgers University was established by the Dutch Reformed Church to teach according to the church’s ideologies.

The Increase of Public Universities

While many of the original American universities were private, the need for men educated in practical skills like farming, manufacturing, and engineering spurred state and city governments to create many public institutions of higher learning, such as the University of the City of New York, the University of Virginia, and East Alabama Male College, which became Auburn University. One of the largest factors that contributed to this reshaping of higher education was the passage of the Morrill Land-Grant Acts of 1862 and 1890, amidst the Civil War and Reconstruction Era, respectively. The 1890 installment was developed to target former Confederate states and, in fact, required race-blind admissions, paving the way for the development of institutions designated for educating those in ostracized demographics–primarily, women and African-Americans.

An Inclusive Education

The first black and female Bachelor’s degree recipients (Alexander Lucius Twilight of Middlebury College and Catherine Brewer of Wesleyan College, respectively) graduated in 1823 and 1840, respectively. However, it was only after the passage of the Morrill Land-Grant Acts and the creation of designated universities for women and African-Americans that enabled them to have some meaningful access to higher education.

Female graduates, many of whom graduated from women’s colleges, helped counter the highly problematic assertion that women should be confined to the home and, therefore, did not need education. Some (mostly males) even believed rigorous study was unhealthy for women-imagine being that out of touch with reality. The development of women-only schools and new co-ed institutions helped to increase the woman’s share of enrollment from 21% to 44% between 1870 and 1930. Despite such overt sexism, (white) women still had a comparative leg up from blacks in higher education. While they were discouraged from obtaining educational tools and resources, African-Americans were historically barred altogether.

Medical College for Women

Students of New York City’s Medical College for Women, dissecting presumably one of said sexist critics.

Blacks began creating their own institutions in the 19th century as well, with the first black-only university, Cheyney University of Pennsylvania, opening in 1837. Others began to emerge around the nation, including the University of DC, Lincoln University of Pennsylvania, and Bowie State University, amongst many more. But interestingly, the “name brand” black universities (e.g., Howard University, Hampton University, Spelman College) did not come into existence until many years after the foundation of the initial black schools for higher learning–much the opposite of the timelines for the previously mentioned predominately white and women’s colleges. Much of this was due to the very obvious barriers during slavery that prohibited blacks from obtaining basic skills, such as literacy and learning tools. However, once momentum grew following the establishment of the first schools, others picked up the pace and began to offer more robust programs and curricula.

A Portrait of the 1900 graduating class of Howard University Law School

A Portrait of the 1900 graduating class of Howard University Law School.

A Change in the (Attendance) Game

With more types of people having access to educational opportunities, the country was indeed moving in a positive direction, but there were a few characteristics that still largely defined the profile of college students: wealth and means. The fact that higher education institutions were initially intended for and attended by those of upper-middle-class and elite socioeconomic backgrounds coupled with the staggeringly low tuition costs of the time meant affordability was not much of a question. For context, a year at Harvard in 1870 would only set students back $150, which, adjusted for inflation, still only rounds out to just over $4K–a figure that nowadays only exists in dreams and the wildest of imaginations. After World War II, this ability for college students to pay their way through problem-free began to change substantially. Students from a wider range of socioeconomic backgrounds were beginning to enroll, but with this uptick in attendance, there was also a burgeoning need for funding assistance, as increasingly fewer students could afford to pay entirely out of pocket. As this issue persisted, the government responded accordingly with the creation and implementation of federal and private loan and grant programs. But we’ll explore that in Part 2.

Bachelor’s Degrees Granted in the U.S.

Chart Displaying Bachelor's Degrees Earned in the US between 1930 and 1950

In the decade immediately following the war, undergraduate education soared to more than triple previous rates, highlighting how collegiate enrollment shifted to become a major national focus and priority


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