How Governments (and the Fed) Make Life Harder for Young Families
How Governments (and the Fed) Make Life Harder for Young Families by Bradley Thomas for Mises
Young people today are delaying starting “adult” life until later and later. The median age of first marriage has climbed to nearly 30, up from the mid-20s a generation ago.
Clearly there are plenty of cultural changes that influence such shifts, but we shouldn’t underestimate the added burdens created by government overreach that make it more difficult for young people to settle down and start a family.
In higher education, as with healthcare, a system increasingly reliant on third-party payers for the expenses has been a major driver of exploding tuition costs. As summed up in this College Board article “with third parties paying part or all of the bills (via government and private ‘scholarships,’ subsidized loans, and subsidies of institutions), schools can often raise fees without dire financial or academic consequences.”
In 2018–19, according to College Board, undergraduate and graduate students received a total of $246 billion in student aid in the form of grants, tax credits and loans.
Indeed, there’s been a stunning 416 percent rise in total federal, state and institutional student aid loans since 1989, adjusted for inflation. Pell Grants, the federal government’s largest college grant tuition assistance program nearly tripled in real terms during that time.
With billions in federal student aid, grants and below-market interest loans courtesy of the US Department of Education artificially inflating demand for college, tuition prices were sure to explode.
From 1993 to 2018, consumer expenditures on higher education exploded by 260 percent, roughly 4.5 times as fast as overall consumer expenditures.1
One obvious result is higher student loan debt. In an article published by Salon, former Labor Secretary Robert Reich notes, “the average graduate carries a whopping $28,000 in student loan debt,” and that as a generation, “millennials are more than one trillion dollarsin the red.”
Making matters worse is that a significant share of recent graduates are not earning enough to afford the debt payments.
Young people are often drawn into college on the promise that a college degree is their only ticket to career success.
But increasingly, it is not. As Ohio University economist Richard Vedder has written, “The Federal Reserve Bank of New York said that 41.4 percent of recent college graduates in December 2018 were ‘underemployed,’ doing jobs mostly held by those with lesser education.”