Home » Planning for College » Paying for School » Three Numbers Explain Why We Have a Student Loan Crisis and How to Fix It

Three Numbers Explain Why We Have a Student Loan Crisis and How to Fix It

Tuition and housing keep climbing but wages haven’t kept pace. It’s far more difficult to pay for college in 2022 compared to 1972 or even 1992.

Written By: Michael P. Lux, Esq.

Last Updated:

Affiliate Disclosure and Integrity Pledge

There is no question that student loan levels are at an all-time high and that many borrowers are struggling to repay their debt.

Most Americans recognize that college has become more expensive and has contributed to the growth of student loan numbers.

However, these generally accepted facts only tell part of the story. Understanding the problem requires asking some difficult questions.

Why have younger Americans struggled when previous generations didn’t have the same issues? How do we wrap our minds around the struggles of new borrowers? What can be done to fix the student loan crisis?

Three Figures Show the Generational Struggles with Student Debt

In a now-viral and well-researched Reddit post, user MikeTheBard pulled wage, rent, and college statistics for three generations.

He found the following:

Year of StudyMinimum WageAverage RentPublic College Tuition

*Note: The Public College tuition figure uses the average cost for one year of tuition at a 4-year University.

At first glance, these figures might seem unremarkable. For each generation, the cost of rent and tuition increased, but so did the minimum wage.

However, the growth of tuition and rent prices dramatically outpaced minimum wage.

The Working Hours Necessary to Pay Tuition

In 1972, a college student could pay for tuition by working about 168 hours. If this student worked 14 hours per week for 12 weeks during the summer, they could pay tuition expenses for the year.

By 1992, the numbers had shifted. A college student would have to work 553 hours to cover tuition for the year. If a 1992 student worked just over 46 hours per week during the summer, they could cover tuition costs for the year. Alternatively, they could work fewer hours during the summer and pick up some work during the school year to cover tuition for the year.

A student in 2022 would have to work 1,426 hours to cover tuition for the year. Today, a student would have to work 119 hours per week during the summer to pay tuition for the school year. Alternatively, they could work 30 hours per week year-round to cover the cost of tuition. However, this path only works if their parents provide food and housing.

A Calculation Note: These simplified calculations do not include taxes that would have to be paid on the income. These numbers also do not account for the possibility that some students might earn more than the minimum wage of their era.

However, by looking at the ratio of tuition or rent compared to the minimum wage, we can get an idea of the comparative difficulty of paying the bills for each generation.

Rent Prices Further Hurt College Affordability

As anyone paying for college knows, paying tuition is only part of the affordability equation. Putting a roof over your head has also gotten much more expensive.

In 1972, a minimum wage worker could cover their monthly rent by working 68 hours (or about 17 hours per week).

By 1992, a minimum wage worker needed to work just over 105 hours to cover rent for the month. That means just over 26 hours per week of work just to pay rent.

Today, a minimum wage worker must work 183 hours per month to put a roof over their head. Even at 40 hours per week, a minimum wage worker can afford today’s average rent.

College Affordability by Generation

For Baby Boomers, paying rent and tuition at a public college on a minimum wage job was a reasonable route. Student loans wouldn’t have been necessary. Hard would still be required, but this was a feasible option for most.

For Generation X, things got more challenging. Covering rent and tuition for the year would have required a full-time minimum wage job. Factoring in taxes and other living expenses, a student in 1992 likely needed to earn more than minimum wage or get help to pay for college for the year. Hard work plus an occasional student loan could get the job done.

Generation Z cannot pay rent and tuition for the year on a minimum wage job. The numbers just don’t work. Even if we exclude all other living costs and taxes, a student in 2022 would still have to work 76 hours per week at a minimum wage job to cover tuition and rent for the year. Help in the form of student loans or parental contributions is necessary today.

$15 Minimum Wage Doesn’t Fix the Problem

One obvious takeaway from these numbers is that minimum wage hasn’t kept pace with expenses. Economic analysis shows that the real minimum wage, when adjusted for inflation, is at its lowest point since 1956.

Even if we raised the minimum wage to the often discussed figure of $15 per hour, a minimum wage worker still can’t work their way through college without outside help.

Doubling the current minimum wage would make the challenges of a current student look more like those faced by a student in 1992. Even at $15 an hour, a student in 2022 still faces a far more difficult path to a degree than a 1972 student.

Put simply, the cost of tuition at a 4-year public school is way too high. And this is based on a yearly tuition of $10,338. Many current students at public schools pay far more than this average amount. Students at private colleges face even more significant affordability obstacles.

The Lesson from the Numbers

To be clear, the lesson here isn’t that Baby Boomers had it easy. Even in 1972, working and paying your way through school was a considerable challenge. Getting a degree without any debt took hard work and sacrifice.

The point is that in 2022, hard work, determination, and sacrifice are not enough. We have a college affordability crisis.

Until we fix the affordability crisis, the student loan crisis will continue to fester.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

Leave a Comment