The Student Debt Crisis Was Intentional

Sara Goldrick-Rab
8 min readNov 20, 2022


Three years ago I said a thing on twitter. Since the bird appears to be going down, and so many people have written me about what they learned from that thread, I’m preserving it here. Some necessary adaptations to make it work in this Medium, but otherwise verbatim. I’ll expand on this in my next book, I promise. Here we go…

And it remains intentional.

Let’s start with basics I’ve written about in many places, including all three of my books.

(1) Americans have *never* agreed on equal opportunity for education for all, let alone for higher ed. The fact that the Pell Grant was created hardly implies consensus.

(2) Americans have long adhered to the idea that some people “deserve” support while others (the undeserving poor) should be “self-reliant.” You can trace a lot of this to the Protestant Ethic (as Max Weber does).

(3) The American appetite for market-based solutions is strong, and that is not at all new. Duh. So when it came to whether and how to expand access to college (eg mid 60s) there was a “great debate.” Remember it took place against the backdrop of the civil rights movement.

A key part of the discussion was whether to accept Senator Clay Pell’s thesis that “student aid is a right.” Many disagreed. One of those people was Milton Friedman. He felt the private sector should replace gov’t in the financing of higher education. In fact, he said that society didn’t benefit enough from public higher education to justify government subsidies.

This thinking gained steadily in popularity over time (ahem, see ISAs today) and especially once Reagan took office. His budget director, David Stockman, saw NO problem in loading students up with debt if they wanted college. This is 1981.

That same year, Reagan made cuts to the Pell *and* reduced access for middle class students at public institutions to subsidized loans, purportedly to save gov’t money. But really, at a time when more students wanted college than ever, it pushed them in more precarious positions.

Let’s be clear: Who did Reagan dislike? Who wasn’t he gonna support? The so-called “welfare queen.”

Reagan advanced, with great effect, a bogus anti-welfare plan that has had the effect of *blocking* educational opportunities for the poor, and pushing the middle class further downwards- to the point that it could disappear. This is highly racialized policy, to be sure, but it has also greatly hurt poor white folks, rural folks, and white middle class folks too. But it’s been carefully disguised as HELPING them by “keeping people from being dependent on the government.”

What kinds of loans did Reagan like and expand? Well PLUS loans of course! He raised loan limits for those and hiked the interest rate from 9 to 14% practically overnight! He felt the government shouldn’t subsidize the loans — rates should rise to market levels. You can also thank Reagan for the loan origination fee. And he exacerbated inequality between public and private higher ed. Check this out from the NYT in 1981.

Ready for this? Thanks to Reagan, as one ED official noted, “People who pay three times the cost of a public university to go to Harvard will still get the same proportional benefits as those who opt for a less-expensive institution.’’ WHO DO YOU THINK REAGAN WANTED TO HELP?

I’m gonna fast forward here and simply say this:

  1. Both parties have cut the Pell grant program. Adding $100 to the max while the purchasing power still falls? That’s a cut.
  2. Both parties have f****d up with loans.
  3. The student debt crisis is first and foremost a crisis of dropout thanks to CREAM. You force students to sing this tune by pushing them to take loans against their will, capping those loans far too low, charging too much interest, and setting bad repayment terms!

4. The second reason student debt is a crisis is because #LowerEd and you best go read Tressie McMillan Cottom on that — again, entirely intentional.

5. But student debt is also a crisis because people are being systematically punished for being insufficiently self-reliant and “undeserving.”

All that said: I am NOT saying Reagan alone intended to create the student debt crisis. I am saying that those who elected him, those who have always elected those like him, have very strong interests in punishing the “wrong people” for trying to get ahead. And here we are.

f you want to read more about these issues, check out the books I’ll post at the bottom of this blog. Please also really get to know Milton Friedman. There are many people suffering all over the world thanks to him and his minions. Some call Income Share Agreements an “Innovative (And Milton Friedman-Approved) Way to Combat the College-Debt Crisis.” That should tell you all you need to know. If you aren’t keeping an eye on *that* special disaster, you’re missing the boat.

There’s a reason candidates have to fight for the middle class. Of course we cannot forget the poor. But the student debt crisis is a scourge on the bottom 90%. We only fix this by demanding a system that works for the 90%. That’s all of public higher ed.

Just in case you’re wondering why you didn’t know this information, please remember that there are those with knowledge who intentionally obfuscate to support their own agendas. Here’s the “leading authority” on student financial aid, per Congress.

This (the subject of a chapter in my second book) was a reflection of Milton Friedman’s influence.

For folks who are curious to learn more about how we got into this student debt mess, here’s the deal:

  1. Student debt is a symptom of a problem, not the original problem. Read my book Paying the Price to understand why.
  2. It would be profoundly unethical to (a) address all the current student debt without protecting future generations from it or (b) protect future generations while doing nada for those being deeply harmed by debt now. We have to do both. I believe protecting the future generations must be top priority — but not the only priority. We have a responsibility to support progress even when it doesn’t personally help us. Would you have voted against making high school free just because you had to pay for it?
  3. Protecting future generations requires investing to make public higher education, high quality, and focused not only on access but also on degree completion. That’s a big lift- but we can afford it. That is, if we make it the first of the two priorities. Making public college free effectively requires bringing states and colleges into a partnership where they benefit from federal support in exchange for real accountability. It also requires alignment between social and education policies. ED, HUD, HHS, Labor, and Agriculture — together.
  4. BTW- making college unaffordable was intended to make you hurt for attending college. This is akin to Reagan’s declaration that “taxes should hurt.” Making it painful to file pushes people to oppose taxation. Making college expensive makes people say “it’s not worth it.”

After I published this thread, a couple good questions came in. Here is a brief FAQ.

Isn’t the sharp increase in the cost of higher education the other side of the story? (The crisis wouldn’t be so bad if price of tuition had only increased with the rate of inflation.) Who do we blame for that part of the problem?

Nope. You’re conflating cost with price. That’s explained extensively in the first couple chapters of my book, Paying the Price.

What about the role of the skyrocketing tuitions at colleges and universities? And were those increases partly the result of easier access to loans for some students?

Prices rose because government changed its contribution. And in the private sector also because of federal loans.

Finally, the other stuff to read, as promised:



Sara Goldrick-Rab

Author of Paying the Price, founder of the #RealCollege movement, the Hope Center for College, Community, and Justice, and Believe in Students