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Since 1978, college tuition and fees have increased by a whopping 1,120%. During that same period, the price of food has increased 244% and medical expenses 601%. In fact, tuition prices have gone up four times faster than the consumer price index, according to a report by Bloomberg.

Over the years, the rapidly increasing costs of an education have been blamed on a number of different factors like professors’ inflated salaries, construction booms on campus, students demanding luxury amenities, increased administrative costs, availability of student loans, state funding cuts and technological changes.

Whatever is causing these increases, one thing is certain – they’ve created big problems for both individual students and the economy at large. According to Edvisors, 70% of students borrow to go to college and they take on an average of $33,000 in student loans. These numbers mean that total student loan debt in the U.S. ballooned to $1.2 trillion, eclipsing the amount of credit card debt Americans hold. This trend is not slowing down, with an additional $110.3 billion borrowed in 2012-2013, according to the College Board.

These unprecedented levels of student loan debt have only been worsened by a lackluster economy. Around 50% of graduates with bachelor’s degrees under 25 are either unemployed or underemployed, according to the Associated Press. It doesn’t help that over the same period that saw rapid rises in tuition rates and tuition paid, incomes have stagnated. That means that a college education is increasingly unaffordable for most students and necessitates a continued increase in student loan debt.

That contributes to making it incredibly difficult for young people to begin paying back their loans. It’s not surprising that more than 30% of loans are currently in deferment, forbearance or default. For some, that makes things much worse with penalties and interest charges turning $10,000 or $20,000 student loans into $100,000 in debt. Due to a lack of financial education in high school, many students take out student loans without truly understanding how student loans work, which gets them into trouble later on.

Not Leaving the Nest

Household formation has hit a nearly 40-year low, the Pew Center for Research found, with many attributing student loan debt as the cause. Students graduating with debt and unable to pay it off are living longer at home with their parents and not striking out on their own. This, coupled with fewer Millennials buying homes means that the economic ripples of these two rites of passage have not made their way through the economy. With household formation estimated by Moody’s to be worth $145,000 once the purchases ripple through the economy, this is a significant amount of spending that has been lost. Furthermore, the inability of so many Millennials to start saving early for retirement means this student loan crisis has created a ticking time bomb that will greatly impact retirement security in the future.

This has led some to start questioning the value of a college education. Depending on whose accounting you consult, the value of a college degree is anywhere from $185,000 (via the Organization for Economic Cooperation and Development) to $1,000,000 (via the U.S. Census Bureau) in extra earnings over the course of a lifetime. But those figures measure the benefits previous generations have received. In addition, the think tank Demos suggests that households taking out $53,000 in combined student loan debt will lose $208,000 over their lifetimes due to their decreased ability to build home equity and save for retirement early in life.

That’s why people like Peter Thiel, the co-founder of Paypal and the creator of the Thiel Fellowships given to students to drop out of college and start a business, are saying that a college degree isn’t always worth it. In the film Ivory Tower, a documentary examining the crisis of student loan debt, Thiel says, “Twenty years ago we would have said all the kids who weren’t going to college were the victims. Now we’re saying that it’s the kids who are going to college who are the victims. It’s like a sub-prime mortgage broker who ripped you off and talked you into buying a house you couldn’t afford. Education is in some ways more insidious than housing.”

Cutbacks in Student Aid

Even with tuition increases slowing down in recent years – in 2013-2014, it was 2.9% for in-state tuition at public four-year colleges and universities, the lowest increase in 30 years, and 3.8% at private schools — what students actually pay has increased significantly, according to U.S. News and World Report. The average amount an in-state student actually paid to attend a public university is 60% higher in the current academic year than in 2009-2010.

That’s because states running deficits due to the recession and economic recovery have cut back on college funding, leaving schools unable to offer the same level of financial aid and thus passing the costs on to students. In fact, the average state appropriations were cut by 10.7% in 2011-2011 and 0.5% in 2012-2013.

While there are some cheap colleges where tuition is affordable, they are the exception and not the rule.

One of the problems is that the availability of student loans allowed colleges to continue to increase tuition without seeing a decrease in demand, according to Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University. In a typical market-driven system, increased prices should drive down demand since fewer people can afford to purchase the service. That’s not the case, however, when there are lenders willing to extend tens of thousands of dollars in loans to young people with no credit. The fact that student loans survive bankruptcy and sometimes even the death of the borrower, only increases lenders’ confidence that they will someday get paid back.

But there is some hope in the fact that for three years in a row college enrollment has decreased. According to the National Student Clearing House, college enrollment decreased by 1.5% in 2013 and 1.8% in 2012. If this trend continues, perhaps the market will force colleges to compete on price and lead to decreases in tuition.

Or perhaps federal or state governments might step in by regulating tuition prices or increasing student funding. This summer, a Senate Budget committee hearing took place to examine how student loans are affecting the economy.

The Long-Term Effects of Debt

Brittany Jones, a student who graduated with $70,000 in debt testified at the Senate hearing and said, “Student loan debt has been the driving force of my decisions for the last eight years of my life. […] According to my current repayment plan, it is projected to be for the next 25 years of my life, well into the years for which I should be planning a retirement.”

Students not only see high debt loads affecting their ability to save for the future and to establish a household, but if they find themselves unable to keep up with their payments, it can destroy their credit as well. Late payments and defaults can affect how much interest they pay for credit in the future (and you can see how it really adds up over time), or may prevent them from getting a loan at all when they need it.

Obviously, there’s a problem when student loans take over people’s financial lives and influence their important life choices. Given the broader economic impacts, we can no longer pretend that it’s just a personal problem. While the slowing growth of tuition prices is something to cheer, the fact that the price a student pays has increased doesn’t give a lot of confidence that anything will change on its own. It’s about time something is done to increase college affordability.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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