Household Debt and Credit Assignment

Posted: December 1st, 2022

Household Debt and Credit Assignment

One of the prevalent issues facing higher education leaders today involves the student loan debt crisis. “Until recently, no known culture has launched its young adults into life with such staggering levels of indebtedness (Haneman,  p. 223). Federal loans were originally intended to supplement other modes of funding such as grants, scholarships or direct payment. Over time, federal loans have become the main way for student’s to pay for college. This paper will address the history of the issue, how student debt has changed over time and will suggest potential ramifications and solutions for higher education to address the issue. Household Debt and Credit Assignment

History of Student Loan Debt in Higher Education

To better understand what has led to the current student debt crisis, we must review the history of how student loans first came to be so easily available for college students to obtain. The very first student loans were offered to Harvard University students in 1840 (Gitlen, no date). The first official student loans were not offered en masse until 1958 when the National Defense Education Act made financing available as a way to compete with the advances of the Soviet Union and other countries (Gitburg, 2016). Eight years later, the Higher Education Act was created to give grants to colleges in order to recruit students who had a severe financial need, followed by the Federal Family Education Loan Program, or FFELP, which enabled banks and private lenders to give government subsidized and guaranteed loans to college students (Gitlen, 2016).


Change of Student Debt over Time

Just as it is easy to obtain immediate credit by applying to a credit card company for a credit card, it has become just as easy for college students to sign their name to a document to obtain large amounts of student loan monies. Craig & Raisanen (2014) reported that between 2005 and 2013, student loan debt had increased in the United States at a rate of 13.3 percent per year. There have been several instances of change that have contributed to this issue. The first change was the access to higher education. Students were no longer geographically bound and could attend a school at any location as long as the school offered an online program. This additional access has allowed thousands upon thousands of additional entry into college. The second change lies within the cost of tuition.

Impact of Debt Sentence for Today and Tomorrow

The magnitude of the student debt issue is staggering for students today and in the future.  Despite the gains and benefits the economy receives from higher education, the “economic burden created by student borrowing has created a drag on the American economy since the 2008 recession, threatening trouble for the country’s future well-being” (Watson, 2014, p. 315-316). Household Debt and Credit Assignment

Watson (2014) pointed out that the enormity of the situation has not even been fully realized and “new graduates will have to struggle mightily in order to repay their student debt, and they may not be able to do so at all” (p. 32).  To assist with this issue, college leaders should make it a priority not to raise tuition when possible. College leaders can also find ways to reduce costs on campus such as cafeteria food and other services.


In summary, the issue of student loan debt remains impactful to us all and is one of national importance. College graduates are leaving school burdened with copious amounts of student loan debt without the possibility of relief.  College leaders should do their due diligence in keeping costs as low as possible for students. This student ‘debt sentence’ remains a serious issue for our nation.


Gitlen, J. (2016). A look into the history of student loans. Retrieved from

Haneman, V. J. (2016). The collision of student loan debt and joint marital taxation. Virginia Tax Review, 35(2), 223-268.

Hicken, M. 92013). Credit card issuers still cashing in on college students, alums. Retrieved from

Watson, B. D. (2014). Preserving the promise of higher education: Ensuring access to the “American Dream” through student debt reform. University of Florida Journal of Law & Public Policy, 25(3), pages 315-330.

Craig J. D. and Raisanen, S. R. (2014). Institutional determinants of American undergraduate student debt. Journal of Higher Education Policy & Management, 36(6), 661-673.

Lee, D. (2013). Household debt and credit: Student debt. Federal Reserve Bank of New York. Retrieved from


Household Debt and Credit Assignment

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