The Great Student Con Job Obliterating Gen Y and Gen Z
Segment #708
The Student Loan Burden on Millennials (Gen Y) and Gen Z: A Systemic Issue, Not a "Con"Generations Y (Millennials, born 1981–1996) and Z (born 1997–2012) have faced a perfect storm of skyrocketing college costs, stagnant entry-level wages, economic disruptions (like the 2008 recession for Millennials and the COVID-19 pandemic for Gen Z), and a job market that often demands degrees but doesn't always deliver commensurate pay. The idea that they've been "conned" stems from the widespread cultural narrative in the 1990s–2010s: "Go to college, get a degree, and you'll secure a good job and financial stability." It is absurd to believe that no one in the university/college system or in the government saw this as a disastrous program.
This was another form of corruption picking winners and losers. The Winners - politicians, colleges and universities. Losers (Again) - US taxpayer and students
What the Govt. Could Have Done But Didn’t In exchange for Accepting Student Loan Liability
Proposals for caps, risk-sharing (colleges pay for defaults), or tying aid to median costs have surfaced (e.g., 2024 College Cost Reduction Act ideas), but none have passed due to gridlock. Public support for controls is high across parties, but entrenched interests prevail.In essence, the lack of controls stemmed from a deliberate choice to prioritize widespread access via guaranteed credit, coupled with resistance to regulating a decentralized, influential sector. This created a system where costs spiraled without checks, burdening borrowers—exactly the outcome critics feared but policymakers didn't prevent. Reforms would require overcoming significant political hurdles.
The Core Incentives That Drove the Crisis
Government Guarantees Removed Risk for Lenders and Colleges: Starting with the Higher Education Act of 1965, the federal government guaranteed private student loans (via the FFEL program until 2010), meaning banks lent freely without fear of defaults—taxpayers covered losses. This flooded the market with easy money, allowing colleges to hike tuition far beyond inflation (nearly tripling since the 1980s, adjusted). Critics argue this created "moral hazard": schools raised prices knowing loans would cover it, while lenders had no incentive to assess borrower viability.
Colleges' Role: Universities aggressively marketed degrees as essential, recruiting heavily (including marginal students) and expanding administrative bloat/new facilities funded by tuition/loans. For-profits were especially aggressive, but nonprofits benefited too. Many knew costs were outpacing wage growth and job prospects in certain fields, yet continued the cycle.
No One "Saw" It as Unsustainable?: Warnings date back decades—economists noted the "higher education bubble" risks in the 2000s–2010s, comparing it to subprime mortgages. Reports as early as the 1980s flagged rising defaults; by the 2010s, articles and think tanks openly discussed over-lending and credential inflation. Policymakers expanded access with good intentions (broader education opportunity), but ignored price signals.
As of late 2025, total U.S. student debt stands at $1.8–1.81 trillion (federal ~92%, private ~8%), held by ~42–43 million borrowers. Average federal balance: ~$39,000–$41,000. Delinquency rates spiked in 2025 after pandemic pauses ended (10–11% seriously delinquent).
Total U.S. student loan debt: Approximately $1.8 trillion, affecting over 42 million borrowers.
Average balances:
Federal loans: ~$39,000–$41,000 per borrower.
Gen Z (younger borrowers): Often start with higher inflation-adjusted debt than Millennials did at the same age (~$20,900–$23,000 for ages 20–25).
Millennials: Hold the largest share, with many owing $20,000–$40,000.
Generational breakdown:
Millennials: ~40% of borrowers; many entered the workforce during/after the Great Recession, facing prolonged unemployment and underemployment.
Gen Z: ~28% of borrowers despite being a smaller portion of the population; facing higher delinquency rates and delays in milestones like homeownership.
Unemployment challenges:
Youth (16–24): 10–11% in mid-2025, more than double the national average (4–5%).
Gen Z men: Higher rates (~9–11%) than women, with many classified as NEET (not in education, employment, or training).
Recent college grads: Unemployment sometimes exceeds that of non-grads in tight markets.
These burdens have real consequences: ~60% of borrowers (higher for younger generations) have delayed life milestones like buying a home, starting a family, or saving for retirement. Many report stress, regret over borrowing, and prioritizing other debts over student loans.Why It Feels Like a "Con": The Broken Promise
Tuition explosion: College costs have outpaced inflation and wage growth for decades, fueled by reduced state funding, administrative bloat, and easy access to federal loans (which enable schools to raise prices without market restraint).
Job market mismatch: Many degrees (especially in humanities or low-demand fields) lead to underemployment. Millennials graduated into the 2008 crisis (youth unemployment peaked at 13–15%); Gen Z into pandemic disruptions and AI-driven job shifts.
Debt trap mechanics: Loans are nearly non-dischargeable in bankruptcy, accrue interest quickly, and repayment plans can extend 20–30 years. Delinquency rates spiked in 2025 after pandemic pauses ended.
Racial and socioeconomic disparities: Black borrowers often owe more and default at higher rates due to predatory for-profit schools and wealth gaps.
Critics argue this system profits lenders, universities, and the government (via interest) while saddling young people with debt that delays wealth-building.Counterpoints: College Still Has Strong Value for ManyWhile the burden is undeniable, it's not universally a "scam." Data shows college degrees retain significant ROI:
Lifetime earnings premium: Bachelor's holders earn ~$7–8 million over a lifetime vs. ~$4–5 million for high school grads—a 60–100% boost by mid-career.
Median ROI: ~12–13% annually, often paying for itself in 8–18 years depending on major.
Top performers: STEM fields (engineering, computer science, nursing, business) yield 200–1,000%+ ROI, with rapid payoffs.
Non-financial benefits: Better health, civic engagement, job stability, and intergenerational advantages (e.g., children of graduates often fare better).
Unemployment is higher for youth overall (normal historically), and degrees reduce long-term joblessness risk. Many borrowers manage debt via income-driven plans, though access has been rocky.Recent Developments in Forgiveness and Relief (2025)Broad forgiveness efforts (like Biden's SAVE plan) were blocked or ended via courts/settlements. Processing backlogs persist under the current administration, with limited discharges (~hundreds monthly via IDR/PSLF). Targeted relief (e.g., public service, borrower defense) continues slowly, but no mass cancellation is on the horizon. Tax implications return in 2026 for some IDR forgiveness.In summary, Millennials and Gen Z aren't imagining the struggle—systemic factors have made higher education riskier and more burdensome than for prior generations. But for many (especially in high-demand fields), a degree remains a worthwhile investment. The "con" lies in overstated guarantees and unchecked cost growth, not education itself. Solutions could include better career alignment, cost controls, or expanded apprenticeships/trade paths.