How the Threat of an ‘Educated Proletariat’ Created the Student Debt Crisis

The roots of today's student debt crisis trace back to a promise broken decades earlier –– when politicians chose to pass the burden of funding higher education onto students.
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  • In the 1960s, many public colleges operated with zero tuition, offering a debt-free degree.
  • Politicians defunded public higher education and limited college grants.
  • The student debt crisis ballooned as college campuses grew more diverse.

In 2022, federal student loan debt broke records. In total, 45 million borrowers owed $1.6 trillion.

How did so many students take on so much debt?

The situation looked very different in the 1980s, when The New York Times reported on federal student borrowing that totaled less than $10 million annually. And it looked very different in the 1960s, when many public colleges did not charge tuition at all.

The roots of today's student debt crisis trace back to a 1960s showdown between future President Ronald Reagan and the country's top-ranked public university system. And the story reveals how politicians passed the burden of an educated populace onto the shoulders of young Americans.

Ronald Reagan vs. the University of California System

In 1966, Ronald Reagan ran for his first political office: governor of California. His campaign very publicly targeted the state's flagship public university. Reagan vowed that, if elected, he would "clean up the mess at Berkeley."

When he took office, the new governor tried to cut the University of California (UC) System budget by 10% –– and he argued in favor of implementing tuition for the first time.

Prior to the 1960s, the UC schools operated with no tuition.

"Reagan did not think you needed a great university supported by public funding," according to then-Berkeley spokesperson Ray Colvig. "He thought if you wanted a world-class university, let the students pay for it."

The governor's ire focused on the "beatniks, radi­cals, and filthy speech advocates" on college campuses.

As anti-war protests grew on UC campuses, Reagan's tactics became harsher. In May 1969, the governor sent 2,200 National Guard troops to the University of California, Berkeley to suppress a 3,000-person rally. Police arrested 1,000 people. And following the Kent State massacre in Ohio in May 1970, Reagan shut down California's 28 public colleges and universities for four days.

Weeks before Election Day in 1970, with Reagan on the ballot for reelection, one of Reagan's advisors publicly defended the governor's attack on higher education.

"We are in danger of producing an educated proletariat," announced Reagan advisor Roger A. Freeman during a press conference on Oct. 29, 1970. Freeman, an economics professor at Stanford, was also an advisor to President Richard Nixon.

"We have to be selective on who we allow to go through [higher education]," Freeman added.

Over the next several decades, cuts to state funding of public colleges would place a growing burden on students –– limiting access to higher education as Freeman proposed.

“Professor Sees Peril in Education," blared the headline of the San Francisco Chronicle the next day.

Reagan would win reelection –– and a decade later, he would become president of the United States. As president, he would oversee a decade of skyrocketing tuition, diminishing grants, and ballooning student debt.

Placing the Burden on Students

Reagan proposed implementing tuition for public higher education in 1967. The very idea triggered a backlash. Previously, states funded higher education because it served the public good –– an educated populace benefited everyone.

Reagan disagreed. The future president and his advisors complained that college campuses were a hotbed for radical socialism and communism. Limiting access to higher education and passing the burden of funding colleges onto students would prevent the "educated proletariat" that worried Freeman.

During the debate over instituting tuition, Reagan derided what he described as "the almost hysterical charge that this would deny educational opportunities to those of the most moderate means."

The governor argued that "tuition must be accompanied by adequate loans to be paid back after graduation."

Students, rather than taxes, should pay for higher education.

In 1987, Reagan's deputy undersecretary of education echoed a position still voiced today. In an interview with The New York Times, Bruce M. Carnes asked, ''Who should pay the bill –– the student or the cab driver who didn't even go to college?"

''Nobody's holding a gun to these people's head and saying, 'You will take this loan, and you will go to this expensive school,'" Carnes added.

Borrowing money to earn a college degree was a choice, Carnes and his allies argued. But most students did not choose expensive schools –– even today, 3 out of 4 college students attend a public institution.

Rising tuition rates became a concern in the 1980s, as student debt grew. "In the last decade, tuition costs have risen as much as 25 percent," reported The New York Times in 1987.

Over the next 30 years –– from 1988-2018 –– public funding of higher education would plummet 25%. Students made up the difference, with tuition rates tripling from 1970-2020 and more than doubling from 1990-2020.

In 1970, college students at public institutions paid around $8,400 per year in total costs, adjusted for inflation in 2020-2021 dollars. That number began creeping up in the mid-1980s, as states slashed their higher education budgets. By the 2020-2021 academic year, public college students faced a nearly $26,000 bill.

In fact, four-year public colleges saw the fastest tuition hike, with tuition ballooning nearly 260% from 1970-2020.

College Diversity and Student Debt

For decades, U.S. colleges and universities offered a debt-free route to a college degree. During those decades, most college graduates were white, Protestant men.

The demographics on campus began to change by the 1960s and 1970s, when new federal legislation guaranteed access to higher education regardless of race or sex.

As colleges became more diverse, tuition rates skyrocketed. At the same time, federal grants dwindled.

In 1975, Pell Grants covered nearly 80% of the cost to attend a public four-year college. Today, Pell Grants pay for less than 30%, leaving students with little option besides loans to pay for the most affordable option.

College graduates who benefited from low or free college closed the door behind them, slowly eroding the notion of higher education as a public good.

Today, the burden of rising tuition prices falls unevenly on students. Over 90% of Black students and 72% of Latino/a students borrow money for college. In comparison, 66% of white students take out loans, according to 2016 data from the Consumer Financial Protection Bureau.

Is it a coincidence that Freeman worried about an "educated proletariat" at the very moment that more women and students of color enrolled in college?

A similar pattern played out in other public arenas after the civil rights movement. As Heather McGhee argues in "The Sum of Us," U.S. cities closed public pools in the face of segregation. Rather than opening a public good to a diverse community, cities chose to shut down public services.

Men like Freeman and Reagan –– both college graduates –– feared what an educated working class would mean for the future of the country. And along with their allies, they worked for decades to shrink public support for higher education and pass the burden of debt onto students.

Today's student debt crisis traces directly back to a promise broken decades ago –– that every American benefits from an educated populace.