The Great Recession & FAFSA Applications
In this post, I’ll be taking a brief look at the impact the 2008 recession had on FAFSA applications, and make (mostly) baseless speculation as to the long term impacts it had on college admissions.
The data I have shows the number of applicants per state by year, from 2006–07 to 2018–19. Here’s California.
Here’s Pennsylvania.
If you haven’t noticed it yet, Texas should make it pretty obvious —
What’re we looking at here? Well, from the data, we can make one strong conclusion:
FAFSA Applications spiked in from the recession, and never really came back down.
Not only that, we can pinpoint the point when they reached their peak — 2011 & 2012. Out of 50 American states, 14of them had their highest ever number of applicants in 2011, and 30 had it in 2011. Or, in other words — only 6 states ever had more FAFSA applicants than they did at the tail end of the recession. Here’s the national totals.
Nationwide, applications peaked in 2011, going from 12.4 million in 2006 to 20.8 million in 2011. That’s a 67% increase in just 5 years. The causes of this are above my paygrade, but the Heching Report has a decent article on it. Long term, it doesn’t look like the trend is reversing. On the surface level, this sounds like a good thing, and it probably is — if you’re a bank. For everyone else, well. FAFSA applicants normally receive loans. This is bad for just about everyone who’s not a bank, for a few reasons.
- As the Harvard Business Review concluded “Student Debt Is Stopping U.S. Millennials from Becoming Entrepreneurs.” Ideally, a surge in numbers of newly educated people would lead to innovation and risk taking, but that simply doesn’t happen when people don’t have the safety to take risks (due to mandatory payments that can’t be escaped even by bankruptcy).
- Severe debt can ruin your mental health. From a survey of borrowers (Summarized in CNBC): “53% of high debt student loan borrowers have experienced depression because of their debt, nine in 10 borrowers experienced significant anxiety due to their loan burden [and] one in 15 student loan borrowers surveyed have considered suicide due to their student loans.” Suicide is already one of the leading causes of death among millenials, and experts speculate one of the primary causes for the recent increase is economic instability.
- Unlike many other types of debt, college loans lead to people putting off having kids. Although putting off having kids can be the right choice for many people, it’s concerning that millions of borrowers are literally too poor to have kids.
Even setting aside innovation & entrepreneurship, sending millions of people to college has still not done much for the labor market. As the National Review points out, it’s led to credential inflation — ie, a job (and the pay) stays the same, but the requirements increase. College, for many, essentially amounts to a very expensive rubber stamp necessary to get a job they could have gotten without college 20 years ago. Of course, this is great for businesses, who can shift the risk of training from themself to their potential employees. (And employers seem to be getting used to it. Even tech, with its storied history of drop-out innovators still has precious few non-degreed employees.)
Looking at the history from ’08, the Covid Recovery isn’t looking great.
