When I was ready to apply for college in the early 1980s, I was one of very few at my high school who planned on actually attending college. I applied to two schools and was accepted into both schools. I did not fill out one document that related to loans, assistance, grants, or work-study programs.

Most of my classmates did not even sit for the SAT, and those who did, did not study or take any prep classes. Things were very different than now. My father paid for my school tuition upfront from monies earned through the Air Force Reserve stints during his summer work vacation. My how times have changed, with the college student loan industry being a billion dollar venture. But when did the history of the student loan industry begin, how did it begin, and why did it start?

When Did the Industry Erupt: World War II Plays A Huge Role

Various student loan studies show that over 80,000 people a year apply for some form of student loan or assistance. This number first began to grow in 1944 when the GI Bill was passed. Also known as The Service Man’s Readjustment Act, this lifesaver helped soldiers returning from Europe, Asia, the Pacific region, and Africa to get an education. Many of these men, most were men and not women, retuned home to little employment opportunity and needed skills for job placement.

The average Harvard tuition in 1940 was just a bit over $ 475.00 total dollars and that was considered exorbitant for the era. Yes, times have changed. In 1950, America’s favorite vegetable toy Mr. Potato Head was invented and additionally 432.058 people graduated from college. Also, in the 1950s the government began to back loans under the National Defense Act. This was a direct and spontaneous reaction to Russia beating the United States into space with Sputnik.

Then in 1960 that number of college bound students ballooned to 328,841 people. And looking at today, the number of people attending the over 5000 universities in the United States alone is nearly 20 million and of those 20 million a whooping 12 million will take out some kind of student loan. That is a bunch of money.

How it Began: Tuition and Attendance Soar

As stated above, the government took the lead in creating college tuition loans. The world of private student loans has some interesting background as well. The private loan sector began to hop around the year 2000. The average tuition cost for four years of college grew became comparable to some home mortgage figures at a $ 23,000 average. People simply could no longer afford to attend colleges, and the private loan industry took notice.

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It also became evident that education has to continue post high school because of the skills needed. It is more and more difficult to obtain a stable and well paying job without a diploma these days. The study of hard knocks and a street education are no longer enough learning for the average person. A young person will have a far greater difficulty getting a job without a degree. Some college tuition loans are the Parent PLUS, Perkins, and Stafford. The 1965 Higher Education Act and the United States Department of Education regulate them. So through the government run loan program and private college loan entities, it was determined that the need was there, so the market grew.

Why Did It Begin

Need plays a role for public and private college loans. The soldiers needed skills and the tuition priced itself out of the ordinary person’s budget. Hence, people turned to loans. Additionally, women began to join the millions of applicants for college. In 1940 a mere 3% of the college population was female, whereas in 2014 that percentage was 32% and females surpassed males by 1% in 2014.

As of late, you also need to look beyond gender equality to see why college acceptances, and therefore loans, have increased, you must also glance at the increase in non-whites attending college. Pew Research indicates that more blacks and Hispanics are attending college than ever before in the past.

History: It’s a Wrap

The world of college loans has changed tremendously since World War II. The needs have shifted, the demographics have been altered, and the amount of students attending has increased dramatically. One variable in the scenario stays the same: students need money to attend college and the college loan industry is happy to fill this void.