The US needed to be smarter after Sputnik.
On October 4, 1957, the Soviet Union launched Sputnik. It was clear to President Eisenhower that the US needed to produce more scientists and engineers to compete with other nations. The education system at the time was exclusive and shut out low- and middle-income people.
As long as the Soviets were in control of the space race, America wasn't going to catch up.
The National Defense Education Act was created by Congress at Eisenhower's request and allows the government to give loans to students in science and mathematics fields. It was amended to remove restrictions on fields of study.
In "The Debt Trap," a new book by Wall Street Journal reporter Josh Mitchell, Sputnik is said to have spurred the creation of the federal student-loan program.
The House report said that America's progress in many fields of endeavor in the years ahead may depend on the education we provide for our young people now.
More than 600,000 additional students have gotten access to education thanks to the NDEA's student-loan program, according to President Lyndon B. Johnson. Johnson said that Americans were spending between $4,000 and $5,000 on each child's college.
"Now, ladies and gentlemen, this must not continue," Johnson said. The challenge is obvious and we have to meet it. Higher costs should not make higher education out of reach.
The average annual out-of-state tuition for a public university is $15,000, fewer and fewer people are going to college as the nation's student-debt load grows by the day. What started out as an educational pursuit has now turned into a crisis.
Government involvement in US education is hurting people.
The American Dream is a pillar of Johnson's war on poverty and he wanted to give everyone a chance at college. The Higher Education Act of 1965, which he signed, guaranteed loans for the middle class to fulfill his goal of universal access to education.
The system came to profit when banks raised interest rates on student loans. Colleges kept raising tuition. Mitchell explains that the more colleges raised tuition, the more Americans had to borrow and the more colleges raised tuition.
Alice Rivlin, the first Congressional Budget Office head tasked with crafting Johnson's student-loan program, told Mitchell in 2019: "Higher education added to your future income and therefore loan finance was a sensible thing." You can pay it back out of your future income.
Rivlin told Mitchell that the loan industry had unleashed a monster.
After graduating, the average American holds about $32,000 in student debt. If the borrower doesn't make enough money, it can be hard for them to pay off the loan.
David Wise, 59, had paid off $175,000 of his student debt, but he still owes $236,485.
"I feel like I've been responsible, and I've paid a lot of money on my student loans," Wise told Insider. "But it really is a debtor's prison."
It's worse for parents who want to give their children a chance at higher education. Parent PLUS loans are federal loans that parents can take out to finance their kids' education, and the loan can cover up to the cost of attendance and is not based on income.
Parents are stuck paying off debt for the rest of their lives because they wanted to give their kids the best future, because of the system of borrowing created by it.
The student debt crisis has been taken care of by the president. He has begun to reform student-loan forgiveness programs that have failed borrowers in the past and he promised to pass free community college during his term.
45 million Americans continue to shoulder significant debt burdens, shutting many out of the American Dream Eisenhower and Johnson envisioned.