Recent college graduates are facing one of the most difficult times that any generation has had to overcome to begin their careers. Many of these graduates have incurred tens of thousands of dollars in student loan debt throughout their academic careers and with the state of the job market, many are finding it very hard to service this debt.  The national average for loans incurred by college graduates in 2010 is $23,000, and this number does not account for any additional credit card or other personal debt. It has been estimated that 2 out of every 3 college students takes out some form of loan in order to finance their education, and the total amount borrowed per year in the US is upwards of $15 billion.

One might question why these graduates have incurred so much debt, and it is directly related to the rapidly increasing cost of college tuition. The chart below illustrates that between 1978 and 2008, the cost of college tuition at private universities increased at more than three times the rate of inflation, and in fact increased more than even the cost of healthcare in the US, which is another industry that has had widely publicized price increases.

One factor that is fast becoming one of the most expensive costs associated with college is the price of textbooks. As we have covered previously, the average student spends $900 per semester on textbooks, which translates into $7,200 over the course of that student’s college career. We want to examine how much the average college graduate would have to pay assuming they took out a Stafford loan for $7,200 for the traditional ten years for all of their textbooks.

Over the course of the ten years, a graduate would pay almost $2,750 in interest to cover the cost of the books they purchased in college; that is $2,750 that they would not be able to invest for their own future, whether it would be saving for retirement, putting towards a house, etc.  Considering the rapidly rising cost of tuition and fees, don’t you think it’s time we considered at least one way to help reduce the cost of education for students by reducing the cost of textbooks?