For generations, America's workers have labored and sacrificed to give their families a chance at a better life. Parents send their children to school, help them with their homework and strive to save so their children can attend the college of their dreams. Students, in turn, work toward their bachelor’s degree, intent on climbing the ladder of economic opportunity and graduating into a better lifestyle. 

Since 1978, the costs of college have skyrocketed by  more than 1,100% , dramatically outpacing inflation. Even as college education has become more important to economic success and stability, it has become much less affordable, forcing students to assume mountains of debt to finance their future. The average student graduates with  more than $27,000 in debt , yet  Washington inaction  allowed rates on newly issued Stafford loans to double to 6.8% this month.  This hard-hitting increase is projected to cost the 7 million American families borrowing for college this fall an  extra $4,000 over the life of their loans, money that can be used to help pay for a new car or toward a down payment on a family’s first home.

Last week, a group of senators reached a deal  that fails to fully restore lower interest rates for students and allows for the possibility of future interest rate hikes on America’s youth. The deal ties undergraduate borrowing rates to the interest rate the Treasury pays for 10-year loans and adds an unexplainable 2.05% fee to loans to undergraduates, with higher fees for graduate student and parent loans. The Washington Post reports:

“ Under the bill, undergraduates would pay an interest rate of 3.86%.  That’s lower than the current fixed rate of 6.8%, but the new rate could go as high as 8.25% in future years…. Under this plan, the government is expected to make about $700 million over the next decade. ”

That $700 million is on top of the $51 billion profit the government reaped this year alone in fiscal year 2013 on student loan debt. To repeat, the Senate is about to require students to pay a higher interest rate on college loans than last year, and it is going to pad its pockets in the process. 

What could Congress do instead? Perhaps consider  Sen. Elizabeth Warren’s (D-Mass.) proposal  to allow students to borrow at the same cost banks pay the Federal Reserve, the “discount rate” of 0.75% while requiring Congress to come up with a better long-term fix for the cost of college. It could increase incentives to invest in college savings accounts, try to contain the cost of tuition increases, or it could pursue a different model of college payment like  Oregon is currently experimenting with .

On Wednesday, I attended a panel on the explosion of education debt at the Generation Progress' annual conference. It was a fascinating discussion focused on the many problems posed by outstanding student loans. Contrary to popular belief, education debt is not an issue contained to the most recent generation of graduates. More than one out of every eight debt holders is older than 65, and many Americans in their 30s and 40s are still paying off their loans. 

Still, there is one crucial distinction between college graduates of 20 years ago and graduates today: the bleak job market. America’s youth unemployment and underemployment rate is  unforgivably high  compared to other wealthy economies. As a result, many younger workers are less likely to be unionized and are not eligible for the types of defined-benefit packages with solid health care benefits their parents likely receive. Many of today’s college graduates receive their diploma and have to scramble to find work before the student loan collector comes calling. They’re more likely to move back with their parents than previous generations while they struggle to repay their share of the outstanding  $1.2 trillion  of federal student loan debt.

As I listened to the panel, I looked around the room at the dozens of debt-burdened students and contemplated the obvious. It’s sad that a college degree is no longer the gateway to prosperity it once was.

Photo by thisisbossi/Flickr .