The Absurd Price of College
The real price of getting a degree. Has college become too expensive for some U.S. families?
Good morning friends,
Today I want to talk about how the price of college has outpaced inflation by 1200% since 1980.
Yes, that’s right, read that again.
Below I put together two charts to help visualize this dramatic change. The left shows the difference in the price of both private & public colleges from the 1980s to now. The percentage change in CPI (consumer price index: the measure of inflation) of tuition and fees is on the right compared to the standard CPI of all items.
Why Is This?
It’s tough to pinpoint the exact source of the surge in college prices, But some factors play a vital role in this process.
Decrease in State Funding
State funding per student decreased from $8,800 (2007-08) to $8,200 (2018-19). This leaves students paying more on the front end for tuition and other fees & colleges increase their revenues.
Increase in Federal Aid
For every $1 in federally subsidized loans, the price of college increases by $0.60, according to a study from the New York Fed. Colleges purposely raise their prices because they know that students will get help from the federal government. This is a cycle that repeats, causing the giant leap over inflation.
Increase in Demand
A college degree has become the norm for our society as undergraduate enrollment rates increased by 26% between 2000-2018. Colleges know this and raise their prices accordingly.
Source:
U. S. Bureau of Labor Statistics
Has College Become Too Expensive For The Average U.S. family?
In 1980 the price of undergraduate tuition & fees for a public college was $1,856 per semester, and the median household income for all families was $21,023/year. Taking up around 16% of their annual income.
However, today the average U.S. household income is $61,937, and it costs $9,403/semester to attend a public in-state university. It is taking up almost twice the space in the annual income of an average family in the U.S. at 30%.
With rampant inflation causing the cost of living to spike, college is taking up more and more space in families’ incomes every year. Not to mention how student debt has climbed in sync with the increase in college prices. As a result, the average family is less inclined to send their child to college and might seek other options.
If this cycle continues, the enrollment rate for all universities will drop. Young adults who previously looked at higher education will consider a job in a high-paying trade or look to try their entrepreneurial luck. Secondary-Education as a whole must be re-thought if there is to be any real change, and change there must be if the big corporations wish to continue to hire the most talented people in the world.
I hope you enjoyed today’s article. Unfortunately, college prices have gotten too out of hand, and it’s easy to overlook year-over-year differences. If you enjoyed today’s post, share it with a friend if you feel like it :)