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On the PRS NewsHour, Judy Woodruff, talking with Mark Shields and Rich Lowry, asked Shields about the cost of college tuition nowadays. Shields responded with his usual vigor, plus some interesting economic statistics. Is there a problem with college costs today? His reply:
“I think it’s a real problem. To be very frank, since 2001 in this country,the cost of a four-year college, a public university, room and board, tuition, has gone up 73 percent, 73 percent in 10 years, between 2001 and 2011. At the same time, the median household income in this country has dropped by $3,400. So, I mean, is it a problem? Is the cost of college a problem?”
Mark Shields’ figures are probably based on a recent report by the National Center for Education Statistics. The big picture is even more dramatic. (We would say worse, but we don’t want to discourage you.) FinAid, an objective site devoted to information about college costs and college financial aid, notes that “On average, tuition tends to increase about 8% per year. An 8% college inflation rate means that the cost of college doubles every nine years.” In other words, if you have a nine-year-old child that you hope to send off to college, you — or you and your child — will be paying twice as much as you’d pay today. Here’s a graph displayed by FinAid showing that for thirty years the cost of going to college has always risen faster than the general rate of inflation.By the way, keep in mind that the graph displays the rate of inflation, so when the line turns down that doesn’t mean that the cost of college tuition declines; it’s still going up, but the rate at which it’s going up has slowed.
And, as if you needed any more bad news on this subject, here’s a chart showing that workers have been getting more and more productive, but their wages have remained essentially flat. In other words, workers have been getting better at turning out goods and providing service, but their income hasn’t risen and the cost of sending their kids to college has gone through the roof. Wages have been essentially flat for decades. ECI is the abbreviation for Employment Cost Index, and ECEC is the abbreviation for Employer Cost for Employee Compensation. The chart comes from the Economic Policy Institute.
College students are now more than a trillion dollars in debt. That comes as news to anyone who isn’t a college student or the parent of a college student. The young and old who graduate this year are quite aware of it. Last year’s college grad started working life — if he or she could find a job — with an average debt of $27,000.
That average of $27,000 is the debt owed only by the student. Mark Kantrowitz, a knowledgeable expert in the field of student loans and student debt, estimates that if you add in the loans taken by parents to pay for their kid’s education, you get an average total bill of $34,000. That was last year. The numbers have been getting worse, year after year. (Kantrowitz was quoted in the New York Times last year, saying that student debt goes up and it doesn’t ever go down.) If student debt goes up 5 percent this year, as it did last year, then the burden — well, you can do the depressing math.
The economics of borrowing and debt often inspires comfortable moralists to criticize the profligate borrowers. But there’s been no criticism of students’ or parents’ borrowing. Over the past 30 years the purchasing power of the middle class has remained flat or has declined. Our average worker hasn’t been able to make the necessary strides ahead of the cost of living which permits increased savings or increased purchasing. But in that same period, the price of a college diploma has steadily gone further and further ahead, rising between 4 and 6 percent a year.
As has happened repeatedly over the past three decades, parents — and now their college-bound children — have to borrow. The gradual erosion of the middle class has increased so that now we are witnessing something rather like a collapse. The rich float further and further up, the poor drift further and further down.
But that’s a terrible note to post during the month of college graduations, so we’ve illustrated this with a diploma from the Italian University of Messina in 1672. We think it’s a great diploma with great but serious colors, a truly intricate initial letter and fancy writing. That’s something worth hanging on the wall! Even if it does put us a bit in debt.