Cost of Higher Education

The school I attended cost $1,000 for a full semester when I was a student there 50 years ago. Today, that institution costs $43,700. I am not the greatest spreadsheet manipulator in the world, but I believe that represents approximately an 8% growth rate over that time. I was honestly surprised when I made that calculation. I expected a much larger growth rate, given all the rhetoric these days about the cost of higher education. This is a sample of one private university in an urban area, and does not include the cost of room and board, and hence includes tuition only. What happened?

The answer became a little clearer when I compared it to a few important things in life that I could recall without doing a lot of research. Two of those things were the price of gasoline, and my own salary. Both of those things exhibited much smaller growth rates over the course of the same time period. On the other hand, the cost of medical care most likely grew at a much larger rate over the same time period. My “medical cost” analysis is based strictly on a feeling in my gut rather than any hard data. I would bet on it though.

Based on that “extensive” research, it looks like a lot of other costs (with some exceptions like medical care) and revenues grew at a rate a lot less than higher education. The result would be that higher education takes a larger share of overall household expense than it did 50 years ago. In addition, a lot more households in the United States are sending their children to college than they did 50 years ago. Households are also sending their students to stay on campus than they used to so they are incurring room and board expenses as well. When I started college, I lived in a suburban area and most of the children in that area at that time were largely first-generation college students. They lived at home and commuted to one of several nearby colleges. Few of my peers went away to college.  Nowadays, second generation parents want their children to experience “the full college experience” that they feel they missed out on as commuter students. Obviously, it  costs a whole lot more to live on a campus that may not even be all that close to home. Psychologically, those additional costs wind up being considered “higher education” costs.

To summarize, it looks like the higher education tuition bill is taking a larger bite out of household spending than it did in the past. Higher education costs have risen somewhat higher than other important costs, such as gasoline. In addition, households are demanding a lot more services (room and board) from higher education, so the definition of “higher education costs” is expanding over time as well.

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