Wednesday, August 19, 2009

Tuition: 4-Year Universities vs. 2-Year Colleges

Using data from the National Center for Educational Statistics, the chart above shows annual price indexes for college tuition at: a) 4-year universities and b) 2-year colleges, both compared to the price index for all goods and services (CPI-U) from the BLS. Although tuition has increased annually at both levels of higher education much higher than the rate of inflation (7.7% for 4-year universities and 6.6% for two-year colleges vs. inflation of 4.3%), the growth in tuition at 4-year universities has increased by more than a full percentage point on average each year since 1976.

It also appears that annual tuition increases at both 4-years and 2-years were pretty similar up until about the mid-1990s, and then tuition started increasing faster at 4-year universities than at 2-year colleges.

Originally posted at Carpe Diem.

8 Comments:

At 8/19/2009 1:51 PM, Blogger Kraut said...

This comment has been removed by the author.

 
At 8/19/2009 1:52 PM, Blogger Kraut said...

Can you say, "bubble?"

 
At 8/19/2009 2:13 PM, Blogger PeakTrader said...

Regarding inflation:

Buffett: We're Going to Be Crushed Under Mountain of Debt

Some not-so-fun facts from Buffett's editorial today in the New York Times:

Congress is now spending 185% of what it takes in

Our deficit is a post WWII record of 13% of GDP

Our debt is growing by 1% a month

We are borrowing $1.8 trillion a year

$1.8 trillion is a lot of money. Even if the Chinese lend us $400 billion a year and Americans save a remarkable $500 billion and lend it to the government, we'll still need another $900 billion.

So, where's it going to come from? Most likely the printing press. And, ultimately, Buffett says, that will destroy the value of the dollar.

Jim Rogers: S&P Could Go To 50,000

The S&P 500 could triple from here if they print enough money and the value of the US dollar collapses, then S&P could go to 50,000, Dow Jones can go to 1,000,000.

 
At 8/19/2009 2:33 PM, Blogger Richard said...

I'd like to see the increase in government grants to colleges lined up in that chart too, perhaps there's an uncanny correlation...

 
At 8/19/2009 4:38 PM, Anonymous Anonymous said...

Let's see: highly inelastic demand, very sticky reputations, no new real competitors (for profit dont count), no major enrollment expansions, the consumers demanding the best quality are generally "price is no object" so there's basically no price competition, and the US government subsidizes very cheap below market tuition financing.

This is a recipe for disaster. The only thing I'm surprised about is that the inflation rate hasn't been higher and I see absolutely no reason why this trend will ever moderate. The government will just provide more cheap loans which will help keep raising prices. If there's a better business model I havent thought of it.

 
At 8/19/2009 9:45 PM, Anonymous Mika said...

Everyone keeps pontificating about how our educational system must be improved and must be second-to-none to meet the greater-than-ever competition from abroad. Yet, we keep allowing it to be less and less affordable for the middle class, and few seem to be concerned. Maybe the question is: Can you say hypocrasy?

 
At 8/20/2009 4:53 AM, Blogger OA said...

To me the biggest hypocrisy is the people who are most willing to maintain the government education monopoly for K through 12 are also the ones who ask for more and more financial aid so students can then go to private universities.

 
At 8/20/2009 7:23 AM, Anonymous Jason said...

Mark, what about the correlation of tuition growth with population cohorts (i.e. baby boomers, baby boomer's offspring, gen-x, gen-next, etc). Also, what about correlation to avg salaries with and without college degrees?

Is this a supply-side phenomenon or demand-side?

 

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