Tuition Rising Faster than Inflation

Wednesday, October 19, 2005 | 12:15 PM

Gee, with everything costing more these days, its a welcome relief that inflation is so low; Otherwise, we'd really be in trouble.

All kidding aside, lets look at a case in point: Education expenses. The headline above is imprecise -- rising Tuition IS inflation. Its more precise to say that Education Expenses are going up faster than "median inflation."

Let's have a look at a few charts.

First, thanks to Mark Thoma, we have a chart depicting exactly how fast Education expenses have been rising:

Inflation Adjusted Tuition and Fees
click for larger chart


Chart courtesy of  Economist's View

Secondly, let's have a look at a chart from todays NYT:

click for larger chart


Clearly, education cost increases predates the rise in energy expenses.

Here's the Ubiq-cerpt:™

Average college tuition grew more quickly than did overall inflation again this year, although the rate of increase slowed after a period of explosive growth, according to an annual survey released here Tuesday by the College Board.

Annual tuition at public universities rose on average by $365, or 7.1 percent, this fall, after a year in which overall inflation was far less. Private universities increased tuition by $1,190, or 5.9 percent. Two-year community colleges increased tuition on average by $112, or about 5.4 percent, the survey said.

In the past two years, public universities had raised tuition by 10 percent and 13 percent, and the slowing growth rates registered in this year's survey were a relief to higher education leaders who have faced public criticism over campus costs that are outstripping increases in the rest of the economy.

Total expenses - including tuition and fees, room and board, books and supplies, transportation and other expenses - now average $15,566 for an undergraduate student attending a public university in his own state, the survey said. Total expenses at private universities now average $31,916 . . .

One reason tuition has been rising fast in public universities is that they have had to replace revenues lost when state legislatures reacted to budget deficits by reducing appropriations for higher education."

Incidentally, this might be where a good hedonic adjustment is necessary. Despite the rising costs, quality of college education is going down, at least by several measurable metrics: Schools have increased class sizes, postponed faculty raises, and have shifted to lower-paid, part-time faculty.

Less for more . . .  Sounds like inflation to me.

Tuition Rise Tops Inflation, but Rate Slows, Report Says
NYT, October 19, 2005

Wednesday, October 19, 2005 | 12:15 PM | Permalink | Comments (11) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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This needs a wider lens: the total cost of education and the departure of government funding.
Students and their families are shouldering more of the costs while the government spends elsewhere. Wealthy students, who see no financial hurdle, benefit in a climate that dilutes the academic pool by eliminating the poorer but brighter students.

Posted by: calmo | Oct 19, 2005 2:18:07 PM

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