Back in 1980, the average annual cost for a 4-year public institution was $3,499. For a 4-year private college, it was $5,594. Fast forward to the 2010-2011 year, and those costs reached $15,918 and $32,617. That’s an increase of 355% and 483%!
Why CPI Matters
Here’s a tiny economics lesson. If you annually track the overall price of things you buy (consumer products), you’ll effectively have the consumer price index or CPI. CPI is a pretty good representation of inflation—how much you can buy with your money.
If you compare the CPI over the last 30 years with the average cost of college, like in the graph on the right from Mother Jones, you may notice something. Namely, the cost of college is growing faster than the average of all the other things we buy every year: food, clothing, coffee, etc.
Where’s The Increase Coming From?
So, if inflation isn’t the real culprit for increasing the cost of college by that much, what is?
By looking at income and spending from 2,000 colleges since 1995, we see that the biggest reason for rising college costs in the 2000s is the reduction in state dollars given to universities—a decrease of almost 18% since 2002. Colleges needed to make up for that lack of funding somewhere (you can probably guess how they did it).
In addition, spending on student services has increased annually since at least 1995. At the same time, administrative and maintenance costs have also increased colleges’ spending. Since 1995, public institutions increased their spending on these costs by 13%.
Another spending culprit is dorm rooms. Residence halls have come a long way in the last 30 years. Schools are phasing out tiny square rooms with cookie-cutter furniture and few of the comforts from home for lavish, apartment-style living. Just remember that these updated dorms come with a big price tag that gets passed on to you.
The Real Competition
Looking at the graph, you might think that colleges are greedy, but that’s not the whole story. College admission is not just a competition for you to get in. It’s also a competition between colleges for you to enroll. Colleges wouldn’t exist if it weren’t for you, and you’re more likely to enroll in the better “college experience.”
The “college experience” is what makes you want to enroll in that school—whether it’s the awesome professors, the new equipment, the comfy dorm rooms, or the activities that will make your time a blast. These come with a large price tag, and colleges are continually investing in them so they stand out from the pack.
Would you really want to go to a school with mediocre professors or antiquated equipment? That’s why colleges keep spending money and increasing their costs. When you factor in the decrease in state funding, it just gets more and more expensive.
So, Is It Worth It?
All the research done on how we fare after college is promising. College graduates make on average $21,528 more a year than non-college grads. A 4-year college grad makes an average of $55,000 per year, and those with post-graduate degrees make an average of $65,000 per year. Another food-for-thought statistic is that 68% of the prison population didn’t go to college.
I’m not saying that you’re on your way to jail if you don’t go to college, but college can open doors that may otherwise be shut. Is it expensive? Yes, but there are ways to cut the costs. Don’t forget about scholarships, student loans, and comparative shopping when deciding on colleges.
How have you dealt with rising college costs? Share your story in the comments.
(Photo: Mother Jones)