The Rising Cost of Education

Cartoon by John Fewings

Today I was reading a PajamasMedia article by Roger Kimball about the rising cost of higher education, particularly in the upper tier schools (e.g., Yale or Harvard). The article links to a post by Paul Caron, who believes that higher education represents a bubble that's even bigger than the notorious housing bubble. Immediately beneath a graph comparing the rise in the cost of homes to the rise in tuition, Caron says the following:

Note that the housing bubble resulted from about a 4-time increase in home prices between 1978 and 2006, and college tuition has now increased by more than twice that amount since 1978 - it's gone up by more than a factor of ten times. The college tuition bubble makes the housing price bubble seem pretty lame by comparison.

Apparently Yale's tuition next year will be $52,900. While most colleges won't be charging quite that much, over the past thirty years tuition costs throughout the United States have soared at a rate far in excess of inflation. Glenn Reynolds, writing in the Washington Examiner, cites a report saying that "After adjusting for financial aid, the amount families pay for college has skyrocketed 439 percent since 1982."

Kimball continues by pointing out that the sort of politically correct nonsense that is currently taught in so many universities will never allow heavily indebted graduates to ever pay off their loans. He specifically refers to the case of a young woman "who graduated from some name school with a degree in Women’s Studies and Religious Studies and debt of $100,000. That’s about 3 times her current annual income." As parents (who pay most of the average student's tuition) realize that the education their child is receiving is less and less likely to pay for itself, they will become less willing to foot the bill. As Reynolds reminds us, "Bubbles burst when there are no longer enough excessively optimistic and ignorant folks to fuel them. And there are signs that this is beginning to happen already."

Given what the Ivy-League schools have given us lately (e.g., most of the Obama Administration), I look forward to the day when this bubble bursts.