That got us wondering what the historical trend has been, so we looked it up and the results are interesting. And a little scary.
For 27 of the past 30 years, the price of education has grown at a faster rate than that of medical care. Education also grew faster than inflation for 29 of the past 30 years, while medical care beat inflation 27 of those years. Could education be our next health care crisis?
The answer is probably no, at least not for a long time. Average spending on medical care was between three and four times more than that of education in any given year from 1984 to 2007, the only range that the Labor Department's spending data was available. In 2007, the average consumer unit, similar to a household, spent $2,853 on medical care and $945 on education.
But that doesn't mean the cost of education isn't on a terrifying tangent. Just last year, the College Board reported that most students and their families could expect their 2008-2009 tuition and fees to increase by $108 to $1,398. Private colleges are reporting a dip in enrollment as this recession compounds the monetary burden for families.
Last Thursday, on the Tavis Smiley show, Education Secretary Arne Duncan predicted that students will increasingly turn to schools that are more creative at keeping their costs low, and he has offered a $5 billion sweepstakes for districts that demonstrates extraordinary results. President Barack Obama has pledged a $4,000 tax credit and often talks about improving access to education, but the early months of his presidency have been dedicated to bailouts and health care. The sad thing is that everyone -- politicians, parents, kids, even the schools themselves -- agrees that the rising costs are a huge problem, yet the 30-year trend demonstrates and even steeper curve than our much-maligned health care inflation.
Can you do some companion graphs showing numbers of people attending University? And, amount of government subsidization of University education? And, numbers of new Universities opening?
I think you'll find a supply/demand driver for rising University cost. Mostly, not enough Universities, huge demand for University education, and lots of government dollars sloshing around. Between high demand, low availability, and easy credit money availability, it is no surprise cost of education is going up.
I am a promotional writer and marketer for Robert Applebaum's Forgive Student Loan Debt movement.
This report does not surprise me in the least. That is exactly why we must urge the Dept. of Education to CHANGE. Arne Duncan HAS the power to restructure things and to regulate a system that is corrupt and broken. It is clear that the student lending system is taking advantage of lower- and middle-class families and students. WE MUST SAY NO!
When I attended one of the last rallies for Obama in Manassas, VA, I BELIEVED his call for change. Here is an opportunity where this administration could change things. We all cheered that night: "CHANGE IS ON ITS WAY!" - let's seize that again! In so doing, let's reclaim one of the most important things we have in this country: access to good higher education. If we do not see a radical change in the way in which the student lending industry is structured, our educational system will collapse. If we burden students with debt in order to obtain higher education degrees, how can they play a role in our consumer society?
Many people argue that most loans are in repayment and not in default. Fine. That's what the data shows. But what if these students are ONLY paying back loans? Are they really contributing to the marketplace? What about the psychological toll, too? Many students (as the data shows) are finding that they can't find jobs out of school. They are moving home. This generation has returned to the basements they thought they'd left behind. We MUST attend to this situation if we are to continue playing a dynamic role in the global economy.
I am an advocate, a nationwide community organizer, because I take Obama's advice seriously. This is my way of being of service to a community - having been an instructor myself, I care DEEPLY for students. THIS IS CHANGE I CAN BELIEVE IN - I AM CALLING FOR A RADICAL RESTRUCTURING OF THE STUDENT LENDING INDUSTRY AND THE DEPT OF EDUCATION NOW!
My blog: http://alleducationmatters.blogspot.com/
I think it's mostly a demand side phenomenon (no offense to Ms. C. Cryn Johannsen, but the reforms she supports would make education much more expensive).
Everyone is now expected to go to college (and many more people do now). Plus more professions now encourage masters degree (Teaching comes to mind).
It also seems like the status of attending a top 100 college is more valued now than it was 20 years ago, which allows them to hike up the tuition.
The chart simply illustrates why the Credit Bubble was the ultimate middle-class squeeze play.
Everything about the price of providing higher education has been fueled by the credit bubble, and is based on extremely inflated incomes/equity all around.
Fact: Colleges can't maintain their enrollment reqs by charging tuitions above what families/students are willing and able to pay, BUT they don't care if the money is coming from debt or not, since they get paid up-front either way.
Just like owning a house, getting a college education has become part of the 'American Dream.' Get a degree and you can be one of the winners in society, etc. Unchecked access to credit from inflated home equity and private student loan lending resulted in a situation where almost anyone could incur the large amounts of debt necessary to pay for bachelor's degrees and expensive graduate programs (regardless of the reality that a very small % of graduates will ever get jobs that allow them to pay back $100k in student loan debt).
At the same time that the middle class was ratcheting up their debt in order to send their kids to college, a lot of upper-middle-class' incomes were exploding due to a bubbling stock market and cheap business capital, so the number of actually rich people went up in parallel with the number of the "debt-rich." Yet, they're all still competing for entry to the same schools, so this created a demand bubble for college degrees.
The rest of the current trends in higher education--tuition hikes to maintain "status" (and corresponding financial aid hikes to maintain a tasteful impression of diversity), exorbitant salaries for celeb faculty, other luxury amenities--all resulted from a flood of consumers who were basically baited into donning a pair of Icarus' wings and flying their financial futures directly into the Sun.
The CPI for education has two major components -- prices at the college or university level and education at the grade/high school level. A little over half of the weight is college and just under half is lower level fees and tuition.
I assume you are using the combined measure of all education.
But it is worth noting that the component for lower level school is tuition at private schools, not public schools. At the college and university it is both private and public schools.
So you can not blame government for the growth in grade and high school education prices.