I recently had a conversation with an older friend of mine about college. He gleefully reminisced on his younger days, times that he spent the whole summer working hard so that he could go and study at school during the rest of the year. Over 30 years later, my friend is a lawyer and has done other work in many other fields for his own enjoyment. This really is the American Dream at its core, work hard, earn your keep; do what you have to do so that you can do what you want to do.
For myself and the rest of the Millennial generation, this Dream is slipping through our fingers. Ask any college student or recent graduate their biggest fear and their answer will probably revolve around debt. This was proven in a survey done by Ohio State University. The survey results showed a shocking 70% of students were stressed about money, and even worse than that nearly a third of students said that money problems actually led them to neglect their schoolwork.
So everybody can agree, the rising cost of college is a problem. If students are neglecting their work, something is not right. But how big of an issue is rising college tuitions? Will the effects of it be small, or could they be potentially crippling? The unfortunate truth is that high college costs are a bigger problem than most people realize.
Before looking at potential consequences of the high price of college, we have to figure out how expensive college actually is. Anybody can tell you that tuition is going up year by year, but let’s take a look at the price of college from a more economic perspective. If you are not familiar with inflation here’s a brief explanation. Simply put, inflation is an increase of the price level of goods over time, it’s the reason $1 could buy more 30 years ago than today. Inflation is why your grandparents talk about seeing a movie for a quarter, while you have to pay ten dollars minimum. Inflation is good for the economy, and every year the government uses the Consumer Price Index (CPI) to measure how much the price of goods has gone up because of inflation.
Why is this important? Inflation and the CPI give us a measuring stick to see if the cost of college is rising at the same pace as overall prices, or if it is outpacing it. Using these measuring sticks, it is too clear that college tuition is rising at a dizzying pace. A WordPress article breaks down all the numbers of college tuition and inflation, and the results are unsettling. College tuition has actually risen three times more than the overall inflation rate. Bloomberg reported that the overall price of obtaining a degree has risen 1120% (not a typo) since 1978, easily doubling the price rise of healthcare, and rising 6 times faster than the price of food.
The numbers only get worse from there. Let’s compare the price of college to the median income of the average American. This chart from ProCon, a nonprofit nonpartisan organization dedicated to research, looks deeper into the issue of rising college tuition. While tuition skyrocketed over the last 40 years, the average median income for men actually dropped from 1971 to 2012. In 1971, college tuition only took up 7% of a man’s median income, and 20% of a woman’s. By 2012, those numbers increased to 26% for men, and 40% for women.
A separate chart seen here shows that up until the early 1980s, a student could work a full-time minimum wage job for just one summer to pay for a whole year of school. Now to pay for a year of school, the student would have to work for nearly a full calendar year straight. This proves that the days of working in the summer to pay for school are long gone.
When the price of college grows quicker than the amount of money people make to pay it, there will be serious consequences to go with it. Some are already being felt. Over the last two years college enrollment overall has actually dropped, including at two-year community colleges, which are made to be more affordable. Each year, student debt increases and hits new historic highs. The same study done by Ohio State from before showed that one in five students expect to owe over $50,000 by the time they graduate.
Some people feel though that the worst is yet to come. Renowned billionaire and Shark Tank star Mark Cuban feels that soon “the college bubble will burst”. He compares the current tuition crisis to the housing market collapse that caused the recession. Cuban notes that with so many irresponsible loans out there, it will ultimately cause a collapse in tuition prices, leading to colleges actually going out of business.
While Cuban does describe the most dire of consequences, his comments should not fall on deaf ears, Americans must stop standing by and watching college prices soar faster than people can pay them. If the current trend continues, there will be awful repercussions for Millennials and generations after that. With an upcoming Presidential election, it will be interesting to see how our nation’s leaders address the college tuition crisis the United States is facing.
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