Part II: Absent change, College prices itself out of the Market
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| From www.Inflationdata.com |
According to one website, Inflationdata.com, the cost of tuition from 1985 to 2011 has risen 498.49% while the Consumer Price Index (which has its flaws and often overstates inflation) rose only 114.85%. Writer Gordon Wadworth notes, "For example, if the cost of college tuition was $10,000 in 1986, it would now cost the same student over $21,500 if education had increased as much as the average inflation rate but instead education is $59,800 or over 2 ½ times the inflation rate."
What this means is that, overtime, College will become so expensive that the cost will dwarf any possible hoped for boost in income potential. The average College Business Graduate earned $28,000.00 in 1986. In 2011, according to NACE, the same starting salary is $48,144. This an average increase of 2.769% a year. Meanwhile college has increased at an average 8% according to FinAid.
Currently four years of College Tuition at VBU cost $36,608.00 In ten years that cost will be $79,034.00, while the starting salary (for a business degree) growing at the historical 2.769% will only be $63,265.00. Twenty years from now the cost will rise to $170,628. Business starting salaries will be $83,135.18 on average.
Thus the CollegeTuition Dollar to Starting Salary Dollar went from:
- 1986 $1 to $2.1
- 2011: $1 to $1.3
- 2021: $1 to 80 cents
- 2031: $1 to 48 cents
Free markets require that, in general, consumers will stop purchasing a product that fails to bring in more perceived value than the cost. What happens when people start questioning the value of a college education as it relates to earning potential? Will college be forced to ratchet down services, costs, and payroll in order to reclaim market share? It is difficult to see what else can be done, since the Federal Government in 2020 and beyond will be faced with enough fiscal demands from the looming Social Security and Medicare demands.
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