The Real Cost of College Tuition
In the day-to-day of college life, we often get lost in the work, extracurriculars, and weekend activities and forget what’s happening behind the scenes. Four years ago, in my high school economics class, my teacher told us a short story from his college life. When his father dropped him off to start his “life of independence”, he left him with a sticky note on his desk. That note had written on it the cost of him being there every day at school. It’s important to remember what’s paid to keep us here to serve as a reminder to not wase the time and resources the college has to offer. Especially over the last decade, college prices have risen drastically. But how much are prices increasing, and how does it compare to price levels? I analyze that in this article in a very rudimentary way. I gathered tuition data from TuitionTracker.com, a tool that compiled tuition data from schools from 3845 schools across the U.S. from the 2009 to 2017 academic years. I did not incorporate schools that began or ended operations over these years for simplicity. Furthermore, schools often have many different prices depending on financial aid resources, in-state versus out-of-state costs, and students living on and off campus. TuitionTracker has data on all these aspects; however in this article, I will use the published tuition price or “sticker price”.
I broke down the school tuition data into three categories: average tuition over all schools each year and the average tuition for schools one standard deviation greater than and less than the mean tuition each year. The standard deviation of each school’s average tuition across all years ended up being 11842.2765 with a mean of 14221.75. Finally, I added Holy Cross’ tuition growth as a benchmark.
As you can see, for the most part, schools are maintaining a tuition growth path that is greater than CPI growth. This is consistent with the fact that colleges are in a highly concentrated period of growth. So many financial resources available have eliminated some of the price competition between schools. Another reason for this growth is simply supply and demand. Holy Cross’ Economics Professor Robert Baumann explained it to me in a way I haven’t thought of before. He attributed part of the U.S. college tuition growth to an immeasurable kind of esteem factor that is incredibly important to college ranking. We often value colleges with a long-lasting reputation, rich history, and longevity. Usually rising prices and profits put downward pressure on prices however this esteem factor makes entering the market nearly impossible.
The next graph breaks down the growth in tuition across schools plus and minus one standard deviation away from the mean to measure how schools are changing their tuitions. Again, Holy Cross follows patterns similar to other schools. Also, there appears to be a sharp increase in tuition across lower-tuition schools in 2011.
This article serves as a reminder that society is highly valued by society. This means we have access to resources during our short 4 years at college, so we should take advantage of these opportunities. This article does not consider the growth of financial aid and other factors that could affect the “real” cost of tuition. For those interested, the dataset is available publicly on TuitionTracker.com
By Tavish McNulty