What If Prices On Everything Went Up As Much As College Tuition?
It’s common knowledge that college tuition costs have been escalating rapidly. And nothing reflects this more than the student loan crisis in America. As of November 2018 Americans owe $1.56 trillion in student loan debt. That’s almost 3 times the 2018 defense budget.
How much has tuition actually increased? And is it true that tuition has gone up much faster than inflation over time?
Data from the College board is public and the numbers speak for themselves. In the 1970/71 academic year, the average cost of a 4-year private college in America was $2,930. A 4-year public in-state college costs $1,410. Both of those figures include room and board.
But those were different times and it’s hard to mentally adjust those numbers to modern costs due to inflation.
Men’s fashion, 1971. I think the dude on the right was going for a Charlie Brown thing that went horribly wrong. Credit. License.
Fortunately math is easy with computers now, something those dapper dudes above didn’t have in 1971.
The CPI inflation calculator tells us that $1.00 in September 1970 (start of the school year) is the equivalent of $6.45 as of October 2018. So our multiplying factor is 6.45.
Therefore, if college tuition only went up with inflation we would be looking at tuition for a 4-year private school to be around $18,898, and a 4-year public in-state school to be around $9,095.
Ha, yeah right…..
The actual average costs in 2018 are:
- 4-year private school (with room & board) – $48,510
- 4-year public school (in-state, with room & board) – $21,370
So instead of 6.45 our multiplying factors are actually 16.56 (private) and 15.16 (public). To get one number I’ll average the two for a multiplying factor of 15.86.
So, what did some common things cost in 1970 and how much would they cost now if they went up as much as college tuition (x 15.86)? Let’s have some (depressing) fun!
| ITEM | 1970 Cost | 2018 “College Tuition Equivalent” Cost |
| Dozen Eggs | $0.60 | $9.52 |
| Glass of Coca Cola at restaurant | $0.30 | $4.76 |
| Fresh Turkey (per lb) | $0.43 | $6.82 |
| Pork Chops (per lb) | $0.59 | $9.36 |
| Star Kist Tuna | $0.29 | $4.60 |
| Gallon of milk | $1.15 | $18.24 |
| Loaf of bread | $0.70 | $11.10 |
| Cup of coffee (out) | $0.25 | $3.97 |
| Crest toothpaste | $0.77 | $12.21 |
| Gasoline per gallon | $0.36 | $5.71 |
| Postage stamp | $0.06 | $0.95 |
| New car | $3,542.00 | $56,176.12 |
| Men’s suit | $37.95 | $601.89 |
| Ladies summer dress | $8.99 | $142.58 |
| Movie ticket | $1.55 | $24.58 |
| House | $26,600.00 | $421,876.00 |
Some of these are interesting. For instance, I haven’t had a coke in like 15 years but I know that you might pay that much at say a baseball game or a place where they have you trapped like Disney World.
And I’m not sure what a cup of regular coffee costs at Starbucks but I think they’re flirting with that price. So some things have gone up almost as much as college tuition at certain venues.
If you live in an expensive area like I do you might see the house price and say “Yea, no way”. It’s hard to find a single family home for $421,000 near DC, especially inside the beltway. But the average cost of a new home in America in 2018 is actually $395,000, so new home prices have inflated nearly as much as college tuition on average.
Remember the difference between “average” and “median” though. Averages are skewed by the extremes, so mutual fund managers in Connecticut with $3 million dollar homes skew the average.
Pro tip – buy index funds and cut them off 🙂
The median home price in America in October 2018 is a slightly more reasonable $309,700.
McFlation
Because the internet is the internet, I found this cool picture of a McDonalds menu from 1971.
So if these McDonald’s items went up as much as college tuition has since 1970 here’s how much they would cost:
| ITEM | 1970 Cost | 2018 “College Tuition Equivalent” Cost |
| Quarter Pounder | $0.60 | $9.52 |
| Quarter Pounder with cheese | $0.70 | $11.10 |
| Big Mac | $0.65 | $10.31 |
| Filet-O-Fish | $0.48 | $7.61 |
| Hamburger | $0.28 | $4.44 |
| Cheeseburger | $0.33 | $5.23 |
| Fries | $0.26 | $4.12 |
The Future
As this data shows, college tuition has increased at an alarming and likely unsustainable rate. Why do I say “likely unsustainable” rate?
This article from the Atlantic shows the growth in tuition rate increase has already slowed. More importantly, the demographic reality of declining birth rates means there are fewer students who will be attending college. Some of that can surely be mitigated with foreign students, but probably not all of it.
Sadly, the Atlantic article incorrectly cites median household incomes in America over the past 30 years as being “relatively flat”. I debunked that too-often repeated meme with real data in this post. Median incomes have gone up pretty solidly (adjusted for inflation) since 1984 in most states.
If you ask me, colleges better look over their collective shoulder. Education has been becoming more democratized and “wiki-fied” for a long time now.
Resources like Khan Academy, Udemy, Coursera, Lynda, and yes even YouTube are making education cheaper and more affordable than ever. Or even free.
Some colleges are commendably joining in on this revolution by releasing free material themselves, including some prestigious ones. I only see this trend increasing.
It’s never been easier to learn, and you can do it from almost anywhere. You just need a computer, an internet connection, discipline, and drive.
It may be that the value in going to college in the future will be more for the experience of being away from home and on your own rather than the education, because the education will be increasingly available online and free.
And if that happens, there’s no way they can justify $50,000 a year for an education in beer pong and inverted keg stands.
*AF Readers – I will be skipping my usual Tuesday post next week since it’s Christmas Day. I wish you a happy holiday season and as always thanks for reading!
College tuition is indeed getting out of hand. There are some degrees that you get in college that you can not expect to be able to pay off the debt burden received from that education.
Medical school tuitions have also followed a similar path. And unlike even keeping up with inflation, there is a downward pressure in physician salaries that make even what we make currently seem like a pipe dream in a few years.
Medicare has gone on an reimbursement cutting rampage and this has huge impacts on a medical professional as the private insurers soon follow suit. An appendix taken out by a surgeon used to be around $1200 or more reimbursed. Now I believe that has gone down to $300. Similar large cuts have affected my specialty of radiology as an MRI of a head for example has seen a similar reimbursement decrease.
Right now physicians make up for this buy doing more to maintain prior year’s income, however there is only so much time in the day and this leads to physician burnout.
There have been 2 medical schools that now have offered free tuition (new York and Michigan) which would be a wonderful trend happening if it does spread more.
Wow, free tuition at a medical school, I had never heard of that. If that were around when I was young I might’ve gone for that!
Tuition and Healthcare – the one, two, knockout punch to unsustainable inflation.
The big change in the State of Texas took place in 2003 when the State Legislature re-regulated the rate setting of tuition and allowed universities to set their own tuition rates. Since 2002 the average tuition is up 147%! The change was due to the State providing less funding to universities. In turn the universities decided to just pass on the shortfall to families and students (vs. looking at ways to reduce their bloated costs).
I have two son’s in college right now. The actual tuition cost is the smaller part of the overall bill we get. All the crazy “fees” that universities tack on adds up to MORE than the actual tuition for classroom time!
Merry Christmas!
Perhaps the colleges took tips from the cable company on how to put more things on the bill
I went to college from 1992 – 1996, and I said the same thing back then. I saw that tuition was going up way higher than the rate of inflation and knew that this couldn’t happen forever, and that it would eventually cause problems. And…here we are.
Here we are indeed…
I’m very familiar with the world of academia. And even from inside the ivory tower – the rise in tuition costs is disturbing. As a “valuist” it’s hard to make the case that my kids should go to college if they don’t intend on studying a STEM discipline. That said – I also appreciate that the buzz about offering “free” tuition in some states is equally disturbing. In order to make a college education valuable, the quality of the education and experience need to exceed what is available on YouTube. This means providing excellent faculty, practical experience (research, internships, etc), and a taste of “adulting.” My hope is that the leveling out (or even reverse) of tuition costs will happen along with an emphasis on providing value to the students and faculty.
I agree. I’m an adjunct faculty member of a local university and I hope I give my students a better experience than what they can get free. But… free is free. and if free keeps getting better, more people will be taking advantage of it.
Yes, the rise in costs is crazy. We see this on the pre-college side while trying to support perfectly capable kids in their effort to attend a certain university. There is a heavy and growing response to build pathways around these institutions now though. The trades are rising again as an option (good), the many lower-cost/free options you mentioned, and a heavy dose on community college or cheaper options for the first years and then a transfer in. So, maybe the market will slow the growth down.
Community colleges have a great opportunity here to really shine, America just has to ditch the stigma that exists in certain circles.
I worked at McDonald’s during my first year at community college, 1978, and I’ve got the sweater to prove it. I remember that a hamburger, fries and drink was under 1 dollar, and later when I got to UC Davis, I was paying $400 per quarter (not quarter pounder!).
It is a matter of time until the YouTube phenomenon takes over and employers stop seeing a Bachelor’s degree as the entry requirement. For instance, a job interview at IKEA is something like, “Make a chair, and have a seat”.
Ha, love it. Hold on to that McDonalds sweater, that thing might net you some serious cash to pad your stash in the future!
The sad part is that overall academic quality has gone down in so many colleges and universities. I originally graduated in 2001 with a degree in English, then again in 2012 with a degree in nursing, and there was a DRASTIC difference in the quality of education. The older folks in my nursing program all agreed that the level of quality was pretty poor, while the younger students thought nothing of it. The younger ones also all expected As, while the older ones expected to earn them. My mother, a recently retired professor, also noted similar changes over the year.
My 16-year-old cousin is scoping out colleges and definitely leans more towards the schools with all the amenities (indoor rock climbing, fancier dorms, etc.). Of course, these schools are also generally more expensive, which she realizes but doesn’t understand the overall outcome of those increased costs. Her mom and I have explained the financial outcome to her, but what exactly do those costs mean to a wide-eyed 16-year-old, who is tempted by all these exciting, non-educational amenities? Essentially, she’s torn and she’s lucky has adults warning her about the financial impact on her future. What about the kids that don’t have adults guiding them? The debt cycle perpetuates itself, and more people look to the government to provide “free” education.
On another note, my grandpa (now deceased) used to discuss inflation in regards to the Whopper – his favorite sandwich!
Merry Christmas!
Ugh, the rock climbing walls and accouterments. I heard a podcast recently where someone called that the “amenities arms race” that colleges have been engaged in for long time now which is a huge part fo the tuition increase problem. And it’s mostly on non-academic stuff. I’m not sure if it’s more a reflection of spoiled kids or just the modern expectation that we should have everything all the time.
college inflation is a terrible tragedy. i think campus housing became too comfortable at some point. i remember living in a nasty concrete dorm with really basic food available. it worked out fine as long as i could stand it (1 year). after that 4 of us po’ folk shared a 2 bedroom apartment as it was the way we could afford it. we never ran the a/c and we lived in norfolk which you know is nasty hot/humid. you can imagine the locker room like smell of a little apartment with 4 cross country runners and no a/c.
the income gap between the barnacles (administrators) and full professors is crazy too when you compare with the pay for the little adjunct course mrs. smidlap just finished teaching. she won’t be going back to that next year i don’t think. i still think the experience and learning how to “ramp up” to adulthood has value, even with all that said. if the economy craps the bed i might even spend a few bucks and go back. we’ll see what happens. enjoy the holidays as king of the potomac.
I’m with ya man, dorms at my college were cinderblock walls and minimal everything. It didn’t matter back then, it was the novelty of being away from home and the camaraderie that mattered.
Your apartment must’ve smelled wonderful!
The problem with higher education is that they spend a ton of money on things other than higher education. When I was at Syracuse, they were at the beginning of the replace every building with the uber mega building. The construction spree turned a very fine old campus to a luxury resort. Sure it’s beautiful, but who needs that. I needed more computer clusters, not glorious architecture. I needed better TAs and not a world class gym.
We are saving about $10,000 a year for my son in a 529, and hoping for the best.
Yep, the “amenities wars” are crazy and driving prices up. College is for learning, not artisanal sushi and climbing walls.
You forgot to compare the cost of medical alongside this – college isn’t the ONLY thing that’s gone up that crazy much 😉 And my little used to be bedroom community outside of Seattle has probably seen even worse increases in home prices thanks to tech. Would be interesting to compare that.
I thought about adding that but the numbers are all over the place. It’s very hard to trust which data is more reliable or accurate and which is not, probably because it’s also politically charged. So there’s bad data out there.
Seems like everything is more expensive out your way after Amazon plopped down. And now they’re coming in my backyard.
Good luck with that 😬
Firstly, great post Dave
I do agree with Mr r2e comment on how the education and healthcare expenses are out Of control in the USA
The problem?
“The controller who controls the controlled”:
Healthcare system that is one entity with the insurance companies
The Universities that are one entity with the student loans companies.
Unless these links won’t be broken (and nobody has the interest at government level) the situation will never change until people will learn how to fly abroad to get education and healthcare at a fraction of the USA price (with better quality)
Merry Christmas!!
Very interesting comment and way of looking at it. I’m not aware that Universities are in bed with the loan companies, and I’m afraid to google and read as I don’t want to get in a bad mood today. I have read a lot about the health insurance companies and the influence to the medical system.
Thanks for the kudos!
I would assume tuitions have increased because they have become big business rather than places of higher learning. Of course you need to fund all those sports teams too…(more corporate silliness there too)
Totally agree – don’t get me on a rant about the corruption of college sports
Man, college is getting expensive. I like you think that Colleges are in for a big surprise. They are going to be hurting more for students in the future.
Yep, and it’s gonna be fun to watch the whole thing play out
College tuition has skyrocketed in the last ~50 years. I made it a point not to pay for school and chose my colleges accordingly. I’m satisfied with my education and especially with the price paid: $0. I couldn’t fathom paying on $75,000 worth of student loans right now.
It’ll be interesting to see how tuition inflation trends play out over the next ~20 years. My wife and I plan to set aside enough money for our kids to attend a 4-year state school. We assume tuition will increase by 3% per year from their year of birth. And we also hope these kids go crazy trying to find scholarships because they’ll get to keep whatever difference is left in their college funds.
I think your assumption is safe… it can’t keep going up faster than inflation. Something’s gotta give
I wrote about the college bubble having to burst wayyyyyy back in 2009, boy was I wrong! It’s really amazing, that some people believe that more gov’t intervention is the answer
Coming from someone who works for the government I can assure you that more government is indeed not the answer