Nailed it on the median family income point. The flat net cost narrative completely ignores the baseline shift that happend in the 90s and early 2000s. My brother graduated in 2003 and took out way less debt than me for the same degree at the same school, even though "costs were flat" for both of us technically. The income bracket breakdown is crucial too, cause the aggregate numbers hide how regressive the burden actualy is. A 110k family in NYC paying 24k for SUNY Geneseo isn't exactly comfortable, and that's supposed to be the affordable option.
Lots of point estimates all around. When talking about populations, the dispersion is equally important. Maybe some people qualify for discounts (scholarships or whatever), maybe others don't. For the second population the costs are infeasibly large.
The people who can afford college stay quiet, the other group is getting larger in all likelihood.
I like what you have covered in this and your previous article on the ROI of college. What do you think all this will lead to? Unfortunately I believe that college is going to be like what it was more than 100 years ago with mostly the rich sending their kids to a handful of top universities that can support teaching and research across a wide range (but still narrower than what we have now) of subjects. I hope that we will see a proliferation of smaller, mot focused institutions that will emerge to cater to people who want to work after high school to gain experience and take up apprenticeships or vocational training.
I tend to be pessimistic. Given that, other than some percentage of colleges closing, not much will change. I may not end up with only rich kids going to college like 100 years ago, but some rebalancing is likely to happen, meaning college will not be able to support as many not-rich students, while some programs will be worth borrowing for.
One of my reasons for pessimism is that so little has changed so far. One would think with colleges' discount rates climbing, clear demographic challenges, and increased competition, that at least a few colleges would try and do something very different. Yet, for the most part, it is business as usual, other than periodic downsizing. I'm at a college that has seen 10 straight years of significant enrollment decline, and the message is we will hit our enrollment (lower) goals this year. Very little has changed in what we do as a college otherwise.
I believe that many colleges operate under the assumption that they will not be the ones to close, and that once several other colleges shut down, the supply and demand for higher education will stabilize, returning everything to how it was in the past for those still open.
I'm no economist, but couldn't a market analysis argue that rising tuition is an expected effect from society preventing the devaluation of college degrees?
The college educated elite must remain the elite by scarcity, even if the Humanities Department says otherwise.
I don't think so. I attribute rising tuition to poor fiscal management by colleges and what students wanted (amenities unrelated to learning), along with generally increasing expenses (i.e., health care for employees and technology). Colleges are charging what they need/want to balance the budget. I think most faculty and colleges generally want everyone to go to college.
50 years ago the majority of college attendees tended to come from families with incomes above the median. Affordability was not much of a concern. Today, with a larger proportion attending four year schools, {at least for young women), many more come from families with below median earnings. In the same period, colleges have found an endless number of new categories of expense that have little relation to education.
"many more come from families with below median earnings". This is an important observation that will be related to the next Tuesday post (I think; I have the data, but I haven't analyzed it yet for what I want to do).
"endless number of new categories of expense that have little relation to education." Yup, a combination of poor fiscal management and, to some extent, the amenities one needed to attract students. All these smart people thought they could just keep spending money.
Ok, reread everything again. I guess im not sure what the disagreement is. It seems to really just be of how to spin the data, that everyone more or less agrees on:
Between 1995 and 2010 the net cost of college went up faster than inflation. Maybe even faster than then the increase in median income but it's hard to say that since the financial aid data only goes back to 2006.
Between 2010 and 2025 the sticker price of college went up at the same rate as inflation, and the net cost of college actually went DOWN in inflation adjusted terms. Since inflation adjusted median household income during this period went up by about 20% that means that as share of income, college did get cheaper.
To make a comparison between 1995 and today we simply need that aid data, no way around that.
The curious thing is - and this is where I think Brookings is right - that the perception of "college is expensive" has really risen in the past 15 years *just as college has gotten less expensive*. I remember back in, oh, 2005 yes some people would talk about how expensive college is but not as much as they do today.
I got my own theory on all this (basically schools went in for stupid marketing schemes in the 90s that worked ok when enrollment was growing but dont work once that's stopped) but it would take a bit of effort to write it up so maybe later
I see the disagreement as more than spin. This really got to me "...parents and grandparents perceive it as expensive" It isn't a perception. Just because net cost has been flat for a while and there was a COVID decline that is starting to go back up, doesn't mean college become not expensive. To me the tone is along the lines of why are people so stupid and not realizing college isn't expensive? When you look at the COA by income brackets, those are high costs.
Porsche can keep car costs stable for decades. I'm still not going to be able to buy one.
"To make a comparison between 1995 and today we simply need that aid data, no way around that." I agree, but I don't believe there would be a significant difference.
As to your own theory. I'm likely to agree. Schools really overspent on amenities to attract students. At the same time, there were some real cost increases (i.e., health care for employees and technology).
"But roughly, if the trends for net prices are similar, the cost of a public four-year in-state college roughly doubled relative to inflation from 1995 to 2025. "
But that's based on the graph for sticker price cost no? The point is that aid also has gone up. Need a graph that is adjusted for BOTH inflation and aid (net price). Theres no reason to suppose that trends for net prices are similar. In fact we know they're not from the Brookings piece.
Actually since all these series are indexed to 1, if trends for *aid* are similar then that means the net price in inflation adjusted $ hasnt changed since 1995
Nailed it on the median family income point. The flat net cost narrative completely ignores the baseline shift that happend in the 90s and early 2000s. My brother graduated in 2003 and took out way less debt than me for the same degree at the same school, even though "costs were flat" for both of us technically. The income bracket breakdown is crucial too, cause the aggregate numbers hide how regressive the burden actualy is. A 110k family in NYC paying 24k for SUNY Geneseo isn't exactly comfortable, and that's supposed to be the affordable option.
Lots of point estimates all around. When talking about populations, the dispersion is equally important. Maybe some people qualify for discounts (scholarships or whatever), maybe others don't. For the second population the costs are infeasibly large.
The people who can afford college stay quiet, the other group is getting larger in all likelihood.
I like what you have covered in this and your previous article on the ROI of college. What do you think all this will lead to? Unfortunately I believe that college is going to be like what it was more than 100 years ago with mostly the rich sending their kids to a handful of top universities that can support teaching and research across a wide range (but still narrower than what we have now) of subjects. I hope that we will see a proliferation of smaller, mot focused institutions that will emerge to cater to people who want to work after high school to gain experience and take up apprenticeships or vocational training.
I tend to be pessimistic. Given that, other than some percentage of colleges closing, not much will change. I may not end up with only rich kids going to college like 100 years ago, but some rebalancing is likely to happen, meaning college will not be able to support as many not-rich students, while some programs will be worth borrowing for.
One of my reasons for pessimism is that so little has changed so far. One would think with colleges' discount rates climbing, clear demographic challenges, and increased competition, that at least a few colleges would try and do something very different. Yet, for the most part, it is business as usual, other than periodic downsizing. I'm at a college that has seen 10 straight years of significant enrollment decline, and the message is we will hit our enrollment (lower) goals this year. Very little has changed in what we do as a college otherwise.
I believe that many colleges operate under the assumption that they will not be the ones to close, and that once several other colleges shut down, the supply and demand for higher education will stabilize, returning everything to how it was in the past for those still open.
I'm no economist, but couldn't a market analysis argue that rising tuition is an expected effect from society preventing the devaluation of college degrees?
The college educated elite must remain the elite by scarcity, even if the Humanities Department says otherwise.
I don't think so. I attribute rising tuition to poor fiscal management by colleges and what students wanted (amenities unrelated to learning), along with generally increasing expenses (i.e., health care for employees and technology). Colleges are charging what they need/want to balance the budget. I think most faculty and colleges generally want everyone to go to college.
50 years ago the majority of college attendees tended to come from families with incomes above the median. Affordability was not much of a concern. Today, with a larger proportion attending four year schools, {at least for young women), many more come from families with below median earnings. In the same period, colleges have found an endless number of new categories of expense that have little relation to education.
"many more come from families with below median earnings". This is an important observation that will be related to the next Tuesday post (I think; I have the data, but I haven't analyzed it yet for what I want to do).
"endless number of new categories of expense that have little relation to education." Yup, a combination of poor fiscal management and, to some extent, the amenities one needed to attract students. All these smart people thought they could just keep spending money.
Ok, reread everything again. I guess im not sure what the disagreement is. It seems to really just be of how to spin the data, that everyone more or less agrees on:
Between 1995 and 2010 the net cost of college went up faster than inflation. Maybe even faster than then the increase in median income but it's hard to say that since the financial aid data only goes back to 2006.
Between 2010 and 2025 the sticker price of college went up at the same rate as inflation, and the net cost of college actually went DOWN in inflation adjusted terms. Since inflation adjusted median household income during this period went up by about 20% that means that as share of income, college did get cheaper.
To make a comparison between 1995 and today we simply need that aid data, no way around that.
The curious thing is - and this is where I think Brookings is right - that the perception of "college is expensive" has really risen in the past 15 years *just as college has gotten less expensive*. I remember back in, oh, 2005 yes some people would talk about how expensive college is but not as much as they do today.
I got my own theory on all this (basically schools went in for stupid marketing schemes in the 90s that worked ok when enrollment was growing but dont work once that's stopped) but it would take a bit of effort to write it up so maybe later
I see the disagreement as more than spin. This really got to me "...parents and grandparents perceive it as expensive" It isn't a perception. Just because net cost has been flat for a while and there was a COVID decline that is starting to go back up, doesn't mean college become not expensive. To me the tone is along the lines of why are people so stupid and not realizing college isn't expensive? When you look at the COA by income brackets, those are high costs.
Porsche can keep car costs stable for decades. I'm still not going to be able to buy one.
"To make a comparison between 1995 and today we simply need that aid data, no way around that." I agree, but I don't believe there would be a significant difference.
As to your own theory. I'm likely to agree. Schools really overspent on amenities to attract students. At the same time, there were some real cost increases (i.e., health care for employees and technology).
"But roughly, if the trends for net prices are similar, the cost of a public four-year in-state college roughly doubled relative to inflation from 1995 to 2025. "
But that's based on the graph for sticker price cost no? The point is that aid also has gone up. Need a graph that is adjusted for BOTH inflation and aid (net price). Theres no reason to suppose that trends for net prices are similar. In fact we know they're not from the Brookings piece.
Actually since all these series are indexed to 1, if trends for *aid* are similar then that means the net price in inflation adjusted $ hasnt changed since 1995
Ugh, 2010 not 1995