College Tuition Will Not Stop Rising

DINO GRANDONI AUG 16, 2011968 ViewsComments (7)

Here's a chart that helps explain why the value of a college degree has been so hotly debated.  Moody's, in a study (PDF) on student lending, has found that tuition costs have more than doubled since 2000. Inflation in the price of tuition has outpaced the inflation rate for all goods, as well as those specifically of housing, energy, and health care (yes, even health care) for two decades. In other words, since 1990 college has become much more expensive relatively to most of the other essential goods and services Americans consume, which has fueled critics like PayPal founder Peter Thiel and hedge fund manager James Altucher who argue that schools are sending their graduates into a tough job market saddled with debt they will have a difficult time repaying. Even Moody's report says that "Fears of a bubble in educational spending are not without merit."

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Though a majority of Americans agree that the higher education systems doesn't provide grads with good value on the amount families spend, 94 percent say they expect their children to attend. Which leads to the explanation of why colleges can charge so much: Because they can. Laura W. Perna, a professor at the University of Pennsylvania, tells The New York Times that schools "have lots of applications and don’t need to reduce price to meet enrollment needs." 

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