First it was the tech stock bubble from 2000, taking hundreds of billions in shareholder equity from stock prices that were totally divorced from reality. Then there was the real estate bubble that drained trillions from homeowner equity, cut housing prices in half and wiped out the housing construction industry.
The next bubble that will (hopefully) pop is the college tuition bubble.
As this article from today’s Washington Post notes, ” . . Since 1980, the average cost of tuition and room and board has grown by a staggering 121 percent while median household income has risen a mere 18 percent . . . ” The credit crunch, housing crash and cuts to state colleges have resulted in a toxic mix of fianances for the upcoming college class of 2014.
How high can these prices go? This list from CNN of the top 10 most expensive colleges (one year of tuition, room and board and fees):
- Sarah Lawrence, $55,788
- Georgetown, $52,161
- NYU, $51,993
- George Washington, $51,775
- Johns Hopkins, $51,690
- Columbia, $51,544
- Wesleyan, $51,432
- Trinity College, $51,400
- Washington University, (St. Louis), $51,539
- (TIE) Bates College and Vassar, $51,300
My alma mater, Rensselaer Polytechnic Institute, must have just missed the list, checking it at $50,310 for a year.
Neither of my parents graduated high school. My father drove a fuel oil truck and my mother worked in the office of an electrical supply company. Yet between grants and loans I was able to complete a 4 year degree at RPI back when tuition and fees were about $14,000 a year. I graduated with a total of $9000 in loans, and I remember sitting there thinking how the heck am I going to pay that??
Now?? My wife and I are both college graduates, yet how the heck can I afford to send my kids to a college for $50-$60,000 a year?? These costs are totally out of whack with reality.
I remember senior year in college when students at RPI were complained about tuition, which in 1982 was about $8900. The dean reminded us of the equation to use for engineering students: 4 years of tuition equals one year of pay, which was true. Four years at $8900 a year was about $35,600 which at the time was the starting salary for an engineering major. But tuition for 2009 is now $30,000 and I don’t think engineers are pulling down starting salaries of $120,000. Tution has more than tripled in 25 years, yet starting salaries have not even doubled.
The colleges will say that the price is deceptive, that with financial aid the actual costs are much less. Well then how come there are kids graduating with $40 or $50,000 in loans??
UPDATE: I see that Instapundit picked up on the same theme. Maybe I’m onto something??