College Tuition in The United States - Disproportional Inflation of College Costs

Disproportional Inflation of College Costs

"Disproportional inflation" refers to inflation in a particular economic sector that is substantially greater than inflation in general costs of living. This kind of inflation for medical costs in recent decades is well known. However, the inflation of college tuition and fees exceeds that of medical costs.

The following graph shows the inflation rates of general costs of living (for urban consumers; the CPI-U), medical costs (medical costs component of the consumer price index (CPI)), and college and tuition and fees for private four-year colleges (from College Board data) from 1978 to 2008. All rates are computed relative to 1978.

Cost of living increased roughly 3.25-fold during this time; medical costs inflated roughly 6-fold; but college tuition and fees inflation approached 10-fold. Another way to say this is that whereas medical costs inflated at twice the rate of cost-of-living, college tuition and fees inflated at four times the rate of cost-of-living inflation. Thus, even after controlling for the effects of general inflation, 2008 college tuition and fees posed three times the burden as in 1978.

According to the College Board, the average tuition price for a 4-year public college in 2008-2009 is now $6,585 compared to 2004 where the price was slightly above $5,000. The average price of in-state tuition vs out-of-state tuition for 2008-2009 was $6,585 for a in-state 4-year college to $17,452 for out-of-state 4 year college (collegeboard.com). The mean increase in college tuition is 4.2% annually