Working Thoughts

I pulled these stats from a College Board report called Trends in College Pricing. There is another list that shows the 2006 current dollars for these figures, but I think this gives a good idea about how the growth in cost for college is increasing at a pretty high rate. Another chart shows from 1996-97 until 2006 the cost increase ranges from 4% to 8% for private college and from 4% to 13% for public colleges. Given that inflation is usually around 3% that means that the cost of college is increasing beyond normal adjustments. But why?

As college enrollment has increased steadily since the 1950s it seems like an economies of scale situation would take place and lower the overall cost. That might still be happening, but then something else is making the cost increase even more.

Why do I think this is important? Because of recent article in the NY Times called Math Suggests College Frenzy Will Soon Ease. This report states that those at the age of normal enrollment are a smaller population than the years that preceded them. So as competition for the best schools has increased over the years, it is now getting to the point where the student has more leverage. But if there are less students attending (there is an assumption that those seats won’t be filled by foreign students who can attend an America university on the cheap) then what happens to the cost structure? Will students pay less because the educational consumables will be more abundant? Or will students pay more because there are less of them to finance the school bills?

Finally, students will definitely benefit from the financial aid packages since there are less people in the pool for them. And after these students complete their term what type of demand will their be for their skills? You can assume there will be high demand, but it is an assumption.