I’m confused by the average cost being $1,000. Is that per credit or something obscure?
what caused the steep rise right around the turn of the century? I know the original rise had a bit to do with a law that made the debt impossible to discharge in bankruptcy.
I hate how college has turned into a for profit business instead of a noble cause for education.
Right around the time the federal government got into the loan business cost started to rise a lot more
Another What Happened in 1978 stealth post
Is this per month per full load? It’s such a weird way to measure but it seems a lot cheaper than I thought it would be.
I did my master’s thesis on this subject and the issue can be squarely laid on the deregulation and neoliberalization of higher education that happened in the 70s. Instead of direct federal funding for universities, states were left to fend for themselves, though at the time the Pell Grant was established to help low-income students. At that time, the Pell Grant would cover the entirety of a student’s ttuition, so the problem was minimized.
However, Congress predictably failed to link the Pell Grant to inflation or COL increases, leading to the relative pittance it provides today. Simultaneously, state spending per student plummeted across almost every state, partially due to political reasons but also because higher education is only of the only “flexible” budget items in most states (It is not really viable, practically or politically, to reduce K-12 education, state-based healthcare, infrastructure, or emergency services). Additionally, professional staff within universities increased – something both good and bad, as it includes critical support services such as learning, counseling, Title IX offices, and the like, as well as unnecessary elements like increased branding and marketing. Finally, because neoliberal policies and principles began to corporatize universities, this led to inflated compensation for c-suite level leadership in many universities.
Taken together, these elements created a massive budget shortfall that can only be made up through tuition, lacking funding from other sources. Private universities are sometimes able to avoid this through financialization of their endowments and research, but overall, this is how we get to the modern university and its costs.
What is the cost for two years at community college and then two years at an in state school?
this could just be a real tuition cost in 1978 dollars graph
It coincides with the reduction of state aid for higher education.
A chunk of the US college tuition cost went to administrative overhead expenses.
The only thing that outpaces college tuition is US healthcare costs
Amazing that this can be true while I am so severely underpaid as a professor. FWIW, this money is NOT going to the professors!
It’s because the government kept paying the bill for millions of students. When colleges started to jack up their rates the government kept paying for it. So the colleges had every incentive to constantly raise prices because they knew the department of education just didn’t care.
Started college in 2002 and each year it was crazy tuition jumps AND room and board jumps.
Infinite student loads guaranteed by Uncle Sam = colleges took every advantage to increase tuition, admin, vanity projects ect.
States cut funding for public higher ed due to budget crunches, and mostly never refunded those institutions. Meanwhile the US gov’t loans loads of money to anyone for the purpose of transferring to a colleges or university for any degree track (or for some borrowers no degree at all).
So higher ed both needed to cover the shortfall and had an opportunity to gorge at the trough. And here we are.
back then a lower percent of graduating high school went to college
I get it, things are expensive. But why would anyone expect everything to inflate the same rate as overall inflation rate? I don’t think it is a reasonable expectation. I can think of 100 other things never beats inflation.
Think of most goods and services. They have become so much more efficient over time. In college you still have 1 teacher, teaching about 30 kids. A factory that at one time produced 1 car per worker now produces 10 cars per worker. 1 teller at a bank used to handle 100 people in a day. Now 1 teller handles 50 difficult cases and 950 people transacted business online with no labor making it 10x more efficient. College has had just abojt -0- efficiency gains.
One day it will all just be superstar teachers and it will all be online and the cost will plummet. At least for a 4 year degree.
3 things in the US consistently outpace inflation.
1. housing – supply is artificially restricted due to NIMBY zoning laws.
2. college education – demand is artificially inflated with guaranteed student loan.
3. healthcare – multiple causes including overregulation in some areas and under regulation in others.
What happened policy wise in 2001,2002 to cause the inflection which made the increase even higher ?
Cost of TVs went down. Cost of college went up. WTF is wrong with us.
A better comparison would be to average hourly earnings. In theory median income might work but because of the major changes in family structure and changing wealth inequality there isn’t really a great base line. You could maybe argue cost of a degree vs starting salary or salary after 5 years or something, but again, changing labour market.
Inflation would be essentially how much would it costs to get a 1978 education in 2025. But that… isn’t how this works. At all.
This is one of the problems with trying to compare prices over time. Prices don’t just grow with inflation, they grow with average worker productivity basically. Now in theory the price of say, 1 kg of iron, or something might track inflation, but modern say eggs are safer than eggs were 40 years ago and probably bigger/more nutritious/from better chickens, whatever. Education sort of has the same problem, the skills you develop in 2025 are more valuable on average than the skills you developed in 2005 or 1985.
College is also tricky in particular because it’s a cost sharing model. There’s the user portion and the public portion (as in you pay some tuition but the government also pays for certain students to go to those schools), and the fraction paid by the student can essentially be arbitrarily changed by a change in the split between government and private portion.
I think several factors contribute to this, including state funding and rising wages for college graduates, which other folks have mentioned. I would add the Baumol effect (https://en.wikipedia.org/wiki/Baumol_effect).
I just saw a post about college admissions that drop significantly… I guess it’s correlated
And yet we still have too many people going to college. It’s over saturated the job market with college educated applicants so graduates are having to take jobs they’re over educated for. Good for employers I guess. But it leave people in debt with often a degree that doesn’t mean much.
Not saying that explains all the increase but…
You would expect college costs to track closer to wage increases rather than inflation. Education is a service industry where it’s harder to increase efficiency to the same degree as the production of goods. Accordingly, education costs should track proportionally to wage growth, not inflation.
While I wouldn’t expect a 5x increase, I would expect a significant increase during that time frame.
The main reason is due to the acceleration of change caused by computers and the internet. During that time frame computers became mainstream and that resulted in the creation of new jobs, fields, and disciplines that didnt exist before. Educational material needs to be produced for all of these in a way that allows people to be functional in the work force.
University’s are literally having to educate people to hold jobs that don’t exit when people enroll but will when they graduate. Feel free to debate how well they accomplis that, but its still a reality.
![[OC] Average Cost of US College Tuition vs Annual Inflation](https://www.europesays.com/wp-content/uploads/2025/09/kdlqn8f0q1nf1-1920x1024.png)
30 comments
I’m confused by the average cost being $1,000. Is that per credit or something obscure?
what caused the steep rise right around the turn of the century? I know the original rise had a bit to do with a law that made the debt impossible to discharge in bankruptcy.
I hate how college has turned into a for profit business instead of a noble cause for education.
Right around the time the federal government got into the loan business cost started to rise a lot more
Another What Happened in 1978 stealth post
Is this per month per full load? It’s such a weird way to measure but it seems a lot cheaper than I thought it would be.
I did my master’s thesis on this subject and the issue can be squarely laid on the deregulation and neoliberalization of higher education that happened in the 70s. Instead of direct federal funding for universities, states were left to fend for themselves, though at the time the Pell Grant was established to help low-income students. At that time, the Pell Grant would cover the entirety of a student’s ttuition, so the problem was minimized.
However, Congress predictably failed to link the Pell Grant to inflation or COL increases, leading to the relative pittance it provides today. Simultaneously, state spending per student plummeted across almost every state, partially due to political reasons but also because higher education is only of the only “flexible” budget items in most states (It is not really viable, practically or politically, to reduce K-12 education, state-based healthcare, infrastructure, or emergency services). Additionally, professional staff within universities increased – something both good and bad, as it includes critical support services such as learning, counseling, Title IX offices, and the like, as well as unnecessary elements like increased branding and marketing. Finally, because neoliberal policies and principles began to corporatize universities, this led to inflated compensation for c-suite level leadership in many universities.
Taken together, these elements created a massive budget shortfall that can only be made up through tuition, lacking funding from other sources. Private universities are sometimes able to avoid this through financialization of their endowments and research, but overall, this is how we get to the modern university and its costs.
What is the cost for two years at community college and then two years at an in state school?
this could just be a real tuition cost in 1978 dollars graph
It coincides with the reduction of state aid for higher education.
A chunk of the US college tuition cost went to administrative overhead expenses.
The only thing that outpaces college tuition is US healthcare costs
Amazing that this can be true while I am so severely underpaid as a professor. FWIW, this money is NOT going to the professors!
It’s because the government kept paying the bill for millions of students. When colleges started to jack up their rates the government kept paying for it. So the colleges had every incentive to constantly raise prices because they knew the department of education just didn’t care.
Started college in 2002 and each year it was crazy tuition jumps AND room and board jumps.
Infinite student loads guaranteed by Uncle Sam = colleges took every advantage to increase tuition, admin, vanity projects ect.
States cut funding for public higher ed due to budget crunches, and mostly never refunded those institutions. Meanwhile the US gov’t loans loads of money to anyone for the purpose of transferring to a colleges or university for any degree track (or for some borrowers no degree at all).
So higher ed both needed to cover the shortfall and had an opportunity to gorge at the trough. And here we are.
back then a lower percent of graduating high school went to college
This is part of why:
https://preview.redd.it/watryewoc2nf1.png?width=750&format=png&auto=webp&s=fa3318f79fd106a916be76dc843aa78c1a206644
I get it, things are expensive. But why would anyone expect everything to inflate the same rate as overall inflation rate? I don’t think it is a reasonable expectation. I can think of 100 other things never beats inflation.
Think of most goods and services. They have become so much more efficient over time. In college you still have 1 teacher, teaching about 30 kids. A factory that at one time produced 1 car per worker now produces 10 cars per worker. 1 teller at a bank used to handle 100 people in a day. Now 1 teller handles 50 difficult cases and 950 people transacted business online with no labor making it 10x more efficient. College has had just abojt -0- efficiency gains.
One day it will all just be superstar teachers and it will all be online and the cost will plummet. At least for a 4 year degree.
3 things in the US consistently outpace inflation.
1. housing – supply is artificially restricted due to NIMBY zoning laws.
2. college education – demand is artificially inflated with guaranteed student loan.
3. healthcare – multiple causes including overregulation in some areas and under regulation in others.
What happened policy wise in 2001,2002 to cause the inflection which made the increase even higher ?
Cost of TVs went down. Cost of college went up. WTF is wrong with us.
A better comparison would be to average hourly earnings. In theory median income might work but because of the major changes in family structure and changing wealth inequality there isn’t really a great base line. You could maybe argue cost of a degree vs starting salary or salary after 5 years or something, but again, changing labour market.
Inflation would be essentially how much would it costs to get a 1978 education in 2025. But that… isn’t how this works. At all.
This is one of the problems with trying to compare prices over time. Prices don’t just grow with inflation, they grow with average worker productivity basically. Now in theory the price of say, 1 kg of iron, or something might track inflation, but modern say eggs are safer than eggs were 40 years ago and probably bigger/more nutritious/from better chickens, whatever. Education sort of has the same problem, the skills you develop in 2025 are more valuable on average than the skills you developed in 2005 or 1985.
College is also tricky in particular because it’s a cost sharing model. There’s the user portion and the public portion (as in you pay some tuition but the government also pays for certain students to go to those schools), and the fraction paid by the student can essentially be arbitrarily changed by a change in the split between government and private portion.
I think several factors contribute to this, including state funding and rising wages for college graduates, which other folks have mentioned. I would add the Baumol effect (https://en.wikipedia.org/wiki/Baumol_effect).
I just saw a post about college admissions that drop significantly… I guess it’s correlated
And yet we still have too many people going to college. It’s over saturated the job market with college educated applicants so graduates are having to take jobs they’re over educated for. Good for employers I guess. But it leave people in debt with often a degree that doesn’t mean much.
Not saying that explains all the increase but…
You would expect college costs to track closer to wage increases rather than inflation. Education is a service industry where it’s harder to increase efficiency to the same degree as the production of goods. Accordingly, education costs should track proportionally to wage growth, not inflation.
While I wouldn’t expect a 5x increase, I would expect a significant increase during that time frame.
The main reason is due to the acceleration of change caused by computers and the internet. During that time frame computers became mainstream and that resulted in the creation of new jobs, fields, and disciplines that didnt exist before. Educational material needs to be produced for all of these in a way that allows people to be functional in the work force.
University’s are literally having to educate people to hold jobs that don’t exit when people enroll but will when they graduate. Feel free to debate how well they accomplis that, but its still a reality.
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