College Inflation rate?

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kellyfj
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College Inflation rate?

Post by kellyfj » Fri Dec 28, 2018 8:52 am

Does anyone have any statistics that are (relatively) up to date (e.g. 2016/2017) about the current "inflation rate" of college costs for 4 year private or 4 year public?

Thanks in advance,

Frank

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GoldStar
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Re: College Inflation rate?

Post by GoldStar » Fri Dec 28, 2018 10:59 am

A quick google search can uncover several up-to-date articles.
Here's one:
https://trends.collegeboard.org/college ... ges-decade

depressed
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Re: College Inflation rate?

Post by depressed » Fri Dec 28, 2018 12:17 pm

I have one data point. My 4-year stint at a state university in 1974 to 1978 cost a total of just over $8,000 including tuition, fees, books, transportation, room,and board. My grandma paid the whole amount by transferring $1,000 per semester to my savings account. I had no scholarships or loans. The 4-year estimate at that same college from 2015 to 2019 is now $111,300.

If I did the math right, that converts to an annual inflation rate of about 6.6% over those 41 years. That compares to an overall inflation rate of about 3.9% during the same period, according to https://westegg.com/inflation/infl.cgi. And if I did the math wrong, let's blame the state university.

adamthesmythe
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Re: College Inflation rate?

Post by adamthesmythe » Fri Dec 28, 2018 5:05 pm

I think this is a case where past performance is no guarantee of future results. A further problem (unless you have near doctor-level income) is that you don't care what the overall inflation rate is, you care what you will end up paying.

My personal guess is that pressures on colleges will lead to lower inflation rates than we have seen in the past.

Also- think about it globally. The education establishment is unlikely to contract by much. It needs to have college remain accessible to a large fraction of graduates.

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fortfun
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Re: College Inflation rate?

Post by fortfun » Fri Dec 28, 2018 7:15 pm

Vanguard and Fidelity both have good college cost/investment tools. They forecast the future cost of college by child's age, state, and type of college. Personally, I recommend Vanguard's tool. Just google Vanguard + College Savings tool.

HEDGEFUNDIE
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Re: College Inflation rate?

Post by HEDGEFUNDIE » Fri Dec 28, 2018 7:19 pm

You can look this up yourself very easily. Most universities have published tuition on their websites for at least the last 15 years. Just google “University of X tuition 20xx”

My private university has increased tuition at 4% CAGR over the last 15 years. This is what I budget in my own planning for my kids.

ENT Doc
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Re: College Inflation rate?

Post by ENT Doc » Fri Dec 28, 2018 7:23 pm

Depends on sticker price vs actual price. Sticker price has been going up by about 4% CAGR for decades for private 4 year colleges. Public has been worse (I believe) in the last 10 as state funding has decreased.

For various reasons the actual payment (post financial aid) has been kept much lower. So the question is where you expect your kid(s) to fall on the price discrimination curve. That will determine your actual payment and rate.

ENT Doc
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Re: College Inflation rate?

Post by ENT Doc » Fri Dec 28, 2018 7:29 pm

Info on sticker vs net here:

http://www.tuitiontracker.org

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JonnyDVM
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Re: College Inflation rate?

Post by JonnyDVM » Fri Dec 28, 2018 9:51 pm

depressed wrote:
Fri Dec 28, 2018 12:17 pm

If I did the math right, that converts to an annual inflation rate of about 6.6% over those 41 years. That compares to an overall inflation rate of about 3.9% during the same period, according to https://westegg.com/inflation/infl.cgi. And if I did the math wrong, let's blame the state university.
Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

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vineviz
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Re: College Inflation rate?

Post by vineviz » Fri Dec 28, 2018 10:01 pm

JonnyDVM wrote:
Fri Dec 28, 2018 9:51 pm
depressed wrote:
Fri Dec 28, 2018 12:17 pm

If I did the math right, that converts to an annual inflation rate of about 6.6% over those 41 years. That compares to an overall inflation rate of about 3.9% during the same period, according to https://westegg.com/inflation/infl.cgi. And if I did the math wrong, let's blame the state university.
Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.
It arguably already has. Tuition increases peaked nationally in 2003, and the tuition inflation rate has dropped from nearly 10% in that year to under 3% the last two years.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

HereToLearn
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Re: College Inflation rate?

Post by HereToLearn » Fri Dec 28, 2018 11:10 pm

I have seen 3.5% to 3.75% per year for the past five years at the private universities my children attend/attended. Happy to say that one has finished.

NoHeat
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Re: College Inflation rate?

Post by NoHeat » Fri Dec 28, 2018 11:24 pm

depressed wrote:
Fri Dec 28, 2018 12:17 pm
And if I did the math wrong, let's blame the state university.
Your state U did just fine. Your grandma’s $8k was well spent.

JBTX
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Re: College Inflation rate?

Post by JBTX » Fri Dec 28, 2018 11:45 pm

The following factors have lead to higher college inflation:

- Inflation for professional services tends to be higher than CPI. Professional services tend to not benefit as much from technology/off shoring as other goods, although that may change in the future.
- direct state funding of state schools has decreased proportionately over the last 20 years or so.
- the greater availability of financial aid/ loans has pushed tuitions higher, with more money chasing finite college resources
- in order to attract more students, colleges add more programs, add more facilities, gyms, programs etc etc, which pushes up the cost (somewhat similar to what happens in medicine)

One would think there is a limit to how long this can continue, but that is hard to predict. It is reasonable to think that the cost of tuition will probably grow at a similar rate to nonimal GDP growth or similar to compensation inflation of the top 25% of the US population.

With financial aid, the actual inflation rate of any particular student can be highly variable.

lakja
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Re: College Inflation rate?

Post by lakja » Fri Dec 28, 2018 11:53 pm

JonnyDVM wrote:
Fri Dec 28, 2018 9:51 pm

Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.
Technology is a prime catalyst to erode the bubble in college education.

NoHeat
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Re: College Inflation rate?

Post by NoHeat » Sat Dec 29, 2018 12:31 am

JBTX wrote:
Fri Dec 28, 2018 11:45 pm
The following factors have lead to higher college inflation:

- Inflation for professional services tends to be higher than CPI. Professional services tend to not benefit as much from technology/off shoring as other goods, although that may change in the future.
- direct state funding of state schools has decreased proportionately over the last 20 years or so.
- the greater availability of financial aid/ loans has pushed tuitions higher, with more money chasing finite college resources
- in order to attract more students, colleges add more programs, add more facilities, gyms, programs etc etc, which pushes up the cost (somewhat similar to what happens in medicine)

One would think there is a limit to how long this can continue, but that is hard to predict...
Yes, that’s exactly right. All of it.

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beyou
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Re: College Inflation rate?

Post by beyou » Sat Dec 29, 2018 12:46 am

Only a handful of colleges can afford to not raise tuition.
Most are poor and spending like drunk sailors.
We get increases annually despite news that inflation has slowed. It has not stopped ! Fortunately for me, just made last payment for my eldest. One more kid to go !

JBTX
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Re: College Inflation rate?

Post by JBTX » Sat Dec 29, 2018 1:14 am

lakja wrote:
Fri Dec 28, 2018 11:53 pm
JonnyDVM wrote:
Fri Dec 28, 2018 9:51 pm

Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.
Technology is a prime catalyst to erode the bubble in college education.
One would think so. And it eventually will. But how fast it works depends on perceptions. It is still widely believed by employers and parents that they key to success is spending 4 or more years in an institution with pretty trees on the lawn and nice brick buildings with fully tenured professors standing in front of students verbally passing on their wisdom. Because that is what they experienced.

Medicine is somewhat similar. The technology exists to transform health care to lead to better outcomes, but it doesnt necessarily fit well in our existing medical infrastructure organizational complex.

TheDDC
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Re: College Inflation rate?

Post by TheDDC » Sat Dec 29, 2018 1:37 am

JBTX wrote:
Sat Dec 29, 2018 1:14 am
lakja wrote:
Fri Dec 28, 2018 11:53 pm
JonnyDVM wrote:
Fri Dec 28, 2018 9:51 pm

Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.
Technology is a prime catalyst to erode the bubble in college education.
One would think so. And it eventually will. But how fast it works depends on perceptions. It is still widely believed by employers and parents that they key to success is spending 4 or more years in an institution with pretty trees on the lawn and nice brick buildings with fully tenured professors standing in front of students verbally passing on their wisdom. Because that is what they experienced.

Medicine is somewhat similar. The technology exists to transform health care to lead to better outcomes, but it doesnt necessarily fit well in our existing medical infrastructure organizational complex.
Exactly why I see no reason to believe the explosive cost structure of colleges as we know them today (or the construct we consider a college today) will exist or be sustainable in even 15 years when my 3 year old is of age to decide what to do. I choose to keep my money out of the mouth of the beast and will invest (or not) in college at that time using plenty of "OPM" if/when the time comes.

-TheDDC
Refreshingly, a double barrel shotgun blast of truth... | Rules to wealth building: 100% VTSAX piled high and deep, 0% given away to banks, minimize amount given to health care industrial complex

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unclescrooge
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Re: College Inflation rate?

Post by unclescrooge » Sat Dec 29, 2018 2:01 am

adamthesmythe wrote:
Fri Dec 28, 2018 5:05 pm
I think this is a case where past performance is no guarantee of future results. A further problem (unless you have near doctor-level income) is that you don't care what the overall inflation rate is, you care what you will end up paying.

My personal guess is that pressures on colleges will lead to lower inflation rates than we have seen in the past.

Also- think about it globally. The education establishment is unlikely to contract by much. It needs to have college remain accessible to a large fraction of graduates.
I also agree with this line of thought.

With online education being virtually free, or near free, colleges are facing pressure to cap fees and spending.

Besides, several articles claim that most of the increase in tuition went towards athletic stadiums and 5 star dorms.

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dogagility
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Re: College Inflation rate?

Post by dogagility » Sat Dec 29, 2018 7:13 am

TheDDC wrote:
Sat Dec 29, 2018 1:37 am
Exactly why I see no reason to believe the explosive cost structure of colleges as we know them today (or the construct we consider a college today) will exist or be sustainable in even 15 years when my 3 year old is of age to decide what to do. I choose to keep my money out of the mouth of the beast and will invest (or not) in college at that time using plenty of "OPM" if/when the time comes.
If you're a typical Boglehead (high earner) at the time your kid is attending college, your family will not be receiving any "OPM" (need-based grants or subsidized loans).
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

alex_686
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Re: College Inflation rate?

Post by alex_686 » Sat Dec 29, 2018 7:46 am

Higher education inflation index. High quality, breaks down private / public rates nicely.

https://www.commonfund.org/commonfund-i ... ndex-hepi/

DonDraper
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Re: College Inflation rate?

Post by DonDraper » Sat Dec 29, 2018 9:13 am

dogagility wrote:
Sat Dec 29, 2018 7:13 am
TheDDC wrote:
Sat Dec 29, 2018 1:37 am
Exactly why I see no reason to believe the explosive cost structure of colleges as we know them today (or the construct we consider a college today) will exist or be sustainable in even 15 years when my 3 year old is of age to decide what to do. I choose to keep my money out of the mouth of the beast and will invest (or not) in college at that time using plenty of "OPM" if/when the time comes.
If you're a typical Boglehead (high earner) at the time your kid is attending college, your family will not be receiving any "OPM" (need-based grants or subsidized loans).
It’s my understanding that the tuition price for Private Universities is kind of like the MSRP on a new car, nobody actually pays it regardless of wealth level. Is that true?

columbia
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Re: College Inflation rate?

Post by columbia » Sat Dec 29, 2018 9:19 am

My tuition for 1989-90 (senior year) was $13,000. That same institution currently charges $54,000.

Oy vey.

noco-hawkeye
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Re: College Inflation rate?

Post by noco-hawkeye » Sat Dec 29, 2018 9:21 am

DonDraper wrote:
Sat Dec 29, 2018 9:13 am
dogagility wrote:
Sat Dec 29, 2018 7:13 am
TheDDC wrote:
Sat Dec 29, 2018 1:37 am
Exactly why I see no reason to believe the explosive cost structure of colleges as we know them today (or the construct we consider a college today) will exist or be sustainable in even 15 years when my 3 year old is of age to decide what to do. I choose to keep my money out of the mouth of the beast and will invest (or not) in college at that time using plenty of "OPM" if/when the time comes.
If you're a typical Boglehead (high earner) at the time your kid is attending college, your family will not be receiving any "OPM" (need-based grants or subsidized loans).
It’s my understanding that the tuition price for Private Universities is kind of like the MSRP on a new car, nobody actually pays it regardless of wealth level. Is that true?
Almost but not quite. The wealthy families frequently pay something closer to sticker price. From the friends I have talked with that have kids in college, I believe this is true with both public and private schools as well. There is an aid process most every family goes through to see what type of support you will get. Families with household incomes near 200k and above get little aid and are closer to sticker price. Families below 100k would likely see some fair amount of aid. These are generalizations and every school and family is going to be different - but there are people paying retail prices for a college education.

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kellyfj
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Re: College Inflation rate?

Post by kellyfj » Sat Dec 29, 2018 9:23 am

Thanks everyone both
http://www.tuitiontracker.org/
and
https://www.commonfund.org/commonfund-i ... ndex-hepi/

were exactly what I needed.
The 3.7% inflation rate and the Sticker vs. Net Price are both super useful for planning - or at least understanding where things are at right now

GrowthSeeker
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Re: College Inflation rate?

Post by GrowthSeeker » Sat Dec 29, 2018 9:26 am

Not an up to date estimate, but when I looked into it about in the 1980s looking back to 1970, it was 7% for one particular big name school.
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Sheepdog
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Re: College Inflation rate?

Post by Sheepdog » Sat Dec 29, 2018 9:40 am

I went to the University of Florida from 1956 to 1960 (yeah,I know that is ancient) at a total cost of about $6500 for those 4 years!! (I did have a free room in the last 2 years as I was a dorm counselor which helped to supply dating money. :D ). Note that tuition was free to Florida residents and the fees (including free Gator football tickets) totaled $150 a semester and you could get most used engineering text books for under $25.
You figure the inflation rate from that.
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dogagility
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Re: College Inflation rate?

Post by dogagility » Sat Dec 29, 2018 10:14 am

DonDraper wrote:
Sat Dec 29, 2018 9:13 am
It’s my understanding that the tuition price for Private Universities is kind of like the MSRP on a new car, nobody actually pays it regardless of wealth level. Is that true?
This depends upon the college/university.

A family with means generally is full-pay (or near it) at public universities. This can also be true for highly selective privates (Ivy and colleges like Swarthmore). The way to reduce the cost of attendance regardless of financial assets at these places is for your child to receive merit aid (having a well above average GPA and test scores for a given university). Relatively non-selective private colleges give out "merit aid" like candy, no matter the family financial assets. Merit aid is really a marketing tool designed to attract students.

If you want a good estimate of the cost of attendance, plug your numbers into a college's Net Price Calculator. It's usually fairly accurate... except in the case of divorced parents or people owning businesses/farms.
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

HereToLearn
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Re: College Inflation rate?

Post by HereToLearn » Sat Dec 29, 2018 10:39 am

dogagility wrote:
Sat Dec 29, 2018 10:14 am
DonDraper wrote:
Sat Dec 29, 2018 9:13 am
It’s my understanding that the tuition price for Private Universities is kind of like the MSRP on a new car, nobody actually pays it regardless of wealth level. Is that true?
This depends upon the college/university.

A family with means generally is full-pay (or near it) at public universities. This can also be true for highly selective privates (Ivy and colleges like Swarthmore). The way to reduce the cost of attendance regardless of financial assets at these places is for your child to receive merit aid (having a well above average GPA and test scores for a given university). Relatively non-selective private colleges give out "merit aid" like candy, no matter the family financial assets. Merit aid is really a marketing tool designed to attract students.

If you want a good estimate of the cost of attendance, plug your numbers into a college's Net Price Calculator. It's usually fairly accurate... except in the case of divorced parents or people owning businesses/farms.
The Ivies do not award merit aid. They award very generous need-based financial aid, but other than small grants (perhaps $5,000 to fund summer research), merit aid is not awarded. The same is true of the NESCACs, but I do not know about Swarthmore.

There are privates such as Vanderbilt and USC that award a surprising number of full-tuition merit scholarships, and then others that award fewer (Duke & Wash U are two I know of).

When evaluating need, some colleges only look at earnings, but most of the highly selective schools also look at assets, including home equity, so there are plenty of full-pay students attending both private and state universities.

I agree with you that running one's numbers through the NPC is the best way to obtain an estimate.

SchruteB&B
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Re: College Inflation rate?

Post by SchruteB&B » Sat Dec 29, 2018 10:47 am

HereToLearn wrote:
Sat Dec 29, 2018 10:39 am
dogagility wrote:
Sat Dec 29, 2018 10:14 am
DonDraper wrote:
Sat Dec 29, 2018 9:13 am
It’s my understanding that the tuition price for Private Universities is kind of like the MSRP on a new car, nobody actually pays it regardless of wealth level. Is that true?
This depends upon the college/university.

A family with means generally is full-pay (or near it) at public universities. This can also be true for highly selective privates (Ivy and colleges like Swarthmore). The way to reduce the cost of attendance regardless of financial assets at these places is for your child to receive merit aid (having a well above average GPA and test scores for a given university). Relatively non-selective private colleges give out "merit aid" like candy, no matter the family financial assets. Merit aid is really a marketing tool designed to attract students.

If you want a good estimate of the cost of attendance, plug your numbers into a college's Net Price Calculator. It's usually fairly accurate... except in the case of divorced parents or people owning businesses/farms.
The Ivies do not award merit aid. They award very generous need-based financial aid, but other than small grants (perhaps $5,000 to fund summer research), merit aid is not awarded. The same is true of the NESCACs, but I do not know about Swarthmore.

There are privates such as Vanderbilt and USC that award a surprising number of full-tuition merit scholarships, and then others that award fewer (Duke & Wash U are two I know of).

When evaluating need, some colleges only look at earnings, but most of the highly selective schools also look at assets, including home equity, so there are plenty of full-pay students attending both private and state universities.

I agree with you that running one's numbers through the NPC is the best way to obtain an estimate.
A large number of families are full sticker price pay at the most elite, selective universities. This info can be found in the Common Data Set for each university. At schools like Harvard and Stanford it is typically 40 to 50% of families paying $70,000+ per year.

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CyclingDuo
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Re: College Inflation rate?

Post by CyclingDuo » Sat Dec 29, 2018 10:54 am

columbia wrote:
Sat Dec 29, 2018 9:19 am
My tuition for 1989-90 (senior year) was $13,000. That same institution currently charges $54,000.

Oy vey.
The tuition has increased in price over the past 29 years due to inflation, and then some to be sure. $13K in 1989 dollars is $26K in 2018 dollars.

Image

How does the tuition increase compare to a few other major items in the same time frame?

Housing

Median Home price in October 1989: $123,000
Average Home price in October 2018: $128,700

Median Home price in October 2018: $309,700
Average Home price in October 2018: $395,000
https://www.census.gov/construction/nrs ... icemon.pdf

Transportation

Average Price of a Car in 1989: $14,372
Average Price of a Car in 2018: $35,385

Income

Median Household Income in 1989: $30,056
Average Household Income in 1989: 36,520.25

Median Household Income in 2018: $62,175
Average Household Income in 2018: $??
"Everywhere is within walking distance if you have the time." ~ Steven Wright

TheDDC
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Re: College Inflation rate?

Post by TheDDC » Sat Dec 29, 2018 11:14 am

dogagility wrote:
Sat Dec 29, 2018 7:13 am
TheDDC wrote:
Sat Dec 29, 2018 1:37 am
Exactly why I see no reason to believe the explosive cost structure of colleges as we know them today (or the construct we consider a college today) will exist or be sustainable in even 15 years when my 3 year old is of age to decide what to do. I choose to keep my money out of the mouth of the beast and will invest (or not) in college at that time using plenty of "OPM" if/when the time comes.
If you're a typical Boglehead (high earner) at the time your kid is attending college, your family will not be receiving any "OPM" (need-based grants or subsidized loans).
Apparently I'm not typical enough then for finding the way to pay the last possible for one of the most inflated products. Should I turn in my membership card?

OPM includes many options including employer paid benefits and loan forgiveness for public service as well. Bogleheads also find bargains to reduce net expenses, which is what would be the way to go on college.

-TheDDC
Refreshingly, a double barrel shotgun blast of truth... | Rules to wealth building: 100% VTSAX piled high and deep, 0% given away to banks, minimize amount given to health care industrial complex

Atilla
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Re: College Inflation rate?

Post by Atilla » Sat Dec 29, 2018 11:33 am

Big10 school for me starting 1985 compared to what I'm paying now for in-state tuition and fees (same school) I get a 2.7% annual increase averaged over the last 32 years.

When I attended the increase was 10%/year, but those were much smaller numbers back then.

We've been very fortunate as there has been a tuition freeze in place for the past 2-3 years once it was discovered the university system was hiding a $1billion slush fund while claiming poverty. :greedy

We might luck out and get the boy through college with little to no tuition/fee increases while he's there.
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dogagility
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Re: College Inflation rate?

Post by dogagility » Sat Dec 29, 2018 11:56 am

TheDDC wrote:
Sat Dec 29, 2018 11:14 am
dogagility wrote:
Sat Dec 29, 2018 7:13 am
TheDDC wrote:
Sat Dec 29, 2018 1:37 am
Exactly why I see no reason to believe the explosive cost structure of colleges as we know them today (or the construct we consider a college today) will exist or be sustainable in even 15 years when my 3 year old is of age to decide what to do. I choose to keep my money out of the mouth of the beast and will invest (or not) in college at that time using plenty of "OPM" if/when the time comes.
If you're a typical Boglehead (high earner) at the time your kid is attending college, your family will not be receiving any "OPM" (need-based grants or subsidized loans).
Apparently I'm not typical enough then for finding the way to pay the last possible for one of the most inflated products. Should I turn in my membership card?

OPM includes many options including employer paid benefits and loan forgiveness for public service as well. Bogleheads also find bargains to reduce net expenses, which is what would be the way to go on college.

-TheDDC
Of course there are ways to pay for college using OPM other than need-based aid, but these require jumping through some hoops/restrictions.
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

dknightd
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Re: College Inflation rate?

Post by dknightd » Sat Dec 29, 2018 12:24 pm

kellyfj wrote:
Fri Dec 28, 2018 8:52 am
Does anyone have any statistics that are (relatively) up to date (e.g. 2016/2017) about the current "inflation rate" of college costs for 4 year private or 4 year public?

Thanks in advance,

Frank
I don't have current "inflation rate" of college costs for 4 year private or 4 year public.
I'd expect them to be higher than CPI. The faculty are lucky to get CPI. But there are many expenses beyond what the faculty provide. They seem to grow faster than the CPI. I'd add 1-2% per year to CPI as a rough estimate.

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Re: College Inflation rate?

Post by willthrill81 » Sat Dec 29, 2018 8:32 pm

vineviz wrote:
Fri Dec 28, 2018 10:01 pm
JonnyDVM wrote:
Fri Dec 28, 2018 9:51 pm
depressed wrote:
Fri Dec 28, 2018 12:17 pm

If I did the math right, that converts to an annual inflation rate of about 6.6% over those 41 years. That compares to an overall inflation rate of about 3.9% during the same period, according to https://westegg.com/inflation/infl.cgi. And if I did the math wrong, let's blame the state university.
Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.
It arguably already has. Tuition increases peaked nationally in 2003, and the tuition inflation rate has dropped from nearly 10% in that year to under 3% the last two years.
That's certainly been the case at the university where I work. Tuition is 18% higher this year than it was back in 2010-2011 and actually lower now than it was back in 2015-2016.

I suspect that, in general, higher education's expenses are unlikely to rise significantly faster than inflation for a while. There simply isn't as much room for them to rise as much as they could 20-30 years ago.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Bacchus01
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Re: College Inflation rate?

Post by Bacchus01 » Sat Dec 29, 2018 9:49 pm

JonnyDVM wrote:
Fri Dec 28, 2018 9:51 pm
depressed wrote:
Fri Dec 28, 2018 12:17 pm

If I did the math right, that converts to an annual inflation rate of about 6.6% over those 41 years. That compares to an overall inflation rate of about 3.9% during the same period, according to https://westegg.com/inflation/infl.cgi. And if I did the math wrong, let's blame the state university.
Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.

That’s the sticker price that wealthy pay.

Less wealthy people pay far less.

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Re: College Inflation rate?

Post by goodenyou » Sat Dec 29, 2018 10:09 pm

There are very few topics that get more vigorous opinions and debate on Bogleheads than the merits of paying for the (high) costs of higher education. If you can afford the costs, pay it. Just don't let your kids saddle themselves or saddle yourself with exorbitant debt. Many people get caught up in the hype of pleasing their kid at all cost or succumb to the pressure of attending a university that has "prestige". A student with motivation, determination and values will rise to the top and find happiness regardless.

Don't do the equivalent of this:

A $21,000 Cosmetology School Debt, and a $9-an-Hour Job

https://www.nytimes.com/2018/12/26/busi ... -iowa.html
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

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Re: College Inflation rate?

Post by randomguy » Sat Dec 29, 2018 10:36 pm

lakja wrote:
Fri Dec 28, 2018 11:53 pm
JonnyDVM wrote:
Fri Dec 28, 2018 9:51 pm

Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.
Technology is a prime catalyst to erode the bubble in college education.
We have been saying that for about 30 years now:) Someday it might even be true. There is some learning where tech helps a lot. A lecture for 150 students is about the same in person and over the net to a class of 1500. A lab class where you are running experiments with a 50k laser isn't something you can do at home. A discussion group with 15 people will still require a moderator if it is done on the net or in person.

Everyone always thinks they can do better than the old way. And sometimes they are right. Sometimes not so much. And you always have to worry about unexpected consequences.

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Re: College Inflation rate?

Post by corpgator » Sun Dec 30, 2018 1:46 am

CyclingDuo wrote:
Sat Dec 29, 2018 10:54 am
columbia wrote:
Sat Dec 29, 2018 9:19 am
My tuition for 1989-90 (senior year) was $13,000. That same institution currently charges $54,000.

Oy vey.
The tuition has increased in price over the past 29 years due to inflation, and then some to be sure. $13K in 1989 dollars is $26K in 2018 dollars.

Image

How does the tuition increase compare to a few other major items in the same time frame?

Housing

Median Home price in October 1989: $123,000
Average Home price in October 2018: $128,700

Median Home price in October 2018: $309,700
Average Home price in October 2018: $395,000
https://www.census.gov/construction/nrs ... icemon.pdf

Transportation

Average Price of a Car in 1989: $14,372
Average Price of a Car in 2018: $35,385

Income

Median Household Income in 1989: $30,056
Average Household Income in 1989: 36,520.25

Median Household Income in 2018: $62,175
Average Household Income in 2018: $??
Median income is the most depressing figure here: income 2x, house 2.5x car 2.5x, tuition 3.5x. Income just isn't keeping up for any expense.

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Re: College Inflation rate?

Post by kellyfj » Sun Dec 30, 2018 8:27 am

We have been saying that for about 30 years now:) Someday it might even be true. There is some learning where tech helps a lot. A lecture for 150 students is about the same in person and over the net to a class of 1500. A lab class where you are running experiments with a 50k laser isn't something you can do at home. A discussion group with 15 people will still require a moderator if it is done on the net or in person.

Everyone always thinks they can do better than the old way. And sometimes they are right. Sometimes not so much. And you always have to worry about unexpected consequences.
Agreed.
When you think about it most courses from MIT and many other places are available entirely for free.
So what you are paying for is not the education per se it's the "stamp of approval" from the institution that Jane / Joey have indeed taken all the coursework and got the following grades and ranked X out of N in their class.

Sadly until the HR gatekeepers realize how ridiculous this is, the importance of the "stamp of approval" doesn't go away or at least you incur a large risk for skipping that.

That said when my kids go to college I definitely plan to help them understand
1) How much their education will cost?
2) How much they will likely earn afterwards and roughly how long that will take to payoff?
3) What's the marginal value of studying at a private 4 year vs. a public one - surely there is generally some value but is it worth it for an extra few years of payments?

My gut tells me I don't want them paying more their loans for more than 10 years and ideally it will be 5 to 8 years.

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Re: College Inflation rate?

Post by Top99% » Sun Dec 30, 2018 9:27 am

One of my favorite quotes is "if something can't continue it will stop" and I think this applies to the inflation rate in college tuition. As an engineer I have watched starting salaries roughly track inflation since I graduated in 1984 while college costs have greatly outpaced inflation. At some point I think people will look at the numbers and realize skilled trades make more sense as a career choice than something requiring a college education from a financial perspective. As others have pointed out technology could certainly help bring college costs down.
Adapt or perish

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kellyfj
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Re: College Inflation rate?

Post by kellyfj » Sun Dec 30, 2018 9:32 am

Top99% wrote:
Sun Dec 30, 2018 9:27 am
One of my favorite quotes is "if something can't continue it will stop" and I think this applies to the inflation rate in college tuition. As an engineer I have watched starting salaries roughly track inflation since I graduated in 1984 while college costs have greatly outpaced inflation. At some point I think people will look at the numbers and realize skilled trades make more sense as a career choice than something requiring a college education from a financial perspective. As others have pointed out technology could certainly help bring college costs down.
As Keynes said “The market can stay irrational longer than you can stay solvent.”
You're almost certainly right but very few people want to take that risk with their kids' futures at stake.

In the end I think the best approach is to take an Economists view - trading off the value of the education (in terms of lifetime income) against the cost. For me the big cost is that at the time your child should be taking risks in their career (the first 10-15 years) they are saddled with massive debt so there's an opportunity cost there too.

DonDraper
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Re: College Inflation rate?

Post by DonDraper » Sun Dec 30, 2018 9:32 am

The In-State/Out of State tuition difference is frustrating for someone living in a small state like NJ.

The In-State options here are somewhat limited, especially with a child who is adamantly against Rutgers urban campus feel. The Out of State prices are outrageous. (Penn State $51k a year).

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Re: College Inflation rate?

Post by willthrill81 » Sun Dec 30, 2018 11:38 am

randomguy wrote:
Sat Dec 29, 2018 10:36 pm
lakja wrote:
Fri Dec 28, 2018 11:53 pm
JonnyDVM wrote:
Fri Dec 28, 2018 9:51 pm

Love it. :beer

College tuition seems to be a bubble. It can’t continue like this where only the wealthy can afford to pay for their children’s college education. With two small children myself I’m wondering when it’s going to burst.
Technology is a prime catalyst to erode the bubble in college education.
We have been saying that for about 30 years now:) Someday it might even be true. There is some learning where tech helps a lot. A lecture for 150 students is about the same in person and over the net to a class of 1500. A lab class where you are running experiments with a 50k laser isn't something you can do at home. A discussion group with 15 people will still require a moderator if it is done on the net or in person.

Everyone always thinks they can do better than the old way. And sometimes they are right. Sometimes not so much. And you always have to worry about unexpected consequences.
I remember the president of the University of Phoenix declaring that traditional higher education would be essentially dead in 10 years around the year 2000. :shock:

Many have been making similar prognostications for the last several years, and yet things haven't really changed much. The bottom line is that our society in general still places a lot of importance on a traditional college education. And perceptions that have become entrenched like that don't change on a dime. They can easily take a generation or more to significantly change. Further, a lot of folks simply don't believe that the quality of online education at least in many areas is as good as traditional higher ed. The extent to which that's true is somewhat irrelevant; perceptions are what matter, at least for a while.

I do suspect that there will be a consolidation of higher ed institutions at some point in the future due to an increasing number of people using non-traditional sources of learning, but higher ed as a whole isn't likely to disappear any time soon.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: College Inflation rate?

Post by Bacchus01 » Sun Dec 30, 2018 11:45 am

kellyfj wrote:
Sun Dec 30, 2018 9:32 am
Top99% wrote:
Sun Dec 30, 2018 9:27 am
One of my favorite quotes is "if something can't continue it will stop" and I think this applies to the inflation rate in college tuition. As an engineer I have watched starting salaries roughly track inflation since I graduated in 1984 while college costs have greatly outpaced inflation. At some point I think people will look at the numbers and realize skilled trades make more sense as a career choice than something requiring a college education from a financial perspective. As others have pointed out technology could certainly help bring college costs down.
As Keynes said “The market can stay irrational longer than you can stay solvent.”
You're almost certainly right but very few people want to take that risk with their kids' futures at stake.

In the end I think the best approach is to take an Economists view - trading off the value of the education (in terms of lifetime income) against the cost. For me the big cost is that at the time your child should be taking risks in their career (the first 10-15 years) they are saddled with massive debt so there's an opportunity cost there too.
The average college debt load is <$35K. The median monthly payment is ~$210/month. Those numbers are also skewed as they include debt for masters degrees and PHD/JD/MD degrees.

How is that massive? They'll likely have a car loan bigger than that. I am still confounded by this "Massive Debt" problem that doesn't appear to be happening.

People love to tell stories of so-and-so that wracked up $100k+ in student loan debt, but that is less than 5% of all borrowers.

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teen persuasion
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Re: College Inflation rate?

Post by teen persuasion » Sun Dec 30, 2018 12:25 pm

corpgator wrote:
Sun Dec 30, 2018 1:46 am
CyclingDuo wrote:
Sat Dec 29, 2018 10:54 am
columbia wrote:
Sat Dec 29, 2018 9:19 am
My tuition for 1989-90 (senior year) was $13,000. That same institution currently charges $54,000.

Oy vey.
The tuition has increased in price over the past 29 years due to inflation, and then some to be sure. $13K in 1989 dollars is $26K in 2018 dollars.

Image

How does the tuition increase compare to a few other major items in the same time frame?

Housing

Median Home price in October 1989: $123,000
Average Home price in October 2018: $128,700

Median Home price in October 2018: $309,700
Average Home price in October 2018: $395,000
https://www.census.gov/construction/nrs ... icemon.pdf

Transportation

Average Price of a Car in 1989: $14,372
Average Price of a Car in 2018: $35,385

Income

Median Household Income in 1989: $30,056
Average Household Income in 1989: 36,520.25

Median Household Income in 2018: $62,175
Average Household Income in 2018: $??
Median income is the most depressing figure here: income 2x, house 2.5x car 2.5x, tuition 3.5x. Income just isn't keeping up for any expense.
Agreed.

Another anecdata point I've noticed: when I was in college in late 80s, the federal student loan limit was $2500, with a several hundred $ origination fee. I remember that the loan - origination fee covered Room & Board for the year. In 2008 for DD1, R&B was ~$10k, roughly double the federal loan limit. Now R&B is ~$12-13k, while the federal loan limit is, what, $5500 for freshmen?

Using "tuition" as a yardstick can be misleading. DS4's state U has tuition of $8k, but fees are $6k. Whenever tuition is frozen by the state, fees increase instead.

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willthrill81
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Re: College Inflation rate?

Post by willthrill81 » Sun Dec 30, 2018 2:16 pm

Bacchus01 wrote:
Sun Dec 30, 2018 11:45 am
kellyfj wrote:
Sun Dec 30, 2018 9:32 am
Top99% wrote:
Sun Dec 30, 2018 9:27 am
One of my favorite quotes is "if something can't continue it will stop" and I think this applies to the inflation rate in college tuition. As an engineer I have watched starting salaries roughly track inflation since I graduated in 1984 while college costs have greatly outpaced inflation. At some point I think people will look at the numbers and realize skilled trades make more sense as a career choice than something requiring a college education from a financial perspective. As others have pointed out technology could certainly help bring college costs down.
As Keynes said “The market can stay irrational longer than you can stay solvent.”
You're almost certainly right but very few people want to take that risk with their kids' futures at stake.

In the end I think the best approach is to take an Economists view - trading off the value of the education (in terms of lifetime income) against the cost. For me the big cost is that at the time your child should be taking risks in their career (the first 10-15 years) they are saddled with massive debt so there's an opportunity cost there too.
The average college debt load is <$35K. The median monthly payment is ~$210/month. Those numbers are also skewed as they include debt for masters degrees and PHD/JD/MD degrees.

How is that massive? They'll likely have a car loan bigger than that. I am still confounded by this "Massive Debt" problem that doesn't appear to be happening.

People love to tell stories of so-and-so that wracked up $100k+ in student loan debt, but that is less than 5% of all borrowers.
+1

Most of those graduating college have less in student loans than they'll earn their first year afterward. I have a hard time calling such a situation a rampant, massive problem. Yes, there are too many with over $100k of student loans than their should be, but frankly that's more often due to poor choices on the part of the student than the fault of the institution. For instance, I have a nephew who floundered for seven years through college to get a bachelor's degree in a topic that doesn't have much in the way of employment opportunity, and now he's working for the USPS and has $30k of student loans. The institutions he studied with aren't to blame for his issues; he is. I have another nephew and two nieces who either studied for years and never graduated or else aren't using their educational backgrounds at all in their current employment. That's not the fault of the institution; it's the mindset that 'everyone should go to college, even when they have no idea what they want do and if they aren't college-material'. It's become taboo to say that someone just isn't cut out for college, but it's very true and a big reason why around half of college freshmen never graduate.

Further, IIRC, the overall debt burden of 25-30 year olds today is about the same as it was 35 years ago.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

RetiredCSProf
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Re: College Inflation rate?

Post by RetiredCSProf » Sun Dec 30, 2018 2:32 pm

While the OP's post was limited to 4 years of college, many students are taking longer to graduate, especially at public universities. My son and many of his friends went to community college for 3 years before transferring to 4-year institutions. My son has changed his major at least three times -- it will take him 6 years to graduate.

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Re: College Inflation rate?

Post by Grt2bOutdoors » Sun Dec 30, 2018 2:34 pm

DonDraper wrote:
Sun Dec 30, 2018 9:32 am
The In-State/Out of State tuition difference is frustrating for someone living in a small state like NJ.

The In-State options here are somewhat limited, especially with a child who is adamantly against Rutgers urban campus feel. The Out of State prices are outrageous. (Penn State $51k a year).
How about some of the other state schools? TCNJ? or have child pay difference between Penn State and Rutgers? I rarely see 18 year olds adamantly demand to sign their names to $120K in student debt. Maybe I'm not looking in the right place? Are there other out of state options that cost less than $51K per year? BTW, those paying Penn State $51K are subsidizing the in-state residents of PA.
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