The cost-benefit relationship of a college education continues to deteriorate as the costs associated with obtaining a degree climb at rates well above general inflation. Compared to the price of goods as measured by the Consumer Price Index (CPI), post-secondary education costs continue to rise at rates of more than twice that of general inflation. With this in mind, we'll take a quick look at current average costs so you can better size up your college savings goals.
College Costs for 2009-10
According to the College Board, average college education costs were:
- Private 4-year: $26,273, up 4.4%
- Public 4-year: $7,020, up 6.5%
- Public 2-year: $2,544, up 7.3%
- Surcharge for Out-of-State Students: $11,528
Projections for 2010-11
Assuming inflation rates remain the same for next year, education costs would project to be:
- Private 4-year: $27,429
- Public 4-year: $7,476
- Public 2-year: $2,730
Application: Calculating Future Costs
If you're a DIY kind of person, it's simple enough to calculate future costs of education using the base numbers given above and the following formula:
The formula above will give you the future cost of a single year of college. To calculate for each additional year, just add one to the '# of Years to College'. When you've finished, you'll have the total cost of a college education some number of years into the future.
Of course, most of us aren't DIY with this kind of math, so here's a nice, quick calculator from the College Board that will do the trick in about three minutes.
In making decisions related to college education, increasing costs continue to be a major concern as it makes the cost-benefit relationship less compelling - particularly for those attending school many years down the road. While there is little doubt that degree holders enjoy higher wages and fewer bouts with unemployment, the costs of these benefits are rising at rates that could eventually lead to college being a poor trade-off.
Already, it is debatable if some liberal arts degrees awarded by expensive private colleges and universities can ever pay for themselves. It will be interesting to see if inflation rates for education will ever return to that of overall inflation. If not, there will come a day when the cost-benefit relationship will no longer make sense.
- If college education costs continue to rise at twice the rate of overall inflation, will a college degree become more expensive than it is worth?
- A private college cost an average of $19,253 more than a public school or close to $80,000 more over the course of four years. How does that affect the cost-benefit relationship? How long would it take for the private education to match the value of a public education assuming a private school grad made $5,000 more per year than his or her public counterpart?
- Part of the college experience is going away from home and learning how to live on one's own. Is this lesson worth the annual out-of-state surcharge of $11,528? What about room and board?
- Financing a college education is relatively easy, but very, very expensive. How does having to use student loans affect the value proposition of higher education?
References: College Board Trends in College Pricing 2009