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College Tuition Rates Double in comparison to inflation– it just costs too damn much

February 9, 2009
Citibank N.A.
Image via Wikipedia

Inside Higher Ed has a piece on the “tuition bubble” effect, kind of like the gas/oil bubble, that prices of tuition will have to drop.  According to a Citibank-backed site, tuition rates rise an average of 8% per year.  Hello, rates of inflation for raises have been calculated at a 4% rate.  So tuition rates of inflation double the national rates of inflation?

Look at the graph that Citibank provides below:

Rate of Tuition Inflation Doubles in Comparison to National Inflation

Rate of Tuition Inflation Doubles in Comparison to National Inflation

Hmm, you think that bubble is going to burst?  Just by the inflation changes, rates of tuition will change.

If you want your numbers crunched, here are the hard facts.  Check out the table below, courtesy of a Citibank backed site:

Year College Inflation General Inflation Rate Ratio
1958-1996 7.24% 4.49% 1.61
1977-1986 9.85% 6.72% 1.47
1987-1996 6.68% 3.67% 1.82
1958-2001 6.98% 4.30% 1.62
1979-2001 7.37% 3.96% 1.86
1992-2001 4.77% 2.37% 2.01
1985-2001 6.39% 3.18% 2.01
1958-2005 6.89% 4.15% 1.66
1989-2005 5.94% 2.99% 1.99

Now I ask you:  how is a person supposed to save for a college education with the rate of tuition inflation is double that of national inflation?  This bubble is burst, but no one at the universities has figured it out yet.  If you doubt this, check out the post about drops in university funding.

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