Are Higher College Tuition Costs Eroding the Middle-Class Dream?

A limited investigation of undergraduate college tuition costs comparing inflation-adjusted in-state tuition costs from 10 geographically distributed flagship universities indicated an average increase of 34 percent from 1998 to 2018.  Sources of additional costs may be increased capital investment costs and lower federal funding of public universities likely resulting in lower accessibility for middle-income students, a higher contribution by relatives of students, and higher debt load due to student loans required to make up the difference.  

​Related Facts:

• The federal government is the nation’s largest student lender, issuing $94 billion in loans in 2018.  
• Higher education programs account for only about 2 percent of the total federal budget.
• Compared to other developed countries the education percentage is competitive.

​Higher costs for post-secondary education lead to less accessibility and consequent lower educational attainment.  Income and social class are directly related to educational attainment.  Lower levels of education lead to lower productivity and lower Gross Domestic Product.  Elevated levels of debt from college graduates can contribute to various areas of concern – lower consumer purchasing power, a higher level of unhappiness and consequent social unrest, and lower savings due to less disposable income.

​Would the United States benefit from higher federal government investment?  Likely these benefits would be measurable and provide generational positive benefit by countering the corrosive effects of higher college costs.

Possible advantages of higher investment:

• Stem the erosion of real wages
• Maintain the position of the United States as a technology leader.
• Build a more robust middle class.
• Increase social stability.
• Support long-term economic vitality – earned dollars would spend on houses, services, and consumer goods rather than provide debt service on loans.

Flagship public universities were included to ensure the sample was comparable – large institutions, publicly-funded, intended to be a destination for the students rather than a second or tertiary choice.  In-state tuition was also chosen for comparison.  Schools were located throughout the United States.

​The widespread use of labor cost lowering strategies such as wide use of adjunct professors would likely lower salary and benefits costs.  Lower costs due to technology vs. technology costs were not examined but assumed to cancel one another out.  There has been a capital investment boom in United States universities but the effect of this is unknown and out of the scope of this evaluation.

Costs were adjusted using an inflation factor of 54.1 percent (https://www.usinflationcalculator.com/) and raw costs from tuition were obtained from the Chronicle of Higher Education (https://www.chronicle.com/interactives/tuition-and-fees).  Information on federal funding was obtained from the Pew Trusts (https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2019/10/two-decades-of-change-in-federal-and-state-higher-education-funding).