The Commodity of a College Degree

It’s January – that time of year when SAT exams are being studied for and taken – when FAFSA forms are being agonized over by parents and students – when college notification letters in mailboxes are met with anxious faces and fast-beating hearts.

Why did it have to get to this? Why do we allow our kids to go through so much pressure and anxiety about going to college? It’s just a given now that if you don’t go to college you’re not going to turn out to be successful – and – if you don’t go to a prestigious school (translation: expensive), then you’re not very high on the impressive scale.

I know I’ve spent a lot of blogging time railing against the cost of college. One might get the impression that I’m anti-college. Nothing could be further from the truth. We should always be striving for more knowledge – everyday. What has trouble me for years, and continues to trouble me, is the business of the college / university industry today.

This industry continues to get a pass from economic realities the other industries have had to deal with.

According to a recent article from the National Inflation Association,

• College is the only thing in America that never declined in price during the panic of 2008. It actually rose in price substantially.


• The annual tuition for a private four-year college was $21,235 in the 2005-2006 school year.
  Despite Real Estate beginning to collapse in late-2006, college tuition rose by 4.6% in the 2006-2007 school year to $22,218.


• Despite the stock market beginning to collapse in late-2007, college tuition rose by 6.7% in the 2007-2008 school year to $23,712.


• Despite oil and other commodities collapsing in late-2008, college tuition rose by 6.2% in the 2008-2009 school year to $25,177.


• Even after the Dow Jones crashed to a low in early-2009 of 6,469, college tuition still rose by 4.4% in the 2009-2010 school year to $26,273.

At the same time,

• College students borrowed $106 billion in total student loans for the 2009-2010 school year, up from $96 billion in 2008-2009, $94 billion in 2007-2008, $87 billion in 2006-2007, and $83 billion in 2005-2006.


• Total student loan debt in the U.S. currently stands at $830 billion and now exceeds credit card debt.

The NIA is predicting a college bubble in 2011. I still think we are 8 years away – two cycles of college graduates who have difficulty getting a job that allows them to pay their bills and begin their adult life. They will be the ones who will question the return on the financial investment in their college degree. Then perhaps the education model will change.