In a post earlier this month, we showed how the costs of an undergraduate education have been rising rapidly over the past three decades: from approximately $2,372 a year (public institutions) and $5,470 a year (private institutions) in 1980-81, to $12,804 a year (public) and $32, 184 a year (private) in 2008-2009. Today we thought we’d look at the data in a slightly different way: as a percentage of median household income.
Just as in our last post, we’re using data from the U.S. Department of Education’s Digest of Education Statistics, which provides the annual costs (tuition plus room and board) for both public and private institutions. For median household income across the U.S., we’re relying on data from the US Census Bureau (adjusted to current dollars).
The following chart shows just how stark this growth in college costs has been: from the period 1980-1981 to 2009-2010, annual costs of an undergraduate education (tuition plus room and board) as a percentage of median household income increased from 5.41% to 25.72% for public institutions, and from 12.46% to 64.66% for private institutions.
Clearly, if we look at the median household income of the entire U.S., the situation looks pretty dire, with a steady climb across the entire 1980-2010 period. But what about if we divide the population by income quintiles as we’ve done in previous posts? In other words, what do annual costs as a percentage of income look like for the richest and the poorest (and those in between) in our country?
Again, we used the Department of Education data on college costs, but this time compared it to the upper income limits for each quintile using data from the Census bureau (adjusted to current dollars) found here.
Perhaps unsurprisingly, the lack of much income growth over this period has had the effect of making the costs of a college education as a percentage of household income much higher, particularly for the lowest two quintiles. For the poorest of the poor, annual costs for an undergraduate education in 2009-2010 was around 62.6% of income in 2010 for a public institution and a whopping 157.4% for a private institution. In contrast, the richest quintile spends around 7.1% of income for a public institution and 17.9% for a private institution; essentially the same percentages as in 1980-81.
Naturally, these figures don’t tell the whole story. For example, students from the lowest quintiles undoubtedly receive more student assistance (such as Pell grants) than other quintiles. That said, given the environment surrounding government spending, it is doubtful that this assistance will grow to match the increasing financial burden that college education is becoming.
As always, we’re interested in your thoughts on this issue! Leave a note in the comments or via twitter.