Ed-uflation: The Growth of Costs for College, Medicine, and the CPI Since 1978

June 2nd, 2010 by 

What's grown faster than inflation the last 40 years?  No, not medical expenses.  What's grown faster than that?  You guessed it (from the title of this post) - education costs increased almost 1000% from 1978 to 2008, compared to about 300% in the generally price level as measured by consumer inflation.  Yes, education is one of the categories of spending which is increasing at an off-the-chart-rate.

The Cost of College

Consider the following graph, made by John Eubersax from College Board and BLS data:

Inflation Breakdown: 1978 - 2008

The American Thinker article links the increase in tuition to the increase in non-professorial staff.  I'm of the opinion a variety of factors are at play here, including the increasing control of the United States government over the student loan market (SLM Corporation was started as a Government Sponsored Enterprise in 1972).  Expect it to slow down?  The government recently took full control over subsidized student loans, which has been barely noticed in the mainstream press.  Education, like health, is a finite resource.  Subsidizing some to go to school will increase demand, increasing college tuition more.  Are we prepared for a further increase in college price?  Let me know in the comments!



PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK lives in New Hampshire with his wife, kids, and dog.

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