For all the debate about a college education, its opportunity cost, the trade off of only having a high-school diploma, the impact of a record amount of debt on an entire generation’s spending habits, and, of course, the alleged lack of inflation everywhere expect in those critical things that 99% of Americans must spend on daily, perhaps the simplest chart is the following, courtesy of the WSJ: it shows the average annual tuition – call it the “upfront investment”, whether funded by debt or equity or both – for both a Bachelor’s and an Associate’s degrees from 1970 until 2013, as well as the average wages of those with each type of degree, once again expressed in real dollars.
In a nutshell:
- The change in tuition costs expressed in real dollars from 1970 to 2013, amounts to a roughly 275% increase
- The change in real wages for a graduate with a bachelor’s degree over the same period amounts to a roughly 10% increase (and an outright decline for Associate’s degree wages despite a doubling for Associate’s degree tuition costs).
Is there any wonder then why the US middle class, and certainly both Generations X and Y, are hopelessly drowning in debt and why the economy can barely survive from one QE episode to the next?
Read more at the NY Fed which clearly tries to put a pleasant spin on the above chart.