Encouraging news reported in the Wall Street Journal this week: The 5.5% average growth rate in college tuition over the last 30 years is down to a mere 1.9% in 2016 – in line with the general level of inflation. A quick list of contributing factors:
Supply is up: the number of two and four year colleges is up 33% 1990 to 2012
Demand is down: college enrollment is down 4% from it’s peak in 2010.
Static Fed Loans: not since 2008 has congress increased the amount a student may borrow directly from the federal government, which further limits buying capacity.
Shifting demographics: There was a larger base of baby boomer kids who have cycled out of college age, replaced by smaller generation of Gen X children. As a result, the number of high school grads was up 18% from 2000-2010, but has only grown 2% from 2010-2017.
Savvier Consumers: A recent study by Sallie Mae found that high prices are a major factor in eliminating schools from student searches.
Our financial plans will continue to assume higher-than-general inflation for the cost of college, for now, but we’ll certainly keep an eye on this encouraging trend.
Source reporting by Josh Mitchell at the Wall Street Journal
