The Cost of College

There's a lot of yelling going on in political and other circles about college loans and the cost of college.  The cost of college has more than doubled since I was a student.   For school year 1977-78, the year I graduated from it, UC Berkeley estimated annual total cost for an in-state student at $4203 and $6108 for an out of state student.   (Berkeley is a state university: they subsidize taxpaying residents and their dependents, while out-of-state students are expected to bear their share of the true costs with a special fee)  Today those numbers are $33,522 and $56,400.  This is an inflation in cost by a factor of 8 and 9.2 respectively.  Had the costs simply matched inflation (CPI) they would have gone up by only a factor of 3.8 ($16K and $22K).

Median household income in 1977 was $13579 and mostly came from a single earner.  That income could pay off a 4 year degree in 15 or 24 months.    It was entirely practical for a median income family to cover this, even without scholarships:  the student might earn $1-2K during the summer and the family would pay the remaining $2-3K.  This works: 100% of the student's and 20% of the family's income was a heavy burden but not intractable for a median income family in 1977, especially if they've been saving in advance.

Today, median household income is $52,762 and a lot of that comes from two earners.  It would take 31 or 51 months to pay off the 4 year degree.  Minimum wage and wages for the types of work students can do is lower today than then, but pretending the inflated equivalent $4-7K/yr, that still leaves $26-$29K to be covered, for the in-state student, and $50K for the out of state student.   No median income family can bear to pay 50% of their income for a student, much less 90%.

This is a fundamental, qualitative change.  In 1977, it was possible for a median family to send a student to college without debt.   In 2013 it is not.  What's changed?

Berkeley's operating budget is $2.29B.  There are 36,000 students.  Pretending student costs are the only expense (they are not--far from it) that's $63,600 per student.   Even the out-of-staters are paying only $35,823, just over half their share.   (the other costs are books, housing, etc).    In fact, students are paying about 40%.  In 1977, they were paying less than 4%.  The state was paying 86%.  Today the state is paying less than half, and the students are being asked to make up the difference.   But they can't.  So they're borrowing.