NCPA - National Center for Policy Analysis

The Cost of the College Bubble

May 2, 2011

Enrollment in higher education has risen so much over the past generation that roughly 70 percent of all high school graduates now enroll in some sort of college.  Costs are also on the rise, according to the John W. Pope Center for Higher Education Policy.

  • From 1990 to 2010 college tuition and fees in the United States increased more than 286 percent.
  • According to the College Board, the average cost of one year of college -- including tuition, fees, room and board, books, supplies and transportation -- is nearly $40,000 at private four-year universities and $19,388 for in-state students at public four-year universities.

In fact, tuition has increased at a far greater rate than housing did before the bursting of the real estate bubble in 2006.  However, because colleges provide financial aid and discount tuition for many students, looking at raw tuition and fees isn't enough.  Beginning in 2010, higher education institutions that participate in the federal student aid programs are required to provide new data that can be used to calculate their "net price" of attendance (after tuition discounts and aid).  Going forward, this data will be useful to gauge the true scope of tuition increases.

In the meantime, though, there is evidence that students are beginning to feel the effects of escalating tuition.

  • According to the Project on Student Debt, in 2009, average debt levels for graduating seniors with student loans rose to $24,000 -- a 6 percent increase from $23,200 in 2008.
  • The Department of Education released new data this year, which show that 13.8 percent of student loan borrowers who entered repayment in 2008 defaulted on their loans within three years of entering repayment -- about 467,000 students.
  • Moreover, the overall student loan default rate is on rise; the rate in the 2008 fiscal year, the latest period for which data is available, was 7 percent, up from 6.7 percent the year before and 5.2 percent in the 2006 fiscal year.

Source: Jenna Ashley Robinson, "The Cost of the College Bubble," John W. Pope Center for Higher Education Policy, April 29, 2011.

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