Friday, January 17, 2014

Nice graph showing how college students get poorer and colleges get richer through subsidies.

Everyone knows the cost of college has increased dramatically in the last 30 years. But by how much?

The graph below is from a study at the Mercatus Center at George Washington University.  It show the difference in the publicly posted LIST TUITION PRICE that colleges charge and the NET TUITION PRICE that students actually pay after grants (Federal and/or State), scholarships, and other aid provided to students by various entities.

I doctored the original graph and put some numbers to it.  The BLACK line to the left indicates the year 1993/94 and the RED lines to the right indicated 2012/13.  I wanted to show a 20 year change.

All prices you see below are in 2012 dollars.

In 1993/94 the average list price for in-State tuition for a US Public college was $4,000 but students only ended up paying $2,000.  That is a subsidy of $2,000 or 50% of the list price.

In 2012/13 the average list price for in-State tuition was approx  $8,800 but students only paid $3,000. That is a subsidy of $5,800 or 66% of the list price.

The list price of tuition increase by 120% in 20 years but the net price paid by students increased by only 50% (from $2,000 to $3,000).

While students are paying more, the subsidies they receive (or I should say received by the colleges on the students behalf), is increasing at a faster rate.

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