The Price of College Versus The Cost of College Versus Tuition Inflation

Moneybox
A blog about business and economics.
Aug. 22 2013 10:50 AM

The Price of College Versus The Cost of College Versus Tuition Inflation

Whenever the subject of college affordability comes up, words like "tuition" and "cost" and "inflation" get thrown around but in order to have a clear discussion of the issue I think it's important to be clear that these are not synonyms. One issue is that, as David Leonhardt writes, net tuition paid by students after considering financial aid has risen much less than the sticker price. That said, we shouldn't necessarily conclude that the cost of higher education has been exaggerated. If the (net) price is being held down by Pell Grants then the cost is being shifted off the backs of low-income students and onto the shoulders of taxpayers. That's a fine idea if you ask me, but it's still true that shifting costs is different from reducing them. If the cost of providing a college education hadn't risen so much we could have used those tax dollars for something else like preschool or invading Syria or highway repairs.

And both of these things are different from—though related to—the idea of inflation. If college becomes more expensive over time because social expectations about what is included in the bundle "college" rise, then that's not inflation. When I was a freshman the dorms had no wifi. By the time I graduated, there was wifi in all the dorms. That upgrade cost money, and the spending is reflected in the price, but it isn't inflation. In 1999, Harvard tuition did not buy you access to a campus-wide wifi network while in 2003 it did.

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You often hear in the press about totally frivolous college spending on climbing walls and such. But building wifi networks isn't frivolous. It seems eminently reasonable. And yet it's by no means obvious that the modern-day presence of on-campus wifi networks actually improves student learning. It has some obvious benefits but is also probably a distraction in many cases. It's a lifestyle amenity that schools provide because students have a range of choices about where to go to school and this kind of thing appeals to students and parents alike. The idea of inflation is that the price gets higher without improvement in quality. But while college in 2013 certainly carries a higher price than college in 1993, I'm fairly confident that the real living standards of four-year college students have gone up in the past 20 years.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.