> Why is tuition continuing to rise so much faster than inflation? Is this simple supply and demand? Government backed loans create infinite supply to anyone who wants them?
I'm not convinced government backed loans have much to do with it. Here's a table comparing Stanford tuition growth to inflation over periods of 10 years.
Each row represents the 10 years ending in the year given in the first column. Second column is how much inflation multiplied prices over that 10 years. Third column is how much Stanford tuition multiplied over that 10 years. Final column is the ratio of the Stanford column and the inflation column.
Government backed student loans didn't really start taking off until the mid '60s, so maybe some of the Stanford spike in the 10 years ending in 1970 can be attributed to that, but after that it falls back to its "normal" faster-than-inflation rates.
It would be interesting to compare to other schools, in particular to other top private schools, top state schools, and other private and state schools, because it is quite possible that factors that can affect tuition affect it differently at different kinds of schools. My Googling only found sufficient historical tuition data for Stanford which is why that's the only one I was able to compare against inflation.
You've picked a very unfair data set. Stanford is one of the top universities in the country and has a $22B endowment [1]. The could choose to simply make tuition free if they really wanted to. Stanford optimizes everything they do (including pricing) to attract the best and brightest.
You're also only looking at cost, which is only half of the equation. You also need to scrutinize lifetime earnings of graduates. For Stanford, this metric would obviously be excellent (see: endowment). For many of the mediocre to bad universities in the United States, this metric is likely terrible.
Column 3 is exponential behavior. Multiply those numbers together to get 28 times faster than inflation in 80 years.
Since the boomers 1970s the cumulative ratio is 5x. In the 1970s you could pay for and education working 1000 hours summer and part time, it is more like 5000 hours according to this ratio.
I'm not convinced government backed loans have much to do with it. Here's a table comparing Stanford tuition growth to inflation over periods of 10 years.
Each row represents the 10 years ending in the year given in the first column. Second column is how much inflation multiplied prices over that 10 years. Third column is how much Stanford tuition multiplied over that 10 years. Final column is the ratio of the Stanford column and the inflation column.
Government backed student loans didn't really start taking off until the mid '60s, so maybe some of the Stanford spike in the 10 years ending in 1970 can be attributed to that, but after that it falls back to its "normal" faster-than-inflation rates.It would be interesting to compare to other schools, in particular to other top private schools, top state schools, and other private and state schools, because it is quite possible that factors that can affect tuition affect it differently at different kinds of schools. My Googling only found sufficient historical tuition data for Stanford which is why that's the only one I was able to compare against inflation.
Inflation data: http://www.usinflationcalculator.com/inflation/historical-in...
Stanford tuition data: http://facts.stanford.edu/administration/finances