Written by: Stephen Hsu
Primary Source: Information Processing
College tuition has increased faster than the rate of inflation for some time now. But the issue is more complicated than this simple observation suggests.
1. The increase in tuition cost at public institutions is mainly due to cuts in state support (see figure below), as opposed to enlargement of the overall budget.
2. The average amount paid per student is typically less than full tuition, due to financial aid. Redistribution is taking place, from families that can afford the full rate, to those that need assistance. The year to year rate of increase in the average tuition paid has typically been less than the increase in full tuition per student (“sticker price”).
Below are the specific numbers for Michigan State University — full tuition in 2012 for Michigan residents was ~ $12k.
Here’s more data (thanks to Dave Bacon) supporting my claim for public institutions of higher learning: total expenditures roughly constant, tuition changes related to internal cost shifting. Note, though, that private research universities are an exception: they’ve been raising both tuition and expenditures in recent decades.