How Much College Can You Afford?

Soaring College Textbook Prices: Part of the Unsustainable Higher Education Bubble

The graph above shows the historical increase in college textbooks (+981%) between 1978 and 2014 in comparison to increases in the overall CPI (+262%), the CPI for medical care (+604%), and the median sales price for new homes (+408%) over that 37-year period.

Textbook prices seem like they are clearly on an unsustainable trajectory.

Under President Obama, Less Education & More Unemployment Since 2009...

Private Schools are OUT. State Schools are IN...

According to the College Board, tuition and fees at the average private college is $27,293. Tuition and fees at the average public university? $7,605.

Parents are discovering they can cover practically a child’s entire college education for what they’d pay for one year at a private university, which is probably why 44% of parents said they’re considering this option (up from 38% in 2007).

Public School Spending Up +375% With No Change in Test Scores...

The graphic below is from Investor's Business Daily showing a +375% increase in public school spending over four decades, with no change in reading, math and science test scores. 

Reason? A bloated, bureaucratic, unionized public school monopoly that is sheltered from competition.   

Question: If President Obama is concerned about "price gouging" for prescription drugs, will he sign an Executive Order that will expose the public school monopoly to greater competition, and end the "taxpayer-gouging" that has increased the cost of public education by +375% with no change in educational outcomes?

The Higher Education Bubble Explained...

Chart of the Day - Why Education Matters - The Unemployment Rate by Educational Attainment

Chart and Analysis Courtesy of ChartOfTheDay.com

Last week the Labor Department reported that the unemployment rate fell to 9.0% during the month of January.

For some perspective on the current state of the labor market, today's chart illustrates the unemployment rate by educational attainment.

As today's chart illustrates, a higher educational attainment has correlated with a lower unemployment rate.

For example, the unemployment rate for those that have not completed high school (red line) currently stands at an extremely high 14.2% -- more than triple the amount for those with a bachelor's degree or greater (blue line), which currently stands at 4.2%.

On a positive note, the unemployment rate for each level of educational attainment has moved significantly lower over the past couple months.

A Half A Million Dollar College Education?...

A child born in 2010 that begins kindergarten in the fall of 2015 would attend college between the years of 2028 and 2032. 

If that child attended an average private 4-year college and if the annual price increases for private colleges experienced over the last 30 years continued into the future, the aggregate 4-year cost of the child's college education (including tuition, fees, room & board) will total $506,423, or nearly $127,000 per year.

Source: College Board


   

Extrapolating A Private College Education for A Child Born in 2010...

A child born in 2010 that begins kindergarten in the fall of 2015 would attend college between the years of 2028 and 2032.

If that child attended an average private 4-year college and if the annual price increases for private colleges experienced over the last 30 years continued into the future, the total 4-year cost of the child's college education (including tuition, fees, room & board) will total $506,423 or nearly $127,000 per year.

Source: College Board    


 

U.S. Education By The Numbers...

7,000 students drop out of high school every school day, for a total of about 1.3 million students a year.

12% of U.S. public high schools (about 2,000 schools) produce nearly half of the nation's dropouts and 58% of African-American dropouts.

50% of incoming ninth graders in urban, high-poverty schools read 3 or more years below grade level.

39% of high school students reported spending one hour or less a week reading or studying for class in 2009.

23% of new American teachers come from the top third of their graduating class.

14% of new American teachers in high-poverty schools come from the top third of their college class.

100% of teachers in Singapore, South Korea and Finland come from the top third of their college class.

Sources: Alliance for Excellent Education, High School Survey of Student Engagement, McKinsey & Co.

The Misguided Promise of 529 Plans...

by Robert Huebscher

Paying for college is one of the most important responsibilities parents have to their children. When Congress passed legislation creating 529 savings plans in 1996, it took an important step toward making that task easier.

It hasn’t worked out that way, though. Along with the overall market, 529 plans – specifically, the funds in which they were invested – suffered disastrous returns in 2008, leaving many families with insufficient funds to pay their tuition costs.

The real problem, though, is not with the past performance of 529s.

A misguided promise underlies the vast majority of 529 plans – that their heavy allocation to equities will provide acceptable risk-adjusted returns for the time horizons over which most parents invest.

Read more here....

The Misguided Promise of 529 Plans

Chart of the Day - Why Education Matters - The Unemployment Rate by Educational Attainment

Chart and Analysis Courtesy of ChartOfTheDay.com

Today, the Labor Department reported that the unemployment rate held steady at 9.7% during the month of February.

For some perspective on the current state of the labor market, today's chart illustrates the unemployment rate by educational attainment.

As today's chart illustrates, a higher educational attainment has correlated with a lower unemployment rate.

For example, the unemployment rate for those that have not completed high school (red line) has increased from 5.8% to 15.6% over the past 40 months -- nearly a 10 percentage point increase. Compare that to the unemployment rate for those that have obtained a bachelor's degree or greater (blue line).

The unemployment rate for those with a minimum of a bachelor's degree is currently 3 percentage points above where it was 40 months ago.

In any event, the upward trend in the unemployment rate (for all education levels) has slowed in recent months.