Background
While the average family spends only about 3% of their budget on education, we hear constantly about the huge education loan debt owed by many Millennials and Xers. Is there a big increase in school debt, and if so, why? This first of two posts on this topic covers college attendance and the trend in college spending; part II will look specifically at student loan debt.
Findings
A lot more people are going to college and spending a lot more! The first half of this equation is attendance. The chart below shows this. While a seemingly large 24% of Boomers got a college degree, nearly 40% of Millennials finished college. This doesn’t even include those who started and didn’t finish college, or went to a two-year school. The combination of those two categories is another 28% of Millennials.
With the increase in demand for college, the prices have been skyrocketing. While there may be many reasons for an education growing in cost, over the past 30 years the cost of a college education has doubled after adjusting for inflation. Whatever you may have paid for your degree, it’s more now!
Implications
While the real implications will be discussed after part II of this post, which will look at student loans, it’s clear that we are becoming a nation of college graduates. Whether it’s parents or students who pay for the education, the rising cost of college means that families are investing a lot of money where they didn’t in the past. The trend in college spending is rising dramatically! Stay tuned to part two where we’ll cover the 45 MM people in this country who are holding student loans.
The small print
College attendance by generation is from the Pew foundation, who used the Current Population Survey to determine what percent of 25-37 year olds in a generation had finished an undergraduate degree. There are some nuances to how the CPS defines this – e.g. in some years it was completing four years rather than actually graduating. The inflation-adjusted cost of college came from an analysis by the College Board.