For all the debate about a college education, its opportunity cost, the trade off of only having a high-school diploma, the impact of a record amount of debt on an entire generation's spending habits, and, of course, the alleged lack of inflation everywhere expect in those critical things that 99% of Americans must spend on daily, perhaps the simplest chart is the following, courtesy of the WSJ [2]: it shows the average annual tuition - call it the "upfront investment", whether funded by debt or equity or both - for both a Bachelor's and an Associate's degrees from 1970 until 2013, as well as the average wages of those with each type of degree, once again expressed in real dollars.
In a nutshell:
- The change in tuition costs expressed in real dollars from 1970 to 2013, amounts to a roughly 275% increase
- The change in real wages for a graduate with a bachelor's degree over the same period amounts to a roughly 10% increase (and an outright decline for Associate's degree wages despite a doubling for Associate's degree tuition costs).
Is there any wonder then why the US middle class, and certainly both Generations X and Y, are hopelessly drowning in debt and why the economy can barely survive from one QE episode to the next?
[3]
Read more at the NY Fed which clearly tries to put a pleasant spin on the above chart [4].
