Why Do College Education Costs Defy Gravity?

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Why Do College Education Costs Defy Gravity?

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August 17, 2016

In the homes of parents today in their 40's and 50's, the debate about how to pay for the rising cost of college has become the topic of conversation. It isn't just the fact that while the Government says inflation remains really low, most parents are experiencing that cash flow management is becoming more of a problem than asset management. So, why do college education costs continue to defy gravity in this low inflation environment.

  • More Non-Teaching Jobs - Higher education payrolls have also been rapidly adding more non-teaching jobs in recent years. Public and private colleges and universities expanded their payrolls by 28 percent between 2000 and 2012, more than 50 percent faster than the previous decade, according to an analysis of higher education staffing by the Delta Cost Project. There are more student programs offered on big campuses, continuing to increase the necessity of these non-teaching positions.
  • Competition For Talent - Ultimately, price is dictated by the law of supply and demand. As more applicants apply for positions at these colleges, the colleges have a need to bring in higher levels of talent for educators and the athletic departments. This also adds to payroll for the colleges and universities. As the colleges can be even more selective, they will be able to continue to raise cost until the demand of applicants goes down.
  • Real Estate - Hardly anybody talks about this aspect of the rising cost of college, but when was the last time you set foot on a large college or university without seeing some type of building happening on campus? The cost to create world class athletic, dining, and housing facilities, necessitates a higher cost for room and board at these institutions.

With private schools in some states approaching $70,000 for all in costs, it's no wonder that some parents are sticking with in state schools. The problem: there are so many applicants that what used to be easy to get into for state schools, is now turning into something as hard as scoring 1600 on your SAT. It's time to do your homework so you can create a plan on how to pay for the rising cost of college.

Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice.


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