Ed Cook: Higher Education and Supply and Demand

Now let’s put this out first.  As many of you know, I have been teaching Business part-time at UMass Boston for nearly 20 years.  And I do love it.  During the past year plus while I have been unemployed teaching has been my only employment.  My wife has for a full 20 years been teaching Nursing at first the Community College level and now at a private 4 year College.  She’s even a candidate for her Ph.D. in Nursing now.

But this is not about me the Adjunct Lecturer, this is about me the parent who is facing two children in college next year.  I am sure I speak for many when I say, “it makes my hair hurt when I think of how much College costs now.”

I started the FAFSA process today, for both my girls.  As the announcer at the Hindenburg crash said, “Oh, the humanity.”  It is a painful process which ends with a painful bill.  You can tell the forms and process was devised by a government bureaucrat, or more likely a committee of bureaucrats, because no right thinking person would come up with such an illogical process.

From a random sample of private Colleges and Universities that I conducted, and confirmed by CBS News, the average Tuition and Room and Board for the 2012/2013 Academic year will be about $42,000. (I did not consider any schools that are absurdly expensive like Sarah Lawrence College in NY at $59,170.)  The Median family income in the USA in 2010 was $50,022.  That means that the Average tuition is 84% of the median income.  Crazy.  I went to Northeastern University in Boston as an undergraduate.  Tuition the first year was $2,250! Room and board was about $700.  Let’s call it $3,000 total.  Trust me when I tell you that the Median income in 1976 was higher than $3,480 which would have been the equivalent percentage to today.  Northeastern’s tuition-only cost this year is $37,840.  That is a 1,581% increase.  The cost of college, on average, has gone up over 800% since 1980.

BUT, this has happened because of several factors. One is the demand for a College Education.  If all else is equal, and the guy or gal you are competing with for a job has a College Degree, your competition is going to get the job.  Same goes for Master’s Degrees. If your competitor has a Master’s Degree they probably get the job if you only have a Bachelor’s. This situation creates greater demand for College degrees.


Anyone who has ever taken an economics course at any level has learned about the concept of Supply and Demand.  In most cases in a free market economy it works.  There are some things where a market is artificially manipulated, and then price and demand do not necessarily relate. (Diamonds are one example as are oil and Gasoline.  See my Blog posted 11/29/11.)

Another reason is the natural progression of people.  As a group we want to get better and education is a means to getting better.  If you look at the educational attainment of the USA back through the last century you are in for a shock.  The average attainment in 1900 was about 5th grade. In 1940 the average was 8th grade (U.S. Census). You may also be surprised to know that in both those years and many other years last century, women’s attainment was higher than men’s. So if you had a High School diploma in 1940 you were way above the average.  Imagine!  Even as late as 1960, if you finished High School you were pretty well set for a job.  It was not until Technology came along in a big way in the 60’s and 70’s that a College Degree was required more often. Plus, the parents of the Baby-Boom Generation wanted their kids to be better off than they were so a better education was part of that package.  So again it was demand for college education.  This was especially true in the late 1960’s and early 1970’s when young men were attending college in huge numbers to get deferrals from the draft for the Vietnam War.  With the GI Bill having given their fathers a shot at education and the sons going to college, a group that was much better educated was created.

So that brings us back to today.  The demand continues to increase, because our competition has a greater education.  As of 2009, 25.9% of Americans had a Bachelor’s Degree or higher (U.S. Census).  It varies by State of course, with little ol’ Massachusetts having the highest attainment at about 40% and West Virginia the lowest at 17.1%.  (OK Washington, DC has the highest at 48% but technically they are not a state.)  A lot of this has to do with the industry in the state in question.  Massachusetts, in addition to having a lot if colleges also has a lot of High tech and medical industry which creates great demand for College degrees.  See Supply and Demand.  I guarantee you that if fewer people went to college, or even applied to college, that tuition would come down.  However, even in the depths of this recession, enrollments went up at many schools, mine and my wife’s included, as people tried to get an edge for getting jobs that would be coming in the future and went attended colleges and universities in big numbers. So parents, don’t plan on seeing those tuition bills coming down…ever.  Next thing you know, the little darlings will call home and say, “Daddy, I want to go for a Master’s Degree”.






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