The price of college is rising faster than wages for people with degrees

How much does college cost?

The average college student paid $24,623 for tuition, fees, and room and board for a year of school in 2019, according to data from the National Center for Education Statistics. That is an increase of 59% compared to 2000, when the inflation-adjusted price was $15,485. Wages have not kept pace. Between 2000 and 2020, the Bureau of Labor Statistics reports that inflation-adjusted median weekly earnings for people with a bachelor’s degree rose 5%.

Tuition for the average student across all types of institutions has risen faster than tuition for students at four-year or two-year colleges, where prices have increased 53% and 42%, respectively. Part of the rise in attendance cost is a shift towards four-year colleges.

Four-year institutions are more expensive than two-year ones. The price of attending a year of courses at a two-year school was about 40% of attending a four-year one in 2019. More students attending four-year institutions rather than two-year schools would increase the price of college for the average person even if costs at both types of institutions remained stable.

The percentage of people with a college degree is growing across the board. But increases have been greatest for degrees that require four years or more of college, according to the Census Bureau’s Current Population Survey (CPS) data on highest level of education earned. Between 2000 and 2020, the share of Americans with an associate degree increased by three percentage points, from 8% to 11%. The percentage of Americans with a bachelor’s degree rose twice as much, from 17% to 23%. The share of Americans with an advanced degree rose five percentage points, from 9% to 14%.

Slow wage growth comes as bachelor’s degrees are becoming more common in non-professional occupations.

Professionals like scientists, engineers, and teachers continue to be the likeliest to have a bachelor’s degree or higher — at a rate of 80%, according to CPS data. That has changed little compared to 2000, when it was 79%.

The share of non-professional positions with a four-year degree or higher increased since 2000. The greatest percentage point increase in people with four-year degrees or more was for technicians, where the rate doubled from 18% to 36%. The rate for management-related positions like accountants, agents, and people working in personnel and HR rose over 17 percentage points, from about 54% to 71%. People working as police and firefighters, administrative support personnel, salespeople, and managers each became over 13 percentage points more likely to hold a four-year college degree. The likelihood of someone working in cleaning, food, childcare, or other services having a four-year degree or higher rose 10 percentage points to 17%.

People with at least a bachelor’s degree have the highest wages and more job security.

Wages have risen 5% for people with bachelor’s degrees and 5.5% for people with advanced degrees. While that lags behind the rise in tuition, it is higher than the 3% wage growth for people with a high school diploma or equivalent and the 0.1% growth for people with some college or an associate degree.

Wage growth for people with bachelor’s degrees is less than the 14% increase in wages for people who never graduated high school. People with bachelor’s degrees still make double the median wages per week than those without a high school diploma.

People with bachelor’s degrees or higher also fared better at keeping jobs or getting new ones during the pandemic. The group’s total employment fell 6% in April 2020 and has almost returned to pre-pandemic job levels as of March. The number of people working remained down 7% for people with some college or an associate degree, 9% for high school graduates, and 10% for people without a high school diploma or equivalent.

How cost-effective is a college degree?

Comparing tuition costs to wage earnings in 2019 dollars can give a sense of the financial benefits of a college degree. An employed person with a bachelor’s degree earned an average of $392 more a week compared to a person with some college or an associate degree in 2019. Those holding a bachelor’s degree earned $502 more per week than a person with a high school diploma.

A person who started school at a four-year institution in the fall of 2015 and graduated in the spring of 2019 would have spent on average about $111,547 on their education, adjusted for inflation. The average American with a bachelor’s degree would earn back the cost of their college education in additional earnings in about four and a quarter years of work with their starting wage compared to someone with a high school diploma. This does not include potential earnings lost by being a student rather than working for four years.

The cost of college for a 2000 graduate was $71,533 when inflation-adjusted to 2019 dollars. That person’s starting wage would average $690 more per week than a person with a high school diploma. Class of 2000 graduates’ starting wages would meet the cost of college in about two years, less than half the time of the class of 2019.

This analysis does not consider the impact of student loans on college students. For those holding student loans, the cost of monthly payments and the interest accrued is an additional financial impact of attending college. Student loan debt, both federal and otherwise, hits lower-income families the hardest. Among households with student loans in the bottom 20% of income earners in 2019, median debt was $15,000 — or 92% of their median income. The US reported $1.6 trillion in federal student loan debt in 2020, almost triple the amount of debt in 2007.

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Correction: A previous version of this piece mislabeled the year in the headline of the first chart as 2019 rather than 2000.