The Truth Re: College Tuition. It's not what you've been told.
- Thread starter piezoe
- Start date
I WANT THE TRUTH!!! It's important to remember the power of compounding. If the tuition rate is increasing consistently just a small amount more than the inflation rate, the difference can be huge over 30 years.
It's especially deceiving ( and becomes especially easy to massage numbers to make your case) when the numbers are so low. It is in our nature to be able to ignore a statement such as "tuition has only been increasing at a rate of 1% faster than inflation" because our instincts and anecdotal evidence tell us that 1% ain't much.
But one must be trained in order to recognize that if inflation is say 3%, then a tuition increase rate of 4% means that tuition increased at a rate that is 33% greater than the inflation rate.
And to demonstrate the power of compounding using these numbers, if you were to stick $1000 in a bank and get 3% interest ( ah the good old days ) in 30 years you have $2500. So you've made 150%. At 4% you'd have $3373. 237%.
So IOW, that measly 1% difference, over time, means a 87% difference in outcome.
It's especially deceiving ( and becomes especially easy to massage numbers to make your case) when the numbers are so low. It is in our nature to be able to ignore a statement such as "tuition has only been increasing at a rate of 1% faster than inflation" because our instincts and anecdotal evidence tell us that 1% ain't much.
But one must be trained in order to recognize that if inflation is say 3%, then a tuition increase rate of 4% means that tuition increased at a rate that is 33% greater than the inflation rate.
And to demonstrate the power of compounding using these numbers, if you were to stick $1000 in a bank and get 3% interest ( ah the good old days ) in 30 years you have $2500. So you've made 150%. At 4% you'd have $3373. 237%.
So IOW, that measly 1% difference, over time, means a 87% difference in outcome.
Now there's a man that understands data. I've been waiting for someone else other then to me to point this stuff out.
I'm sorry, I've gotta agree with Denner here, so all of a sudden you are no longer a left wing Keynesian? Are you only now acknowledging that that big gov't central planners, your friends on the left, have devalued our currency and created "real" inflation that is much higher then your friends on the left admit? I mean did you really make that jump or is this all a ruse?
See, the issue here is you are changing the denominator in the equation when you use the shadow stats inflation data since their data is reflecting much high real inflation. So when you put in tuition for the numerator, the rate of change is smaller. The shadow stats data represents a failure of gov't primarily the left wing oligarchs. There is plenty of blame on the right as well, but their philosophy at least is not for more bigger gov't.
I just have a hard time believing you suddenly are acknowledging the failure of your belief system. And one more thing, I noticed your subtle "lower middle class" descriptor. That is not accurate. The lower middle class has been subsidized through grants. It's the "middle" class that is getting scammed here. They get stuck with higher tuition and they don't have access to grants and aid. Even worse if they happen to be white middle class. I've actually seen black kids come from a family of doctors getting aid because you know, they are back and all.
One of my children is going in the second year of the same prep high school I went to 30 years prior...the cost is 9x what my parents paid for me....anyone else finding the same multiplier for their kids here??
I will admit its a bit stressful funding this and the prospect of two kids in college at the same time soon may make my head explode.
I will admit its a bit stressful funding this and the prospect of two kids in college at the same time soon may make my head explode.
I'm not arguing about inflation, just the logic he was using. I liked how he never answered the questions I posed to him. Standard protocol.
In my opinion, the method of computing consumer inflation used by the government in the mid 1980s provides a more realistic measure of inflation actually experienced by typical consumers than does the method used currently by the government. The Shadowstat inflation numbers are based on the 1980's method. By "lower middle class" I mean the bottom 50% of the middle class as defined in the many graphs and statistics posted here on ET.
I don't identify with either major political party nor with far-left or far-right politics. I am fiercely independent in my political views.
The answer is likely on the internet. Try a Google search. Here is what Raghuram Rajan has to say about this topic on page 25 in his book "Fault Lines." (A book I highly recommend.)
...Although the United States has led historically in the fraction of the population with high school degrees, that fraction has not increased since 1980, and other countries have caught up and surpassed the United States. Moreover, while more and more Americans in the 20-24 age group are going to college (61 percent in 2003, up from 44 percent in 1980), no doubt in part attracted by the potential boost to wages, college graduation rates have not kept pace: toomany studets like jane are dropping out of college despite an increasing college premium over time. College graduation rates for young men born in the 1970s are no higher than for men born in the 1940s --a shocking fact when one considers how much greater demand there is now for workers with college degrees. (Rajan's ref. is: Golden and Katz,"The race between Education and Technology,Pgs. 249-50, Belknap Press, Cambridge,MA, 2009.)