Part I of II A few days ago, The Washington Post ran an article on the College Board’s Annual Survey of Colleges. This survey collects information about tuition and financial aid and compares it to inflation-adjusted data from years past. The Post focused, unsurprisingly, on tuition increases for both public four-year colleges and private four-year colleges. However, I think there’s a slightly more subtle – and far more worrisome – angle the Post missed. The Annual Survey of Colleges gave me 25 years of data on the average tuition price for private four-year colleges – such as Lawrence, schools that receive no public funding; public four-year colleges – state schools that receive government funding; and public two-year colleges – technical and community colleges. Looking at the graph, one can see an inexorable increase in tuition across the board. But tuition increase by itself is not problematic; things get dicey only if tuition increases faster than the means of paying tuition. I checked out the U.S. Census Bureau’s “Income, Poverty and Health Insurance Coverage in the United States: 2008″ report, which gave me Americans’ inflation-adjusted median household income over the same 25-year span. Unfortunately, the 2009 report hasn’t been published yet, so most of my data is two years old. Just to be clear: Household income represents the amount of money everyone who lives in any given house makes in a year – this includes salaries, investment returns, interest from savings accounts, everything. Over the past 25 years, median household income has trended upwards, but not nearly as steeply or steadily as college tuition. Uh-oh. I looked at college tuition as a percentage of median household income – in other words, what percent of a household’s yearly earnings go to paying for college. Public twoand four-year college tuitions look fairly reasonable: for the 2007-08 school year, public four-year college cost the average family about 13 percent of their household income, while public two-year college cost about five percent. For the 1985-86 school year, the respective percentages were six and three; while there has clearly been an increase, it’s nothing insane. Private four-year colleges are a different story. In 1985-86, private school tuition cost the average family about 27 percent of household income. Stiff, right? In 2007-08, private school tuition cost the average family 49 percent of their household income. You read that right – in 2008, the average family would need to spend half of their income for the year to send one child to an average private school. Of course, that’s not the whole story. The federal government and most colleges offer financial aid grants – the kind you don’t have to pay back. In 2008, private schools offered an average of $9,300 per student. Factoring this in, our average family would still need to spend 30 percent of its yearly income for one year of private school tuition. That’s not quite as heinous – always assuming the student is awarded financial aid, which is far from guaranteed. But remember that many families have more than one child to put through college, and myriad expenses completely unrelated to school. A quick caveat: The median household income figure is of course far from representative of every American family – there are households that make 10 times more than the median, and households that would be lucky to make a 10th. Similarly, average college tuition is far from a perfect statistical measure. I can’t use this data to make many concrete statements. What I can do, though, is look at the trends, and think about what they may signify and where they might lead. Here’s what the Post left unsaid: Private college prices are increasing faster than median household income increases. We can tell this because the ratio of college tuition to median household income isn’t staying steady, but rather is increasing. Of course, public college tuition is increasing at just as steep a rate, but because it started so much cheaper, it is still quite affordable, and will be for a while. However, every year, students who decide to go to private colleges must pay a ridiculous percentage of their family’s yearly income. The private college market is in something of an economic bubble. Sooner or later, a majority of potential private school students will decide that a private school education is not worth the price tag. This might take years, but as long as tuition increases at this disproportionately high rate, private colleges are in trouble.