As the New York Times reports, “The government’s official statistic for college-tuition inflation has become somewhat infamous. It appears frequently in the news media, and policy makers lament what it shows.No wonder: College tuition and fees have risen an astounding 107 percent since 1992, even after adjusting for economywide inflation, according to the measure. No other major household budget item has increased in price nearly as much.But it turns out the government’s measure is deeply misleading.
“For years, that measure was based on the list prices that colleges published in their brochures, rather than the actual amount students and their families paid. The government ignored financial-aid grants. Effectively, the measure tracked the price of college for rich families, many of whom were not eligible for scholarships, but exaggerated the price – and price increases – for everyone from the upper middle class to the poor.The good news is that the Bureau of Labor Statistics has gradually begun to change its methods since 2003, to capture the effects of financial aid. It will take more time to know how well those efforts are working. But the bureau won’t alter the historical data, which means the long-term comparisons will never capture the actual cost of college for American families.
“Those oft-cited comparisons, notes Sandy Baum, a George Washington University professor and an expert on college costs, says, are “certainly misleading.”
“The discrepancy matters because the country is in the midst of a roiling debate about whether college is worth it. Various pundits on both the left and right have taken to claiming that higher education is overrated and often not worth it. The shocking increase in college costs, according to the official Bureau of Labor Statistics numbers, is part of their argument. Continue reading “Government can overestimate college costs”