Prometheus 6

Hindsight Advice on Paying for College: Buy Stocks in 1982
By FLOYD NORRIS

It now takes more than a year of work for the average American to earn enough income to pay for a year at a private college, where costs have risen more rapidly than inflation for 26 consecutive years.

But by one measure, American colleges cost less than they used to. Those who plan on paying for their children’s education by selling part of their stock portfolios now need to sell less than half as many shares as their parents would have had to sell a quarter-century ago.

The College Board, a research organization, released its latest study of average college costs this week. For the current school year, the average for a private four-year college was $30,367, while the average cost for a public college in the United States is $12,796. Both figures were up almost 6 percent from the previous year and outstripped gains in the overall rate of inflation.

Those figures include tuition, room and board, but exclude the cost of books, which has been rising rapidly. And they are averages that significantly understate the cost of top universities, where total costs are over $40,000 per academic year.

The accompanying charts show the annual costs for the last 30 years in three ways. First, the figures show the costs for public and private colleges in 2006 dollars, thereby adjusting for inflation.

The second chart shows the annual cost of public and private colleges as a multiple of the average pretax weekly earnings of workers in American industry, as reported by the Labor Department. Thirty years ago, private college costs were equal to 21 weeks of average pay. Now the figure is 53, or more than the average worker earns in a year. The public college cost, expressed that way, has more than doubled from 10 weeks to 21 weeks.