College Tuition vs General Inflation
Average 4-year public university tuition & fees indexed to 1970 (1970=100), compared to CPI
“College became unaffordable because fiat money allowed unlimited government student lending.”
Average tuition at 4-year public universities rose from ~$500 in 1970 to over $11,000 by 2023 — a 2,100% increase versus ~700% for general inflation. The divergence accelerated after 1980 as states cut higher education funding and federal student loans expanded without price controls.
Perspectives
← Swipe between perspectives →
State disinvestment and federal loan expansion created a cost spiral
Tuition inflation resulted from states cutting funding while federal loans enabled schools to shift costs to students without market discipline.
This is genuinely one of the most alarming charts — tuition has risen 3x faster than general inflation since 1980. But the causes are identifiable policy decisions: state budget cuts, loan expansion without price controls, and university spending on non-academic functions.
Causal Factors
State funding cuts for higher education
30%Per-student state appropriations fell ~30% in real terms since 2000. Universities shifted costs to students through tuition increases. Public schools now get more from tuition than state funding.
Federal loan expansion (Bennett Hypothesis)
25%Expanding federal student loans increased students' ability to pay, enabling schools to raise prices. Annual loan limits rose from $2,500 to $12,500 for undergrads.
Administrative bloat
20%Non-instructional staff grew 2x faster than faculty from 1975-2015. Spending on amenities, student services, and compliance increased dramatically.
Reduced price sensitivity
15%College is perceived as essential for middle-class life, making demand inelastic. Students borrow because they view it as an investment, reducing price discipline.
Rising costs of research & technology
10%Universities invested heavily in research facilities, technology infrastructure, and compliance with federal mandates, adding costs passed to students.
Data Source
National Center for Education Statistics (NCES), Digest of Education Statistics Table 330.10
View original dataLast updated: 2024-01
Key Events
Pell Grants created
Basic Educational Opportunity Grants expand federal student aid
State funding cuts begin
Per-student state funding begins long-term decline after recessions
Unsubsidized loans
Federal Direct Loan Program makes unsubsidized loans widely available
Bankruptcy reform
Student loans become nearly impossible to discharge in bankruptcy
Direct lending only
Federal government becomes sole provider of federal student loans