Is college still worth the price?

Posted by Jonathan Tse
By Penelope Wang, Money Magazine senior writer
Last Updated: April 13, 2009: 12:36 PM ET

Costs are soaring twice as fast as inflation, even as salaries for graduates are falling. Time to examine the old belief that college is worth whatever you can pay.



For more than two decades, colleges and universities across the country have been jacking up tuition at a faster rate than costs have risen on any other major product or service - four times faster than the overall inflation rate and faster even than increases in the price of gasoline or health care (see the chart to the right). The result: After adjusting for financial aid, the amount families pay for college has skyrocketed 439% since 1982.
Prices for college have begun to follow their own peculiar logic. In the absence of any objective measure of the value of an education, price becomes the default yardstick. The more expensive a college is, the better the education it presumably provides. (After all, if other families were willing to pay this much to send their kids here, it must be worth it.)

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