Earning an MBA degree at top business schools in the United States remains a substantial investment. The cost of higher education in the US has increased at a higher rate than the national inflation. Due to the rapid increase in the cost of higher education, the US faces a student debt crisis, as student loans have outgrown auto loans and credit card debt.
As higher education costs get higher than inflation and the student debt crisis becomes a cause of concern, students have begun to question if higher education is worth the price. Others are beginning to seek lower alternatives, choosing to study MBA at public universities or even outside the American borders.
Though the cost of acquiring a degree in the US has skyrocketed in recent decades, so too has the accessibility of higher education. This post investigates the effects of the rising cost of higher education in the US. First, we look at the spiraling cost of higher education vs. the national inflation. Let us jump right in!
Rising Cost of Higher Education vs. Inflation
A recent report shows that the cost of higher education in the United States rose by more than 500% between the 1985-86 and 2017-18 academic years. In comparison, medical costs and the average consumer price index have jumped more than 286% and 121%, respectively. Based on these findings, the cost of attending university has been rising more than twice as fast as the national inflation.
The US is Facing a Historical Student Debt Crisis
Acquiring a university degree has a high impact on employability and the annual average income. The bureau of labor statistics indicates that college graduates’ earned weekly wages that were 80% compared to high school graduates. For instance, Americans with bachelor’s degrees have median weekly earnings of $1,173 compared to $172 a week for those with a high school diploma.
Therefore, more Americans apply for student loans to afford the cost of higher education, knowing that they will be eligible for the top-paying jobs. In the process, the student debt crisis has continued rising. Reports highlight that the US is facing a historical national student loan debt balance. As of the last quarter of 2020, student loan debt in the US stood at $1.68 trillion, and it is growing six times faster than the national economy. On average, 42.3 million Americans with federal student loan debt each owe $36,520 in student loan debt. This leaves a substantial socio-economic impact on society.
Rising Cost of Higher Education Creating Challenges for Minorities
The rising tuition cost creates a severe challenge for minorities who cannot afford the cost, leaving alone to repay the student loan. In essence, the US education system presents unequal opportunities to those seeking higher education. Statistics indicate that black students borrow more than white students do. Therefore, it is clear that higher education’s rising cost creates a severe challenge for the minorities.
Conclusion
As higher education costs increase almost eight times faster than the national wages, it is clear that US education is becoming inaccessible to minorities and students from low backgrounds. Therefore, there is a need to change the paradigm and make university education more affordable. The US needs to focus on re-establishing an inclusive system by creating free education for all.
- Zack Friedman,(2020), Student Loan Debt Statistics In 2020: A Record $1.6 Trillion. Forbes.com
- Michelle Jamrisko and Ilan Kolet (2013), College Costs Surge 500% in U.S. Since 1985: Chart of the Day. Bloomerg.com
- Allan Akhtar, (2019), 7 Countries where higher education is free. Businessinsider.com