Fix Falling Wages, THEN Tell Me College Is Too Expensive - Millennial Money with Cliff Mason

BIO

Cliff Mason is the author of Millennial Money. He is the Senior Writer of CNBC's Mad Money with Jim Cramer, and has been that program's primary writer, in cooperation with and under the supervision of Jim Cramer, since he began at CNBC as an intern during the summer of 2005. Mason was the author of a column at TheStreet.com during 2007, which he describes as "hilarious, if short-lived." He graduated from Harvard College in 2007. It was at Harvard that Mason learned to multi-task, mastering the art of seeming to pay attention to professors while writing scripts for Mad Money. Mason has co-written two books with Jim Cramer: Jim Cramer's Mad Money: Watch TV, Get Rich and Stay Mad For Life: Get Rich, Stay Rich (Make Your Kids Even Richer). He is 100% responsible for any parts of either book that you did not like. Mason has also had a fruitful relationship with Jim Cramer as his nephew for the last 23 years and will hopefully continue to hold that position for many more as long as he doesn't do anything to get himself kicked out of the family.

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Dec.05

4:26 PM ET

Friday, 5 Dec 2008

Fix Falling Wages, THEN Tell Me College Is Too Expensive

Posted By:Cliff Mason

Topics:Economy (U.S.) | Education

Check out this hysterical headline from The New York Times two days ago, "College May Become Unaffordable for Most in the U.S."

Wow, sounds scary. But is it true? Here's the not-so-rock-solid evidence from the article: "Over all, the report found, published college tuition and fees increased 439 percent from 1982 to 2007 while median family income rose 147 percent." That 439% is a big number, but when you adjust for inflation, college tuition and fees have increased just 150% from 1982 to 2007, a figure I got from blogger Kevin Drum. That's not a small amount, but it's not heart-attack inducing figure either.

Should we be freaked out about the rising costs of higher education? The recession is going to make everything a lot more difficult, and the coming tuition hikes next year will hurt. But this is not something I think we should be worrying about. A college degree is a valuable commodity, more people want to go to college, and they're willing to borrow a lot of money to pay for it. Despite the alarmism about rising College Tuition and fees, there's no real sign that people are being priced out of the college market, which, thanks to state schools and community colleges, still includes plenty of affordable options.

That's why you'll come across sentences like this one in the Times article, "although college enrollment has continued to rise in recent years, Mr. Callan said, it is not clear how long that can continue." Well, if college enrollment has continued to rise over a period where tuition and fees increased by 150% in real terms, why should we think enrollment will stop rising? It didn't stop this year, or in 2007, or 2006, and costs were up big then too.

Here's a thought, why don't we worry about college becoming unaffordable for most Americans when per capita enrollment actually starts to fall? Because until then, all of this is just fear-mongering.

Harvard: Stop Being A Hedge Fund And Spend Endowment

More important, the actual problem here is not that college has gotten more expensive. It's that the real median family income in this country has been stagnant for years, about 8 years actually. If we're going to get hysterical it should be about stagnant or falling real wages, which make everything less affordable, not just college.

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