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Fix Falling Wages, THEN Tell Me College Is Too Expensive

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.

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.

Questions? Comments? Send them to millennialmoney@cnbc.com