According to the New York Federal Reserve Bank’s Survey of Consumer Expectations, since January 2021, respondents consistently predict rising college education expenses in the coming 12 months: 5.6% increase in January 2021, rising to a 6.1% increase in May 2021, and most recently in July 2021, even higher at a 7.5% rise. Whereas, just a year ago in July 2020, consumers expected only a 4.8% increase in college expenses.
As college costs have increased at an approximate ratio of $6 for every $1 of inflation since 1980, the continued expectation of rising costs may be concomitant to the longer term trend.
Yet, a 7.5% increase in college education year over year equals approximately $2679.00 more per year or $10,716 over four years (assuming a student graduates in four years), using the average college cost of $35,720 according to researchers at educationdata.org
As consumers continue predicting rising college education expenses, those seeking college degrees will likely contend with the dilemma of borrowing more than previously expected, cutting expenses elsewhere, even forgoing, or possibly postponing enrollment in college. Furthermore, the popular narrative that college is unaffordable for the average middle class family could sour sentiment about the value of college.
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