Chapter 1. Section 3(15), Problem 6

Step 1

Work It Out
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You must read each slide, and complete any questions on the slide, in sequence.

Question

College tuition has risen significantly in the last few decades. From the 1979–1980 academic year to the 2012–2013 academic year, total tuition, room, and board paid by full-time undergraduate students went from $2,327 to $17,988 at public institutions and from $5,013 to $39,296 at private institutions. This is an average annual tuition increase of 6.4% at public institutions and 6.5% at private institutions. Over the same time, average personal income after taxes rose from $8,037 to $39,514 per year, which is an average annual rate of growth of personal income of 4.9%.

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To determine it is more or less difficult for a typical person to afford college, we would need to know how much tuition had increased relative to average income in the United States. Average personal income after taxes rose from $8,037 to $39,514 per year from 1979 to 2013, or an average annual increase of 4.9%. So it was more difficult for the average person to afford to attend either a public institution, where tuition increased 6.4% annually, or a private institution, where tuition increased 6.5% annually. For further review see the section, “Inflation and Deflation.”
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