Education Costs Rising Faster Than Health Care

By Niraj Chokshi

A little more than a week ago, the Labor Department announced that, among other things, the price of education increased faster than the price of medical care over the last year, according to its July Consumer Price Index report.

That got us wondering what the historical trend has been, so we looked it up and the results are interesting. And a little scary.


For 27 of the past 30 years, the price of education has grown at a faster rate than that of medical care. Education also grew faster than inflation for 29 of the past 30 years, while medical care beat inflation 27 of those years. Could education be our next health care crisis?

The answer is probably no, at least not for a long time. Average spending on medical care was between three and four times more than that of education in any given year from 1984 to 2007, the only range that the Labor Department's spending data was available. In 2007, the average consumer unit, similar to a household, spent $2,853 on medical care and $945 on education.

But that doesn't mean the cost of education isn't on a terrifying tangent. Just last year, the College Board reported that most students and their families could expect their 2008-2009 tuition and fees to increase by $108 to $1,398. Private colleges are reporting a dip in enrollment as this recession compounds the monetary burden for families.

Last Thursday, on the Tavis Smiley show, Education Secretary Arne Duncan predicted that students will increasingly turn to schools that are more creative at keeping their costs low, and he has offered a $5 billion sweepstakes for districts that demonstrates extraordinary results. President Barack Obama has pledged a $4,000 tax credit and often talks about improving access to education, but the early months of his presidency have been dedicated to bailouts and health care. The sad thing is that everyone -- politicians, parents, kids, even the schools themselves -- agrees that the rising costs are a huge problem, yet the 30-year trend demonstrates and even steeper curve than our much-maligned health care inflation.
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This article available online at:

http://www.theatlantic.com/business/archive/2009/08/education-costs-rising-faster-than-health-care/23705/