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[quote=Anonymous]I was thinking about this. It is inevitable that the expensive colleges will break the 100k mark. It'll be a psychological effect as well. The higher education bubble is well known and few people can genuinely explain or justify it, which does suggest it is a bubble to a degree as it's seemingly beyond the point of logic.

My parents put their two kids through expensive private colleges in the period from 1996-2002. When my sister went off in 1996 the tuition was just about hitting 28k, and when I graduated in 2002 from a comparable school, the tuition was just about hitting 35k. During this period my parents' income rose from 140k to 150k. For the time it was a very solid UMC income, especially for the mid tier city where we lived. They were able to put their children through expensive private schools and save for good colleges and live in a nice house and take European vacations and still saving substantially for retirement. That is the reference point.

The inflation calculator suggests my parents' 150k income would be the equivalent of 215k today, although I suspect based on their jobs and years of experience, today's equivalent probably is around 250k. The ratio of tuition to income has gone from approximately 23% to 32%. And, of course, keep in mind this is pre-tax income.

But I was thinking that the equivalent of my parents' income in a place like DC or NYC or Boston or California would be a lot higher, probably closer to the 350k mark. And then suddenly it started to make sense - the high tuition increases has paralleled the inflationary growth in both housing and salaries in the coastal cities, that have pulled them further away from the mid tier / flyover cities. It's mirroring a tale of two Americas, a divide that has likely worsened in the last 20 years. It makes sense when you consider that the elite colleges are in many ways much more closely tied to the expensive coastal cities than the mid tier cities, not just geographically but also culturally.

I would not be surprised if a study of the geographical distribution of students at the expensive colleges, especially the LACs and universities that rely more on full freight, are showing a shift to more students from the high cost cities and fewer from the mid tier cities. Just a speculation, and it's based on that the economies of the high cost cities puts UMC families in a better position to pay for the expensive colleges as their inflated salaries can match the inflated tuition. This theory is also based off another observation I had, that it's often better to move to a high cost city on the coasts early in your career because despite the higher cost of living you are in a position to "mature" in a higher cost economy, you reap the benefits of higher salary growth and higher housing appreciation, for example. Physically, it may not be a nicer experience with smaller/lesser housing being the key differentiator, but in the long run you're often financially better off than a comparable professional who opted for a cheaper mid tier city. And it gives you more options, including paying these high tuition. [/quote]

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