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The rise (and fall?) of the cost of education : Education inflation appears to be converging with general inflation, at least for now

Summary:
[embedded content] For many years, the cost of education has risen steadily and significantly more than the general level of prices. This trend has led to numerous complaints that education is out of reach; it has also led to a boom in student loans. The graph clearly shows how education inflation (blue line) has been above general inflation (red line) every year since 1994. And, again, quite significantly so. The past few observations, however, exhibit a marked reversal, with one observation even showing CPI inflation higher than education inflation. Does this mean education will become relatively more affordable now? It’s difficult to say from current data, especially since there have been two other episodes, in 2008 and 2011, when the two series converged only to diverge again.

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For many years, the cost of education has risen steadily and significantly more than the general level of prices. This trend has led to numerous complaints that education is out of reach; it has also led to a boom in student loans. The graph clearly shows how education inflation (blue line) has been above general inflation (red line) every year since 1994. And, again, quite significantly so. The past few observations, however, exhibit a marked reversal, with one observation even showing CPI inflation higher than education inflation. Does this mean education will become relatively more affordable now? It’s difficult to say from current data, especially since there have been two other episodes, in 2008 and 2011, when the two series converged only to diverge again. Time will tell if this latest development is pomp or circumstance.

How this graph was created: Search for “CPI Education” and create the graph. From the “Edit Graph” section, under “the Add a Line” option, search for and select CPI. Choose units “Percent Change from Year Ago” and click on “Copy to All.”

Suggested by Christian Zimmermann.

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FRED Blog
The Federal Reserve Bank of St. Louis is the center of the Eighth District of the Federal Reserve System. This District includes Arkansas, eastern Missouri, southern Illinois and Indiana, western Kentucky and Tennessee, and northern Mississippi.

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