Costs Of University Degrees

The cost of higher education in the United States continues to escalate. With these increases, students at all stages are constantly challenged with paying the high price for earning bachelor, master’s and doctorate degrees. Aside from taking into account the cost per hour at either a public university or private college, students must also meet the cost for fees, text books, supplies, living expenses and even miscellaneous costs.

Assuming an individual would have living expenses and miscellaneous costs with or without school, let’s examine the cost of earning an undergraduate degree versus an MBA and a PhD. Of course these degrees are cumulative in that one cannot simply jump to a PhD, but instead must complete a bachelor’s and the course requirements for a master’s first. One cannot negate the other, nor does having one reduce the cost of the other. [1]

First, let’s examine the cost of a four-year private degree. According to Fortune Magazine, the average cost of such a degree has climbed 7.4 percent a year for the past 30 years. This growth rate is double the inflation rate. Despite what could be construed as price gouging, demand was not affected until the global economic slump hit hard this past year. [2]

As recently as 2006, the average cost of a four-year private college degree came in at $30,367, according to When this figure is combined with Fortune’s estimate of 7.4 percent increases, students beginning a four-year private school degree this fall could expect to now pay more than $35,000 for the class hours alone per year. [3]

The news is not so dire in the public university or college setting. While there have been increases in the 6.3 to 7.1 percent range for the past three years, the average is still well below the private sector. cites the average tuition at a four-year public college or university as $5,836 per year. The ongoing increase in cost has ensured this amount is already obsolete, yet still affordable when compared with the private rate. [3]

The major area of study can also play a role in the total cost of the degree. The Delta Cost Project estimates the total cost of earning an elementary education degree at an average of $29,681 for public institutions. For an individual seeking a mechanical engineering degree at the same institution, he or she can expect to pay more than $40,000 on average for an undergraduate certificate. [4]

The debate over continuing the college education experience lies entirely on the expected payoff from earning a higher degree. The U.S. Census Bureau estimates the additional earnings a master’s degree will generate over a bachelor’s degree is $240,000. Over a lifetime, the individual possessing a master’s degree can earn a salary of $3.3 million. Considering the $100,000 cost associated with earning a private education master’s degree, the cost is certainly justifiable. [5]

Assuming the selected master’s degree does generate the substantial increases in income, it can be well worth the cost. Assessing the cost alone can be overwhelming when potential payoff is left out of the equation. FindAid estimates the median additional debt for a Master’s degree is $25,000. Roughly 25 percent of graduate and professional students borrow more than $42,898 for a Master’s degree – above and beyond any debt they have already incurred for their bachelor’s degree. [6]

The Harvard Business School offers perhaps one of the most useful tools on its website for those potential MBA students evaluating the cost of continuing their education. The site provides a Cost Summary Page with an outlined budget for the 2-year program. The total could knock you off your feet as it does reach more than $76,000 for a single MBA student per year. This amount does include all possible expenses and provides the potential student with a real-world estimate. [7]

Among those in academics, there continues to be much debate over whether or not an individual should seek out an advanced degree for the income potential or for the love of education. The U.S. Census Bureau estimates doctorate degree holders will earn nearly one million dollars more than their master’s degree holding counterparts over the course of their career. [8]

While those individuals seeking doctoral degrees had a net access price of $6,800 at public institutions and $13,900 at private, not-for-profit institutions per year for four years, full time doctoral students in both sectors tend to receive much larger amounts in grants, assistantships and other aid. As a result, doctoral students on average do not borrow more than those students seeking a master’s degree. [9]

Reaching your educational goals in the United States can be a fulfilling expenditure, but some students seek something more. For those wishing to study abroad, degrees can be found in a variety of fields and for a variety of costs. A bachelor’s degree can cost anywhere from $12,500 per year on up for a four year program. [10]

An MBA on the lower end costs $29,000 [11] while doctorate costs can vary widely according to the program, institution and country. Surprisingly, there are a number of programs available that present no cost to the student at all. Instead, the accepted student participates in research and other curriculum-enhancing activities to benefit the school. [12]

No matter what your intentions are for seeking an education beyond that which your state of residence is legally obligated to provide, there are a number of factors to consider before selecting your educational. Cost will certainly be a big factor and understanding what you get for that cost – both directly and indirectly – should be key to your overall decision.

— A 2014 update on the costs of education in the United States —

A summary from Economist Harry S. Dent

Education, especially college education, has seen the greatest inflationary spiral of any major sector in the last three decades, far greater than even health care costs.

Tuition costs have risen 9.78 times or 878% since 1980!

In comparison, health care costs have “only” risen 507% while overall consumer inflation is up 203% over that same time frame.

In the last 14 years alone, tuition costs have more than doubled!

We can blame much of the inflation on educational institutions’ insistence on major investments in facilities and campuses during the real estate bubble. The more expensive the building, the more students must fork out for their education.

The thing is: this situation in the education sector is completely and utterly unsustainable… an extreme bubble, just like everything else these days… and it cannot — and will not — last much longer.

A massive shake-out is coming… Will This Event Trigger the Next Great Depression?

Harry S. Dent, the Florida-based economist who predicted nearly every major financial event of the last thirty years now warns that we are sitting on the precipice of the greatest financial crisis in history.

Like everything else in the economy, college education has its own predictable demographics.

We spend the most on college education when we’re 51 years old. The average kid is born to the average parent at age 28 to 29 and they’ll graduate from college at age 22, when mom and dad have passed that big five-o milestone. The peak in education occurred already in 2012.

This peak is confirmed by a look at the echo boom birth rates, which first peaked in 1990. A 22-year lag on that index (for the average age at which kids graduate from college) also shows the peak at 2012.

Now there will be a seven-year decline in graduations into 2019 until the second wave of echo boomers, which peaked in 2007, push their way through the education system, creating another peak in 2029.

That first decline — the one we see happening now — coincides with Dent’s four key long-term cycles, all of which show a trend downward until 2019 or 2020.

And that indicates a perfect storm is developing over education, especially colleges and universities, which will violently shake out the sector, transforming it in the process – According to Dent.

The truth is that colleges and universities have had the average, more affluent household over a barrel for decades. Heads of such households want nothing more than to get their kids into the best colleges to give them the edge in the future.

Yet, upward mobility has declined in the U.S. due to the high costs of getting kids into college, and the rise of student loans have burdened those less fortunate, making it harder for them to even afford a house.

Something’s Going to Give… and Soon

Clayton Christensen is a professor at Harvard Business School and author of The Innovator’s Dilemma, explains that there is a revolution in education coming over the next 15 years that will put many colleges out of business unless they jump onto the online education bandwagon.

In particular, Christensen believes our prestigious school faces an innovator’s dilemma. Does it offer an online equivalent of its infamous case-method approach to teaching to head off the competition ahead? Or does it stay offline and fight an almost impossible-to-win fight?

Michael Porter, one of the most famous business strategy professors at Harvard, believes the institution should have a limited, pre-MBA online course that helps prospective students get into Harvard’s two-year, on-campus, case method course (which is, of course, very expensive). Christensen, on the other hand, believes Harvard should move the entire course online.

Dent thinks Harvard will follow Porter’s approach because it will stubbornly protect its high-end model for as long as possible. That’s a natural response. But it’s also likely a mistake, and one that Harvard could pay for dearly down the road.

Dent believes a hybrid model for college education would be ideal. Certain basic classes, that require more interaction among students and professors, can be on campus while the best technical classes and expertise from around the globe are taken online.

Regardless of how it happens, or what it ends up looking like, expect a major revolution in education to occur during the next six to 10 years.

This will make higher education affordable again, and be the straw on the camel’s back that will eventually break the upper-class lock on this powerful sector.

Education Around The World - Infographic



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