HESA

Higher Education Strategy Associates

The Cost of PSE, 2030

One type of story which always makes the back-to-school news is the “what will PSE cost in 2020/2025/whatever” (the choice of year is usually 18 years in the future) story, which normally emanates from a press release from a financial institution trying to sell savings products of some kind. The problem with most of these estimates is that they are based on straight-line extrapolations of recent trends. Thus, all the stories from the late nineties assumed that 8% increases in tuition were going to continue on indefinitely; thus the headlines that the cost of an education by 2015 would be in the region of $125,000. Cue apocalyptic headlines.

I’m not here to engage in retrospective sniggering – heck, it was perfectly clear at the time that these projections were nonsense. Making decent projections isn’t tough: and just to prove it, you can do a walkthrough with us of our own PSE cost projections for 2030.

Tuition (40% of total expenditures): It doesn’t seem like we’re heading towards large tuition increases anytime soon. Governments have decided that universities are like utilities and need to be regulated in roughly the same way. That said, like all labour-intensive industries, costs tend to rise faster than inflation and it’s not as if governments will have the money to cover that. So, let’s say that tuition will rise, on average, by 2% above inflation, or 43% over 18 years.

Books and supplies (7%): In some industries, technology reduces prices, but not in this one. For the forseeable future, the model for publishing is going to involve giving students better products for similar or higher prices. Best guess: 1% over inflation, or 20% by 2030.

Rent (25%): This depends a lot on location: over the last decade, rent went up 46% in Saskatoon, but fell in Toronto. Best guess: no change in real dollars.

Food (12%): This could actually be the biggest problem area. Oxfam recently suggested that food prices could double by 2030 due to rising demand and climate change. Even at half that (which is what we’ll use), it would be a big increase.

Transportation (7%): This one’s tricky – does Peak Oil hit? Do fuel efficient/electric/driverless cars make a major difference? To be conservative, let’s assume a 50% real increase, as for food.

Other (9%): Almost by definition, everything else is going to rise at about the rate of overall inflation.

(Disagree with our guesses? Make your own! Then multiply out by the weights provided.)

Multiply all that out, and what you’re looking at is an increase in total PSE costs of 26.1% (or, about $4,700) over and above inflation over the next 18 years. Nothing to sneeze at, of course, but not exactly apocalyptic, either.

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