July 29, 2009
Is education cheaper during a recession?
Ask any college administrator, and they'll tell you, college applications are up. In fact, this usually happens during recessions. Is it simply because with the job market down, there are fewer opportunities for folks?
Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"Actually, yes, that's the answer, but I'm going to expand a little bit. When someone looks at the cost of going to college, of course part of the cost is going to be what you have to pay for tuition, for books and for fees. But there's a second cost. And economists call this the opportunity cost. For example, what if you were earning $30,000 a year working full time, and let's say you're thinking of going to college full time, so you're not going to be able to work. Well, if you do go to college and give up your job - quit your job - that's a foregone return of $30,000. So you can think of the income you give up each year that you're in college in this example as at least partially based on that $30,000. Now, if there's a poor job market, and let's say you were fired or laid off at your job because of the recession, then that $30,000 cost doesn't exist. So economists think this is another reason why we do see college applications go up' simply because the alternative cost of giving up work is not as great because the unemployment rate is so high."
Posted by Dave at July 29, 2009 08:00 AM