University Costs vs a Jug of a Milk in 1990

In Kyle’s recent podcast discussion with Rob Carrick they talked about how the weird forced ignorance of past generations when it comes to truly understanding how much a post-secondary education costs today.  Whenever I bring up these increased costs in a social setting, most older people respond with something along the lines of, “Sure school costs more, but so does everything else.  You know we didn’t make as much money back then either.  Kids these days just want to buy brand-new cars and cell phones and stuff that’s why there is nothing left for school.”  Then they insert some sort of random anecdote that is all the confirmation that their warped theory needs to solidify in their minds.

You Had Something Called a Penny Candy?

The phenomenon that my elders are referring to is of course known as inflation.  A quick online check shows us that the Bank of Canada has done exactly what they have set out to do and since 1990 the average annual rate of inflation in Canada in right around 2%.

A 2012 report from the Canadian Centre for Policy Alternatives shows that since 1990 the average university tuition and compulsory fees for Canadian undergraduate students have risen at an astounding rate:  it works out to 6.2% annually.  The study states that the average tuition and fees for a full course load today are $6,186 per school year, and that number is expected to climb to a stifling $7,330 by 2016.  The raw arithmetic that Mr. Carrick points to in one of his columns, titled 2012 vs. 1984: Young Adults Really Do Have It Harder Today, shows that, if the rise in university tuition and fees had matched average inflation, the $1,000 tuition levels he enjoyed as a student in 1984 would have risen to just $2,028 today.

University Costs vs a Jug of a Milk in 1990
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In order to fully illustrate just what a 6.2% inflation rate looks like when compared to the more normal 2% rate that more or less everything else in society has “inflated” at, I thought I’d take a look at what a few common items cost in 1990 and compare them to what their price would be in 2013 if their prices had risen at the same rate as those in the world of education.  In order to confirm the prices back in 1990 I took the highly scientific step of asking three people who remember the year 1990 and found the rest using the Google machine (a much harder search than one would think).

That 90’s Show

It was a simpler time back in 1990.  The Oilers had just won their fifth cup in seven years, the Jays didn’t suck, and Ice Ice Baby spent some time as the #1 song on the charts.  Back in the day:

  • A new mid-level Honda Civic cost about $12,000.  My baby boomer readers are likely quick to point out that they cost substantially more than that today.  The only problem is that if the price were to have risen at the same rate as university costs, Civics would be 45,073.43 a pop at your dealership in 2013.
  • How about something a little more basic?  A candy bar was about 50 cents.  Today they would $1.88 each.
  • A gallon of milk was roughly $2.78 in 1990.  Today it would be over $10!
  • When I was just getting out of diapers a litre of gas was about 70 cents.  While prices have risen considerably, they certainly aren’t $2.63 – which is what they should be given the “everything has risen in cost at roughly the same rate” line of logic.
  • Finally, the ultimate comparison in the consumer goods market for a young student – a beer – would have set you back about $2.00 back in the good old days of 1990.  Today, that sudsy goodness would be listed at $7.50! (My liver might have been happier at that price but not any other part of me.)

It Must Be Nice to Build Your Own Reality

So please, don’t patronize us generations past.  We know that you guys control government policy because we’re too dumb/lazy/idealistic/preoccupied/self-absorbed to vote, and consequently student debt levels will continue to escalate as post-secondary costs gets subsidized at lower and lower levels.  Just realize that even if you used to be able to buy a pop and bag of chips at the local store when you were a kid (after walking uphill both ways of course) for half a dollar, this doesn’t mean you get to make up your own math rules when it comes to inflation data.

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Great post – It’s so interesting to look at the difference in the way things cost!

Really like this post, and glad to see some real numbers to carry out the “everything has risen” mantra that I hear a lot. I just saw my most recent billing for school and my tuition is up again, and more than what i had originally budgeted for. I don’t feel as though my educational experience is really getting incrementally better yet it keeps moving up in cost. Thanks for another great post and getting me thinking.

Koala

There’s also the ‘education inflation’. There are diplomas now for many jobs that people used to get straight out of high school (or less schooling). Some degrees have gotten longer, requiring 4 years instead of 3.

Great post!

Inflation is the silent wealth builder we don’t spend nearly enough time trying to fight in our portfolios.

Media Buff

Education has risen faster than the inflation rate. But your rate is exaggerated by picking a start date at the end of a long period when education costs were flat or rose slower than inflation. To your credit, you’ve included recent years, when inflation has been lower (or flat in some provinces). It was the 90s when education inflation was truly high – e.g. in Ontario, where tuition for many programs more than doubled from 92 to 97. What you miss overall though is: – most provinces made grants and/or loans much more generous in tandem with higher tuition –… Read more »

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