2008 K-STATE STUDENT PRICE INDEX SHOWS RISING COSTS

MANHATTAN, KS – October 16, 2008- For the first time in the seven year history of the K-State Student Price Index, tuition increases at Kansas State University have not kept up with the overall increase in the price index for KSU students. The Student Price Index (SPI), compiled by the KSU Economics Club, increased by 7.3 percent from 2007.  This increase was driven by a thirty-seven percent rise in gas prices which was somewhat offset by a five percent increase in the price of grocery staples.  Tuition for the average K-State student did increase by six percent since 2007 which is comparable to the overall increases in average consumer prices in the United States.  One year ago the SPI had risen 6.3 percent, but in 2007 students and other consumers did not experience quite as substantial of an increase in gas prices.

Figures released earlier today by the U.S. Bureau of Labor Statistics indicate that prices paid by urban consumers, (as measured by the U.S. Consumer Price Index) have increased only 4.9 percent.

Megan Korte, President of the KSU Economics Club, coordinated the efforts of several club members who visited local restaurants, grocery stores, filling stations, bars, and movie theaters to gather information about prices.

“We know from our economics classes that students respond to price changes by substituting comparatively less expensive goods,” said Korte, a junior from Overland Park, KS.  “This means we should expect the rational student to travel less.  I have noticed an increase in the number of students staying in Manhattan on the weekends.  I have also observed an increased use of modes of alternate transportation such as bicycles and mopeds and more available parking spots on campus.”

Lisa Taylor, junior from Oakley KS, is the secretary of the KSU Economics Club.  “This year the tuition increase was less painful than usual,” Taylor observed. “It appears the increased online competition for textbook purchases has tempered these price increases.  Students have fewer excuses not to purchase textbooks especially when we observe double digit percentage increases in the price of beer.”

Victoria Tidwell, senior from Elkhart, KS, collected prices for this project.  “I observed that housing prices were up for all students.  This year we included fraternity and sorority housing as part of the SPI.  Without that data housing prices would have increased by 7.1% instead of the 6.2% increase that we observed.”

Professor Daniel Kuester serves as the faculty advisor for the KSU Economics Club.  “Once again, K-State students have been hit harder than the average consumer by inflationary pressures.  According to my estimates, the SPI has increased by about sixty-nine percent since we started measuring this data in 2002.  There has been little relief in inflationary pressures on the basic staples of food, gasoline and tuition for the typical K-State student,” he observed.  “While college students are more affected by inflation than the average consumer, we can infer that from the perspective of our students, the value of a KSU education continues to increase particularly in comparison to the average stock portfolio.”  He added, “College educated individuals on average earn higher wages and experience lower rates of unemployment than those without an advanced degree.  In these uncertain economic times the relative value of a college education is substantial.”

Increases in the prices of food, up 5.3 percent, and housing, up 6.2 percent, also contributed to the Student Price Index's 12-month growth, according to the Economics Club's figures. Other staples in the index include beer and movie tickets, which were up twenty-one and three percent respectively from a year ago.  Pizza prices were unchanged from last year and that provided some relief to the typical student's budget.

Josh Moldrup from Manhattan KS stated, “We have learned in our economics classes that students are very price sensitive.  We have elastic demand for goods and services so it is not surprising to see more students enjoying movies and eating pizza while spending less time in Aggieville on the weekends.  Sadly some students are not always rational in this regard.”

Gasoline                      +36.9 percent

Groceries                    +5.3 percent

Tuition                        +5.9 percent

Beer                            +20.8 percent             

Housing                      +6.2 percent

Textbooks                   +0.6 percent

Pizza                           unchanged

Movies                        +3.1 percent

Contact: Dr. Daniel Kuester, 785-532-6341, dkuester@ksu.edu; Lisa Taylor, ltaylor2@ksu.edu, 785-672-7490; Megan Korte, mkorte18@ksu.edu; Josh Moldrup, 785-341-5702, moldrup@ksu.edu

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