Dive Brief:
- The cost of running a college jumped 5.2% in the 2022 fiscal year, according to data from Commonfund, an asset management firm that tracks inflation in the higher education sector.
- That's the highest rate of inflation the Higher Education Price Index, or HEPI, has tracked since 2001, when it hit 6%. It's also a sharp increase from 2021, when the college inflation rate was 2.7%.
- But the HEPI increase was outpaced by inflation more broadly in the U.S., a rare occurrence according to Commonfund. The Consumer Price Index, or CPI, reached 7.2% in fiscal 2022.
Dive Insight:
Colleges saw rising costs across all aspects of their operations in 2022, as the U.S. experienced the most dramatic inflation since the 1980s. But it's atypical for the CPI to outpace the HEPI, especially so significantly, according to Commonfund.
This is the first year in almost a decade the CPI exceeded HEPI. The last time it happened, in 2013, the difference between the two was only 0.1 percentage point.
Commonfund promotes HEPI as a more accurate indicator of cost changes for colleges than the CPI. The HEPI calculates the inflation rate for higher education based on salaries, as well as the cost of utilities, supplies and materials, fringe benefits and miscellaneous services. However, it excludes research.
In 2022, utilities led the sector's cost increase with a 43.1% year-over-year jump, followed by supplies and materials, which rose 21.5%.
Utilities have a history of high cost volatility. Still, in 2022, they dramatically deviated from a five-year average increase of only 9%. The cost of supplies and materials saw a similar jump over the five-year average increase of 6%.
Among the factors evaluated by Commonfund, faculty salaries rose the least, by only 2.1%. The lack of significant raises led the wages of full-time faculty members to decrease by 5% in 2021-22 after adjusting for inflation, according to a separate report from the American Association of University Professors.
The substantial jump in colleges' costs was such that slight increases in tuition prices couldn't offset the difference, according to Fitch Ratings.
