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What is Tuition Inflation?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 18 September 2016
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Tuition inflation is a rise in the cost of college tuition. Like inflation in the general economic market, it is a reflection of a number of factors, including increased prices for products and services. Colleges and universities must pass such prices on to students in order to remain operational. According to the Department of Education in the United States, tuition inflation is about twice that of regular inflation, for a number of reasons.

It is important to consider tuition inflation when planning ahead for college. People just entering college need to be prepared for increases in tuition and fees, although some schools offer tuition freezes as long as students remain continuously enrolled, guaranteeing a set price for tuition. People planning for professional degrees must think even further ahead, as the costs for such degrees could become much higher by the time they are ready to enroll in medical school or law school. Likewise, students pursuing doctorates need to think about how to afford their educations.

Parents preparing tuition funds for children must also weigh tuition inflation. College costs may increase by as much as fourfold from the time a baby is born to when she is ready to enter college, and this means that such funds need to be larger than might seem merited when they are first established. Creating a college fund with a good interest rate and some flexibility in planning is very important for parents who want to plan ahead to cover tuition for their children.

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In the 1990s and 2000s, radical increases in tuition began to be noted and many of these increases were linked to increased college staffing as colleges were forced to hire more support personnel for positions like information technology specialists and environmental coordinators. Likewise, colleges were forced to invest heavily in amenities to respond to a shift in the way people viewed college education. With students considering themselves customers as much as students, colleges needed to woo applicants with new facilities and other benefits, all of which contributed to increases in tuition costs.

While tuition freezes are sometimes proposed to address rising tuition inflation, this solution is not favored by some economists studying college and university markets. Freezes in tuition result in less funds available to support infrastructure, maintenance, and personnel like professors. This, in turn, contributing to declines in the quality of education. Providing more government funding to mitigate costs is one option, as is spending less on amenities and working to change the way people view prospective colleges and universities to decrease expectations.

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