College Tuition Inflation Rate

Report Highlights. The average annual cost of tuition at a public 4-year college* is 37 times higher than tuition in 1963.

• College tuition inflation averaged 4.63% annually from 2010 to 2020.
• The cost of tuition at public 4-year institutions increased 31.4% from 2010 to 2020.
• After adjusting for currency inflation, college tuition has increased 747.8% since 1963.
• The most extreme decade for tuition inflation was the 1980s, when tuition prices increased 121.4%.

*Public data always uses in-state tuition unless otherwise noted.

Related reports include Average Cost of College | Average Cost of a College Credit Hour | Average Cost of College by State | Average Cost of Private School | Average Cost of Community College

College Tuition Inflation Rates

While tuition inflation is not consistent, annual rates have generally trended downward over the last decade.

• From 2010 to 2020, the average annual tuition inflation rate at a public 4-year college was 3.11%.
• Over that same period, tuition increased 31.4% while tuition inflation declined 95.6%.
• Among public 4-year institutions, the 5-year average annual inflation rate is 1.33%.
• Over the same period, the inflation rate declined 1.00%.
• Among 2-year public institutions or community colleges, tuition increased 43.4% from 2010 to 2020 while tuition inflation declined 47.0%.
• Among 2-year private nonprofit institutions, the cost of tuition declined 2.81% between the 2019-20 and 2020-21 academic years.
• All nonprofit postsecondary institutions reduced tuition inflation 96.6% from 2010 to 2020; average tuition increased 35.0% in that same period.
• All for-profit postsecondary institutions increased tuition inflation 233.8% from 2010 to 2020; the average tuition increased 12.1%.
• Among all postsecondary institutions, tuition increases at a 5-year average annual rate of 2.89%.
• Over the same period, the tuition inflation rate declined 20.9%.

Historical College Tuition Inflation

Tuition at public universities increased by more than 75% every decade from the 1970s through the 2000s.

• The average annual college tuition inflation rate of the 2010s (3.11%) was the lowest of any decade since the Higher Education Act of 1965 authorized federal student loans.
• In 1963, the average annual cost of tuition at a 4-year public college was $243.34.
• Adjusted for inflation, this amounts to $2,348.67 as of 2022’s second fiscal quarter.
• In the first decade of the 21^st Century, public 4-year universities increased tuition at a 31.5% faster rate than the average postsecondary institution.
• Since 1963, the average annual tuition inflation rate at public 4-year institutions has been 65.8%.
• The average annual tuition inflation rate at public 2-year institutions since 1963 has been 61.6%.
• Annual tuition inflation at private 4-year institutions has averaged 55.2% since 1963.
• Also since 1963, annual tuition inflation at private 2-year institutions has averaged 40.5%.

Graduate School Tuition Inflation

Tuition inflation for graduate school students mirrors undergraduate tuition inflation.

• From the 1989-90 academic year to 2020-21, graduate school tuition increased at an average annual rate of 12.2%.
• Graduate school tuition inflation lagged behind undergraduate tuition inflation 33.0% from 1989 to 2020.
• The 5-year average annual graduate tuition inflation rate is 1.75%.
• Among public institutions, the 5-year average annual graduate tuition inflation rate is 1.92%.
• Graduate school tuition inflation increased at an average annual rate of 2.03% over five (5) years at nonprofit private institutions.
• For-profit institutions inflate graduate tuition at a 5-year average annual rate of -0.91%.

Analysis: Why College Tuition Increases

While no single cause is attributed as the primary reason college tuition keeps increasing, several possible explanations have been offered on the subject. Each of these ideas explain the rise in tuition as a result of an imbalance in market driven economics.

• The Bennett Hypothesis
  The more grant aid a college student and their family get, the more they are willing to pay for tuition; subsequently, this allows colleges to set higher rates of tuition.
• The Golden Ticket Fallacy
  Believing any college degree would result in improved future earnings results in college students doing less in depth research on the cost of college, including tuition.
• The Invisible Menu
  The published prices of tuition do not include grant aid or discounts the student may receive. With the true cost of tuition obscured, colleges have trouble lowering prices to match their competition.
• Oligopolistic Competition
  For the majority of college students finding a college constrains them to their local geographic area. Without competition, the small number of local colleges in the area can keep tuition rates high.
• Excessive Regulation
  Regulation, accreditation, and federal subsidies make it difficult for innovative providers of higher education to emerge and offer the kind of competition the market needs to lower tuition prices.

Sources

1. National Center for Education Statistics, Digest of Education Statistics: Most Current Digest Tables
2. U.S. Bureau of Labor Statistics, Consumer Price Index Inflation Calculator
3. U.S. Department of Education, Federal Student Loan Programs Data Book: Introduction
4. Congressional Research Service, The Higher Education Act (HEA): A Primer
5. Manhattan Institute Report: A New Approach for Curbing College Tuition Inflation