Dive Brief:
- Colleges’ expenses rose 4% in the 2023 fiscal year compared to the year prior, according to new data from Commonfund, an asset management firm that tracks inflation in the higher education sector.
- That’s a lower rate of inflation than the Higher Education Price Index, or HEPI, tracked in fiscal year 2022. That year, the rate reached a decades-long high of 5.2%.
- Consumer inflation outpaced colleges’ increases for the second year in a row, an unusual occurrence. The Consumer Price Index hit 6.3% in fiscal 2023. Since fiscal 2000, annual CPI has outpaced the HEPI just 21% of the time.
Dive Insight:
Colleges, and the U.S. more broadly, have struggled with significant inflation since the pandemic began.
The HEPI has increased almost 3.5% on average since fiscal 2020. That’s a marked uptick from the decade beginning in fiscal 2010, when annual cost increases averaged 2.2%.
“Inflation is easing, but for higher education institutions, it is still well above the prior decade’s norm,” George Suttles, executive director of Commonfund, said in its report. “We anticipate this will be an ongoing subject of attention alongside other high priority agenda topics.”
Commonfund calculates HEPI using data on the cost of employee salaries, utilities, supplies and materials, fringe benefits and miscellaneous services. It does not include changes in research costs.
Faculty salaries increased 4% in fiscal 2023, the highest rate in 15 years. The uptick comes after faculty salaries rose 2.1% in fiscal 2022 — making it the category with the least growth that year.
Utilities, a traditionally volatile expense for colleges, was the only category where prices fell in fiscal 2023. Those costs decreased by 3.7%, after jumping 43.1% in fiscal 2022.
Meanwhile, supplies and materials rose 7.3% in fiscal 2023 after surging 21.5% the year before.
Inflation hit private colleges harder than public institutions in fiscal 2023, at a rate of 4.5% compared to 3.8%. Private institutions typically experience bigger annual price increases than public colleges, Commonfund said, but the difference between the two is on average 0.1%.
Commonfund based its fiscal 2023 calculation on data from July 1, 2022 to June 30, 2023, a time period that aligns with most colleges’ budget years.