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Universities blame inflation for tuition hikes on students

Hheightened inflation may be offering colleges an opportunity to raise tuition rates even though such an increase may not be necessary, according to a higher education expert.

“Institutions are businesses at the end of the day, and so part of their mission is to increase their empire and to do more and do better for their students,” Beth Akers, a senior fellow at the American Enterprise Institute, told the Washington Examiner. “If there’s a sense that people are willing to pay more this year because they understand that inflation is happening, I can certainly see institutions using that as a cover to raise prices.”

After keeping tuition rates mostly flat for the past two years amid the COVID-19 pandemic, a number of colleges and universities announced that they would be increasing tuition for students by as much as 5%, with many citing economic pressures brought about by inflation.

INFLATION TICKS DOWN TO 8.5%, BOLSTERING HOPES IT MIGHT BE CRESTING

On Wednesday, the Bureau of Labor Statistics reported that the US economy had experienced an inflation rate of 8.5% over the past 12 months, far above the Federal Reserve’s target of 2%.

Last month, the Iowa Board of Regents approved a 4.25% tuition increase for the state’s three public universities, which will see tuition for in-state students increase by over $300 per year.

Similarly, Penn State University announced that tuition would increase by 5% at its primary campus. However, the increase only applies to students from households making more than $75,000. Officials attributed the increase to several factors including “unprecedented inflationary cost increases.”

In announcing his university’s 4.25% tuition increase in May, Boston University President Robert Brown specifically blamed the tuition hike on inflation.

“This increase does not keep pace with the current national rate of inflation and cannot fully offset the increased costs of University operations or fund salary increases that would fully mitigate the effects of inflation on the families of faculty and staff,” Brown said. “I also am mindful that our students and their families are affected by our increases and by inflation. We are caught in an inflationary vise between the institutional pressures and the impact on our students and their families.”

On the lower end of increases was Washington State University, which increased tuition by 2.4%, the maximum amount permitted by state law. Stacy Pearson, the university’s vice president of finance and administration, said the increase was needed to “stabilize the university’s budget as inflation rates rise.”

Akers told the Washington Examiner that higher education tuition and consumer price inflation have not generally been linked, but that doesn’t necessarily mean they can’t be, especially as colleges see their operating costs increase.

“Historically, when you look back at how college tuition prices have changed across time, it’s really not largely been tethered to price changes in the broader economy,” Akers said. “But on the downside, institutions and state systems are pretty comfortable changing prices … so, to the extent that institutions are facing higher costs because of inflation in the broader economy, they’ll be able to really quickly pass those on to students in the form of tuition increases.”

But with inflation hovering at 8% or higher, Akers said the fact that tuition increases are not keeping up with inflation is having the indirect effect of actually lowering the cost of higher education.

“We’ve got like an 8% annual rate of inflation right now,” she said. “At that rate, college, in some sense, in those places, has become cheaper because in real terms, the price hasn’t increased. It’s actually fallen.”

What would really drive up the cost of obtaining a post-secondary education, Akers said, is if the Biden administration goes forward with issuing a widespread student loan forgiveness, something the administration has publicly flirted with for months as it has continuously extended a pause on under federal student loan payments.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

“If we were to see [loan forgiveness] happen, then we’d probably see tuition prices escalating at a quicker pace than they have been historically,” she said, before adding that debt forgiveness likely would not contribute significantly to inflation in the economy at large.

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