In an email to staff last week, Boston University President Robert A. Brown outlined many well-known challenges in higher education today: the need to help Ukrainian students impacted by the war in their home country, lingering concerns regarding the coronavirus pandemic and difficulties in hiring and retaining talent amid the Great Resignation that has caused many workers to quit their jobs.
Most importantly, Brown identified inflation as his biggest concern.
“By far my biggest immediate concern is the impact of inflation on faculty and staff, our students and the university. We’ve increased tuition for the upcoming academic year by 4.25%, our largest increase in 14 years, after increasing just 3.0% last year,” Brown wrote. “This increase does not keep pace with the current national rate of inflation and cannot fully offset the increased costs of running the university or fund salary increases that would fully mitigate the impact of inflation on faculty and staff families. I am also aware that our students and their families are affected by our increases and inflation. We are caught in an inflationary vise between institutional pressures and the impact on our students and their families.”
This near-historic tuition increase follows the best year of fundraising in Boston University’s history, which raised $225 million in philanthropic support in 2021.
Brown, who declined to be interviewed, is not alone in his concerns about inflation: colleges across the country are grappling with its effects. BU isn’t the only institution raising tuition, either. Looking ahead, experts say sharp tuition hikes could become more common unless inflation slows.
Rising costs for universities
Colleges are being squeezed in much the same way as American households.
“Inflation is real. And it may be a talking point for institutions as they defend price increases in the years to come, but they face absolutely higher costs that we’re all facing today across the economy,” said Beth Akers, senior fellow at the center. right American Enterprise Institute think tank and trained economist. “Just as we all face higher prices for goods and services, they must also increase the wages they pay to their faculty, support staff and administration.”
And while colleges may pay more for things like fuel, utilities, groceries, health care and other essentials, some experts note that raising tuition will only go so far as to alleviate cost pressures caused by inflation — which means that it’s just part of institutional finance planning.
“Rarely does tuition increases cover all expected costs, which will lead to cutbacks in other areas to do what institutions believe are the basic needs they need to do,” said Jim Hundrieser, vice president for advisory services for the National Association of Higher Education and university business administrators.
Hundrieser added that if inflation doesn’t ease soon, he expects near-historic tuition increases, like those at Boston University, to become more frequent either this year or next.
The current inflation rate is 8.3 percent over the past 12 months, according to data released by the US Bureau of Labor Statistics on Wednesday. That figure marks a small 0.3 percent decline since March, when inflation hit its highest level since April 1981.
And when prices go up, they often don’t go back down – meaning certain costs will remain high even if inflation slows.
“These are real price hikes that are not going away,” Akers said. “Even if we talk about a slowdown in inflation in the future, we will not see a price reversal. When we talk about a target inflation rate, that’s still a positive inflation rate. So we will continue to see prices that institutions need to respond to by increasing tuition fees so that institutions can recoup the expenses they incur, just for the day-to-day expenses that we all face, which are also increasing.”
Cost of climbing lessons
Tuition fees are increasing at many public and private universities this year. This comes after two years of historically low tuition increases, according to the College Board’s annual trends report.
While a comprehensive assessment of this year’s tuition increases is not yet available, a cursory glance reveals that many increases have been approved or are currently being considered. In December, the University of Virginia approved an 8.4 percent increase in tuition and fees over the next two years; the Oregon Institute of Technology increased tuition by 6.6 percent, or 7 percent when tuition is included; and Syracuse University increased tuition by 4.5 percent, to name just a few examples of institutions that beat Boston University’s 4.25 percent increase, the highest since the Great Recession.
The University of Virginia did not respond to multiple media inquiries, but previously described the tuition increase as “a response to increasing university operating costs across a variety of sectors.” And like several others, he pointed to inflation as one of the driving forces behind the rise.
“These new tuition fees will help the university balance its annual budget in an inflationary environment while maintaining our commitment to accessibility and value,” UVA President Jim Ryan said in a December press release when the two-year tuition increase was approved.
While some colleges have a lot of leeway to increase tuition, others face legal restrictions. Such is the case in Washington, where a 2017 law caps tuition at public colleges for undergraduate students, although it allows flexibility for other categories of students.
Washington State University’s Board of Regents this month approved a 2.4 percent increase in tuition for undergraduates. While WSU faces several challenges — including inflation, declining enrollment, and rising reimbursement costs — the university must go no further.
“Honestly, I think inflation is only compounding the challenges we face,” said Phil Weiler, Washington State’s vice president of marketing and communications, who also points to the declining enrollment at state community colleges, which WSU regularly provide with transfer students.
Before the legally capped tuition fees were increased, Weiler found that pricing was subject to “wild swings.” Tuition rose by as much as 15 percent a year after the Great Recession. Now the university is striving for predictability, expecting a 2.5 percent increase that will be consistent year over year for in-state students. However, this may not apply to international students and graduate students.
“The law specifically states that the legislature will set a cap on how much tuition fees public universities can charge local students,” Weiler said. “It’s a large percentage of our student body, but it’s not the only category of students. We have non-resident undergraduates, resident graduate students, non-resident graduate students and of course international students. The university has flexibility with all these other categories of students.”
Regardless of category, however, tuition remained within 5 percent for all students.
Some experts warn that certain government measures could push tuition fees even further on top of inflation. Akers of the conservative-leaning American Enterprise Institute suggests that as the federal government forgives student loan debt, tuition will rise accordingly.
“In terms of inflation, what I fear with this policy is that by canceling debt we are creating an implicit guarantee that the people who borrow tomorrow will also be faced with some sort of bailout on their loans so they don’t get hooked be able to pay back everything they borrowed,” Akers said. “And the concern is that as a borrower, as someone who decides how much I want to spend, how much I want to borrow for college, I’m going to tend to spend more than I would otherwise have if I think someone step in and relieve me of my debts in the future.”
If students are willing to borrow more under the assumption that their loans will be forgiven, Akers suggests that it relieves the pressure on colleges to keep education costs down.
“You don’t have to be a predatory institution to respond to stimulus in this way,” Akers said. “If institutions don’t have to be as competitive on pricing to compete for the students they want to apply, they will be less aggressive in trying to contain pricing, and the natural result is that pricing will go up.”