Will College Tuition Costs Continue to Rise?
November 10, 2008
The quick answer to the above answer is NO or at least almost certainly NO. Parents looking for a break on college tuition, now that the economy is an a recession and inflation is tame, are unlikely to see it based on the historical increase in the index of college inflation:
College Inflation (CB) vs General Inflation (CPI)
2007 6.3% CB vs 2.29% CPI
2006 5.9% CB vs 3.23% CPI
2005 5.94% CB vs 3.39% CPI
2004 5.97% CB vs 2.66% CPI
2003 5.99% CB vs 2.28% CPI
2002 5.80% CB vs 1.58% CPI
2001 5.48% CB vs 2.85% CPI
2000 5.25% CB vs 3.36% CPI
1999 4.56% CB vs 2.21% CPI
1998 5.24% CB vs 1.56% CPI
1997 5.16% CB vs 2.29% CPI
1996 5.05% CB vs 2.95% CPI
1995 5.32% CB vs 2.76% CPI
1994 5.44% CB vs 2.77% CPI
1993 5.99% CB vs 2.78% CPI
1992 5.79% CB vs 3.16% CPI
1991 7.61% CB vs 4.45% CPI
1990 7.83% CB vs 4.81% CPI
1989 8.61% CB vs 4.99% CPI
1988 7.89% CB vs 4.16% CPI
1987 7.39% CB vs 3.90% CPI
1986 8.02% CB vs 1.61% CPI
1985 8.15% CB vs 3.55% CPI
1984 8.03% CB vs 4.14% CPI
1983 9.78% CB vs 2.44% CPI
1982 14.35% CB vs 6.48% CPI
1981 13.95% CB vs 10.73% CPI
1980 12.00% CB vs 13.22% CPI
Through good times and bad times, college tuition increases at a faster pace than inflation and wages. Parents who have lost a great deal of value in their children's 529 plans are in a worse position than ever. That's because even the most optimistic stock market forecasts are not suggesting that the Dow Jones Industrial Average will cross the 14,000 barrier in the next few years. At the same (as the graph below shows) college tuition should be expected to continue to increase at an even faster rate than CPI.
Source: Finaid.org
Parents looking for a different solution to college savings plans can explore the various options listed on the Money-Rates.com College Savings Plan page.
