Will College Tuition Costs Continue to Rise?

November 10, 2008

By MoneyRates Team | Money Rates Columnist

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.

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