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Tuition prices will rise as colleges grapple with inflation and demand for higher salaries

In June, Rutgers University joined a growing list of colleges and universities that have raised tuition fees due to inflationary pressures. The Board of Governors on June 21 approved a $5.1 billion budget for the 2022-2023 academic year, which included a 2.9% increase in tuition and fees. Full-time, in-state undergraduate students at Rutgers University in New Brunswick, the university’s main campus, will be charged $16,263 before financial aid this year.

Universities are raising tuition fees by 2% to 3% this fall, with the highest increases between 4% and 5%, said Emily Wadhwani, senior director and principal analyst for colleges and universities at Fitch Ratings. Most tuition fee increases remain well below the current rate of inflation, which was 9.1% in June.

Rutgers attributed some of its increased spending to university programs and university services such as academic counseling, library services, computer services, student health services, counseling and financial aid.

“When we look back over the past two years, during the pandemic, schools are making extraordinary (cuts) spending,” said Jessica Wood, senior director of charter schools and higher education at S&P Global.

Colleges and universities cut programs and laid off employees to manage the financial implications of the pandemic, and many of those cost-cutting measures are still in place today. Today, schools face staffing shortages, supply chain issues, and demand for higher salaries as employee living costs rise.

Public colleges typically don’t raise tuition as quickly as private colleges, given their focus on access and affordability, Wood said.

“The concern then becomes ‘how affordable are we staying with the type of effective purchasing power of families and students in mind?’ Against, ‘how do we increase our income to levels sufficient to absorb all these inflationary cost increases, as well as supply and labor costs?’” Wadhwani spoke about the price of tuition.

Both public and private institutions have increased their tuition fees over the past decades. Private four-year colleges raised tuition by an average of about $7,000 every decade from 1991 until the pandemic, according to the College Board’s latest Trends in College Pricing report. In fact, over the past 30 years, average private college tuition has nearly doubled, from $19,360 in 1992 to $38,070 recently. This equates to an average annual increase of 3.2%.

Public universities experienced a 158.2% increase in sticker prices between the 1991-92 and 2021-22 academic year. However, from 2011-2012 to 2021-2022, public universities only raised tuition fees by an average of 8.6%.

Forbes’ 20 best colleges in 2021, made up of four public universities and 16 private universities, are raising their tuition by an average of 3.7%. Amherst College saw the largest tuition hike of the group at 4.6%, bringing annual tuition to $63,500.

The Massachusetts Institute of Technology will increase its tuition by 3.7% to $57,590 this fall. Harvard University raised tuition by 3% to $52,659 this fall, Yale University by 3.8% to $62,250, Princeton University by 2.5% to $57,410 and Stanford University by 4% to $57,692.

In May, The Ohio State University raised tuition for its new freshman class by 4.6%. Tuition and fees for this class will be $12,485, an increase of $549 over last year’s rate. This rate will be frozen for those students’ four years at Ohio State.

Texas Christian University, a private institution, increased tuition in November. Their Board of Trustees approved a 4.5% tuition increase to $53,890 for the 2022-23 academic year. The university’s chancellor, Victor Boschini, cited “escalating running costs and rising inflation rates” in a message to students and faculty.

Howard University, a historically black private university, is raising its tuition by 7.5% to $30,584 this fall.

“The tuition fee increase is being implemented at a time when the University, and the country as a whole, are facing levels of economic inflation not seen in decades,” wrote Stephen Graham, Chief Financial Officer of Howard.

In general, Wadhwani says public and private institutions are raising their tuition fees to similar levels this fall. Highly selective schools grant the largest tuition increases because their enrollment will not be affected by a higher price.

Some public institutions will not increase their tuition fees at all. Adequate public funding, combined with budgeting and spending cuts, offset spending inflation.

“Interestingly, (state funding is) a current bright spot,” Wadhwani said. “Most states have had better-than-expected revenue trajectories throughout the pandemic and have also been the recipients of a significant amount of federal stimulus.”

The 11 universities in the Texas A&M System will not raise their rates for fall 2022. A&M System Chancellor John Sharp credited Texas state officials and the system’s budget management last year.

“We recognize that there is inflation for running universities, but there is also inflation for families and students,” Sharp said in a press release.

In Tennessee, no public university or technical school will raise tuition this fall due to a decision by the Tennessee Higher Education Commission (THEC) to keep tuition flat for college students. ‘State. The decision was made thanks to the state’s higher education budget of more than $137 million passed by the Tennessee Legislature and signed by Governor Bill Lee earlier this year.

“The cost of living is going up in general, in all areas, because inflation is going up and gas is expensive, and all those things. So as we thought about the big picture around affordability, it was really important to have these discussions with the Governor,” explained THEC Executive Director Emily House.

THEC asked Lee and the Tennessee General Assembly to budget between $90 million and $130 million for higher education this year, but they received more than they asked for. The budget includes $90 million for public four-year institutions and $47 million to raise salaries for college faculty and staff.

The tuition freeze has been welcomed by universities in Tennessee, according to House. If they had received less money from the state, House thinks the schools would not have been so happy with the freeze.

“I think there was a lot of gratitude and appreciation for the budget, there was a recognition of that beyond what we’ve received in the past,” House said. “Everyone was very happy.”

Although sticker prices will increase, students will not necessarily pay the full increase. Many private colleges lower their tuition significantly with grants and loans. The NACUBO 2021 Tuition Reduction Study found an estimated average institutional tuition reduction rate of 54.5% for full-time freshmen in 2021-22 and 49% for all undergraduate students, with data reported by 359 private colleges and universities. Tuition discount rates have steadily increased over the past decade.

According to Wood, schools want their net tuition fees to remain low, so that when their tuition fees increase, their institutional financial aid also increases to balance the price for students.

Wood and Wadhwani agree that the pandemic has forced colleges and universities to budget more efficiently, which will benefit them in the future.

“Schools enter the next year with inflation, rising expenses and challenges, but they also enter the year with better financial flexibility or better financial position,” Wood said.