Inflation Institute

Table of Contents

• TL;DR

  • Inflation in the U.S.

  • College Inflation

  • Divergent Trends

    • Financial Burden

    • Policy Concerns

    • Long-term Economic Impact

• Looking Ahead

TL;DR

• Inflation rate has increased 3.56% on average per year since 1977

• Since 1977 college inflation has had a cumulative increase of 1502.25%

• Policy makers may be prompted to make changes because of this trend

• Increasing costs could negatively affect the development of a skilled workforce

Inflation in the U.S.

The overall U.S. inflation rate, as measured by the Consumer Price Index (CPI), has experienced significant fluctuations over the past decades:

• 1977-2024 the average annual inflation rate was 3.56%, resulting in a cumulative price change of 418.27%

• Recents Trends: In 2022, inflation peaked at 8.0%, the highest level in four decades. By May 2024, the annual inflation rate had moderated to 3.3%

College Inflation

College tuition and fees have consistently outpaced the overall inflation rate, showing a much steeper increase:

• 1977-2024: College tuition experienced an average inflation rate of 6.08% per year, resulting in a cumulative increase of 1,502.25%

• Cost Comparison: College tuition costing $20000 in 1977 would cost approximately $320,450.36 in 2024.

Divergent Trends

• General Inflation: The overall U.S. inflation rate has seen periods of high and low inflation with a long-term average of 3.56% per year.

• College Inflation: College costs have risen at an average rate of 6.08% per year, significantly outpacing general inflation.

Financial Burden

• Rising Costs: The persistent rise in college costs relative to general inflation means that higher education is becoming increasingly expensive in real terms, making it less accessible for many families.

• Student Debt: The disparity between college inflation and general inflation contributes to the growing student debt crisis, as students often need to borrow more to cover rising costs.

Policy Concerns

• Affordability: The divergence between these two inflation measures may prompt policymakers to consider interventions to make higher education more affordable and accessible.

• Economic Impact: If the trend continues, it could have broader economic implications. It could potentially affecting workforce development, social mobility, and overall economic growth.

Long-term Economic Impact

• Workforce Development: The increasing cost of higher education could limit access to many institutions, affecting the development of skilled workforce.

• Social Mobility: Rising tuition costs may hinder social mobility, as higher education becomes less attainable for lower-income families

The U.S. has made progress in controlling inflation better, with rates moderating to 3.3% as of May 2024. However, college costs have continued to rise at a faster pace.

This persistent gap between general inflation and college inflation remains a significant economic and social challenge that warrants ongoing attention and potential policy interventions.

Looking Forward

We will look at

• The economics of burnout

• U.S. consumer confidence

• Fertility Crisis