Parents paying the full cost of Ivy League tuition bills are getting a little relief — and they can thank inflation.
The cost to attend an elite school in the upcoming academic year is poised to fall by an average of about 5%, when adjusted for the rate of price increases in the broader economy, according to a Bloomberg analysis of tuition data. That’s the biggest drop in at least a dozen years.
The decline is being driven by a quirk of the economy: Sticker prices at schools are rising less than the general rate of inflation. The eight Ivies, as well as Stanford University and MIT, are planning to raise tuition an average of 3.3% for the 2022-2023 school year. By contrast, inflation is running at 8.5%.
Among those schools, Yale plans the largest tuition increase, at 4.3%. Factoring in inflation, that works out to a drop of 4.2%. The figures exclude other expenses such as room and board.
For decades, tuition has risen faster than prices, making college costs a flashpoint. Harvard tuition has surged 56% since the 2009-2010 year, and the upcoming school year will cost undergraduates almost $53,000.
Even so, few parents pay full price at these schools, which are among the most generous in offering financial aid. Harvard points out that about 55% of students receive need-based scholarships, and 20% pay nothing to attend.
A Bloomberg survey forecasts inflation will fall to 5.7% in the fourth quarter of this year, a hefty drop from the current rate but still well above pre-pandemic levels. Should inflation prove sticky, schools could come under pressure from faculty and staff to increase wages so that their pay keeps up with rising costs. That would cut at the heart of what colleges spend their money on, according to Phillip Levine, an economist at Wellesley College.
“If we observe over the course of the next year that wage pressure expands, that will drive up university costs and then they’ll have to start increasing tuition at a faster rate,” said Levine, whose recent book “A Problem of Fit,” focuses on the complexity of college pricing.
Which means families probably shouldn’t rest easy.
“This is an unusual situation that may not last,” said Mark Kantrowitz, a financial aid expert and the author of “How to Appeal for More College Financial Aid.”
