Education Costs & Inflation
Plain English
College costs have historically tended to rise faster than general inflation, which is why a college-savings projection usually uses a separate, often higher, assumed growth rate for education costs specifically.
What is it?
Education-cost inflation is the rate at which tuition, fees, room, and board rise year over year. It's tracked separately from general consumer price inflation because it has historically moved at a different pace.
Why does it matter?
Using general inflation to project a future college cost can significantly understate what's actually needed — see the College Savings calculator, which lets you set the education-inflation assumption explicitly rather than assuming it matches general inflation.
How does it work?
A projection inflates today's known cost at a chosen education-inflation rate for the number of years until enrollment, then (in the College Savings calculator) multiplies by the number of years the student will be enrolled for a total projected cost.
Risks and limitations
Historical education-inflation rates are not a guarantee of future rates, and they vary significantly by the type of institution (public in-state, public out-of-state, private). A single assumed rate is a simplification, not a prediction for any specific school.
Questions to ask a professional
What education-inflation rate am I assuming, and does it match the type of school being considered? How many years until enrollment, and how sensitive is my plan to that assumption?