Friday, February 02, 2007

Wrestling Rising Costs with Innovation

Although higher education leaders cannot fully control the price of a college degree, many institutions and policymakers are looking at creative ways to deal with the rising cost of educating students.



Context
While tuition costs are likely the most talked about topic in higher education, focusing on the institutional finance is equally important. The growing expenses associated with educating students is often a catalyst for rising tuition and fees, and they play a large role as educators plan for the future of their institutions.

To assess the overall outlook of higher education costs, economists and education leaders often look at the annual Higher Education Price Index (HEPI), a calculation that measures inflation for college and university goods and services. In 2006, higher education institutions saw prices jump 5.0 percent, compared to the Consumer Price Index that rose just 3.8 percent. The 2006 calculated HEPI included significant price increases in several areas, such as utilities, where prices soared 27.1 percent in one year alone. Also noteworthy are the price increases of supplies and materials, rising more than 8 percent while administrative salaries and fringe benefits both grew 5.0 percent. These high costs often saddle institutions with tough budget decision, like delaying capital projects, canceling classes, laying off staff and faculty and raising tuition and fees.

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