PeopleImages / Getty Images

College tuition, which measures how much college costs increase each year compared to previous years, has been climbing faster than regular inflation for decades. Unlike general inflation that affects all goods and services, tuition inflation has consistently outpaced it, and it’s easy to see costs have ballooned when you look at the big picture.

The price tag for a college degree has risen dramatically due to increasing overhead for schools and overall inflation. From 2014 to 2024, average tuition and fees at public four-year colleges increased from around $9,140 to $11,610 for in-state students – that’s about a 27 percent increase in just one decade.

Student loan calculator

Want to crunch the numbers on your student loan? Or maybe you want to see what your payments might look like? Bankrate’s calculator is here to help you

Calculate student loan now

8 Reasons for rising tuition costs

Understanding why college costs keep climbing helps explain why tuition inflation consistently outpaces general inflation. Bipartisan Policy Center research identifies multiple factors that drive these increases:

• Reduced state funding
  

  State governments have been cutting per-student funding for public colleges since the 2008 recession. When states provide less money, public colleges make up the difference by raising tuition.

• Rising administrative costs
  

  Colleges employ significantly more administrators than they did decades ago. Student services, compliance offices, and support staff have all expanded, which increases operational costs.

• Upgrading and expanding campus facilities
  

  According to Derek Brainard, national director of financial education at AccessLex Institute, “one of the more headline-grabbing reasons” experts offer to explain college tuition inflation exceeding inflation is that “institutions are offering more and more amenities, modern housing, state-of-the-art facilities and staff to increase the student experience.”

• Rising faculty salaries and benefits
  

  Competition for qualified professors, especially in high-demand fields, drives up salary costs. Benefits packages andretirement contributions have also increased.

• Demand for more college services
  

  Students expect comprehensive support services, from career counseling to mental health resources. These services require additional staff and funding.

• Changes in enrollment numbers
  

  Brainard admits that although more services and better amenities are key drivers of college costs, they don’t tell the whole story either. For instance, over the last decade, enrollment at postsecondary institutions has been dropping consistently. Fewer students mixed with rising costs means a higher cost per head.

• Student completion and retention challenges
  

  Students are taking longer to graduate from school. This leads to higher costs for degrees as additional semesters of tuition and fees are tacked onto the total. There are also students who drop out for personal or economic reasons, and those who switch schools midway through their programs to pursue a different type of degree.

  The National Center for Education Statistics shows that only 64 percent of students who were pursuing an undergraduate degree for the first time in 2014 had graduated from a program at the same school by 2020.

• Federal financial aid availability
  

  Paradoxically, the availability of federal student loans may contribute to tuition increases. When students can borrow more money, colleges may feel less pressure to keep costs down.

5 Theoretical reasons for college tuition increases

Economic researchers have developed several theories to explain why college costs rise faster than inflation:

• The Bennett hypothesis: Named after former education secretary William Bennett, this theory suggests that increases in federal financial aid enable colleges to raise tuition because students can borrow more to cover higher costs.
• The golden ticket fallacy: The belief that a college degree guarantees high earnings leads students to pay almost any price for education, reducing price sensitivity in the market.
• The invisible menu: Unlike restaurants or stores, colleges don’t display clear pricing upfront. This lack of price transparency makes it harder for students to comparison shop effectively.
• Oligopolistic competition: Elite colleges face limited competition because they offer prestige that can’t be easily replicated. This allows them to raise prices without losing customers.
• Excessive regulation: Compliance with federal regulations requires administrative staff and systems, adding to operational costs that get passed on through tuition.

College tuition inflation rate beats national inflation rate

College tuition costs have increased at four-year institutions, climbing from roughly $11,840 a year in 1981-82 to $24,920 a year at in-state public schools for the 2024-2025 academic year. Record inflation, coupled with increased costs for overhead, forces institutions to raise everything from tuition and fees to room and board to keep up with costs.

College costs are high because tuition inflation consistently runs higher than general inflation. While the current general inflation rate has been fluctuating around three to four percent in recent years, college tuition inflation averages about eight percent annually. Looking at historical data from the Higher Education Price Index, colleges have been outpacing general inflation for decades. While general consumer prices have roughly doubled since the 1980s, college costs have more than tripled.

Trump administration’s influence on college tuition inflation

Recent policy changes under the Trump administration are expected to put additional upward pressure on college costs. The administration’s withdrawal of federal funding from higher education institutions and the passage of the One Big Beautiful Bill (OBBB) create new financial pressures that colleges are likely to pass on to students through higher tuition.

Inside Higher Education and PBS NewsHour report that colleges are navigating significant cuts to federal research grants and other funding streams by making up the difference through increased tuition and fees. Many colleges are restructuring their budgets to handle reduced federal research funding, often by shifting costs to educational operations funded through tuition revenue.

The OBBB will change how federal student aid gets distributed, potentially reducing aid access for many students. When students have less financial aid available, colleges often adapt by either reducing enrollment or maintaining tuition levels that become less affordable.

Federal student loan changes making you eye private lenders? Here are 7 with federal loan-like perks

Wondering if private lenders would work out better for you amidst the confusion of massive federal loan changes? Bankrate senior writer Lauren Nowacki shows how some private lenders offer federal perks.

Learn more

College tuition inflation by state

The cost of college varies not only by the type of institution you attend (public vs. private), but also by state. The CollegeBoard’s 2024 “Trends in College Pricing and Student Aid” report shows tuition inflation has actually dropped by 10 percent overall in the U.S. over the last five years, but this national average masks huge variations across states. For example, tuition inflation increased 12 percent in the same timeframe across schools in the state of Missouri while other states experienced significant decreases.

This variation largely depends on state funding policies, local economic conditions, and individual state budget priorities. States that maintain or increase higher education funding tend to keep tuition inflation lower, while states that cut education budgets often see steeper tuition increases.

Here’s how tuition costs and changes break down across different regions:

15-State Regional Comparison: Tuition Change Over Five Years

5 States with the Lowest Tuition

5 States with the Highest Tuition

How to navigate increasing college costs

Although college’s increasing prices are out of our control and tuition will likely continue to go up over time, here are ways to make your education more affordable. Here are some alternatives to a 4-year college:

• Go to community college first: If you can complete some of your courses at a community college before transferring to a four-year school, you can save on tuition and fees. If you need some financial help, some lenders offer loans for community college. Current data shows that tuition and fees at public, two-year (in-district) schools average $4,050 nationally for the 2024-25 academic year.
• Attend a public, in-state school: Public, in-state schools cost considerably less on average than out-of-state or private schools, thus you can likely pay less for a degree by attending a public college closer to home.
• Choose a degree with a positive return on investment (ROI): If you are looking to use postsecondary education solely as a way to step into a career, make sure the degree you want to earn will actually pay off. FREOPP research reveals a range of programs that have no ROI, or even a negative ROI.
• Apply for scholarships and grants: Beyond filling out the Free Application for Federal Student Aid (FAFSA), you should also apply for as many scholarships and grants as you can. At the very least, apply for funding options you believe you’re likely eligible for.
• Start saving and planning early: Early planning gives your money more time to grow and reduces how much you’ll need to borrow.
• Look into alternative pathways: Trade schools, certificate programs, and online degrees offer valuable skills at a fraction of traditional college costs.

Best private student loan rates

Want to know what rates student loan lenders are offering? Bankrate curated all the top lenders and rates to make things easier for you.

Check rates and lenders now

Bottom line

While you cannot prevent tuition inflation, knowing college tuition inflation consistently outpaces general inflation helps explain why college is increasingly becoming less affordable. Recent policy changes and continued state funding cuts suggest tuition inflation may accelerate in coming years, making strategic planning even more important. Compare college costs across a wide range of institutions and see the return on investment the degrees could bring over the next 20 to 30 years.

You can also attend community college for the first few years before transferring to a four-year school, and you can apply for scholarships and grants that can drive college costs down further. By making these moves and others over the course of your college career, you can pay less for college and reduce or avoid student loan debt.

Frequently asked questions

• How much has college tuition adjusted for inflation over time?
  

  When adjusted for inflation, college costs have still increased dramatically. What cost $11,840 in 1981-82 (in today’s dollars) now costs $24,920 for in-state public school students – more than double the inflation-adjusted amount. This shows that college tuition inflation has significantly outpaced general inflation.

• How much has college tuition increased in the last 40 years?
  

  College tuition has increased by more than 300% at public universities during the past 40 years, according to NCES historical data. This far exceeds the general inflation rate during the same period, which roughly doubled prices for most other goods and services.

• What state has the most expensive college tuition?
  

  Vermont has the highest average in-state tuition at $17,490 annually, followed closely by New Hampshire at $17,360. However, when including room and board, the total cost picture can vary significantly by institution and location.