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Inflation is a big-ticket news item right now, even in a time of many big-ticket news items. The news cycle repeats its concerns in blaring color—inflation, tariffs, general instability—parroting economic uncertainty ad infinitum. It’s very difficult to ignore, especially for middle- and low-income families who have a plethora of financial responsibilities to juggle already.

While it’s easy to see the price of eggs going up when you head to the grocery store each week, it’s harder to anticipate the impact on a longer-term investment like a college education. Some families may feel more hesitant (or outright discouraged) from committing to a large-scale expense like a college degree right now because of concerns about the future purchasing power of their money and likely continued increases in tuition costs.

If college is on the horizon, you might be feeling stressed, overwhelmed, or downright confused about how inflation could impact you. Luckily, there are tangible steps you can take to better understand this issue, reduce uncertainty, and protect your finances.

How Inflation Impacts College Tuition Spending

Economists say that a actually encourages spending, because it gives the consumer an incentive to buy now in order to avoid a product costing more in the future. But with college decisions, students and families must consider entering into a multi-year investment, where they will have to spend more in the coming years. In many cases, families also have to take out student loans, some of which can have higher interest rates during periods of inflation.

In fact, cost is the to students’ enrollment and completion of college degrees. And these questions of cost and affordability are greatly exacerbated in periods of economic instability.

So what does this mean for families preparing to make college decisions in the near future? Let’s take a closer look.

Facts First: What do the numbers say?

It’s certainly true that college tuition prices have trended upwards, and sometimes precipitously, over time. The average cost of college has since 2000. While this overall statistic takes the average across institution types (including 2-year, 4-year, private, public, nonprofit, and for-profit), increases in tuition prices have been much more significant at private institutions over public ones, and account for the majority of that “doubling” statistic. Furthermore, over the past decade, (adjusted for inflation) have been much more level, and in some cases have even slightly fallen. At least some of this flattening effect is likely due to the that many colleges and universities instated as a result of COVID-19.

For the upcoming 2025-2026 school year, most elite universities have announced that they will or more, which is just slightly higher than the current CPI inflation rate. University officials have indicated that this year’s tuition increases are at least partially in response to federal policy changes, including cuts to federal research funding and a proposed increased tax on endowment income.

Some quick numbers, via the :

• The average cost of college at a 4-year institution in the US is $38,270 per year.
• For an in-state student attending a public university (and living on campus), the cost of attendance is an average of $27,146 per year.
• And for a student attending a private nonprofit college or university (and living on campus), the cost of attendance is an average of $58,628 per year.

But before you get too much sticker shock, it’s important to keep in mind that most undergraduate students will never pay the advertised full price for tuition. After institutional scholarships, grants, and other financial aid, the average student actually pays less for tuition than they would have a decade ago. And for families below certain household income thresholds, there are a growing number of colleges and universities that offer .

It’s important to consider all of this information in aggregate, because at face value, the impacts of inflation and continued tuition hikes can appear dire. But when students and families are armed with more complete knowledge and data, they can make more informed choices about when, whether, and how a college education fits into their financial planning.

Digging Deeper: Why do tuition costs keep going up?

Economists have proposed for why rising tuition costs have continually outstripped the overall inflation rate.

Golden Ticket Fallacy

This theory proposes that if students and families believe that any college degree—regardless of institution or area of study—will be a “golden ticket” to job security and higher earnings, then they will be less discerning about identifying the actual return on investment. College degrees have become a much more ubiquitous job requirement in many fields, and with that increased demand, universities can (theoretically) raise their prices accordingly. Without doing due diligence, students and families may then assume that higher tuition prices might correspond to greater value or return on investment, and so the cycle continues.

Invisible Menu

Unlike with other kinds of goods and services, the price any particular student might pay for college tuition is “invisible” until after they apply and are accepted. The universities’ advertised prices of tuition don’t take into account the institutional discounts or federal/state financial aid a student might receive. Because of this, students are limited in their decision-making, only having full information about the schools they chose to apply to (or could afford to apply to). Without more transparency, there is less downward pressure on the pricing between competing institutions.

Geographical Constraints

The majority of college students are nontraditional students in one way or another—either enrolled part-time, with other obligations such as work or dependents, never living on campus, or not entering directly from high school. Most of these students will have to make their college decision from a limited number of options within commuting distance of home. Some economists have proposed that these hyper-local markets might cause price hikes because there is high demand locally and less competition. Geographical constraints like these might additionally demotivate institutions from continually improving the quality of their education, in the way they might if they had wider competition.

Regulation

There are differing opinions on the way regulation impacts tuition costs. The current higher education system in the US seems to occupy an unfortunate no-man’s land between a more idealized free-market system and the socialized (and thus, more highly regulated) education systems of Europe and elsewhere. The regulations we do have in place require institutions to go through a process of accreditation to be eligible for federal financial aid. On the free-market side of things, this makes it more difficult for new or innovative educational models to enter and disrupt the market. On the opposite end of the spectrum, there is currently no regulatory policy around capping tuition costs, which means institutions can keep raising prices.

The real hidden impact of inflation on college decisions is that any anxiety and uncertainty around the economy further obscures some of these systemic factors, and intensifies the cognitive biases that come along with them. When families are aware of these factors, they can take a more clear-eyed approach to college deci

sions.

Now What: How can families plan going forward?

Keeping all of this in mind, there are still some important steps that families can take to lessen the impacts of these systemic issues and mitigate some of the uncertainty and anxiety around the trajectory of the economy. There are some things we can’t control, and some things we can’t foresee. But with access to more information and a commitment to in-depth research, every student and family can make the smartest and best-fit decisions for their unique circumstances.

With thousands of colleges and universities around the country, it may feel difficult to narrow down the field enough to actually determine the best-fit options. An important first step is to sit down together and discuss the components of a college education that matter most, from the purely practical (like family budget, loans, and future job prospects) to the more socio-emotional (such as campus environment, distance from home, and academic and extracurricular passions). All of these things may be important to you! But a complete list of college applications should never cater to only one component at the expense (quite literally!) of the others. This brings us to one of your list’s most critical inclusions: a financial safety school.

The Importance of a Financial Safety School

At ������һ����ӰԺ�ݲ�, we recommend creating an application list that not only includes a mix of safety, target, and reasonable reach schools but also at least one financial safety school. A financial safety school is an academic safety school where your budget could comfortably cover 100% of the cost of attendance (either completely out of pocket or with the added assistance of low-interest government loans).

Going through the process of researching and identifying the best financial safety schools for your family’s unique situation will allow everyone to be on the same page about the significant investment of a college degree, and avoid some of the pitfalls of the “golden ticket” fallacy.

One resource that we recommend for researching your best-fit options is the Department of Education’s . This searchable database allows you to look up and compare schools based on a number of factors, including graduation rate, average annual cost, median income, and top-earning majors. This resource currently pulls data only from students who received federal financial aid (Pell Grants or federal student loans), which means it is limited in scope. However, the DOE does account for financial aid in its calculation of average annual cost, which corrects for some of the issues of the “invisible menu” approach to tuition pricing.

We encourage students to be as curious and engaged in this process as possible, from research and comparison to the nitty-gritty of the financial considerations. It may not be the most fun part of the process, but it does free up the space for even more genuine excitement when the acceptances start rolling in!

Final Thoughts

In a time of economic instability, it can feel even more difficult to make an already monumental financial decision like beginning a college education. But whether inflation is on the rise or not, our recommendations remain the same. Clear heads and adequate information are your best tools for making financially sound choices for you and your family. Once you find the metaphorical boxes that matter most, you can determine which schools check them all. And if the smartest choice for your family is “not right now,” then that is okay too. We will be here to help, however and whenever you’re ready to take that next thoughtful and well-informed step.