Commonfund’s Higher Education Price Index (HEPI), the premier inflation index for the education sector, is used by thousands of practitioners to ensure their budgeting processes account for real costs, and that their investment management practices and policies use an inflation metric that offer a meaningful benchmark for achieving intergenerational equity. HEPI tracks the changes in a set bundle of goods and services purchased by educational institutions each year.
The weights that determine the contribution of each HEPI component (and hundreds of subcomponents) to the overall measure are typically held static. Like the Consumer Price Index (CPI), this allows the measure to gauge the year-over-year change in prices – comparing apples in year x to apples in year x+1 – so that the inflation rate is not skewed by compositional changes to the underlying factors.
But what happens when the bundle of goods and services materially changes over time? In higher education, technology budgets have surged while faculty salary budgets have contracted due to the growing reliance on contingent and adjunct faculty. The 2026 HEPI methodology update accounts for this evolution and more, based on a rigorous assessment of how institutional cost structures have changed over time. We believe that periodic assessments and respective methodological updates are necessary to ensure HEPI remains a comprehensive inflation benchmark that reflects the dynamic sector realities of the higher education sector.
Key 2026 HEPI Methodology Updates
Below is a summary of key changes described in the 2026 HEPI Methodology Update memo. For a more thorough explanation of changes as well as an impact analysis and project approach, see the full memo here.
New Technology Component Added: A new technology component, approximately 8 percent of the overall HEPI measure, brings the total number of core HEPI categories from eight historical components to nine. Technology has become one of the fastest-growing costs in higher education as institutions invest in campus wide systems, digital learning tools, and shared data platforms. Ongoing software, cloud services, and rising cybersecurity threats—along with increased IT staffing—have made technology a permanent and strategic operating expense, and all together justify its new place within the HEPI methodology.
Faculty Salaries Component Reduced: The faculty salaries component—the largest in HEPI—has been reduced from 35 to 29 percent to reflect long-term changes in the academic labor market. Institutions increasingly rely on contingent and adjunct faculty, who now make up a large share of the instructional workforce and are generally lower cost than tenure track faculty. At the same time, the growth of online and hybrid learning has enabled more flexible staffing models and reduced reliance on traditional full-time faculty roles. Together, these structural shifts support a lower weighting for faculty salaries that better reflect current instructional cost realities.
Clerical Employees Component Reduced: The clerical employees component has been reduced from 18 to 14 percent to better reflect current staffing patterns in higher education as institutions employ fewer clerical and administrative support staff as digital workflows, automated systems, and centralized services handle many routine tasks.
Administrative Salaries Component Increased: The administrative salaries component (which tracks administration and leadership positions) has been increased from 10 to 13 percent to reflect the continued growth in administrative staffing and compensation across higher education.
Utilities Component Reduced, with Renewable Energy Included: The utilities component of HEPI was reduced from 7 to 4 percent to reflect long term gains in campus energy efficiency and changes in how institutions manage energy use. Efficiency improvements, sustainability efforts, and a cleaner energy mix have reduced the overall share of utilities in institutional budgets, supporting a lower HEPI weighting. The utilities component also now includes renewable energy as a subcomponent alongside traditional energy sources to reflect renewable energy’s integration in the energy generation mix across geographic regions.
Miscellaneous Services Component Increased, with Food and Travel Added: Miscellaneous services has increased from 2 to 6 percent to reflect the portion of expenditures on the newly added subcomponents of food and travel. Educational institutions are facing substantial costs for food and travel, driven by operational demands, rising prices, and the need to support campus activities, events, clubs and sports teams, and conferences.
Impact and Conclusion
The impact analysis described in the memo, comparing the new methodology with the historical findings over the past ten years, demonstrates that the updated methodology preserves the continuity and reliability of the index. The differences between the historical and revised approaches are modest, even in years with the largest methodological effects, indicating that the adjustments to category definitions and weights refine the measure without altering its long-term trajectory. Moving forward, periodic assessments will enable potential improvements, and allow HEPI to better reflect contemporary cost structures while maintaining consistency with its historical trends.
For any questions you may have, please reference HEPI: What You Need to Know or fill in the form below to reach one of our team members.
