Planning for higher education budgets can be challenging without insight into the main cost drivers and funding increases necessary to maintain purchasing power. That’s why we produce the Higher Education Price Index (HEPI), an inflation index designed to track this information and assist educational managers in understanding and planning for the future of their institutions’ finances. HEPI is issued annually by Commonfund Institute, with estimates released quarterly, and is distributed for free to educational institutions.
From its inception in 1961, HEPI was produced by Research Associates of Washington, D.C. A methodological shift implemented in FY1983 established that year as the index’s baseline. In 2005, Commonfund Institute assumed management of the Index, with the latest assessment resulting in the 2026 HEPI Methodology Update.
The Consumer Price Index (CPI) tracks consumer goods — food, housing, transportation — but does not account for academic labor market compensation and benefits dynamics. HEPI, by contrast, tracks the actual cost structure of higher education, including the major components and weights that reflect realities of an educational institution.
CPI categories such as food, travel, supplies, utilities, and technology are integrated into HEPI and hold weights that reflect an educational institution’s budget. Unlike CPI, HEPI estimates are based on the fiscal year (July to June) to align with the higher education budget process and are available by institution type and region.
Over the majority of years being tracked, HEPI has exceeded CPI, reflecting the structurally higher cost pressures unique to higher education. Using CPI as a proxy may systematically understate what institutions must earn to preserve purchasing power.
HEPI uses FY1983 as its base year, assigned a price value of 100.0. Index values in subsequent years reflect cumulative price level change from that base. An index value of 115.0, for example, represents a 15 percent increase over 1983 prices. Year-over-year changes are expressed as percentage changes and represent the fiscal year (July 1 to June 30). HEPI is a fixed-weight price index. The weights assigned to the budget components are held constant so that only the effects of price changes — not quantity or quality changes — are reflected in the index. Each year, price changes for each component are weighted according to this base year expenditure pattern. The index is not re-weighted unless there is a substantial, documented change in the buying pattern of colleges and universities.
HEPI is based on price data for nine main components and hundreds of subcomponents for budget items that schools typically procure. The main components are:
Salaries for faculty, administrative, clerical and service employees | Fringe benefits | Miscellaneous services | Supplies and materials | Utilities | Technology
Prices for items impacting HEPI are obtained from publicly available salary surveys conducted by the::
American Association of University Professors | College and University Professional Association for Human Resources | U.S. Department of Labor’s Bureau of Labor Statistics
Additional price information is gathered from three indices:
Consumer Price Index (CPI) | Employment Cost Index (EPI) | Producer Price Index (PPI)
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