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2023 HEPI Report Released

December 13, 2023 |
5 minute read

Inflation for U.S. Higher Education Institutions
Rises 4.0% in Fiscal 2023, Down from Fiscal 2022 Rate 

WILTON, Conn., December 13, 2023 – Data from the annual Commonfund Higher Education Price Index® (HEPI) show that inflation for U.S. colleges and universities rose 4.0 percent in fiscal year 2023, falling from 5.2 percent in fiscal year 2022, but still more than double the fiscal year 2020 rate of 1.9 percent. This year’s rate is the second highest since FY2008 when HEPI was reported at 5.0 percent. (Fiscal year 2023 covers the period from July 1, 2022, to June 30, 2023, and coincides with the budget year of most institutions of higher education.) 

Download Full HEPI Report

Since the inception of HEPI in FY1961, we’ve seen the highest annual increases generally occur in the latter 1970s and early 1980s, largely driven by a combination of monetary factors and oil supply constraints, with inflation lingering alongside raised interest rates – some factors of which resemble the current context. The highest rate, 10.7 percent, was recorded in FY1981, which was part of a decade in which HEPI averaged 6.6 percent. After the FY1981 high, HEPI did not fall below this year’s rate of 4.0 percent for eleven years, when it reached 3.6 percent in FY1992. In the three decades since then, HEPI has been below the FY2023 rate in 24 out of 30 years. The lowest annual rate was an increase of 0.9 percent that occurred in FY2010 following the Great Recession and the muted monetary and economic expansion that followed, compared with recent years. That year marked the beginning of a decade when annual increases in HEPI averaged less than 2.2 percent, followed by another year, FY2020, when the increase was just 1.9 percent.  

Year over year, inflation rates in FY2023 surpassed those of FY2022 in four of the eight components tracked by HEPI (faculty salaries; administrative salaries; fringe benefits; miscellaneous services), with the most pronounced increases in both faculty salaries and administrative salaries. The former, which is the highest weighted HEPI component making up 35% of the index, rose from 2.1 percent in FY2022 to 4.0 percent in FY2023, and the latter from 2.9 percent to 4.1 percent during that same time period. The four components that saw a decrease in inflation rates in FY2023 were clerical costs, service employees, supplies and materials, and utilities. The most dramatic changes came in the utilities category, falling from the FY2022 historical high rate of 43.1 percent to a deflationary -3.7 percent in FY2023, and in supplies and materials, which fell from 21.5 percent to 7.3 percent during that time period. Rounding out FY2023 year-over-year changes are the following: 

  • Fringe benefits—up to 2.8 percent 
  • Miscellaneous services—up to 4.9 percent 
  • Clerical costs—down to 5.0 percent  
  • Service employees—down to 6.4 percent 

Figure 1 tracks annual changes in HEPI vs CPI over the last five fiscal years.  

Numbers in percent 


Past performance is not indicative of future performance
Source: 2023 Commonfund Higher Education Price Index Report

HEPI is an inflation index designed specifically for use by institutions of higher education. Compiled from data reported by government agencies and industry sources, HEPI measures the average relative level in the price of a fixed market basket of goods and services purchased by colleges and universities each year through current fund educational and general expenditures, excluding research. A more accurate indicator of cost changes for colleges and universities than the Consumer Price Index (CPI), HEPI is used primarily to project future budget increases required to preserve purchasing power. With compilations dating back to 1961, HEPI offers more than 60 continuous years of higher education inflation data. It is an essential tool enabling schools to determine increases in funding necessary to maintain both real purchasing power and investment. In 2005, Commonfund Institute assumed responsibility for the index and the proprietary model used to calculate HEPI’s values from Research Associates of Washington, D.C.  

Comparing HEPI and the CPI, the former showed costs rising 4.0 percent in FY2023 and by 6.3 percent in the latter. This marks the second straight year that CPI has exceeded HEPI. Historically, the annual rate of increase in HEPI typically exceeds that of the CPI, with HEPI increasing at a higher annual rate than the CPI in 19 out of 24 years79 percent of the timesince FY2000. Note: the CPI values reported by Commonfund in this annual HEPI report are based on fiscal year (July 1 through June 30) 12-month averages rather than the monthly—or point-to-point—CPI values usually reported by the Bureau of Labor Statistics.

Woman looking at report

HEPI for FY2023 vs. a 5-Year Average 

Figure 2 compares reported rates of change for FY2023 against their historical five-year averages. The principal observations follow:  

  • Of the eight cost factors, six were above their five-year average in FY2023 and two were below. 
  • The most heavily weighted HEPI component, faculty salaries, rose at a rate 64 percent higher than the five-year average (4.0 percent in FY2023 compared with 2.5 percent five-year average). 
  • Of the other three most heavily weighted HEPI components, cost increases in FY2023 were above their five-year average for two and lower for one. Costs were higher for administrative salaries (4.1 percent in FY2023 versus a five-year average of 2.5 percent) and clerical costs (5.0 percent versus 3.9 percent). The fringe benefits component was below its five-year average (2.8 percent versus 3.2 percent.)   
  • For FY2023, the greatest deviation from the five-year average was in the utilities component, which deflated by -3.7 percent compared with its five-year average of 7.9 percent.  
  • Of the remaining three components, service employee costs rose 6.4 percent in FY2023 versus a five-year average of 5.5 percent, miscellaneous services rose 4.9 percent in FY2023 versus a five-year average of 3.2 percent, and supplies and materials rose 7.3 percent versus a five-year average of 6.6 percent. 

On a historical basis, utilities have been the most volatile component in the index, rising or falling by more than 15 percent in four of the past five years. The rate of inflation fell 47 percentage points from FY2022 to FY2023 (from 43.1 percent in FY2022 to -3.7 percent in FY2023), the largest one-year change since FY2003.   



Past performance is not indicative of future performance.
Source: 2023 Commonfund Higher Education Price Index Report

Nominal Faculty Salaries Rise, Real Salaries Fall 

Faculty salaries, the heaviest weighted component of HEPI, rose 4.0 percent nationwide in FY2023. This was the highest rate since FY2008 and compares with 2.1 percent in FY2022 and 1.0 percent in FY2021.  

When data are viewed by type of institution, faculty salaries rose at a higher rate among public institutions than they did among their private counterparts—4.4 percent among the former versus 3.8 percent among the latter.  

Looking more closely at public institutions, faculty salaries increased 4.3 percent at doctoral institutions, 3.8 percent at master’s degree-granting institutions, and 4.1 percent among two-year colleges. Within private institutions, doctoral institutions saw the highest salary increases at 3.6 percent. Faculty salaries at private master’s degree-granting institutions increased 2.5 percent and at baccalaureate institutions they rose 3.7 percent. (Data for public two-year colleges and private baccalaureate institutions are not directly comparable for several reasons, notably the difference in the period of matriculation.)   

Regionally, increases in faculty salaries ranged from a high of 5.8 percent in the Mountain region to a low of 2.2 percent in the West South Central region. 

Despite increases in faculty salary costs across institution type and region, real faculty salaries – adjusted for CPI inflation – fell in each institutional category. For example, at public doctoral institutions real salaries fell by $2,923 in FY2023, and for private doctoral institutions by $5,497. 

Media Contacts  

Tony Ialeggio

Emily Roy
Prosek Partners


Commonfund Institute


Commonfund Institute


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