2024 HEPI Report Released

Inflation for U.S. Higher Education Institutions

Rises 3.4% in Fiscal 2024, Down from Fiscal 2023 Rate

WILTON, Conn., December 16, 2024 – Data from the annual Commonfund Higher Education Price Index® (HEPI) show that inflation for U.S. colleges and universities rose 3.4 percent in fiscal year 2024, falling from 4.0 percent in fiscal year 2023, but still elevated from the fiscal year 2020 rate of 1.9 percent. This year’s rate is the third highest – only lower than fiscal years 2022 and 2023 – since fiscal year 2008 when HEPI was reported at 5.0 percent. (Fiscal year 2024 covers the period from July 1, 2023, to June 30, 2024, and coincides with the budget year of most institutions of higher education.)

This year continues the trajectory of tempering of price increases, falling 35 percent from the recent peak of 5.2 percent in FY2022, which had been the highest since FY2001. However, the trend of elevated inflation rates in higher education, compared with the previous decade, continued in FY2024. From 2010 to 2019, the average annual HEPI figure was 2.2 percent. By contrast, annual HEPI rates since 2020 average 3.4 percent.

Year over year, inflation rates in FY2024 declined from those of FY2023 in six of the eight components tracked by HEPI. The two highest-weighted HEPI components, faculty salaries and clerical wages, which comprise 35 percent and 18 percent of the index respectively, had inflation rates decrease in FY2024 compared with those in FY2023. Meanwhile the next highest-weighted components, fringe benefits and administrative salaries, were the only two components that had higher inflation rates in FY2024 than in FY2023. The remaining four components that saw a decrease in inflation rates in FY2024 were service employees, utilities, supplies and materials, and miscellaneous services. The most dramatic changes came in the utilities category, which continued a two-year trend of deflation in FY2024 after a huge spike in inflation in FY2022, and in supplies and materials, which also deflated in FY2024 after a spike in FY2022.

Figure 1 tracks annual changes in HEPI vs Consumer Price Index (CPI) over the last five fiscal years.

FIGURE 1: THE HIGHER EDUCATION PRICE INDEX, FISCAL YEARS 2020 – 2024

Numbers in percent

Past performance is not indicative of future performance
Source: 2024 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 CPI, the former showed costs rising 3.4 percent in FY2024, and by 3.3 percent in the latter. After two years in which CPI exceeded HEPI, FY2024 reflects a return to the norm of HEPI typically exceeding CPI: HEPI increased at a higher annual rate than CPI in 20 out of the past 25 years (since FY2000). (Note: CPI values reported by Commonfund in this annual HEPI report are based on fiscal year 2024 12-month averages rather than the monthly, or point-to-point, CPI values usually reported by the Bureau of Labor Statistics.)

HEPI Components for FY2024 vs. their 5-Year Average

Figure 2 compares reported rates of change for FY2024 against their historical five-year averages. The key observations follow:

• Of the eight cost factors, five were above their five-year average in FY2024 and three were below.
• The most heavily weighted HEPI component, faculty salaries, rose at a rate 41 percent higher than its five-year average (8 percent in FY2024 compared with a 2.7 percent five-year average).
• Cost increases in FY2024 were above their five-year average for each of the next three most heavily weighted HEPI components. Costs were higher for fringe benefits (5.9 percent in FY2024 versus a five-year average of 3.7 percent), administrative salaries (5.1 percent versus 3.0 percent) and clerical costs (4.2 percent versus 4.1 percent).
• For the second year in a row, the greatest deviation from the five-year average was in the utilities component, which deflated by 17.5 percent compared with its five-year average of 4.2 percent.
• Of the remaining three components, service employee costs rose 4.2 percent in FY2024 versus a five-year average of 5.5 percent, miscellaneous services rose 4.1 percent in FY2024 versus a five-year average of 3.6 percent and supplies and materials deflated by 2.9 percent versus a five-year average of 5.2 percent.

FIGURE 2: ANNUAL PERCENTAGE CHANGES IN THE 8 HEPI COST FACTORS VS. 5-YEAR AVERAGE

Past performance is not indicative of future performance
Source: 2024 Commonfund Higher Education Price Index Report

Nominal Faculty Salaries Rise, Real Salaries Mixed

Faculty salaries, the highest weighted component of HEPI, rose 3.8 percent nationwide in FY2024. The FY2024 rate fell below the FY2023 rate of 4.0 percent, but aside from last year was the highest since 2016.

When data are viewed by type of institution, faculty salaries rose at a higher rate among private institutions than they did among their public counterparts—4.4 percent among the former versus 3.5 percent among the latter. This was a reversal from last year in which public faculty salary inflation exceeded that of private institutions on average.

Looking more closely at public institutions, faculty salaries increased 3.3 percent at doctoral institutions, 2.8 percent at master’s degree-granting institutions, and 1.7 percent among two-year colleges. Within private institutions, doctoral institutions saw the highest salary increases at 4.2 percent. Faculty salaries at private master’s degree-granting institutions increased 3.7 percent and at baccalaureate institutions they rose 3.0 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 5.1 percent in both the West South Central and South Atlantic regions to a low of 2.9 percent in the Pacific region.

Despite increases in faculty salary costs across institution type and region, real faculty salaries – adjusted for CPI inflation – fell in FY2024 for public comprehensive and two-year institutions, and for private baccalaureate institutions. Meanwhile real inflation-adjusted salaries rose in FY2024 for public and private doctoral-level institutions and at private comprehensive institutions.

To learn more about HEPI compared to CPI as an index that more accurately defines inflation for colleges and universities and to sign up for HEPI quarterly updates, click here. To access a copy of the complete HEPI report, please visit www.commonfund.org/hepi.

To learn more about the Commonfund Institute click here.