University Inflation Rate Hits Record Low

The rate of inflation affecting universities nationwide fell to 0.9 percent in fiscal year 2010—the lowest rate on record—and rates for institutions in New England dipped even lower, according to the Higher Education Price Index.

The numbers mean that costs incurred by universities rose at an unprecedented low rate during the year that ended June 30.

“It’s good for universities and for the consumers of the university’s product if in fact those costs are then reflected in the way the product is priced,” said William F. Jarvis, managing director of the Commonfund Institute, which compiled the data.

From 2009 to 2010, the cost of attendance at the College increased by 3.8 percent, nearly 3 percent more than the national average inflation rate.

Universities in the New England region faced a lower rate of inflation than all other regions for the year, with costs rising at about 0.4 percent. That rate is 3 percent lower than the previous year.

Human resources costs such as salaries and benefits comprise the single largest cost facing universities and increased 1.2 percent.

Costs for private universities increased at a slightly lower rate than public universities, with costs increasing at 0.5 and 0.9 percent respectively.

University financial officials could not be reached for comment late yesterday.

Over the same period, the Consumer Price Index—the national inflation rate—increased by 1 percent. The HEPI provides a more accurate picture of cost increases for universities as it uses a basket of goods that more accurately mirrors the goods and services purchased by institutions of higher education.

The Commonfund Institute, which has been publishing the report since 1961, found that the last time the inflation rate fell to comparable levels was in 2002 when the national economy was emerging from the bursting of the dot-com bubble.

But since that time, the costs facing universities have increased by about 25 percent.

The University reported late last week that its endowment had grown by 11 percent during fiscal year 2010, an increase of about $1.4 billion.

The previous year the endowment precipitously fell by 27 percent, resulting in steep budget cuts across the University.

—Staff writer Elias J. Groll can be reached at egroll@fas.harvard.edu.

—Staff writer William N. White can be reached wwhite@fas.harvard.edu.

Correction: Due to an editing error, an earlier version of this article headline stated "University Inflation Rate Hits Record High."