Factors that have an Impact on the Cost of Higher Education

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How worried should be about inflation? How concerned should we be about rising costs in higher education? According to congressman Russ Carnahan, “Congress has not raised the minimum wage since 1997, and it is now at its lowest level in 50 years adjusted for inflation” (Russ Carnahan). Concomitantly critics point out that the schools are raising tuition at rates exceeding inflation (Weisbrod et. al, 2011). While battling inflation and calming concerns about their fiscal management, college and universities are ubiquitously expected to manage capitals and operations and remain within tightening budgets. The Higher Education Price Index, or HEPI, is one instrument they may find useful in combatting inflation. This particular inflation index is made with higher education in mind, a custom-tailored indicator of cost changes for colleges and universities (Commonfund, 2011).

The Higher Education Price Index (HEPI) serves to guide, point out, or otherwise facilitate reference for the persistent increase in the level of prices in various categories affecting higher education costs. The Commonfund Institute disseminates the Index free of charge to educational institutions each year. Commonfund Institute does not generate the figures used, but HEPI is constructed from figures distributed by government and economic agencies. Research Associates of Washington, D.C. produced HEPI until 2005 when Commonfund Institute took over management responsibility for the Index. Unlike the Consumer Price Index, “HEPI is an inflation index designed specifically to track the main cost drivers in higher education,” according to the Commonfund website.

Since fiscal year 2002, HEPI has been based on a regression formula. Regression analyses are widely use...

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... Baltimore, MD: The Johns Hopkins University Press.

Hurley, D. J., McBain, L., Harnisch, T., & Russell, A. (2011, January). Top 10 higher education

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Kelly, John. (29 March 2010). How the hope scholarship works. Retrieved from

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Leslie, L.L., & Rhoades, G. (1995). Rising administrative costs: Seeking explanations. Journal

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Russ Carnahan. Quotes (2012). Retrieved from

http://www.brainyquote.com/quotes/authors/r/russ_carnahan.html

Weisbrod, B.A., Ballou, J.P., & Asch, E.D. (2010). Mission and money: Understanding the

university. Cambridge: Cambridge University Press.

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