Daily Aid 2: Out of control price increases, green fellowship

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Daily Aid 2: Out of control price increases, green fellowship

4 September 2008 1 views No Comment

Daily Aid 2: Out of control price increases, green fellowship

Student Financial Aid News

The Higher Education Price Index reached 3.6 percent for the 2008 fiscal year, up slightly from 3.4 percent the previous year, the Commonfund Institute is announcing today. The index is based on costs facing colleges and is designed to give a more accurate assessment of the inflationary pressures on academe than does the Consumer Price Index (3.7 percent for the same time frame). The index’s gain may appear small to campus money managers who have been watching certain costs, especially for utilities, skyrocket in recent months, but the timing of the calculations means that those increases aren’t counted in the new data.

Commentary

These numbers seem low to me. If you look at CPI-U (Consumer Price Index, Urban areas), which is the metric that income protection for the FAFSA is set by (it’s on page 30,905 of the Federal Register, not joking), the year over year CPI-U is 5.6%, which is a significant jump over 3.6%. However, it’s no secret that I disagree with CPI in most of its forms anyway, because CPI measurements exclude food and energy, which are two of the biggest costs that impact your wallet on a regular basis.

The government knows this and even includes food and energy as separate indices. What’s the year over year cost increases of food and energy? According to the Bureau of Labor Statistics:

Food: 6%
Energy: 29.3%

For everyone, but especially lower income students and families, food and energy represent a large portion of expenses. The real cost of inflation is nowhere close to 3.6% for anyone, colleges, parents, families, students, or even politicians.

What does this all mean for you? Continued high inflation, continued increases in food and energy prices (no matter what index you use) always translate into higher tuition bills, not to mention higher personal expenses. If you haven’t already embraced frugality, now is the time to do so. It almost goes without saying that everyone, regardless of income level or background, should be aggressively hunting for scholarships even while in school.

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