College-cost inflation

A year of college has a published price, the sticker cost: tuition and fees, plus housing and food. College-cost inflation is how fast that price rises from one year to the next. It is its own rate, separate from the general inflation in consumer prices, and it differs by school type and from year to year.

A projection applies the rate as compound growth. A cost today, grown at a rate g for n years, is the cost times (1 + g) to the power n. At 5% a year a price grows to 1.89 times itself in 13 years and to 2.41 times in 18. A projection prices the college years separately, so the fourth year's bill is three more years of growth past the first.

The rate is usually stated before adjusting for general inflation, a nominal rate. A projection in nominal dollars pairs it with a nominal return on the savings, so both sides of the comparison are in the dollars of the year the bill is paid.

A child is five and enrolls at 18, 13 years from now. A year at an in-state public school costs $25,850 today, the College Board's 2025-26 average for tuition, fees, housing and food. At 5% a year, the first year's bill is $25,850 × 1.05^13, or $48,744. The four bills come to $48,744, $51,181, $53,740 and $56,427: $210,093 in all, against $103,400 for four years at today's price.

At 3% a year, the same four years come to $158,817, so the two extra points of inflation add $51,276 to the bill. With $10,000 saved, $250 a month and a 6% return, the same savings cover 37.9% of the bill at 5% and 50.7% at 3%.

Cost per year, today

$25,850

Inflation, 5% a year for 13 years

+ $22,894

First year's bill

$48,744

Four years of bills, at 5% a year

$210,093

The rate sets the bill side of a college projection. In the example, two points of college-cost inflation move the four-year bill by $51,276, and the share the same savings cover from 50.7% to 37.9%, with nothing about the savings changed.

A projection holds one rate across the years, and the price does not rise at one rate. The College Board's Trends in College Pricing 2025 put the 2025-26 rise in average published tuition and fees, before adjusting for inflation, at 2.9% at public four-year schools for in-state students, 3.4% for out-of-state students and 4.0% at private nonprofit four-year schools. Those figures cover tuition and fees only, not housing and food, and one year's rise does not set the next.

Taiga Finance's college planner, “College savings” under Scenarios, sets the rate once for the whole plan: “College-cost inflation”, in “%/yr” under “Assumptions”, 5% by default. A beneficiary's “Cost per year, today” is grown by that rate from today to each college year, and that year's bill is drawn from the balance at the start of the year. The “Year by year” ledger lists the “College bill” for each college year.

Opened, “College cost covered” shows its working: the school's cost today, a line that reads “× 5%/yr for 13y · first bill” beside the first year's bill, the total of the college years' bills, the amount “Covered by the 529”, and “Coverage”. The public college savings calculator takes the same “College-cost inflation” field, from 0 to 10% a year, and runs the same projection for one child.