How BLS Measures Price Change for College Tuition and Fees in the Consumer Price Index

College tuition and fees, a component of the tuition, other school fees and childcare index, is included in the education and communication group of the Consumer Price Index (CPI). Both the tuition and other school fees index and the college tuition and fees index are published monthly at the U.S. level. The education and communication index is published in all publication areas on each area's publication cycle.

The tuition and other school fees index includes the four components shown below with the relative importance of each index. These data are for the U.S. city average of the CPI for All Urban Consumers (CPI-U) as of December 2007.

College tuition and fixed fees (hereafter referred to as college tuition) accounts for about 50 percent of the weight of the tuition and other school fees index and is the largest component of this index.

The base period weight for each CPI item group is the out-of-pocket expenditures households incurred for that item. The weight for college tuition reflects annual consumer expenditures for undergraduate and post-graduate studies at 2-year colleges, 4-year colleges, major universities, and professional schools (law, dental, medical, etc.). The CPI sample of colleges and universities priced was selected proportional to expenditures for students as reported by households located in the 87 areas sampled by the CPI. Because students may choose to attend colleges that are outside of the 87 pricing areas, colleges included in the sample are located throughout the United States (which is unlike the samples for most other CPI items).

Only degree-conferring institutions are eligible for pricing in the college tuition index. However, nondegree students attending degree-conferring colleges are eligible for pricing. Student tuition, whether priced as a fixed amount per full-time student or priced per credit hour, as well as necessary fixed fees (such as registration fees, athletic fees, student union fees, health fees, etc.) are eligible for pricing. Various types of student financial aid can also be considered for eligible colleges. Room and board and textbook charges are covered elsewhere in the CPI sample.

Institutions being priced for the college tuition index are eligible to be priced on a monthly basis. However, the vast majority of colleges and universities make a limited number of adjustments to their tuition and fixed fees each year. To reduce the burden on the colleges' respondents, as well as the cost of the CPI program, the pricing frequency is reduced. Most institutions are priced between 2 and 4 months per year, with the selected pricing months being those where price changes are most likely to occur. For nonpricing months, the last collected price for each quote is carried forward for use in the current index.

Tuition and fixed fee charges for academic terms are eligible for collection once the new prices have been set and are payable to the college. Colleges put the majority of tuition and fee changes into place just before the start of a new academic year, so most of the changes for the college tuition index will be captured in the late summer or early fall of each year. Because much of the year's change is captured in one season, the CPI also publishes a seasonally-adjusted college tuition index. Seasonal adjustment attempts to take index changes that are clustered into a small portion of the year, and spread them over the course of the full year, thereby facilitating the analysis of the underlying trend.

Selection of characteristics to be priced

College Tuition is now eligible to be priced including adjustments for various types of student financial aid. Scholarships and grants are now eligible for inclusion, and probability sampling techniques are used to determine if scholarships or grants should be included when pricing tuition for a specific college. All College Tuition quotes will price student tuition and fixed fees. Selected quotes will additionally be adjusted by financial aid.

When CPI field staff seek prices for college tuition, they first determine if the college being priced is public (owned and supported by a governmental agency) or private. Next, the field staff selects the major price-determining characteristics for the student to be priced. It is assumed that the tuition is for a student residing in a specific area, from among the 87 CPI sampling areas, where the college was identified for sample selection. The college's resident status rules are used to determine if a student from this specific sampling area is deemed to be an in-state resident or an out-of-state nonresident. Once all data have been selected, the many characteristics associated with this student are identified to ensure that the same student is priced each collection period, or if there is a change in the student's situation, that change can be identified readily. The following is an example of characteristic information that would be identified:

Control of school—public

Resident status—resident

Attendance—full time

Degree status—undergraduate

Course or hour load per term—15 credits

Length of school term priced—semester

Method of tuition charge—per semester

Fixed fee—registration

Fixed fee—health

Fixed fee—general

Fixed fee—student activity

Financial aid included

Type of financial aid—Pell Grant

Issues associated with college tuition

One of the most difficult problems for the CPI is to accurately quantify changes in the quality of an item and to factor these quality changes out of the item's price movements. If an item's characteristics change, a quality improvement (such as increased instructional time) or deterioration may have occurred. In addition, because quality change often accompanies price change, when the price of an item changes significantly, BLS field staff will ask the respondent to identify a cause.

For college tuition, the majority of price changes from respondents are not accompanied by resulting causes. When no causes accompany tuition changes, and the characteristics for the identified tuition items remain unchanged, the price changes are reflected in the college tuition index.

The inclusion of financial aid has added to the complexity of pricing college tuition. Many selected students may have full scholarships (such as athletic), and therefore their tuition and fixed fees are fully covered by scholarships. Since these students pay no tuition and fees, they are not eligible for pricing. In addition, there are other students who pay a very small fee to the college since the majority of their tuition and fixed fees are covered by scholarships. When these situations are priced by BLS Field Staff, normal increases in tuition/fees and minor declines in scholarship awards can provide extremely large changes for entry in the CPI index. For some of these same quotes, minor tuition declines or minor scholarship award increases can actually result in negative prices, which make the quotes ineligible for use in the CPI.

Additional information

Additional information on the Consumer Price Index can be found in the BLS Handbook of Methods, chapter 17, "The Consumer Price Index," Bulletin 2490 (1997). The current version of this chapter is also available on the BLS Internet site (www.bls.gov/opub/hom/homch17_a.htm) or you may call the Information and Analysis Section of the CPI at 202-691-7000.

 

Last Modified Date: March 6, 2008