College to link tuition increases to U.S. consumer price index
Tuition increases may become more predictable as financial experts on campus decide on a new way to calculate costs per credit.
UCC plans to approve a new policy for determining tuition increases by linking a consumer price index, also known as CPI or the index, to the college’s financial needs. Annual increases in tuition would simply be calculated by taking the existing tuition and raising the price by the average percentage of certain economic changes.
“CPI gives a good baseline for how much the price of goods and services have increased each year,” Rebecca Redell, UCC’s chief financial officer, said. “By tying base tuition increases to the CPI, the college is being proactive in covering the increased operating costs that occur every year.” The change will attempt to prevent another tuition hike similar to the $10 increase last year, according to Redell.
With the index changing each year, this would mean the amount tuition increases would vary year by year rather than be a fixed amount like it is now.
However, the college must first decide on which index formula best represents UCC and is most reliable. Redell presented three options to UCC’s board of trustees: An index regionally based around Portland, an index based around western region of the United States and a national index specifically designed for higher education institutions. Each of these formulas has its own strengths and weaknesses.
“The Portland CPI is the one closest to us geographically, but it also has been the most volatile over the last five years or so,” Redell said. “The Western CPI includes our area geographically but also includes over 10 other states. The Higher Education Price Index (HEPI) includes the whole U.S. and is most closely linked to what we do.”
Last year, the index for the Portland region was at 2.8 percent, which would have meant a 2.8 percent increase to tuition had the college linked tuition increases to this formula. The Western index would have been 1.8 percent and HEPI would have been 1.7 percent, according to Redell.
A suggestion will be made Wednesday, May 14, to the board of trustees on which index the college should use.
“We are planning on recommending the Western CPI due to the geographic considerations along with the lower volatility,” Redell said. However, regardless of the decision by the board, tuition increases will not be seen for another year due to the last month’s moratorium placed on tuition.