The college inflation rate refers to the annual increase in college tuition and fees, similar to the way the general inflation rate refers to the annual increase in the cost of living. The college inflation rate is typically in the range of 3% to 5% for both private and public colleges. (Source: The College Board)
For parents trying to keep up with their child’s college fund, it’s important to choose investments for college savings that keep pace with college inflation. You can use the college inflation rate for a given year or the average rate of inflation over the past decade to help project college costs in the future. Be aware, however, that the more years your child has to go until college, the greater likelihood that your cost estimate will need to be revised at a later date.