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What is the college inflation rate?

The college inflation rate refers to the annual increase in college tuition and fees, similar to the way that the general inflation rate refers to the annual increase in the cost of living. The college inflation rate is usually measured separately for public and private colleges. For the 2010/2011 academic year, tuition and fees at four-year public colleges for in-state students averaged 7.9 percent, tuition and fees at four-year public colleges for out-of-state students averaged 6.0 percent, and tuition and fees at four-year private colleges averaged 4.5 percent. (Source: The College Board's Trends in College Pricing Report 2010)

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.