Like overgrazing livestock denuding a pasture, rising fixed costs stunt institutional growth, severely damage the balance between expenses and revenue, and erode the financial equilibrium important to making education affordable. Rising costs to do business outpace revenue (primarily tuition, fees and room and board). Utilities, insurance, food services, maintenance and construction represent major expenses in the budgets of all residential colleges and universities. These costs are not controlled writ large by the institution.
For example, U.S. institutional electricity rates tracked closely with residential rates, which increased 30 to 35 percent from 2014 to 2024 according to the U.S. Energy Information Administration’s Electric Power Annual 2024. Along with price volatility (particularly during 2021–2023), it created significant budget pressures at higher education institutions. KFF’s annual Employer Health Benefits Survey reports health insurance premiums for employer-sponsored coverage have increased approximately 50 to 60 percent over the past decade. For colleges and universities, some health plan premiums have risen more steeply.
Property and casualty insurance for higher education campuses has also increased sharply since 2020. Insurance companies are among the largest providers of employer-sponsored group insurance to higher education institutions, and many major campuses rely on insurance for student health plans, property and coverage, and directors’ and officers’ liability. Further, food commodity prices rose sharply from 2021 to 2023, exceeding 20 percent in some categories, as reported by the U.S. International Trade Commission’s 2021 Commodity Price Surge report. University dining operations saw a 15 to 25 percent cost increase from 2021 to 2023 according to the National Association of College and University Food Services.
