Tuition inflation isn't as bad as you think

Here's something you might think you know: The cost of going to college has been rising a lot faster than inflation for many years.

• In fact, college costs haven't been rising in real terms. For private four-year colleges, they've actually been falling.

Why it matters: President Biden's decision to forgive billions of dollars in student debt has inevitably raised the specter of college cost inflation.

• Now that this precedent has been set, there has been a worry (or concern trolling) that colleges will feel free to hike their tuition costs, on the grounds that anybody taking out loans to pay that tuition will ultimately get a significant chunk of their debt forgiven anyway.

The big picture: The amount that Americans pay for college tuition is ultimately set according to the rules of supply and demand. Right now, thanks to overbuilding, a falling birth rate, and a decline in foreign students, there's significantly more supply than there is demand — and that means flat or declining prices.

• Total freshmen enrollment in 2021 was 2,116,631 students, per the National Student Clearinghouse. That's down almost 20% from the 2,592,703 freshmen who enrolled in 2015.

Between the lines: Don't look at soaring official tuition costs to work out how much people are paying. Instead, look at the amount they actually pay, which is invariably lower.

• Colleges have worked out that a high tuition fee combined with a high "merit scholarship" is more attractive than a lower tuition fee, so now almost everybody gets some form of financial aid.

By the numbers: Over the past eight years, the published tuition fee for a four-year private college, in constant 2021 dollars, rose 9.4%, to $38,070, per the College Board. If you include room and board, the increase was the same — 9.4% — but the total was $51,690.

• If you look at how much students actually pay, however, after accounting for grant aid and other discounts, the total fell slightly to $32,720, with room and board included. That's the lowest number since the 2012–13 school year.

The bottom line: Most private colleges — with a few high-profile exceptions — charge as much as they can, with or without the promise of possible future debt forgiveness.

• For the past decade, competition among colleges has kept prices from spiking. Even a rational expectation of future debt relief shouldn't fundamentally change that dynamic.

Go deeper: Axios' Dan Primack writes about why college costs are still objectively too high, and what might bring them down meaningfully.