Inflation

• One of the simplest financial reasons a college raises its tuition is that it has not done so in a while. Over time, inflation and increased costs for the college to provide education mean an adjustment to student tuition is needed. Some schools raise tuition more consistently to avoid steep increases. Others wait longer and institute more significant increases.
  
  

State Funding Cuts

• Another common reason schools raise tuition is to adjust for diminished funding from other sources. Nonprofit colleges typically desire funding from tuition, private donations and state funding. During economic recessions or when states struggle with budgets, they often cut funding support to institutions. This forces schools to consider tuition increases to make up for the short fall. James Romoser discusses struggles in North Carolina affecting many schools in his January 2009 "Winston-Salem Journal" article "Colleges, universities to cut spending, raise tuitions." He notes that several schools had to raise tuition midyear 2008 in response to outgoing Gov. Mike Easley's decision to withhold budget allocations to many state agencies, including colleges.
  
  

Pay for Upgrades

• When colleges construct buildings or invest in new projects and renovations, they often seek additional funding. If the state and private donors are unable to fully foot the bill for the upgrades, a tuition hike might occur. This is similar to a city raising property taxes to cover new projects and infrastructure. Students are sometimes asked to share in the investment in new projects and renovations for the good of the institution.
  
  

Increase Student Percentage of Funding

• Though not commonly the main reason for a tuition increase, college leaders often consider the percentage of funding currently coming from tuition when making budget decisions. In general, colleges want to maintain a reasonable balance in funding from various sources to avoid over-reliance on one. If a school needs to increase funding and the board feels the percentage of the income from students is proportionately low relative to other schools, it could opt for a tuition increase.