S&P Dow Jones Indices has launched a new index that that has the potential to hedge against the rising cost of college tuition once new investment vehicles based on the index come to market.
The S&P Target Tuition Inflation Index is designed to be a better long-term hedge against the rising cost of college than a typical 60/40 stock/bond portfolio, says Jodie Gunzberg, a managing director, product management, at S&P Dow Jones Indexes.
(Related: How American Families Pay for College: 2017 )
"College tuition has risen a lot faster than CPI, which is challenging for people saving for college," says Jodie Gunzberg, a managing director, product management at S&P Dow Jones Indices, referring to the consumer price index, the primary indicator of rising inflation.
Between the 2011-'12 and 2016-'17 school years, published tuition and fees rose 9% at public four-year colleges (for in-state residents) and 13% at private nonprofit four-year institutions after adjusting for inflation, according to the College Board.
(Related: How American Families Pay for College: 2017 )
Average net prices rose even more. Net tuition and fees over the same five years rose 21% at public four-year colleges and 12% at private four-year institutions.