Stagflation refers to an economy that is experiencing no (or negative) growth, as well as inflation. Thus, stagflation typically means that people's employment situations are not improving, but their overall cost of living is still increasing.
The last prolonged period of stagflation in the United States occurred in the 1970's, when the overall economy was struggling, but inflation (driven by oil and energy prices) continued to rise.
For parents attempting to save or pay for college, a cost which is already subject to an above average rate of annual prices increases, stagflation adds insult to injury. In such an environment, many parents will find their ability to save or pay for college limited dramatically, while the actual costs of a college education rise faster than ever.
Section 529 prepaid tuition plans and I-Bonds are likely to be a favorite of many parents suffering under stagflation, since these programs guarantee that their savings grow at least as fast as inflation.
