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| The skinny on levelized-tuition plans |
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In general, built-in inflation rates range from 8
percent to 10 percent among schools, though specific rates and formulas
can vary from state to state, as well as from school to school.
What all levelized plans do have in common, however, is that parents
pay one fixed rate for all four years of attendance no matter what
happens to the school's budget.
"So many people look at college on a year-to-year
basis. We're trying to open people's eyes and get them to look at
the entire college experience and make some plans for the length
of their college stay," says Tommy Dismukes, vice president of enrollment
for Huntingdon College in Montgomery, Ala. "This is our way of showing
people that we're going to assist them, to show them that they can
start making plans for college."
At Huntingdon College, which calculates its tuition
inflation rate differently than most schools, incoming freshman
students who locked in costs in the past two years paid a relatively
modest surcharge -- 4.8 percent -- over the prevailing tuition rate.
Maximizing enrollment and efficiently managing operating expenses
helps keep costs in line, Dismukes says.
Fixed-rate challenges
While levelized-tuition plans do give families the ability to financially
plan, Jim Barrett, director of admissions at Hiram College in Hiram,
Ohio, warns that when universities face an unexpected drop in funding,
levelized-tuition programs can, in some cases, wind up costing families
coming into the program a higher rate than they would have received
without the fixed-rate plan.
"With levelized programs, the natural challenge is that unexpected
costs must be borne on the backs of the incoming class," Barrett
says. "Rather than spread out a 2 percent increase over each year
of students, you may have to put a 7 percent increase on new students."
For years when state budgets run dry and endowments don't yield
as much as desired, schools with levelized plans that cover the
entire student body have no choice but to put all the financial
strain on incoming freshmen, since all other students already have
their tuition rates locked.
Barrett notes that this scenario predominantly affects public
universities that heavily rely on funding from the state. Private
institutions with sizable endowments such as Hiram often have the
ability to temporarily subsidize tuition inflation so that incoming
students won't have to pay a significantly higher tuition inflation
rate than previous classes. However, keep in mind that while private
colleges may keep tuition inflation costs down, they are generally
much more expensive to attend than public universities.
Read the fine print
For students thinking about attending a school with a levelized-tuition
program, Mark Kantrowitz, publisher of the financial aid Web site
Finaid.org,
recommends reading the fine print, making absolutely sure that there's
no clause that allows the school to change your tuition price for
any reason, and ensuring that you understand what happens to your
tuition if you need to withdraw from school for a semester or two,
or you need an extra year to graduate.
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