| The skinny on levelized-tuition plans |
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Kantrowitz also notes that your tuition rate isn't
the only thing affected by a levelized plan -- your financial aid
package could be impacted as well.
"A levelized plan locks the tuition rates, but it
doesn't tell you how much you're going to have to pay after financial
aid is taken into account," Kantrowitz says. "If the tuition is
locked in, but the financial aid is variable, you could end up paying
more each year."
When creating financial aid packages, Kantowitz says,
colleges frequently set a benchmark to help determine when a student
will need gift aid -- aid they won't have to pay back, such as scholarships
and grants -- and when "self-help" aid will suffice. Self-help aid
is money that students will have to pay back, including subsidized
and unsubsidized loans and work-study packages.
For example, if a benchmark is set at $5,000, students
who demonstrate that they need less than $5,000 worth of financial
aid every year will receive packages solely consisting of loans
and work-study funding, while students who demonstrate that they
need more than $5,000 will receive grants and/or scholarships in
addition to self-help aid. When a levelized-tuition plan is in effect,
even though the tuition rate may stay constant, schools still have
the ability to raise or lower the self-help aid benchmark each year.
If your school is using the self-help aid benchmark to compensate
for budgetary changes, you could wind up with a significant change
in your financial aid package from year to year and potentially
pay more out-of-pocket expenses for your education.
The key to making sure you truly do pay one rate for
all four years, Kantrowitz says, is to ask your financial aid officer
about their financial aid packaging philosophy, how they determine
your aid award, whether they use a self-help benchmark, and if they
do, what that benchmark has been for the past four years. If the
benchmark has risen at a slower rate than tuition has for incoming
classes over the past few years, that's a good indicator that the
school is trying to keep financial aid constant and provide students
who show demonstrated need with the same level of funding each year.
Whether or not you're receiving financial aid, all
students should also become well-versed in the rules and conditions
of the tuition guarantee program, noting what happens when you've
got to put your studies on hold for a semester or two, you change
majors or take longer than the typical four years to complete your
degree.
Be absolutely certain that this is the school for
you before you enroll and that you're willing and able to finish
out your degree. Students who spend one or two years in a school
with a tuition-guarantee program, and then transfer or drop out,
wind up paying higher inflation rates for the first few years of
school, but leave before the inflation rate averages out.
Getting informed, asking the right questions and knowing
exactly what you're jumping into before you sign on the dotted line
will help ensure that your tuition-guarantee program is right for
you.
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