Fixed rates are latest in college tuition plans

Dec 24, 2013 by

MILWAUKEE (AP) — Freshmen at Northland College, a small Wisconsin liberal arts school known for its environmental focus, will pay no more than $30,450 in tuition next year. They’ll pay the same the following year. And the year after that.

The college on the shore of Lake Superior is joining a growing number of schools promising fixed-rate tuition — a guarantee that most students will pay a single rate for the length of their college careers.

The programs at schools like George Washington University, University of Kansas and Columbia College in Missouri aim to help families budget for college without worrying about big price jumps. They also give recruiters something to tout on the road to try to ease the sticker shock.

Tuition and fees at four-year public colleges rose 27 percent in the past five years, while those at four-year private schools went up 14 percent, according to the College Board.

About 320 colleges and universities offered tuition guarantees during the 2012-13 school year, according to an analysis of U.S. Department of Education data done by the National Association of Student Financial Aid Administrators. The schools represent about 6.7 percent of the nation’s nearly 4,800 institutions where students receive federal financial aid.

Many fixed-rate plans are coupled with a commitment to hold financial aid steady so students have a firm cost estimate, but they are not discounts. At Kansas, students starting as freshmen pay more than standard tuition in their first two years to offset lower rates in the last two. Other schools try to estimate expenses and inflation and set rates that cover costs when averaged over four years. Transfer students generally pay tuition for the year they enter; at Kansas, they pay standard tuition.

Students say the programs help them hold down costs by allowing them to budget wisely and borrow less.

‘‘I can’t think of any other major expense where a student or their family is expected to commit to such a large expense without knowing what it is going to cost,’’ Jane Mahoney, a recent graduate of the University of Kansas, said in an email. ‘‘I think the tuition agreement puts a lot of students and families at ease when figuring out how to fund a college degree.’’

Mahoney, 23, said Kansas’ program helped her and her parents decide how much she needed to work, take out in loans and receive in family help. It also gave her an incentive to graduate in four years because the rate was only good that long. Mahoney ended up finishing a semester early, with $16,000 in loans — an amount she has found manageable with her job as the alumni association’s digital media and marketing coordinator.

Many schools have been rethinking their costs as graduates struggle with student debt and diminished job prospects. Some schools have frozen tuition. A smaller group has slashed rates 20 percent or more in heavily publicized ‘‘tuition resets.’’

Even without those moves, few students at private schools have been paying full freight. Most schools offer scholarships to lure students with attractive grades, athletic skills or other talents. Post-recession, that aid has increased at private schools more quickly than tuition, said David Warren, president of the National Association of Independent Colleges and Universities.

‘‘The out-of-pocket expense is less today for a family than it was five years ago,’’ Warren said. ‘‘That’s a little known fact.’’

Northland has been part of that trend too, with a guarantee that students who meet certain academic and income criteria won’t pay more in tuition than they would pay at the flagship university in their home state. In Wisconsin, that figure is the $10,400 in tuition and fees charged by the University of Wisconsin-Madison.

Fixing the cost of tuition is aimed at helping students reduce debt by planning better. Northland officials said they noticed that after freshman year, student borrowing tended to mirror tuition increases.

‘‘In most cases, the institutional awards that are given stay the same, so as the cost of education goes up . . . most of our students have gone ahead and turned that into an additional loan, which has escalated the amount they needed to borrow,’’ President Michael Miller said.

Susan McHale, 21, a George Washington senior from the Philadelphia area, said its fixed-rate tuition plan — established in 2004 and one of the oldest in the nation — was a great relief to her father, a cost-conscious accountant who began saving and budgeting for her college education when she was in middle school. She has helped pay for room, board and other expenses with summer jobs and a part-time position in the school’s admissions office.Continued…

Fixed rates are latest in college tuition plans – Education –

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