Increasingly, the cost of higher education has become the most formidable factor in deciding whether and where to attend college. As prices creep up – an average of 3.2 percent each year for four-year public institutions over the past decade – students and their families have much to balance when calculating how they will pay for school, and the unknown variable of rising rates each year adds to the challenge. A fixed-rate tuition plan steadies the equation – to the students’, parents’ and schools’ benefit.
A growing number of schools are offering students the option to pay the same tuition rate for each of their four years, thereby neutralizing the possibility of an unforeseen jump between academic years. By calculating the rate this way, students may pay more than market price during their first two years of school but then often see a dip when they become upperclassmen.
While it may be a bit of a mental trick – students can do the math on average tuition increases and make a fair estimate even without the fixed-rate option – the result is a concrete planning tool that can both improve graduation and retention rates as well as better prepare students to assess the financial picture associated with their college careers.
While the College Board’s finding of 3.2 percent average price increase for public schools – 2.1 percent for private, four-year institutions – may sound manageable, that figure does not necessarily reflect spikes that can make the difference between college being affordable and out of reach.
In the past five years, for instance, tuition at public, four-year schools has leapt up 27 percent, while private colleges have seen a 14 percent hike, according to the College Board.
Such steep year-over-year increases can significantly affect debt, as students borrow more each year to keep pace with the tuition and fee jumps. By calculating a per-year cost over four years, that variable – and its associated debt – becomes known.
By extension, then, students are less likely to look to other schools for transfer because the fixed-rate tuition would not follow to another institution. That correlative benefit increases schools’ student body cohesiveness and retention rates, all while improving four-year graduation rates – the fixed-tuition costs are often good for only four years.
There are approximately 320 schools offering the fixed-rate plan – about 6.7 percent of the colleges and universities in the United States, according to the U.S. Department of Education. There is every reason to increase that number: for students and their parents to budget, to foster a commitment to an institution and to help students focus their college time to graduate within four years.
The option does not necessarily bring down the cost of higher education, but it does make it more attainable by making the financial obligations more clear – prompting a thorough assessment of how to meet those obligations. It is an educational exercise in itself – and one that can produce meaningful opportunities for students and their families.