The cost of college tuition has been rising dramatically over the years — greater than the rate of inflation in most instances. Colleges and universities try to keep these tuition increases at a minimum for their students and families but, unfortunately, budget cuts and reduced funding at the state and federal level sometime dictate a different outcome.

Over the next few months, higher education institutions will be convening their boards and trustees to help establish what their position will be on tuition pricing for the upcoming academic year. When it comes down to it, they really only have three options: Increase Tuition Rates, Freeze The Cost of Tuition, or Reduce Tuition Rates. Let’s take a look at these three options and see the pros and cons for each.

Increase Tuition Rates

Pros:

• Price (higher) equals prestige…
• College will be better equipped to meet budget demands and provide more student focused initiatives

Cons:

• Students will have to find a way to cover the additional costs…
• College may price themselves out of range for some prospective families
• Some upperclass students may not return (probably because of other issues but the tuition increase may provide additional justification)

Some tuition increase articles from the last year:

• Warning! – Double Digit Tuition Increases Ahead
• Princeton University Sets The Pace For Tuition Increases
• Massachusetts Students Brace For Record Tuition Increase
• Want To Avoid Tuition Increases? Here Are 5 Tips!

Tuition Freeze

Pros:

• Keeps tuition rate at the same level and families and students don’t have to worry about absorbing additional costs
• Provides a marketing tool for the university when trying to recruit prospective students
• Could help to boost enrollment numbers for incoming and returning students

Cons:

• University will have to absorb the lack of tuition increase into their budget (may not be a problem for many but with costs rising in every other sector it could be a challenge)
• Based upon the above, some new student programming initiatives may be delayed indefinitely

Examples of schools providing tuition freezes:

• 13 Colleges That Guarantee No Tuition Increases
• EMU Displays Oneupmanship With Freeze On Fees
• University of Missouri Freezes Tuition for 2010-2011
• Tuition Freeze at Maine Community Colleges

Reduction In Tuition

Pros:

• Students (and their families) will be holding parties in the streets in favor of this decision
• Provides a huge marketing edge for the university to use in recruitment of prospective students
• A reduction in tuition rate may put a college or university in the prospect pool for more families.

Cons:

• In order to sustain/support this model (tuition reduction) a university or college will need to have steady growth in enrollment.
• If the tuition reduction is rolled out to upperclass students (and depending on the amount of the reduction), their financial aid packages may need to be adjusted accordingly so that the desired net revenue is still met by the college (University of the South – Sewanee recently got some flack for this approach)
• Students will not have as much tuition expense to deduct on their taxes using the 1098-T. This is actually a good con!

Examples of some colleges providing a reduction in tuition costs:

• Reducing Fees – An Outside of the Box Approach to Tuition Pricing
• University Of Charleston Vows To Cut Tuition Rates By 22 Percent
• Cutting Tuition, Increasing Revenue – Muskingum, Albertson, and Wells College

So What Do You Think?

After looking at all of these options, what do you think would be the best approach for your university or college to adopt as it moves forward in tuition pricing for the upcoming academic year. Can you think of any other options or approaches to tuition pricing? Feel free to leave your comments, thoughts, or ideas below.

The title of this article could probably reflect what a street sign would look like if it were placed near a campus that was getting prepared to hike tuition rates by at least 10%…or more.

Tuition increases have far outpaced inflation over the years but I have been a little hopeful lately as I see more and more colleges implementing modest to no increase in their tuition rate. That was of course until I got news about some recent bumps in tuition that students will be feeling next academic year in their wallets.

The first is Temple University, found in Philadelphia, Pennsylvania. They recently announced that they will be increasing tuition by 10 percent for in-state students and 5.4 percent for out-of-state students for the coming academic year. The percentage increase impact in dollars comes to about $1,200. The total in-state tuition at Temple will be $13,006 and the out-of-state tuition will be $22,832.

The second is the University of Tennessee college system. The trustees recently voted in approval of a 12 percent tuition increase at their main campus. This will bring the Knoxville campus’s annual tuition rate to $8,396. Ten percent increases were also approved for the satellite campuses located in Martin and Chattanooga.

To the credit of each of these Universities, the double digit increases were not adopted without hesitation and it does appear that a decrease in state funding is to blame in each situation (or at least that is what University officials are claiming)… Of course, I have already offered my solution to all the state budget woes and the impact it has on education funding for colleges.

If you are a student that is attending one of the colleges above, or you just find yourself having a difficult time absorbing the tuition increases at your school, I encourage you to check out this article for help in dealing with rising college costs. Also, it never hurts to browse over our College Resource Center for additional assistance and ideas.

I really enjoy when CheapScholar.org gets to showcase great tuition deals across the nation. I especially like it when I hear the word FREE combined with tuition.

Last week, the University of Massachusetts – Lowell (UML) just offered a free tuition option for students looking to transfer in from local community colleges this coming Fall Semester. This new program (referred to as Advantage Plus) will provide up to four semesters of free tuition (which should be enough for most students to complete their bachelor’s degree requirement).

The following are the qualifying requirements for the free tuition offer:

• Must be a graduate from one of 15 Massachusetts Community Colleges
• Students must have and maintain a GPA of 3.0 or higher

The current in-state annual tuition rate at UML is $1,454. So a student could potentially save about $3,000 over the span of two years while they complete their bachelors degree. Seems like a pretty descent offer right? Well… as Paul Harvey says “and now for the rest of the story”…

Even though UML is offering free tuition, this population of students will still be responsible for annual fees totaling over $9,000 and if they plan on living and eating on campus, that will be an additional $9,000. So, they get $1,454 in free tuition each year but could experience about $18,000 in extra expenses…ugh. Doesn’t sound like such a great deal anymore.

The basis of this story is that it is important for you to inquire about ALL the fees being charged by the colleges that you are looking at attending (Tuition, Room, Board, and Fees). In the case of UML, they have amazingly cheap tuition but they will quickly depress your college savings with their fees. Other schools may have reasonably high tuition rates but little to no fees. So be smart and try to compare apples to apples when looking at college costs and not apples to oranges.

We all know that the cost of college is a moving target. Some of your charges are billed directly from the school, some are offset by financial aid, and some are added “soft-costs” that you pick up along the way. It is hard to figure out the exact expense that your checkbook will absorb over the 4 year span but the following info-graphic helps to shed light on some of the more common non-tuition education expenses that you will experience (click on the picture for the full-size version):

As strange as it may seem, I remember reading a story about this many years ago. I can’t place the name of the college; all I know is that it was in rural America and the school had taken on a bartering system with local residents to help make their college accessible and affordable.

The only restriction that they put on the bartering is that the product they were receiving had to somehow benefit the college. When it came to livestock and produce, they would make use of it in the dining hall and the student would get a reduced tuition bill. If they had deferred maintenance on a building and a tradesman was able to offer services to remedy this, they would gladly accept the deal and credit the “going rate” of the work performed to the tuition bill.

Since this is how commerce first initially used to take place before the invent of money, it doesn’t surprise me that it could be making a resurgence in troubled economic times. In order to effectively help families and colleges traverse any bartering system that they may encounter with college expenses, I have devised the following chart to serve as a guide when dealing with produce and livestock. Enjoy!

(disclaimer)
All prices represent the average retail price and the weights are the typical size (dressed). Your livestock and produce may be able to fetch more or less depending on size and market conditions.I attempt to round up or down whenever possible in my calculations.

With the current level of education costs, many families tend to be more apt to think about leveraging some sort of guarantee to insure that their investment for the semester is not a complete loss if by chance their student suffers a serious illness or accident and has to leave the university. A number of insurance companies have recognized this growing demand and are providing the option of tuition refund plans for families/students. Basically, the insurance plan will make the family “whole” on any out-of-pocket education expense that is not refunded by the school.

Sample Scenarios
If a student has to medically withdraw from a college during the second week and the school provides an 80% refund of charges, the tuition refund plan (T.R.P.) would kick in the remaining 20%.
-or-
Let’s say the student withdraws (for medical reasons) in the 10th week and the University provides no refund of charges, the tuition refund plan (insurance policy) would reimburse the family for their full expense.

The following is a chart that helps to depict other scenarios:

What’s The Cost?
Based upon my research, the premium for this type of insurance policy can gravitate around the 1% mark.  So, if your college tuition, room, and board fees are $40,000 for the year, you can expect to pay about $400 to insure your investment.

What’s The Catch?
There is really no catch that I can see. All of the tuition insurance policies that I researched do not have a pre-existing illness clause. So, if your student suffers from some ailment prior to going off to college, you would probably be a good candidate for the tuition insurance plan.

In a conversation with Dana Tufts, president of A.W.G. Dewar (one of the nation’s leading tuition insurance providers), I inquired about the “make-up” of their participants. He stated that their families represent a pretty broad cross-segment of all situations and scenarios but that they do experience a high propensity of students reflecting some sort of chronic medical or mental illness in their past and that is the market in which their tuition insurance policy is the most beneficial in regard to payout.

Where Can I Get It?
You will first want to drop a call to your college’s Bursar’s Office (also known as Office of Student Accounts in some circles) and see if they have a pre-existing relationship with a tuition insurance provider.  If they don’t have a program established, you can go out on your own and secure your own policy. However, at this time, I only know of one organization that provides this benefit independently (not through the college). They are known as GradGuard and you can check out their website here.

Is It Worth It?
I am not usually one to buy the extended protection services offered with my appliance and electronic purchases, so I would tend to lean toward not investing in this plan. However, my tv or dishwasher doesn’t cost $20K-$40k a year. So, if my child had some sort of pre-existing condition that may interrupt their education mid-stream, I would probably think a little harder about enrolling in the tuition refund insurance plan.

Hope you found this information helpful. If you know of someone else that many benefit from this article, please don’t hesitate to pass it along using the “share tab” below.