Demystifying College Costs: Fixed-Rate Tuition Plans

"Next to buying a home, college tuition is the biggest expense most people face, but at least homebuyers know the total cost and can plan accordingly," FOX Business reports. "'It’s kind of strange when you think about it that students and parents are expected to make this enormous investment in a school (and) for the most part they don’t know the final price tag,' says Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators. 'That lack of clarity can really make it hard to be financially prepared.' A growing number of schools are attempting to fix that. As college tuition prices continually outpace inflation and student loan levels reach record highs, more colleges and universities are offering fixed-rate tuition plans. These plans, which are set in contracts, lock in a single rate for a certain amount of years. While the trend is still small with 320 schools offering these plans from 2012-2013, according to Draeger, it is gaining momentum as schools face financial pressure from declining state and federal funding and alumni donations. ... Draeger recommends students thoroughly review any fixed-rate contracts from a school before signing and enrolling. 'They tend not to be overly complex, but they still need to sit down and understand the commitments they need to meet in order to still qualify and what happens if they fail to meet them.' Most schools require set enrollment and attendance levels in order to remain eligible for the rate. He adds that students need to make sure the rate applies to every semester. 'If a student wants to be continuously enrolled, say through the summer, they should know if there is going to be a different rate.'"

NASFAA's "Financial Aid in the News" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.