Tuition Archives - Page 2 of 3

In Tuition: College ‘Pre-Pay’ Gains Popularity

Times Union: “To broaden college access and affordability, lawmakers have in the past pushed for a ‘pre-paid’ plan that would let families lock in tuition for their kids by paying in advance … So far, 11 states have added pre-paid components to their 529 savings plans, according to the Rockefeller Institute study. Those include a plan in Massachusetts that lets savers lock in half of their future tuition: If tuition was, say, $10,000 today, a $5,000 Tuition Certificate would be guaranteed to cover 50 percent of tuition — no matter how much the tuition cost increases in the future.”

“Florida, which has the nation’s largest pre-paid, plan lets parents lock in tuition at a state school from a child’s birth. At the current rate, families that paid $186.28 per month from the child’s arrival would cover tuition and fees for 120 credits, enough to earn a bachelor’s degree.”

“A November report by the Brookings Institution found that parents accumulating six-figure loans for their children are making up a record share of borrowers for college loans … Not everyone is convinced that pre-paid programs are the answer. The New York Public Interest Research Group believes more financial aid is needed. It’s unclear what schools overall think of pre-payment plans … One potential challenge the schools might be contemplating: If costs go up faster than expected, schools might face a financial gap if a lot of families have locked in their tuition rates.”

Maryland Students ‘Crowdfund’ Tuition

The Baltimore Sun: “Thousands of students … have increasingly taken advantage of crowdsourcing platforms to help them cope with steady increases in tuition and fees in Maryland and across the country … The number of education-related campaigns has increased each year since GoFundMe launched in 2010, said spokeswoman Heidi Hagberg. She said that more than $70 million a year has been raised on the platform for educational initiatives, with more than 100,000 annual fundraisers for causes ranging from teachers’ back-to-school drives to students’ college tuition.”

“GoFundMe hosted twice as many campaigns in 2017 as in the previous year related to college tuition in Maryland, Hagberg said in an email. And according to GoFundMe data from the 2016-2017 academic year, the most recent available, about $1.5 million was raised for Marylanders’ educational purposes in roughly 3,200 campaigns.”

“John Quelch, dean of the University of Miami business school and an expert in consumer behavior, said widespread acknowledgement of the onerous nature of paying for college motivates many students to feel comfortable publicizing their need.”

Tuition ‘Resets’ Yield Mixed Results

Forbes: “For decades, the cost of college in the US has risen meteorically. But now, a four-year degree has become so expensive that some colleges and universities think costs have hit somewhat of ceiling – and are slashing tuition by as much as 50% in hopes they can attract more students .. So far the move – known as a “tuition reset” – has had middling results. Only 27% of schools studied by the Education Advisory Board that had employed tuition resets as a strategy managed to sustain enrollment gains of 5% or more. In addition, only 29% of schools managed to meet a 3% revenue growth target following their tuition reset.”

“Small, private, liberal arts institutions are predominantly the ones electing to adopt tuition resets. Ten schools pursued the strategy this year, and four have already announced cuts for 2019-2020. Seton Hall University, a private Catholic school, slashed tuition by 61% in 2012-2013. Sweet Briar College, a women’s liberal arts institution in Virginia that announced it would close in 2015 – and was resurrected by alumnae the next year – reduced tuition by 32% this year.”

“The College of William and Mary, an elite public school in Williamsburg, Virginia, in 1999 was among the first to pursue a reset, though the concept has become trendy just in the last few years. More than four dozen schools used the tactic in the past decade, and more are likely to follow.”

College Coupons: Some Schools Discount Tuition

The Wall Street Journal: “Escalating the heated battle for students, some private colleges are offering to match public in-state tuition … The discounts aren’t limited to private schools. Public universities in Michigan, South Dakota and Nebraska now let students from other states pay as if they were locals.”

“Some colleges, facing dwindling populations of local high school graduates, are motivated to attract students from across the country. Others are battling the perception they aren’t affordable or looking to boost their academic profiles.”

“The price-match guarantee, a sales tactic borrowed from retailers, illustrates how fiercely competitive higher education has become. It also adds to the confusion over how much college really costs, especially at private schools. Although the pricing campaigns suggest major savings, already generous financial-aid packages mean the net price for many students won’t change by much.”

How Much Is That College Degree Worth?

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Quartz: “While Americans without university degrees have seen a fair rise in household income in recent years, they still lag far behind their college-educated peers. Per triennial data from the US Federal Reserve published this week, people with college degrees these days have a median net worth more than four times that of people without.”

“It’s not that college-educated Americans are making dramatically more money than before—in fact, their median net worth has only grown 2% between 2013 and 2016—but rather that those without college degrees still have a long way to go to catch up. In that three-year period for which Fed data was collected, the median net worth for those with only a high school diploma actually jumped around 25%, from $54,100 to $67,100. But the median net worth for those with college degrees is $292,100.”

Supply & Demand Reduces Tuition Costs

The Wall Street Journal: “U.S. college tuition is growing at the slowest pace in decades, following a nearly 400% rise over the past three decades that fueled middle class anxieties and a surge in student debt … Abundant supply is running up against demand constraints … Longer-running economic and demographic shifts also are at play. Lower birthrates and the aging of baby boomer children have reduced the pool of traditional college-age Americans.”

“Another factor: Congress last increased the maximum amount undergraduates could borrow from the government in 2008. Some economists have concluded schools raise prices along with increases in federal financial aid. A clampdown on aid, in turn, could limit the ability of schools to charge more … Moreover, the number of schools is declining in response to oversupply, particularly among for-profit schools, a trend that could reduce competition and increase pricing leverage for schools that remain open.”

“Public four-year colleges, which teach the majority of bachelor’s candidates in the nation and tend to be cheaper than private schools, are benefiting from increases in direct state funding as tax revenues improve. That has eased schools’ need to raise prices on students … State officials have also pressured schools, through legislation and public speeches, to rein in prices, and they are admitting more international students to boost revenues.”

Super Seniors: The Six-Year Plan

The Wall Street Journal: “Low graduation rates hurt a school’s reputation, and staying enrolled for extra years adds to the tab for students. So dozens of schools and statewide systems are trying to cut back on the number of ‘super seniors’ milling about campus.”

“Schools have embraced marketing gimmicks like ‘Class of ’17’ bumper stickers to rally students around their graduation year. But they also are changing how they price a semester to make it easier to stay on pace to graduate, notifying students eligible to graduate that they should do so soon, and altering the classes offered in a given term to help students take the courses they need.”

“Nationally, four in 10 students who entered college for the first time as full-time freshmen in 2008 graduated within four years. The six-year rate hovers around 60% … Meanwhile, students who are ready to move on can struggle to get credit for how far they have come. With more than one-third of students now attending multiple institutions during their college careers, convoluted credit-transfer policies continue to slow the timeline to graduation.”

Amazon Prime Loans: Read The Fine Print

The Washington Post: “Wells Fargo is offering Amazon.com customers discounted interest rates on private student loans, creating a partnership with the online retail giant at a time when private lenders are fighting for market share.”

“Amazon Prime Student subscribers who apply for any of the bank’s education loan products are eligible to have their interest rate lowered by half a percentage point. Wells will take off an additional quarter of a percentage point for borrowers who enroll in an automatic monthly loan repayment plan. Interest rates on Wells undergraduate loans for four-year colleges range from 5.94 percent to nearly 11 percent on a fixed-rate loan and 3.39 percent to 9.03 percent on a variable-rate loan. Students who enlist a parent or grandparent on the loan can get lower rates because co-signers are obligated to repay the debt if the borrower does not.”

“As it stands, interest rates on federal student loans are at an all-time low. Undergraduate students can expect to pay 3.76 percent in interest on new Stafford loans for the 2016-2017 academic year, while graduate students will be charged 5.31 percent interest. Government loans are only offered at fixed rates and students don’t need co-signers with stellar credit to qualify for the lowest rate. What’s more, federal student loan borrowers can take advantage of the government’s income-driven repayment plans that cap monthly payments to a percentage of their earnings. There is nothing comparable in the private market.”

Pauline Abernathy, vice president of the Institute for College Access & Success (TICAS), comments: “Amazon and Wells Fargo are trumpeting a discount while burying the sky-high rates on these private loans and without noting that they lack the consumer protections and flexible repayment options that come with federal student loans. It is a cynical attempt to dupe current students who are eligible for federal students loans with a record-low 3.76 percent fixed interest rate into taking out costly private loans with variable interest rates currently as high as 13.74 percent.”

Happy ‘Lap’ Year: The 5-Year College Career

Money: “About a quarter of parents each year face the daunting prospect of paying for an extra year (or two, or three) of college, according to student loan lender Sallie Mae’s latest survey. The situation comes up so often that financial planner Allan Katz … has all his clients save for five years of tuition instead of four … Even that kind of preparation does not stop many parents from panicking when their child gets to junior year without enough credits to get a degree in four years.”

Financial planner Hank Mulvihill … takes it even further. He tells clients to expect to pay $50,000 a year for six years … During his 25 years as a planner, Mulvihill has seen the chips fall every which way. One family recently faced an extra year of tuition at a private university but simply did not have another $65,000. So the student had to transfer to an in-state public school to finish her studies.”

“Fear of going overtime in college has prompted some parents to push their children to stack up credits in high school so they can graduate college either early or on time … These are lessons that Frost Gordon will take to heart when her younger son applies to colleges next year. ‘I’m going to be more conscious about my spending now and plan for a fifth year,’ she said. ‘And I’m going to ask on the tours how many kids are getting an undergrad degree in four years’.”

Thinking Outside the ‘Ivy League’ Box

Quartz: “Well-heeled universities tout the benefits their name will give graduates: namely strong alumni networks, star faculty, and a résumé boost. But you needn’t attend an Ivy to reap those rewards. In fact, lower tier school alumni networks are arguably stronger, because fellow alumni recognize that you didn’t necessarily have an easy path to follow. They might be more willing to offer career help, because your less illustrious school denotes that, like them, you are also full of hustle and tenacity.”

“The Washington Post reported on a recent study by Princeton economists in which college graduates who applied to the most selective schools in the 12th grade were compared to those who applied to slightly less selective schools. They found that students with more potential earned more as adults, and the reverse held true as well, no matter where they went to school. Likewise, star faculty are not always found where you’d expect. Big name schools are not necessarily the best places for professors; plus, many professors split teaching time between multiple colleges and/or universities.”