Locked In Tuition Rates

There are certainly plenty of factors that influence your decision to attend college in a given location. Understanding locked in tuition rates can be something that helps you to decide to go with one school over the next.

What are Locked in Tuition Rates?

A locked in tuition rates means there won’t be any increase in the cost of your attendance between your first year of college there and your graduation year. There can be some differences if you take more credit hours, but the cost per credit hour won’t increase.

Most schools have some stipulations in place that influence if you qualify for a locked in tuition rate. While you do need to check the policies for the school you wish to attend, these are the most common:

Student must graduate with a degree in 4 years

  1. Student must be enrolled full time
  2. The 4 years must be consecutive

Why is Locked in Tuition so Important?

The cost of attending college isn’t cheap, and it can be stressful to budget for it. Getting the financial aid you need in place that first year of college is a load off your shoulders. Hopefully, between Pell grants and scholarships you don’t have to take out any student loans.

However, you do have to think about how you will pay for college the following year. Knowing the tuition rate is going to be the same lets you know how much you need to budget for. If you have scholarships that can be renewed each year, that is money you can count on.

Then you can complete your FAFSA and see what your Pell grant qualification will be for the following year. Subtract the cost of attending from your scholarships and Pell grants to determine your unmet need. There isn’t going to be any stress or anxiety trying to account for a huge price increase from one year to the next.

Unfortunately, that is the case at many colleges, and it can be upsetting to both parents and students. The increase can be as much as 25% from one year to the next. Imagine the difference that makes for overall cost from the time you start your freshman year of college and you start your senior year of college.

Variable Option

There are colleges out there that give you the variable option. You can choose to enter into a locked in tuition rate or to opt out of it. As of 2013, all of the colleges in the state of Oklahoma offer this option to students. This is only offered to their in state students or out of state students who have been granted a waiver.

In Oklahoma, all students are enrolled at the variable rate plan. If they would like the locked in tuition rate, they must ask for it. There are plans at many more schools and even among many other states to make this an option in the near future.

Beware of Scams

Even though the college itself may offer legitimate programs, some of them have found ways to offer scams with locked in tuition rates. They do this by inflating the cost from the start. They make you feel like you are getting a very good deal with the locked in rate.

In reality, you are already paying more per year to attend college there than other schools that compare to them. Overall, you aren’t saving money but it is a clever marketing ploy that makes you think you are if you don’t take the time to compare prices with various colleges.

Most schools argue this isn’t a scam – it is legal. They are fully disclosing the cost of tuition and they are simply stating you can lock that rate in for four years. While it may be legal, it certainly doesn’t seem to be very ethical.

Private College 529 Plan

Parents often think about the day when their children will leave home and go to college. One way for them to pay for it now, and to lock in current rates, is with the Private College 529 Plan. It is a way for future students to get a tremendous value because inflation doesn’t factor into the equation.

There are currently about 270 private colleges out there where such tuition certificates can be purchased for. The number of such colleges continues to grow too based on the demand for it. What also has to be understood is just because you buy such certificates at a given college for your child; it doesn’t guarantee they can be admitted as a student there when it is time for them to attend college.

The fact that the family has purchased certificates has no bearing on the application process. If a student is accepted to any of the colleges that participate in the program, the funds can be applied tax free to any qualified educational expenses. However, the account must be active for at least 36 months before funds can be withdrawn.

The prepaid tuition units don’t have to be used as soon as a child graduates from high school either. Perhaps they take another path and decide to go to college later in life. The prepaid tuition units are valid for up to 30 years after purchase. Such an investment plan is a guarantee there will be money for college.

As a result, many parents are opting to put their money into such plans. They realize it is a safer option than investing in the stock market or other types of investments that could actually result in a loss on that money instead of a gain. What happens if the student chooses to attend a college that doesn’t participate in the Private College 529 Plan?

The prepaid tuition units can often be rolled into another type of account that is sponsored by the state where the college they will attend is located. Should the student not go to college at all there are a few options for parents. One is to allocate those units for another child in the household.

If that isn’t an option either, the parents may withdraw the funds they have invested in the 529 Plan. They will earn the given amount of interest on that money that has accrued so it is will be similar to a savings account. However, taxes will have to be paid on that money at the time it is withdrawn.

Finding Colleges that Offer a Locked in Tuition Rate

Most colleges that offer a locked in tuition rate proudly advertise it. You will see that perk when you start checking out information about the college. They know it is a huge incentive for students to enroll there. You can also check online by college if you have a particular school in mind.

If you don’t see the details you are looking for, pick up the phone and call them. It will only take a minute or two and you will have the information you need. If the school does offer you a locked in tuition rate, make sure you read all of the terms and conditions that are associated with it.

Most of these locked in tuition rates only apply to undergraduate programs. Some colleges do extend it to their graduate programs too but not very many. Too many students make the assumption though it will continue. What does this mean? If you sign up for a locked tuition rate as a freshman it will continue through your bachelor’s degree graduation.

This is typically a period of four years to qualify based on the policies at most of the colleges. However, you may decide you would like to continue going to college there for an additional two years to earn your master’s degree. While the school would love to have you, the first year of your graduate program is going to be at the rates for that point in time – not back to when you entered as a freshman.