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Guaranteed Tuition at Other Universities Presents Both Pros and Cons

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A new tuition-funding model may rock Ohio University in the coming months as administrators look for ways to appease students’ financial concerns.

Guaranteed Tuition, as the plan is called, is a funding model that ensures a student will pay the same tuition rate at graduation that he or she paid upon enrollment. A student will be locked into this rate for a four-year term, which guarantees tuition for that student will not be raised.

Continuing tuition hikes and increasing student loan debt have prompted university officials to explore new territory in funding. Proposed by Vice President and Provost Pam Benoit and Vice President for Finance and Administration Stephen Golding, students were first exposed to the plan during a Student Senate meeting in November 2012.

“This conversation is predicated on the belief that the business model for higher education in this country is unsustainable in its current form, and that we need to come up with a different way of providing the resources necessary to support higher education in this country,” Golding said during a Senate meeting early February.

The model is still in its preliminary stages of development, but has become the token proposal for its predictable mode of revenue and stability for students and families. A guaranteed rate allows families to plan how they will fund their student’s education years ahead of time.

The plan was proposed to the Board of Trustees during its Feb. 8, 2013 meeting and has the possibility to be voted on in April or June. Until then, Benoit and Golding are tasked with working through the details of a relatively new model that has no guarantee of success.

Other universities have been experimenting with level tuition models for the past decade. University of Dayton recently approved of a guaranteed tuition model for four-year terms that locks in net price of attending the university, and will be implemented in the 2013-2014 school year.

But UD is not the only one. FinAid.com documented 39 individual colleges that have used a level or guaranteed tuition model, and two states—Florida and Illinois—require all public universities to utilize the same method of setting tuition rates.

While little information can be found about the success rates of most universities that use guaranteed tuition plans, one university experienced a notable failure. Central Michigan University implemented a guaranteed tuition plan, called the CMU Promise, in 2005 and eventually phased the plan out by 2008.

Months before the recession hit, the university, according to its newspaper “CMU Life,” ended the Promise because of Michigan’s failing economy and up to 40 percent tuition increases during its three-year run.

Georgia also had a similar plan, enacted statewide by the Georgia Board of Regents in 2006, but was repealed in 2009 after a condition in the plan was not met. The Georgia Guaranteed Tuition Plan stipulated that tuition rates could not be decreased. When they were, the board repealed the act and universities now use traditional tuition models.

But implementation of a guaranteed tuition plan at OU could be very different. Ohio state law limits the percent of which a university can raise tuition to 3.5 percent. And while the economy continues to see small improvements, prospects for a guaranteed tuition model seem favorable.

Still, not everyone is sold on the idea. Art & Science Group, LLC, a market intelligence group specializing in university budgets, released a market intelligence brief that strongly advises against the plan. According to the brief, a tuition lock may discourage enrollment and does not solve high tuition costs in the long run. The group also advises that a tuition lock would make it hard for universities to raise tuition during an unforeseen budget crisis.

“If, for example, the regional or national economy faced an unexpected downturn and state and/or federal support was reduced, having promised a lock on tuition, an institution would face even greater resistance if it were forced to break the lock,” the brief said.

There are also many unanswered questions about how the plan will be executed at OU. Such as: What if OU sees a tuition rate decrease? What will the rate be for five-year seniors and graduate students or students who decide to take breaks in their education?

The plan also pertains only to tuition rates. There is a possibility that rates for room and board could be increased every year, no matter a student’s guaranteed tuition rate.

Golding and Benoit stressed during a Feb. 7 Senate meeting that the plan is still being organized and other institutions with similar plans are being monitored to determine the feasibility of the plan.

Editorial Note: The article is part of an ongoing series featuring the administration’s proposed tuition model.

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