Prepaid college tuition rates may increase by 50 percent

Erin Neff

Tuesday, Dec. 3, 2002 | 11:25 a.m.

State Treasurer Brian Krolicki said Monday he will have to raise prepaid college tuition rates by 30 to 50 percent when the program is again offered early next year because of projected tuition increases at Nevada colleges and the current stock market performance.

The program allows a parent to lock into a set rate today for future tuition payments. Last year a parent who participated could lock into a $7,460-a-year tuition charge for a current newborn or $9,630-a-year tuition for a current ninth grader.

There are accounts for 8,407 children.

"To make sure that prepaid tuition is a viable option, we've had to delay the offering this year and will have to raise rates when it is offered again early next year," Krolicki said. "The price is likely to be substantially higher."

Delaying the offering by about six months will give Krolicki's office more time to analyze market conditions and tuition increases approved by the Board of Regents of the University and Community College System of Nevada.

Regents Chairman Doug Seastrand said the Nevada system was forced to raise tuition because of the rising cost of higher education and reduced revenues for programs from the state.

"It's very similar to national trends in that the cost of higher education has gone up at the same time the amount of funding from the state continues to drop," Seastrand said. "It's now incumbent on us to have more of the cost passed on to students."

In March, regents approved a 15 percent tuition hike over the next two years for Nevada's four-year universities and a 7.7 percent increase over the next two years at its community colleges.

The cost of a Nevada four-year university is $2,370 a year in 2003 and $2,760 in 2004. The costs at Nevada community colleges will rise from $1,896 this year to $2,370 in 2003 and $2,760 in 2004.

Costs at four-year public universities nationwide rose 9.6 percent this academic year, according to the College Board.

Krolicki's job as chairman of the Nevada Higher Education Tuition Fund Board is to predict costs 20 years out in some cases.

The program allows a parent to contract with the state for enrollment at any accredited university, college or community college in the nation. Children enrolled in Prepaid Tuition do not have to choose a Nevada school.

There are four plans available: a four-year university plan prepaying 120 credit hours; a two-year university plan, prepaying 60 credit hours at a four-year university; a two-year community college plan for four semesters at a community college; and a hybrid plan that prepays two years of each.

A parent can pay the tuition in one lump sum, in equal monthly payments until the child reaches college age or in 60 equal payments over five years. Parents can also put $1,000 or more down to reduce the payment costs.

Krolicki said that while Nevada's program donations earn about 7 1/2 percent annually in the market, the tuition increases make it impossible to keep rates at their current level.

"The last thing we want is an unfunded mandate," Krolicki said.

The increased rates are expected to be approved early next year by the Nevada Higher Education Tuition Fund Board and be offered to the public by February.

Nationwide about 20 states that offer prepaid tuition plans are raising rates amid concerns that rising school fees and the current recession could cause multimillion-dollar deficits.

States are shortening enrollment periods to limit the number of new families enrolling.

In Ohio, the program has a projected $46 million deficit and unit costs were raised 53 percent for new enrollees.

Once a parent is enrolled in a prepaid tuition program, he or she is locked into the contracted rate despite future increases to the program or future tuition increases.

Krolicki said a parent who locked in four years ago does not have to worry about the current tuition increases. Krolicki is enrolled in the program for each of his three daughters.

The Associated Press

contributed to this article.