Truth-in-Tuition Proposal Gains State and Local Steam

As middle class families increasingly feel the squeeze of rising college tuition and stagnant financial aid, some in Congress have decided to go on the offensive. The hunt for both an explanation and a solution is in full force. Republicans are blaming the college affordability crisis on tuition hikes. Democrats say student loans cost too much.

Lets take a look at one non-partisan solution first proffered by the New America Foundation that seems to be gaining steam. In November of 2005, we called for institutions of higher education to provide families with "truth-in-tuition" pricing. Its a simple plan: colleges should fix and advertise multi-year tuition levels for students at the beginning of their freshman year.

How exactly does this help? Predictability and Planning. Students and families know how much their education is going to cost from the startno surprise hikes, no sophmore, junior, or senior year sucker punch, and plenty of time to plan financially. With "truth-in-tuition" pricing, colleges have to think ahead about costs and have an incentive to develop more restrained budget growth plans.

Recent developments in Texas and Arizona are shining light on similar truth-in-tuition options. A Republican State Senator in Texas has proposed legislation that would guarantee freshmen the same tuition rate for four years. Arizona State University just announced a pilot program that will allow freshmen to lock in a four-year tuition rate. Freshmen that choose the option will be charged a slightly higher rate upfront, but it will remain intact for four years. And that can make a big difference. In 2003-2004, Arizonas three state universities raised tuition by a shocking 39%. Imagine how rising college seniors (and their parents) felt.

Frankly, "truth-in-tuition" action by states and universities is not new. Illinois has a truth-in-tuition law. Individual colleges, such as George Washington University, Baylor, Central Michigan University, and The University of Minnesota, have fixed four year tuition rates. The benefit of these four year freeze plans is simplicity and clarity. The problem is that tuition may be front-loaded. First and second year tuition tends to be inflated in order to compensate for under-charging in later years.

Our truth-in-tuition plan is a little more nuanced, modest, and probably therefore more appealing to universities. Under our plan, schools can set multi-year tuition levels, meaning that tuition can increase by a predetermined amount each year. A first year student knows in advance how much tuition will go up for each of the next three years. We recommend four year tuition schedules as opposed to a four year flat rate, but either way the "truth-in-tuition" idea is based on the same principle ? required long-term pricing on the part of colleges and universities so that parents and students can plan ahead financially.

Of course, "truth-in-tuition" is only part of the solution to skyrocketing college costs. More important is for Congress to demand that states stop cutting higher education funding. Cuts in state funding for higher education are the number one driver of college cost hikes, because institutions back fill state funding cuts with increased tuition charges. Washington requires a match for federal elementary and secondary education funding, for Medicaid funding, for transportation funding why not for increased federal higher education aid? That would have a dramatic impact on restraining the growth in college tuition.

Some Republicans in states like Texas, a couple of high-profile Democrats, and some universities embrace the idea of "truth-in-tuition." Combine it with restraints on state higher education funding cuts, decreased federal student loan interest rates, and higher Pell Grants, and, well, youve got the beginnings of a pretty good plan to address the middle class squeeze.