Centenary Joins Select Group of Private Colleges and Universities Forming National Prepaid Tuition Program, a First for Private Schools
SHREVEPORT, LA -- Centenary College is one of 54 private colleges and universities around the country which is launching a national prepaid tuition program that will help reduce families' future college costs while bolstering enrollments.
The Tuition Plan, Inc. (TPI), now being refined, will allow the prepayment of up to 100 percent of a child's future college tuition and room and board costs via purchasing contracts that lock-in tomorrow's costs at today's prices or even lower ones.
Officials from 54 private schools -- including Princeton, Kenyon, Vanderbilt, Southern Methodist University, Rice, Trinity, and Washington and Lee -- are seeking a consortium of about 100 schools. The institutions will offer a prepaid tuition plan similar to those existing in some 17 state programs, but theirs will be the first national plan devoted to independent colleges.
"We expect that it will take another year to get up and running, but we are excited about the possibilities for our future students and for the College," said Thomas Phizacklea, Centenary's vice president for finance and administration.
Most state plans allow prepayment of tuition at 100 percent of today's rate, but the private consortium plans to aggressively invest the prepayment funds to offset the discount. "We think we can get a high enough return so that you ought to be able to buy in at less than today's rate," said William Spitz, treasurer at Vanderbilt.
The proposal would allow parents to purchase, on an annual installment basis, certificates of various denominations that would pay a guaranteed percentage of tuition and room and board at any of the colleges, regardless of future pricing increases by the colleges. If a student chooses not to attend a participating school, certificates would be redeemable for the unused principal plus a pre-established level of interest or actual earnings.
The founding members of TPI "have launched an exciting effort to develop a way for families to afford an independent college or university education for their children and grandchildren," said Richard M. Libby, the plan's president and chief executive officer.
Established and directed by nonprofit, accredited, independent colleges and universities offering undergraduate degrees, TPI offers members that are diverse in size and geography. "This diversity, combined with our prepaid tuition design will encourage attendance, build a long-range foundation of more fully financed students and enhance the financial base at our member institutions," Libby said.
Organizers are continuing to expand the consortium's membership and to seek the same tax benefits provided for state prepaid programs. "The final design," Libby said, "will be simple enough to market successfully, well crafted to meet various tax and securities law criteria, and flexible enough to accommodate a wide range of tuition rates set by member institutions."
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