JUNE is graduation month. Hundreds of local high school students, members of the Class of 2019, have or will be donning caps and gowns to accept their hard-earned diplomas.
And as proud parents watch their sons and daughters walk across the stage to the familiar strains of “Pomp and Circumstance” with that oh-so-bittersweet mixture of pride and nostalgia that graduations tend to evoke, in the back of their minds many are also probably wondering: “How are we going to pay for college?”
That’s not an idle question. According to the State Council for Higher Education for Virginia, the average total cost of one year of post-secondary education for a full-time resident undergraduate at a four-year state college or university this past academic year was $24,003. The cost ranged from $19,850 at Norfolk State University to $35,636 at the College of William and Mary, but the average tab for four years comes out to a staggering $96,012.
And except for a one-year freeze on tuition and fees courtesy of the General Assembly, it would have been even higher next year.
For the past two decades, Virginia families have been able to save for their children’s college educations by participating in the Prepaid529 plan. The program allowed them to pre-pay college expenses tax-free by buying contracts to cover up to 10 semesters of future in-state undergraduate tuition and mandatory fees at all public colleges and universities in the commonwealth.
The program incentivized savings, provided a hedge against rising college costs and a volatile stock market, and eliminated campus sticker shock. But it was too good to last. Institutions with higher tuition started complaining that they were getting the same amount per Prepaid529 student as lower-cost colleges.
Prepaid529 permanently closed for new enrollment on May 1, although existing contracts will be honored. According to the program’s website, “the steep increase in the cost of higher education since Prepaid529 opened in 1996 has put the cost of contracts out of reach for most Virginia families.” It went on to state that it is in the process of “changing the program’s benefit structure” and creating a similar program whose details “are still being finalized.”
A November 2018 report by the Joint Legislative Audit and Review Commission offers a clue on what the new program will look like. Instead of a defined benefit plan, JLARC recommended a weighted average tuition (WAT) program that would pay out the same amount to all students, regardless of which post-secondary institution they wound up attending, including private and out-of-state colleges.
If such a plan had been in place, the weighted average tuition for the 2018-19 academic year would have been $13,210—enough to cover tuition and fees at the University of Mary Washington and seven other institutions, but not enough to cover costs at seven pricier Virginia public universities.
JLARC pointed out that families would be able to purchase single WAT units (estimated price: $157) compared to a one-semester Prepaid529 contract ($8,485—the smallest increment available), enabling more people to enroll in the program.
And it would eliminate the current disparity between students who attend less expensive schools who are “essentially subsidizing the more generous payouts to other beneficiaries.” The report noted that “tuition and fees at the highest cost Virginia public institution has grown from 186 percent of the lowest-cost institution in 2005-06 to 258 percent of the lowest-cost institution in 2018-19.”
But WAT would not eliminate the crux of the problem: inexplicable year-after-year increases in tuition and fees at Virginia’s four-year state-supported colleges and universities averaged 76 percent over the last decade – far beyond the rate of inflation. Meanwhile, median annual household income in the commonwealth remained virtually stagnant during that time.
This trend is clearly unsustainable. No amount of tinkering with prepaid tuition programs or one-time infusions of cash from the General Assembly will make much difference until and unless college administrators start doing something about their out-of-control spending.