Freshmen to pay fixed tuition rate

The University’s Board of Trustees gave the green light Friday to a fixed-pricing plan that will allow incoming students to pay the same tuition for their entire stay at GW.

Next year’s freshman class will pay $34,000 in tuition, a figure that is not subject to the yearly tuition hikes GW traditionally enacts for incoming and current students. On Friday, the board approved a 5 percent tuition increase for current students.

The plan, which does not affect existing students, poses significant risks for the University, which faces an uncertain economy and the possibility that some parents will balk at paying one of the highest tuition rates in the country.

The $34,000 price tag, a 16 percent increase from the tuition being paid by this year’s freshman class, will also give GW a short-term revenue boost.

Under the plan, incoming students who warrant financial and merit scholarships will be guaranteed their original aid packages while they attend GW. Housing and food costs, which traditionally increase by 2 percent or 3 percent each year, will not be fixed.

With this year’s boarding rates, incoming freshmen would be paying about $44,000 a year in total costs.

Executive Vice President and Treasurer Louis Katz said officials have been discussing fixed tuition for months, which the 35-member Board of Trustees passed unanimously after 45 minutes of debate Friday afternoon.

“Basically we feel … someone needs to change in the way pricing models work in higher education,” Katz said.

Board member Phil Amsterdam said before the vote that fixed tuition is a “way of stabilizing (tuition) and giving parents and students a fair break.”

University President Stephen Joel Trachtenberg brushed off suggestions that the pricing model would make prospective students shy away from GW.

He said fixed tuition would make paying for GW more predictable for students and parents at a time when higher education costs have significantly escalated.

“We think that someone has to take a stand to give parents greater piece of mind,” Trachtenberg said in an interview after the board approved the plan.

Financial ramifications for parents and students

GW is one of the first private universities in the country to implement a fixed-pricing system. Pace University, a private college in NewYork, locks its tuition but does not guarantee a four-year financial aid plan.

Officials said parents and students who are able to pay GW tuition without financial assistance will not be undaunted by first-year costs that would make GW one of the most expensive colleges in the country.

“The ones that could be affording the full amount, when you’re talking about … a few thousand dollars difference … we don’t believe parents will make the decision not to come here,” Katz said.

Officials also emphasized the University’s revamped financial aid packages, which would allot cash-strapped students more money than they would receive under GW’s former plan. Currently, most students’ aid packages do not keep apace with tuition rises.

Some parents of prospective students said a fixed tuition would allow them to plan for the future.

“(I)t’s better than being surprised every year,” said Louis Stesis, who was taking a tour of the campus with his daughter Friday afternoon.

Arthur McCann, director of the guidance department at Great Neck North High School, a Long Island school that sent two of its students to GW last year, said the fixed tuition would be welcomed by parents.

He also said GW’s high tuition would not deter wealthier parents from forking over almost $180,000 for their child’s four-year college education.

“Education is so highly valued that people will move heaven and earth to get their kids into higher education,” he said.

“If in the long run, if they felt this was going to be stable … it’d generally be perceived in a positive way,” McCann added.

A member of the class of 2008 attending GW for four years will end up spending about $3,000 more than they would have if the University continued the trend of 5 percent tuition increases during the next three years, according to Hatchet calculations. Students facing a tuition of $30,820 their freshman year would face a bill of $132,838 after four years if GW had instituted a 5 percent increase, while the fixed plan totals $136,000. But officials warned that there are no indications that the recent tuition increase average of 4.6 percent would remain stable.

Some current students said a fixed-pricing plan is a good idea only if it parallels tuition increase at GW’s peer institutions.

“On the negative side, it would filter out some students who would go here if the tuition was lower. But on the positive side, you know what you’re getting into,” senior Jeremy Liebman said.

“If it stays consistent with other schools’ (tuition increases) … I’d probably do it,” he added.

“It sounds like a good idea for parents to have a fixed tuition, but I’d really need to look at (a chart showing GW’s projected tuition increases for the next few years) before I’d be for or against it,” senior Meghan Shea said.

Although the plan gives families a greater ability to budget college expenditures, the University’s high sticker price and a decrease in federal financial aid might discourage low-income students from going to GW, said Lawrence Gladeux, a freelance higher education consultant.

“I don’t think colleges like GW … are doing enough to help low-income students,” he said.

Gladeux also said the plan would not temper overall interest in GW.

Financial ramifications for GW

While the plan seeks to assuage parent’s concerns about spiraling tuition, it would prevent GW from responding to market fluctuations. The University, which has increased tuition in the past few years partly to combat rising inflation, would be unable to respond to unanticipated economic events that require a more-than-anticipated fee hike.

University officials, who used a 3.8 percent inflation rate to calculate next year’s fixed tuition rate, said a resurgent economy minimized chances that prices would rise precipitously in the next few years.

“We should be able to manage our inflationary exposure,” Katz said.

The pricing plan will give GW a short-lived revenue increase in the next few years that will be neutralized by the time next year’s freshman class become upperclassmen, said Robert Chernak, senior vice president for Student and Academic Support Services.

GW’s coffers will swell by a much as an extra $72 million under the new plan if the University reaches its goal of admitting an incoming class of 2,400 students, according to Hatchet calculations.

Chernak said some of the extra funds would be diverted to financial aid, with the remainder held in reserve until officials can evaluate the University’s health under the plan.

Since the pricing plan anticipates future tuition increases by initially making costs higher, GW would not see a net gain in revenue in the next few years, Chernak said.

Evaluating the plan

While next year’s class is locked into the fixed tuition plan, GW could always revert back to a market-determined tuition that increases every year. The plan would need to be in effect for a “minimum of a couple of years” before officials could weigh its effectiveness, Chernak said.

“You might need two years of experience to see what the true impact was,” he said.

Chernak said officials would judge the plan’s affect on enrollment and revenue, and the quality of students it attracts, among other factors.

He said the plan would have a positive impact on GW’s 93 percent retention rate but that students planning to transfer would leave despite the up-front costs that may make paying for GW more expensive than most other colleges.

“A lot has to do … with the (academic and social) experiences someone has while they’re here,” he said.

“Those are factors that far outweigh … whether you’re paying 42,000 (dollars) or 46,000 (dollars) a year,” Chernak added.

Communicating with incoming students

In the next few days, the University will launch a Web-based marketing blitz to inform incoming freshmen already admitted to GW under its Early Decision I program and prospective students of the pricing changes.

Chernak said GW has sent e-mails to the hundreds of Early Decision I students that were notified Dec. 15 of their acceptance to GW.

Officials will need to increase some students’ financial aid packages to account for the tuition hike, said Chernak, who noted that awards do not take effect until GW receives parents’ 2002 tax returns, which are typically sent in the spring.

Officials allocated an additional $14 million toward next year’s undergraduate and graduate financial aid budget.

Other prospective students who applied to the University under the Early Decision II and regular application process will receive notification of the new pricing plan upon being admitted to GW in the next few months, Chernak said.

Chernak said he was unsure how the plan would affect transfer students.

Trachtenberg said the plan would be popular with incoming students and noted that GW has received a record 20,000 applications as of Wednesday.

“(Students will) be thrilled,” Trachtenberg said. “If we didn’t think would be positive we would not be doing it.”

-Bryn Lansdowne contributed to this report.

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