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Tuition-Freeze Plans May Not Save Money for Families, Study Finds

As high school students weigh the cost of a four-year education at various colleges, it often involves guesswork. Tuition will likely go up each year, but how much is an unknown.

Some states have tried to provide families with predictability by requiring public institutions to promise to charge students a set rate for four years. On the surface, the concept sounds good. However, a new study in Illinois shows its guaranteed-tuition law actually translated into public colleges and universities raising their rates faster than if they had the flexibility to make annual tuition-rate increases.

Since Illinois enacted its Truth-in-Tuition law in 2004, the annual tuition rates at the state's 12 public colleges and universities increased by 26 to 30 percent over increases in other states not subject to a guaranteed tuition law, on average about $1,500 each year. Authors Jennifer Delaney and Tyler Kearney, researchers at the University of Illinois, compared this to price increases at similar institutions in the United States from 2000 to 2012. They discovered Illinois' increase was about 6 to 7 percent more over four years than was typical for other colleges with similar missions and sizes.

While the idea behind the law was to help families manage costs, colleges often "frontloaded" tuition and raised rates more to guard against inflation. Before the new measure locked in tuition rates for freshmen, Illinois colleges ranked 13th nationally in tuition costs. By 2007, the state was in sixth place.

"There is growing interest and appeal in guaranteed tuition, as evidenced by the number of institutions that are electing to offer these programs," Delaney said in a press release May 26. "But if the primary intent is to promote affordability, rather than predictability, our results suggest that state-level, guaranteed-tuition laws may not be entirely effective."

In the paper, the authors suggest Illinois lawmakers should strongly consider eliminating the guaranteed tuition mandate and caution other states considering similiar measures.

Oklahoma and Texas have guaranteed-tuition laws, however, students are given the option of fixed rate. About 500 individual colleges, mostly private, have also adopted tuition freeze policy, the paper notes.

The full study on Illinois will appear in the August edition of Economics Education Review.

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