Newswise — College financial officers say the academic arms race - the pressure colleges face to keep up with peer schools' new buildings and other student amenities - is a primary cause of tuition increases. Also, there is a new issue keeping CFOs up at night-how to position their university at the forefront of the environmental sustainability issue-and how to pay for it. Those are among the findings of a new survey of financial officers at nearly 100 private colleges and universities commissioned by Independent 529 Plan, the private college-sponsored, national prepaid 529 plan sponsored by the nonprofit Tuition Plan Consortium and administered by TIAA-CREF Tuition Financing, Inc.
The complete survey report can be found at http://www.i529.org/survey.
"The pressure colleges face to attract the best students and to appeal to them by keeping up with their competitors is a major driver of rising college tuition costs," said Nancy Farmer, president and CEO of Independent 529 Plan. "Whether through new technology, dorms, or recreational facilities, colleges want to differentiate themselves and provide students a state-of-the art education. But to enable their children to take advantage of those amenities when their kids reach college age, parents should start planning now."
Among survey respondents, the most frequently cited reason for tuition increases was the cost associated with the academic arms race. This factor ranked higher than rising healthcare costs, declining government support and growing faculty salaries as reasons for rapidly growing tuition costs at private universities. The overwhelming majority of college financial officers who participated in this survey " eight in 10 of those contacted" expect tuition rate increases to continue to outpace inflation. Over the past five years, tuition at private universities has risen 31 percent, according to The College Board, a nonprofit association of colleges and educational organizations.
"These findings highlight the impact that rising college costs can have on access to higher education," concluded Ms. Farmer. "This further underscores the need for parents and families to plan for college expenses as early as possible through programs such as Independent 529 Plan, which provides a guarantee against tuition inflation."
A relatively new issue that CFOs face is one of environmental sustainability- Sixty-five percent of those surveyed said they were spending more time thinking about the issue this year than they had in the past 2 years.
"It's clear that the cost of going green is very much on the minds of finance officers," notes Nancy Farmer. "Colleges and universities feel pressured to be in the forefront of this movement. There are price tags to items such as the College and University Presidents' Climate Commitment, erecting buildings to LEED standards, energy-efficient purchasing policies, and other green initiatives." When asked about the Spellings Commission proposals, college finance officers strongly disagreed with suggestions that would require institutions to spend a specific percentage of their endowment each year as well as a restriction of federal aid for students attending high-endowment schools. Independent 529 Plan allows families to prepay tuition today that their children can later use at any member college.[1] It provides the flexibility to choose from 274 of the nations' top colleges. Independent 529 Plan has no start-up fees, no maintenance fees, and no annual fees — and is free from federal taxes.
About the Member Study Research Report Survey:
The Independent 529 Plan Member Study Research Report was conducted by Kathleen Micken, D.B.A., who invited financial offers at 274 of the Independent 529 Plan member schools to participate in the online survey. Just over 35 percent of the members, 100 individuals, participated.
Just under half of the respondents worked for schools with 2,000 or fewer students but there was representation from schools of all sizes including those with more than 10,000 students and those with fewer than 1,000. Institutional budgets ranged from less than $40 million to more than $300 million. Eight percent have endowments of more than $1 billion and 14 percent have endowments of less than $25 million. Doctoral and research universities comprised 10 percent of the sample. Master's degree-granting institutions represented 34 percent. Fifty-five percent described their institutions as baccalaureate. About Independent 529 Plan
Independent 529 Plan is sponsored by the nonprofit Tuition Plan Consortium and administered by TIAA-CREF Tuition Financing, Inc. Tuition purchased can be used at any of the 274 participating colleges and universities nationwide, as well as any that join in the future. In return for account owners prepaying college costs, member colleges accept the investment risk and protect them from future tuition increases. Tuition purchased today is guaranteed to satisfy costs at the time the child enrolls. For example, someone who purchases a half-year of tuition today will receive a half-year tuition when the child later redeems the tuition certificate at a member college. This is true regardless of how much tuition rises or what happens in the investment markets.
For more information, visit the Independent 529 Plan News Room.
About TIAA-CREF TIAA-CREF is a national financial services organization with more than $436 billion in combined assets under management as of December 31, 2007 and the leading provider of retirement services in the academic, research, medical and cultural fields. Currently, TIAA-CREF Tuition Financing, Inc. manages several state-sponsored 529 plans in addition to Independent 529 Plan. For more information about TIAA-CREF, visit http://www.tiaa-cref.org.
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