The Tuition Prepayment Option (TPO) offered by many colleges provides savings by eliminating future tuition increases. When you enroll in the plan, you prepay all remaining undergraduate tuition and required fees at the rate in effect when you enter the plan. Tuition and fees (not including room and board) for the 2011-2012 academic year are $37,489 at Harvard University. Total undergraduate tuition for an entering freshman at this rate is $149,956. Tuition, fees, room, and board normally increase each year, but it is difficult to predict by how much, since costs depend on future economic trends and institutional priorities. The following chart lists thetuition and required fee rates since 2007: Academic Year Tuition and Fees Required Prepayment2007-2008 $31,665 $126,6602008-2009 $32,882 $131,528 2009-2010 $33,983 $135,9322010-2011 $36,143 $144,5722011-2012 $37,489 $149,956Suppose that you enrolled in the TPO for the academic year 2008-2009. In 2012, looking back four years from the time of enrollment, knowing now exactly what the actual tuitions were, do you think your decision was justified in an economic sense to prepay "when money saved or invested was earning" at an interest rate of 6%?
The Tuition Prepayment Option (TPO) offered by many colleges provides savings by eliminating future tuition increases. When you enroll in the plan, you prepay all remaining undergraduate tuition and required fees at the rate in effect when you enter the plan. Tuition and fees (not including room and board) for the 2011-2012 academic year are $37,489 at Harvard University. Total undergraduate tuition for an entering freshman at this rate is $149,956. Tuition, fees, room, and board normally increase each year, but it is difficult to predict by how much, since costs depend on future economic trends and institutional priorities. The following chart lists the
tuition and required fee rates since 2007:
Academic Year Tuition and Fees Required Prepayment
2007-2008 $31,665 $126,660
2008-2009 $32,882 $131,528
2009-2010 $33,983 $135,932
2010-2011 $36,143 $144,572
2011-2012 $37,489 $149,956
Suppose that you enrolled in the TPO for the academic year 2008-2009. In 2012, looking back four years from the time of enrollment, knowing now exactly what the actual tuitions were, do you think your decision was justified in an economic sense to prepay "when money saved or invested was earning" at an interest rate of 6%?
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