Question
The Tuition Prepayment Option offered at some colleges may provide savings by eliminating the potential of future tuition increases. When a student enrolls, he/she prepays
The Tuition Prepayment Option offered at some colleges may provide savings by eliminating the potential of future tuition increases. When a student enrolls, he/she prepays all remaining undergrad tuition and fees at the rate in effect when the plan is initiated. Tuition and fees for the 2018-2019 academic year are $37489 at College. Total undergrad 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 fees rates since 2014:
Suppose you enrolled in the TPO for the academic year 2013-2014. In 2017, looking back four years from the time of enrollment, knowing now exactly what the actual tuitions were, do you think your decision was justified and economically sound to prepay when money saved or invested was earning an interest rate of 6% over that period of time? Why or why not?
Academic Year Tuition & Fees Required Prepayment 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 $31,665 $32,882 $33,983 $36,143 $37,489 $126,660 $131,528 $135,932 $144,572 $149,956Step by Step Solution
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