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PREPAY COLLEGE WITH TUITION CERTIFICATES

SHARE PREPAY COLLEGE WITH TUITION CERTIFICATES

College tuition costs are rising much faster than the consumer price index, and the rate of their increase shows no signs of abatement. Parents are increasingly worried that when their little John or Jane (or, as is morel likely today, their Jennifer or Jason) reaches college age, they will be unable to come up with the price of tutition.

Numerous plans for prepaying college tuition have been developed in recent years to address this problem. Most plans ask that a parent prepay four years of the chosen college's tuittion in a lump sum. If, for any reason, their child doe snot attend that particular college, the payment with perhaps interest added to it, is refunded.These plans are too new to have any record by which to judge them. I believe, however, that there is a better system than lump sum prepayment.

Colleges could sell, instead, bearer certificates redeemable for a specific number of credit hours, usable by anyone attending that college in any year. The cost per semester hour would be the going rate at the time of purchase of the certificate.

The benefits of such a certificate plan are twofold. Colleges and universities, hard-pressed for investment funds, would have an immediate influx of money. Parents would be able to purchase -- gradually -- four years of college tuition. Grandparents and other relatives could purchase a few semester hours of tuition as gifts for a child on birthdays or special occasions. Whether or not the entire four years of college had been prepaid, the student's family would be that much ahead come registration day.

With any prepayment plan, there is always the possibility that the student for whom the investment was made might not want to attend College X. Or perhaps College X will not admit the student.

But, unlike a lump sum prepayment plan, certificates for semester hours could be sold on the open market, where they would presumably have a value that equaled the actual tuition at that time. Certificates would be usable by the bearer, would not expire and those not used would be completely negotiable.

There may be tax advantages, too, if the certificates were used by the purchaser for tuition -- as against an investor who bought them in hopes of realizing a profitable sale at some point. It certainly seems reasonable that the purchase of 10 semester hours of tuition in 1989 for use in 1999 would not subject the user to any tax liability, even though tuition might have risen 150 percent during the decade. The purchaser is in fact buying a service to be delivered in the future -- similar to an airline ticket. Congress could step in early and make such plans tax exempt.

I am unaware of any college, university or state that has proposed a certificate proogram and, obviously, I'm offering the idea free of charge to any who wish to implement it. As one who is concerned about our country's future, my aim is to make higher education more affordable and offer some hope to the workingclass. The creation of a tuition certificate plan would be a big step toward those ends.