Flat Rate Tuition: The Key to Cheaper College?

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If you’re researching colleges, you’ve probably noticed that there are different ways of calculating tuition. This can be confusing and can make it harder to compare costs between schools. Colleges used to calculate tuition per credit hour, and many still do. But more schools have started using a flat rate tuition model.

I’ve recommended flat rate (sometimes called block rate) tuition as a way to save money in college. I thought I should explain flat rate tuition in more detail, especially whether this type of tuition can really reduce the cost of your degree.

In this post we’ll define flat rate tuition and look at an example of the flat rate tuition model. We’ll also answer the question of whether flat rate tuition is cheaper than traditional per credit hour tuition. Finally, we’ll go over some tips on how to get the best deal with flat rate tuition.

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​What is Flat Rate Tuition?

Flat rate tuition means students pay one price for taking a block of courses, defined by a minimum and maximum number of classes. That’s why flat rate tuition is often called block rate tuition.

To better understand the flat rate tuition model and how it works,​ let’s take a quick look at the traditional per credit hour method of calculating tuition.

​The per credit hour tuition model

Historically, colleges calculated tuition per credit hour. Each credit hour was charged at the same rate. So, if tuition was $200 per credit hour, a three credit hour class cost $600.

Under the per credit hour model, if you took 12 credit hours in a semester, you ​paid for 12 credits. If you took 18 credits, you ​paid for 18 credits. Simple enough, right?

The per credit hour method made it easy to estimate tuition costs for an academic year. And since most colleges used the per credit hour method, it was easy to compare tuition rates between schools.

However, in the last decade or so, more and more colleges have been adopting the flat rate tuition model. Now there are two common ways of calculating tuition, which makes cost comparisons between schools more difficult.

​The flat rate tuition model

Under the flat rate tuition model, students taking credit hours within a specified range all ​pay the same price.

For example, ​a common flat rate tuition model charges students one price for taking between 12 and 18 credits a semester. Since each class is usually worth three credits, a student taking four classes will pay the same amount of tuition as a student taking six classes.

The flat rate tuition model is designed to get students to take more classes each semester so they graduate faster. This benefits students because they can take more classes for less money and therefore incur less student loan debt.

But this also benefits colleges, since the federal Department of Education monitors the number of students who graduate within six years. If the graduation rate falls too low, a school could lose access to the federal financial aid system. That makes flat rate tuition a win-win for colleges and students…right? Maybe not.

​Is Flat Rate Tuition Cheaper?

On the surface, flat rate tuition seems cheaper​, since you can take more classes for the same amount of money. But you need to look deeper to make sure flat rate tuition is the best deal. You can do this by calculating the cost per credit hour under flat rate tuition.

​The real cost of flat rate tuition

Let’s say a university charges a flat rate of $6,000 to students taking between 12 and 18 credits a semester. Obviously, this is going to be a better deal for a student taking 18 credits. To find out how good of a deal, we need to calculate the per credit hour cost for each student.

For students taking 12 credits, the cost per credit is $6,000 divided by 12, or $500 per credit hour. If a student takes 15 credits, the cost per credit hour is $400 ($6,000 divided by 15).

Meanwhile, students taking 18 credits pay $333 per credit hour ($6,000 divided by 18). So, students taking the maximum number of hours pay nearly $200 less per credit hour than students taking the minimum.

I want to be very clear about what this means: under flat rate tuition programs, students who take fewer credit hours subsidize the cost of college for those who take more credit hours.

Colleges know that not all students enrolled in flat rate tuition programs will take the maximum number of credits. In fact, colleges depend on many students taking less than the maximum credits. They ​need ​these students to offset the cost of students who do take the maximum credits.

This doesn’t mean that flat rate tuition programs are a scam or that I’m against flat rate tuition. These programs can be a great way to help reduce the cost of college for many students and families. What I am against is colleges using flat rate tuition as a marketing tool. Colleges tout these programs as one way they’re helping make college more affordable. The reality is, these programs don’t cost colleges much. Students taking fewer than the maximum credits are really the ones paying for the program.

Given all this, some students would clearly be better off going to a college that charges tuition by the credit hour. They would pay the same tuition rate as all other students, regardless of how many (or few) credits they took.

​How to Get the Best Deal with Flat Rate Tuition

​To figure out ​if a school with flat rate tuition is the best deal for you, here are a few steps you should take.

​Be realistic about how many credits you will take

If you’re able to take 18 credits a semester, then a flat rate tuition program is a great choice for you. You’ll get maximum financial benefit from the program, graduate faster and probably have less student loan debt.

However, due to work, family or other obligations, many students are not able to take 18 credits a semester. Many students struggle with 15 credits a semester. And I see plenty of students who take 12 credits a semester, the minimum required to be considered a full-time student.

So, you need to be honest with yourself about how much of a workload you’ll be able to handle in college. If you truly think you can only manage 12 credits a semester, then you’re unlikely to get much benefit from a flat rate tuition program.

​Calculate per credit hour rates

If you’re looking at one or more colleges that charge flat rate tuition, calculate the per credit hour cost, as we did in the section above. This makes it easier to compare the true cost of tuition among different colleges.

When you’re doing this, make sure you understand how the flat rate tuition program works. Most flat rate tuition programs kick in at 12 credit hours, but some don’t kick in until 15 credit hours. If you’re only planning to take 12 credits per semester, you wouldn’t qualify for the flat rate tuition program.

Even schools with flat rate tuition programs still have per credit hour tuition. ​This is the rate they charge students who don’t take enough classes to qualify for flat rate tuition. Look on the college’s website to find the normal per credit hour tuition rate. Then you can calculate how much tuition would cost if you didn’t qualify for the flat rate program.

​Make sure fees are included

Cost quotes on most college websites include tuition and mandatory fees. Fees can add hundreds of dollars to the cost of college each semester. You need to make sure the tuition numbers on the website include both tuition and mandatory fees.

This goes for both flat rate and per credit hour tuition models. Make sure you’re comparing equivalent numbers by knowing whether mandatory fees are included.

Whether a school charges per credit hour or flat rate tuition is just one factor to consider when deciding which college to attend. You also need to take into account things like each school’s financial aid offerings.

For instance, if a flat rate school offers you a scholarship, that college may be a better choice. You need to look at the whole picture, not just the tuition cost. (In fact, overfocusing on tuition is one of the most common mistakes people make when budgeting for college.)

That said, you should always do the math to find the per credit hour cost for each college. You may ​learn you’re better off at a college that charges by the credit hour, even if the flat rate tuition at another college seems much cheaper.

​Until next time, best wishes and keep learning,

P.S. ​You can​ get more ideas on​ ​affording college, in my post How to Afford College: 5 Tips from a Prof.

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