A bill passed by Congress and awaiting President Bush's signature would provide more financial aid to students who have their college education paid for in advance.
The legislation proposes putting such prepaid programs and similar college-savings plans -- both offered by state governments -- on equal when in comes to federal financial aid. But Penn and other institutions are way ahead of Congress on that point.
"We have been where the federal methodology is going for some time," said Student Financial Aid Director Bill Schilling.
Prepaid plans, which vary among the 20 states that offer them, allow parents to pay for their child's education at a state school before the student is ready to attend. Parents are therefore not liable for tuition increases that may occur in the meantime.
If the student decides to go to a public school in the state, they only have to pay the difference between the two schools' tuition fees.
In college-savings plans, meanwhile, money set aside for tuition is invested.
Under the current government system, a student with savings in a prepaid tuition plan receives less financial aid than an identical student with the same amount of money in a college-savings fund.
The proposal would give prepaid savings the same weight that college savings get now.
Schilling said Penn has always treated prepaid tuition and college-savings plans equally when awarding aid, as have other schools including Brown, Columbia, Cornell, Dartmouth, Yale, Haverford and Swarthmore.
While the potential law would not change Penn's university-level grants, Schilling said it could affect students' eligibility for federal aid-based loans, or Stafford Loans.
He added that only a small percentage of Penn students use a prepaid program.
Kantrowitz said that while the potential change may cause more families to consider prepaid tuition, there are pros and cons to this payment method.
"It can give you peace of mind if you know that you paid for a certain number of years of college," he said.
However, he added that students investing through college-savings plans far enough in advance might receive a greater return than they would with a prepaid program.
Kantrowitz said that other provisions of the bill are not as student-friendly, with a proposed $12.7 billion cut in student loans over the next four years.
"You could think of the law as being one step forward and four steps back," he said. "Most of it's coming out of the student's pocket."
Joseph Hurley, CEO and founder of savingforcollege.com, said that the bill could cause more states to use prepaid plans but would not likely influence individual students' enrollment decisions.
He added that the measure resulted from states lobbying for equal treatment for prepaid-tuition programs.
"It didn't really make sense that they wouldn't be treated equally," Hurley said.
Making ends meet - New bill will end inconsistencies between federal payment aid programs - Penn already takes differences into consideration when determining financial aid for students with partially prepaid tuitions - Program could affectstudents who receive federal loans for college
