Indiana's Buy-Now, Study-Later Plan

AND now for something new in college finance ... Indiana University (IU) is offering an innovative way to cut rising college costs: Buy college credit hours now - at today's tuition prices - for your child's education in the future. Since Dec. 12, Indiana has sold more than a million dollars' worth of ``tuition certificates'' (about 15,000 hours) - which can be exchanged for undergraduate credit until the year 2010.

If the certificates aren't used, parents are guaranteed their money back - plus interest - through a secondary market trust set up by Indiana's three leading banks.

Four years' tuition at IU now runs $8,000. Ten years ago the cost was $4,500. Four years equals 124 credit hours.

Some colleges already offer parents an early-start college savings program - whereby money is invested, often in savings bonds. But IU is the first to sell actual credit hours.

It's an inflation-beating investment that also offers parents peace of mind about the biggest family cost other than buying a house, IU officials say. ``A parent can say, `I am going to put four years of college into the safety deposit box. If in 15 years Junior wants to go to Michigan State, we can sell them back,''' remarks IU vice-president John T. Hackett, the architect of the plan.

Credits are good at any of IU's eight campuses, which now serve about 85,000 students. The certificates are tax free.

There are some rules: First, parents must buy at least 15 hours at the outset, for about $1,000. After that, they can buy three or more hours at any time.

More important, parents must stipulate in advance which block of college time they plan to use - in effect, locking in the student. There is a 15-month flexible ``grace period'' if a student decides to work or travel before college.

Mr. Hackett says the IU alumni office is forming a clearinghouse that will inform parents of others who want to swap allotments of college time.

Unfortunately, IU officials have not yet figured a way to defray those other rising college costs: housing, books, and pizza.