Prepaid college tuition plans nationwide are under pressure due to rising tuition expenses and investments that have gone sour.
Alabama, for example, has seen its fund shrink to half of what it once was. In Florida, lawmakers saw the state’s prepaid tuition fund as a pot of money it could “borrow” from. Florida Gov. Charlie Crist opposed the raid this week, though, saying he didn’t think it was a smart idea.
Eighteen states have pre-paid programs, in which families can lock in kids’ college tuition at today’s rates and prepay the costs.
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West Virginia’s plan stopped letting people enroll their children more than four years ago. Its investments have lost $23 million since July 1, or nearly 27 percent of their value, said Greg Stone, spokesman for the state treasurer’s office.
“We do have quite some time to make this up. We can only anticipate that things will get better. They can’t get much worse,” Stone said.
Programs have also stopped allowing new families in South Carolina, Ohio, Kentucky and Colorado. Texas stopped taking new students in its first prepaid college plan in 2003 due to a sudden rise in tuition, but later started a new one.
The cost of these kinds of programs has risen recently. In Virginia, for example, the cost of a four-year contract rose more than 10 percent this year. The state’s plan is projected to show a $51 million shortfall.