OT: Prepaid tuition programs

[SackAttack]

http://www.cnn.com/2003/EDUCATION/10....ap/index.html

That is to say, they've been suspended in several states. I don't know if any of you have participated in this, but I know many of the posters here have children, so I thought it would be at least somewhat relevant to them.

My immediate concern is what's being done with the money already paid into the system by families prior to the cutoff here. Are they still able to redeem their credits when their child comes of college age? Are they being refunded the money they paid in, with or without interest?

Or are the states just sitting on that money to cover budget shortfalls elsewhere? Depending on what the answer to that question is, I'd be shocked if there wasn't some kind of uproar over this.

Josh

[kcchief19]

From the article, I inferred that the benefits are still valid for people already enrolled. It seems to indicate that rather than states sitting on the money or using it cover budget shortfalls, they are actually forced to subsidize the program because their investments are losing money.

[JPhillips]

Another program that looked great in the boom years, but nobody thought about what would happen if the economy went south. When interest earned is less than seven or eight percent and tuition increases are fifteen to thirty percent this idea just won't work.

[SackAttack]

7-8% is still more than you'd get by letting your money sit in the bank, and probably a good deal safer than some of the other, more lucrative investment options. But I can see where turning the money directly into tuition credits, as opposed to just socking it away to pay for tuition, could have a financial backlash for the state.