<p>Do not worry, do not fear, no state, and particularly no politician in any state would ever, for even a nanosecond, think of not providing whatever funding from state funds is needed to make good on contractual promises made to families in the event that current funds in the plans are insufficient to cover actuarial costs.</p>
<p>In Florida, for instance, with 875,000 families having money in these plans, a Florida legislator would have better luck diving into an alligator pit, the day after the attendant sicked out, than facing his or her constituents after failing to provide funds to cover these plans.</p>
<p>States in a tough spot…budget shortfalls means cutting state schools budgets…and now the college funds have been hammered…so where do they put the scarce funding? If you think it cant get worse…beware!</p>
<p>It sounds like Michigan was the first state to offer these plans. We were living there at the time and I remember thinking it was a great deal, but we didn’t have children. I also remember them shutting it down before too long because of the huge response and lower than expected returns. We moved to Texas in the mid-90’s and guess what? They had this new pre-paid college plan and this time we had kids. We enrolled. Then they had to shut down their original plan for the exact same reasons. I just can’t believe these states can’t learn from each other’s mistakes. Tuition has been rising at astronomical rates for years and there have been a few economic downturns in recent history.</p>
<p>I have been extremely grateful for the PA plan. I cashed in all of the kids’ savings when they started the Guaranteed Tuition Plan. With those savings plus a lot of effort, I finished buying 4-years of tuition at PSU’s tuition rate (guaranteed) for my kids several years ago. It has been an incredible bargain for me. I watched Penn State increase its tuition each year, monitoring their tuition increases against schools that raised their tuition signficantly less. (Under the PA plan, my kids can use the value of Penn State’s tuition for any other schools.) </p>
<p>I missed the years in which they added premiums to the tuition credits as part of their plan to keep the fund completely solvent. When the market tanked, I was able to keep breathing because my kids’ tuition monies weren’t in the market. The gains have been huge, and they’re tax-free. They’ve added an annual fee and recently changed the way the fee is charged, but I’m still way, way ahead. Thank you, PA Treasury and PA taxpayers.</p>
<p>I got a letter yesterday from the Texas Gauranteed Tuition Plan. They changed their refund policy. If you cancel your plan, for any reason, they used to give you back your money plus interest. Now you just get your base money back. It’s kind of scary because they remind you that they have the right to modify the plan at any time. They went on to tell us that tuition has increased an average of 8.9% per year, overall. But the plan’s investment has only grown 4.4% per year.</p>