Enrollment Deadline Approaches for Prepaid Tuition
by: Laurie Johnson, February 10, 2009 9:02:25 pm
The Texas Tuition Promise Fund is a prepaid college tuition program.
Texas Comptroller Susan Combs says they've tried to make the program as flexible as possible.
"It allows families to lock in undergraduate tuition and the fees at the current rates. And you can prepay those expenses before the child is ready for college. So if you've got a one-year-old or a seven-year-old you can start buying those hours now and then even if all of the tuition goes up you know five, ten, twelve years later, you've bought that tuition at the date today."
One advantage of a prepaid tuition plan is it doesn't fluctuate with the stock market. In that respect the Texas Tuition Promise Fund is different from the state's old program called the Texas Tomorrow Fund.
"The problem with the old program was that the state acted as pretty much the insurance company."
That's Joe Hurley, the founder of Savingforcollege.com.
"The state had to come up with the dollars to pay for tuition if the program itself didn't generate enough investment income on its own funds. And so the state found out that it was falling pretty far behind as tuition grows rapidly and the investments did not keep up."
The Texas Promise Fund, on the other hand, puts the onus on the schools. If school tuition rates outpace the invested funds, the schools will still have to accept prepaid students at the lower rate.
Hurley says the new Texas program is unlike any other in the nation.
"It's truly groundbreaking the way that the new Texas program is structured and I think credit goes to the Texas legislature for coming up with this law, essentially forcing Texas public schools to share this risk with the program itself."
Prepaid tuition programs aren't right for everyone. There are risks...if your child decides to attend school out of state for example. But Combs says families with young children should seriously consider a program like the Promise Fund.
"This is a really great way to sort of hedge against the future volatility of tuition hikes."
The deadline for enrollment is February 28th and the first payments are due on May 1st.
For more information, view the Texas Tuition Promise Fund website.
Laurie Johnson. KUHF-Houston Public Radio News.