Saturday, June 30, 2012
Prepaid Program Loses Money As Tutions Rise
Illinois’ prepaid college tuition program has lost $68 million in a year, mainly because of the higher cost of tuition. The fund dropped from $1.13 billion a year ago to $1.06 billion at the end of May, despite investments turning a profit, according to a report this week to the Illinois Student Assistance Commission, which oversees the College Illinois! program.
The prepaid tuition program has been a source of consternation for legislators and parents because of controversial investment decisions and an unfunded liability of more than $500 million, about 70 percent. So far this year, investment returns are about 3 percent, much less than the 7.5 percent the fund predicted, according to John Samuels, spokesman for ISAC. Additionally, tuition for a year at a state university has increased by an average of 12.5 percent annually over the past decade, outpacing any gains on investments, said Samuels.
The program stopped taking new contracts last year after media reports about risky investments by the program and the size of the unfunded liability. Samuels said College Illinois! could start selling plans again as early as this fall. New plans could bring in more money, but only if parents are willing to invest in a program that’s had a rough few years.
You can read Andrew's full report at: http://illinois.statehousenewsonline.com/8899/prepaid-tuition-program-loses-money-due-to-tuition-increases/