- The Washington Times - Sunday, December 1, 2002

RICHMOND (AP) Virginia's prepaid college-tuition plan is increasing its rates by 25 percent to keep up with rising costs at universities and colleges nationwide.
Virginia is one of 20 states offering the prepaid plans that will raise rates to stay afloat amid concerns that the economic downturn and rising school fees could cause multimillion-dollar deficits over the next 10 to 15 years.
The higher rates would begin for families enrolling in the program in February. The 50,000 people already signed up would not be affected.
"There's no reason to panic right now," said Diana Cantor, chairman of the College Savings Plans Network and executive director of Virginia's fund. "It's just an indication that if things continue along the same path, there could be a problem."
For the family of a kindergartner in Virginia who would enter a four-year university in the year 2015, the price increase would translate to a one-time lump sum of $21,636, or $236 a month.
The rates would differ for older and younger prospective college students, Miss Cantor said.
The increase comes as state-funded colleges and universities across Virginia are bumping up tuition in response to mandatory budget cuts earlier this year. Most state-funded schools are looking at deficits of millions of dollars because of the cuts, which Gov. Mark R. Warner, a Democrat, ordered to help make up a state budget shortfall surpassing $1 billion over the next two years.
The Virginia Prepaid Education Program was created in 1994, just before Gov. George F. Allen froze college-tuition rates at state-funded colleges and universities because of anger over escalating costs. The freeze was lifted by the General Assembly this year.
The prepaid plan allows parents to lock in the current cost of tuition for use in the future either by purchasing "units" of tuition or contracts with states. The money is released when the child is ready for college.
Costs are based on tuition and fees at four-year public universities, which according to the College Board, went up 9.6 percent on average nationwide this academic year. That was far more than states had anticipated when they set rates.
When the fiscal year ended June 30, many of the 20 states projected that they could face multimillion-dollar deficits if the economic slump continues and tuitions keep rising. Until then, states that started prepaid tuition plans in the 1990s had projected surpluses.
Despite rising costs for prepaid tuition, parents still see the program as a better than waiting until their children are of college age.
Participation in the Virginia plan is on the rise.
During a three-month enrollment period that ended May 1, about 10,500 Virginians joined the plan a 42 percent increase over last year's sign-up period. This year's enrollment was the most since about 16,000 signed up in 1996, Mr. Cantor said.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide