State Treasurer May Ask to Suspend Pre-Paid College Trust Fund

The state could soon suspend a program that allows parents to pre-pay for college credits at today’s tuition rates. The State Treasurer fears the fund could become insolvent over the next decade because the price of college tuition is going up faster than the stock market.

The Baccalaureate Education System Trust took a 20% hit last year, even while college tuition continued on an upward trend.

State Treasurer David Lillard says he may ask the legislature to suspend the pre-pay program because the state can’t afford to bail out the fund down the road.

“Given where we are as a state right now, you have to prioritize your spending in that respect. And that gap between 9% tuition, maybe even 10% tuition increases, and what we can earning in the market is going to be getting greater as time goes on.”

Lillard says the state will be able to make good on its current obligations. But instead of the pre-paid credit hours, Lillard is encouraging parents to use another tax exempt 529 college savings plan which operates more like a 401k. There, the investor assumes the risk.

WEB EXTRA:
Lillard kicked off a college savings push Wednesday at the state capitol. He also announced a coloring contest for students in kindergarten through sixth grade. The winner of the drawing will get $1,000 to start a 529 savings plan.