Prepaid tuition plans threatened

Posted: 03/10/2009 01:59:02 PM PDT
Updated: 03/10/2009 03:40:01 PM PDT

The rising cost of college and plunging stock market have combined to create a disparity between what some of the 18 states’ prepaid tuition plans have on the books and what they’re supposed to pay. The worst case is in Alabama, where the sour economy has sliced off nearly half of the fund’s assets, and state officials are telling parents the full cost of college isn’t a sure thing.

Among the other states with fewer assets than anticipated liabilities are Tennessee, South Carolina, West Virginia and Washington. Seven of the 18 — Florida, Maryland, Massachusetts, Mississippi, Texas, Virginia and Washington — back their plans if money runs short.

Many state plans are being hit from two sides. Their investments are dropping in value and public universities are raising tuition by higher-than-normal amounts because the economic downturn is shrinking state funding for higher education.

West Virginia’s plan stopped letting people enroll their children more than four years ago. Its investments have lost $23 million since July 1, or nearly 27 percent of their value.

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