Popular Prepaid College Program Temporarily Closed To New EnrolleesBy Jeffrey Hess | Published 18 Sep 2012 05:54pm |
An audit is underway to determine if a prepaid college program in Mississippi is still viable. MPB's Jeffrey Hess reports the popular program is temporarily frozen to new enrollees.
The Mississippi Prepaid Affordable College Program lets Mississippi parents lock in the cost of college at today's rates, so their children can attend college later with their tuition paid in full.
That program is now closed to new enrollees for at least a year while a Michigan company runs an audit.
State Treasurer Lynn Fitch, whose office oversees MPAC, says it is only 75-percent funded and that raises questions about its long term stability.
"When we just got in the recent interest earnings, they were only at .6%. And when you have an actuary who says in order to maintain you need to acquire 7.8% earnings, it is pretty hard to do right now. With the status of the bonds and the economy and the financial world, to make that happen," Fitch said.
Fitch says its possible that the audit will show that the program should not be re-opened.
Lt. Governor Tate Reeves, who was treasurer for the last 8 years, says he was surprised by the move since MPAC was 84-percent funded last year.
"An 84% funded at June 30 of 2011 would have been in the top 20% of all defined benefit plans in America. You can't look at any one year. You have to look at the long term performance," Reeves said.
In addition to low returns from the stock market, the program is facing soaring tuition costs at public universities and colleges.
Dr. Hanks Bounds with the Institutions of Higher Learning is quick to point out a long term decline in state support has put colleges in a bind.
"We have already made all the cuts and found all the efficiencies that we can find. So as we see escalating costs and cuts from the state we have no other option but to raise tuition," Bounds said.
In all, 19 states had programs similar to Mississippi's but over time those have been closed to new enrollees, leaving just 10 states with this type of prepaid college system.
The freeze will not affect anyone currently enrolled....it is backed by state tax payers should it ever come up short of cash.
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