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Thursday, November 18, 2004

Florida: Make Pre-Paid College More Expensive

If you are planning to join the state's pre-paid college tuition program, do it sooner than later. Lawmakers are again discussing changes to the program that will raise costs enough that it could become too expensive for moderate-income vitals.

Almost one million kids have been signed up since the program began. The advantage is that you lock in tuition to the rate it is when you enter the program – you pay a lump sum and the state gets to use that money for investments. When you kid starts college, the tuition is already paid.

Here's the problem: state universities want to begin raising tuition annually at more than 14 percent, which would mean the state would lose money on the prepaid program. The prepaid lump sum is based on the state making about 8 percent interest.

To cover the proposed increase, parents would have to pay $4,000 more than they do now. This would obviously be an impediment for many families, and that's sad. The idea of the program was to create a way for low and moderate income families to afford college educations for their kids, and it has been wildly successful.


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