Future of the Prepaid College Tbition program may be in jeopardy
BY LESLIE JONES McCuxm
STAFF WRITER
Boca Raton Councilman Dave
Freudenberg put two children
through college with the benefit
of Prepaid College Tuition
Program and two children with-
out it, and he says the program
made saving for a kid's college
education a lot easier.
"I started it in 1988 when they
were in the seventh grade and
the program first began. In
1988, tuition was $5,000 per
year at the University of Florida -
now it covers about six weeks,"
he said.
He said that because of inci-
dentals the money-saved through
the program covered only half of
the college expenses.
"It didn't cover all of the hous-
ing expenses and it didn't cover
all of their meals or phone calls
home every time they needed
money," he said.
"We used the program because
it allowed us to budget ahead of
time," he said.
He didn't have that luxury with
his First two children and putting
two children through college at
once was difficult, he said. But
he said that because they were a
two-income family, they got
through it.
And now his son Michael will
do the same for his child who is
entering middle school this fall -
except that the return on his
son's investment won't be guar-
anteed.
This month Fruedenberg ques-
tioned State Senator Ron Klein
about the issue at a council
meeting.
"I asked a specific question at
the council meeting...you are
effectively paying the college
tuition cost at current cost. It's
based on the assumption of a
return on capital being the
same," he said.
But, as it stands, the increas-
ing cost of education is throwing
the financial equation out of
whack.
"It's not working because cur-
rent tuition costs are running
three times the inflation rate.
Literally, the system is going to
fall apart," he said.
Klein agreed. He told members
of the council that the program
may be jeopardized because of
rising tuition costs.
"There continues to be a lot of
discussion about college tuition
increases, the funding of higher
education in Florida and the
future of the Florida Prepaid
College Plan," Klein said in a
telephone interview this week.
But State Rep. Adam Hasner
(R-Delray) says legislators are
well aware of the issue and are
working to pass a bill to help
guarantee resident's invest-
ments.
Senate Bill 1930 proposed by
State Senator Jeff Atwater, didn't
pass this year, but will be rein-
troduced in the future because,
"we want to make sure that
everyone knows that we want to more financial analysis and about the rest of my constituen-
guarantee all existing con- changing the investment portfo- cy," State Rep. Irving Slosberg
tracts," Hasner said. lio based on more current finan- (D-Boca Raton) said. He sat on
He also said Florida law guar- cial data. the Education committee last
antees contracts for the next five The OPPAGA report said the legislative session and backs
years - grades seven and under effect of the early graduation Hasner in his efforts to make
are not yet guaranteed. policy would probably be small. sure the program remains sol-
"We want to expand to include An example is that 24,000 high vent.
all existing contracts," he said. school students would have to Speaking as a father, Slosberg
Hasner cited the Office of graduate early to make a differ- said hopefully the state would
Program Policy Analysis and ence. honor its commitments to
Government Accountability It also suggested that institut-
investors in the college tuition
report on projected college ing enrollment caps would have plan. His daughter will be enter-
tuition costs, which states that little effect. As many as 26,000
ing the eighth grade this school
"in spite of a drop in surplus over high school seniors would have year and, as a consumer, he is
the past year, the prepaid to delay going to college to make
happy.
College Program continues to be a difference. "It's working out great.
financially sound." The report states that the
Everyone worries about rising
But it also said, "large sus- board mostly invests in the bond tuition costs. I've been a member
tained tuition increases could market but neither re-balanced
for the last two years. As a tax
threaten the program's long-term its portfolio according to its tar- payer, its a great thing," he said.
viability." get assesed allocation nor
Prepaid College board may changed its overall investment Representatives from the
need to consider changes to the plan in the last year. The report Florida Prepaid College Board
program," the report read. suggests changing the program's did not return phone calls on the
The report, released last year, investment strategy to include issue, however a message from
made suggestions for improve- equities, which will raise long- the organization's chairman,
ment and board members fol- term asset return. Stanley G. Tate said the "debate
lowed some of those sugges- However, the program can sus- is far from over."
tions. tain tuition increases of 7.9 per- "There continues to be a lot of
The Prepaid College board cent every year for 23 years and discussion about college tuition
commissioned a study to re- still have enough assets to cover increases, the funding of higher
assess the asset allocation in the liabilities. The report cautions education in Florida and the
program's investment portfolio. that it would need to increase future of the Florida Prepaid
The report said the Investment earnings for the next 20 years if College Plan.
Plan might offer higher invest- tuition increased beyond that. I want to personally thank the
ment returns than the prepaid "We need some legislation to many Florida Prepaid families
college plan but some of the change it but the process is slow. who have taken the time to be
options carry more financial I have confidence that this will heard on these important issues
risk. become law. (The cost of) every- and who have voiced their sup-
The study suggested using up- thing is going up and we have to port for the Florida Prepaid
to-date financial information, have some stability. I'm worried College Plan," he said.