Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, May 29, 1995 TAG: 9505300103
SECTION: VIRGINIA PAGE: B-3 EDITION: HOLIDAY
SOURCE: TONYA WOODS STAFF WRITER
DATELINE: LENGTH: Medium
The state of Virginia hopes to help them.
In July, the state will begin setting up a prepayment tuition plan that will give parents a reasonable guarantee that, when their children begin college, their tuition already will be paid. When the time comes, the parents can take out of the fund what they need for tuition.
Under the Virginia Higher Education Trust Fund Act, which was passed by the General Assembly last year, parents will be able to pay their child's tuition to a community college or four-year school in advance at current tuition rates.
"This program will provide a centralized payment plan to make sure sufficient funds are available when it's time for college," said Ron Tillet, state treasurer.
Tillet says the plan is a fairly complex undertaking, where parents will pay according to the age of their children.
"If a parent has a child that's 5 years old, their payments will be different from a parent with a 10-year-old child," Tillet said. "And the investment won't generate the same kinds of interest."
Whether payments will be collected monthly, yearly or in lump sums has not been determined. Gov. George Allen will appoint members to administer the plan, which is expected to be in effect next year.
Virginia has looked at other states that have or have had prepaid tuition plans, including Ohio, Pennsylvania, Florida and Michigan, Tillet said.
Bobbie McKennon, special assistant to the Michigan state treasurer, said the Michigan Education Trust Board wrote at least 54,000 contracts after the prepayment program began in 1987.
"The plan can provide the best of both worlds if there are moderate increases in tuition and if the investment income offsets tuition increases," she said.
The Michigan Education Trust was closed to new contracts in 1991, when tuition increased substantially and investment interest rates began dropping, McKennon said. However, demand has been so great that the state plans to reconsider its decision.
Though Virginia's plan has yet to be completed in detail, Tillet says parents can't lose.
"Even if they drop the program, they will still get a reasonable amount of investment earnings, with an administrative fee," he said. "We don't want to create an investment vehicle, but we do want to encourage parents to send their children to school in Virginia."
If students choose to attend college out of state, they would get the earned interest on the money their parents have invested.
Those who choose a private college in Virginia would also receive the earned interest on their parents' investment, but it would not exceed the cost of the highest public college tuition, said Robert Lambeth Jr., president of the Council of Independent Colleges in Virginia.
He said the state's 25 private colleges were eager to be involved with the plan, and they believe the proposed arrangement is fair.
"The really good news is when parents are ready to send their children to college, they will have accumulated a sizable amount of money," he said.
According to the Virginia State Council of Higher Education, tuition at public colleges has increased by 35.5 percent since 1991.
Tillet said an enrollment analysis will be done to determine an average tuition cost and the average tuition increase.
"Some assumptions will be made," he said, "but we want to end up with a single number of what it will cost to attend college in Virginia." Tuition at state-supported colleges for the 1994-95 year ranged from $1,358 for community college to $5,070 for Virginia Military Institute.
by CNB