RICHMOND, Va. (WRIC) — For the first time in their 20-year history, Virginia529 College Savings is considering changes to its prePAID program to keep up with changing tuition models at colleges and universities, some of which are now charging by credit rather than semester.
“The prepaid program tries to pay out the same thing to all students at any given school, but with the different models, that’s become a bit of a challenge.”, explains Virginia529 CEO, Mary Morris.
Here’s how the program works: Parents of newborns up to kids in the ninth grade pay off contracts covering the cost of tuition by the time their child reaches college.
According to a study conducted by Virginia 529, participation in their prePAID program has dropped over the last 10 years by eight percent. Morris says part of the decline is due to a spike in tuition costs since the program started in 1996.
“The average was a little over $15,000 for four years of tuition at a Virginina four-year university,” she explained. “Last year that average was about $65,000 dollars, so you can see in 20 years what’s happened to tuition and the cost of a prePAID program.”
To make things more affordable for families, Virginia529 is in the very early stages of weighing their options. One is to look at a weighted average model.
“That would make it more simple we think,” Morris said. “We set it up on units and so people can probably purchase less than a semester, which makes it more affordable for more families, and you still know that you have a certain benefit.”
Morris says anyone currently on the prePAID plan would not be impacted, adding that no decisions would be made until 2018.
Even then, it would then have to go before the general assembly for a final vote.
Morris also said Virginia529’s prePAID program is funded at 129 percent and one of three programs nationwide to receive a gold rating from Morning Star.
Click here to learn more about Virginia529 College Savings.