WMBFNews.com | Myrtle Beach/Florence, SC | News, Weather, SportsState college pre-paid tuition program deep in debt
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By Darragh Copley - email
COLUMBIA, SC (WIS) - The struggling economy in South Carolina has claimed another victim -- the state Tuition Prepayment Program.
State officials say the program that allows parents to pay future college tuition using today's rates is about $60 million in debt.
"She's just a gifted child, she's got a bright future ahead of her," said parent Don Henderson, one of the 6,000 families across the state involved in south Carolina's prepaid tuition program. He began investing in his daughter's future when she turned two.
"We knew that education was going to go up exponentially and we knew that the cost was going to rise and it seemed like a great deal at the time to lock it in at today's rates," said Henderson.
Holly is now in the fourth grade, but the prepaid tuition program is drowning in debt.
"I'm angry and I feel betrayed by the state because I trusted the program and now I feel unless they honor their commitment they are betraying me," Henderson said.
State Treasurer Converse Chellis says the problem started when the cost of tuition started to skyrocket and the economy plummeted.
"What I'm trying to do at this point is warn the General Assembly that in eight to 10 years we could, we will definitely not have the money to pay out like it needs to," said Chellis.
The program has been closed to new enrollees since 2007, but with hundreds of future college students still in elementary school, Chellis says the general assembly will have to figure out a way to pay back all of its current members.
"The legislature has somewhat of a moral obligation to look at what they may have to do to solve the problem at that point," said Chellis.
"It's not only a moral obligation, but I think they have a legal obligation," said Henderson.
Henderson's future scholar will only be a junior when the program will be completely out of money in 2017. Unless lawmakers act, his early investment will become nonexistent.
"We did our part, we gave them our money they have a moral and legal obligation to honor they're part of it because we do have a contract," said Henderson.
If you are part of the prepaid tuition program, you can cancel your plan at any time for a $150 dollar fee. You will receive two-percent interest on your earnings, but you will have to pay taxes.
You can also transfer your money to the state's Future Scholar 529 college savings plan, which provides tax breaks on contributions but does not require any state funding. If you move your money with the interest to the 529 plan, all fees and taxes are waived.
If you have questions or concerns about your college savings plan, you can call 737-6880.
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