by Lilly Rockwell
The News Service of Florida
Florida Senate budget writers are poised to close the popular state prepaid tuition program that allows parents to lock in discounted tuition and fees for their children to attend state colleges and universities.
Existing prepaid tuition program participants would still be able to continue investing in their plans.
Prepaid tuition would be closed to new enrollment, except for the Stanley Tate STARS scholarship for at-risk students. The proposal surfaced Thursday when the Senate released its proposed draft of its higher education budget.
The total proposed higher education budget is $6.8 billion, a cut of $320.3 million from the current year. Some of that difference is the result of the loss of federal stimulus money that propped up last year’s budget.
Though cutting new enrollment in the Florida Prepaid program would not impact the budget’s bottom line, it would relieve the state from being the guarantor of the program.
Sen. Evelyn Lynn (R-Ormond Beach), chair of the Senate Subcommittee on Higher Education, said she feared the state was taking on too much debt through the prepaid tuition program.
As parents pay into the plans, the state invests the money and pays tuition when it comes due.
The Florida Prepaid College Trust Fund has $10 billion in assets and $9.5 billion in liabilities, according to its 2010 annual report. There are more than 30,000 active prepaid investment plans.
“The state is totally obligated should something fail,” said Lynn. “The stock market has been dropping the last few days. Should the investments not prove to be able to take care of promised contracts, the state of Florida is totally responsible.”
It isn’t clear if the Senate’s proposal to cut new enrollment in prepaid tuition will gain traction in the House. Both chambers are just starting to put their proposed budgets together. The House earlier this week released a proposal to raise tuition and make it harder to get Bright Futures.
Rep. Marlene O’Toole (R-Lady Lake), chair of the House Higher Education Appropriations Subcommittee, did not immediately respond to a request for comment. A spokeswoman for Florida Prepaid College Plans also didn’t immediately return a call for comment.
Prepaid isn’t the only college financing plan under a microscope. Senate budget writers are also considering reducing the merit-based Bright Futures scholarship by $1,000 per student.
Lynn said most students would see this cut offset by a federal tax credit. Both chambers are also looking at making the eligibility requirements tougher for the scholarships, which help pay for many of the state’s top students to go to state universities and colleges.
Though some college savings or scholarship programs might be cut, some new scholarships would be created under the Senate budget.
It would establish a new STEM (Science, Technology, Engineering and Math) scholarship for students with financial need studying those subjects. It would require matching funds from colleges.