Parents may be able to prepay tuition

By Beth Silver

Arizona Daily Wildcat

PHOENIX Arizonans could be allowed to pay for their children's tuition as early as the day they are born and at the same rate as college costs today.

The Arizona Students' Association is trying to pass a bill to entice parents to prepay their child's tuition by having the state treasurer invest the money for them.

Rep. Joe Hart, R-Kingman, chairman of the Public Institutions and Universities Committee, said one of the bill's biggest merits is that it doesn't cost the state a cent. At the same time, it provides an incentive for parents to save for their children's education, he said.

But University of Arizona Controller Ron Smith said the state might have to dole out money in years when tuition increases outpace the state's rate of return on its investments.

In the last 20 years, he said the state's conservative investments would have kept up with the average 6.8 percent annual increase in tuition. But they would have lagged behind in the last two years because of lower interest rates, he said.

"It makes a lot more sense for them (the parents) to invest the money themselves," he said.

If the state has to subsidize the program, Hart said prepaid tuition would not survive after a few years.

"That's part of the selling point, that it's self-sufficient," Hart said. "If it's a program that works and just has minor needs, we'll agree to it."

Ben Driggs, UA student lobbyist, said if the program were killed, parents' money would be refunded, including interest.

Hart said the plan has wide support and expects it to pass. Its biggest hurdle is getting the $400,000 for its initial start-up costs, he said.

But after making a return on the parents' investment, the money would be paid back to the state, said Paul Allvin, Arizona Students' Association executive director.

Regent Andy Hurwitz said he likes the idea of prepaying tuition, but isn't sure this bill would work for Arizona's universities.

"I like the concept, but I'm not convinced whether or not it works," Hurwitz said. "How do we make sure we are getting somewhere close to tuition?"

By the time a child born today is ready for college in the year 2013, college could cost more than $6,000 per year.

The theory is, if parents start paying monthly installments early on, they will only have to worry about their child's other costs at college such as dorms, books and food, Allvin said.

Parents could start the program until the child reaches eighth grade and can stretch out monthly payments until the child starts college. The tuition rate is locked in when they start making payments.

If the child does not go to college or chooses a school outside of Arizona, the money would be refunded at the current rate of tuition.

If the child drops out before they complete four years, the state will refund the parents' remaining investment.

ASA modeled the bill after Florida's state university system, which has used a prepayment program since 1988. They've sold 275,000 packages and have a $55 million surplus, over the projected cost of tuition on the investment, Driggs said.

"That's what's great about this, the sheer number of people it can affect. It could help several tens of thousands of people pay tuition," Driggs said.

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