
NEWS REPORT
SUMMARY
PREPAID COLLEGE SAVINGS PLANS MIGHT NOT COVER ALL COST
According to the news the economy of funds in United states has changed but it doesn’t go well. For example in the last two decades people around the US have invested in stale funds without care how it was increasing.
But in the last year, the stock market slump and rising college cost have combined to drive all two fund to saving plans, but now they are in red. It means not so good for the funds.
The losses have forced some programs, like Pennsylvania’s and Washington’s, to impose new and higher fees.
“I think ultimately more and more of these plans are going to close down to new investments,” said Mark Kantrowitz, the founder and publisher of FinAid.org
“Every time there’s a significant market downturn.
There are many families that have received help from the funds from the 18 state funds
Not every state fully guarantees its prepaid funds. Only five states offer a “full faith and credit” of the state guarantee, and seven are required by law to consider helping the funds out if need be.
All of the funds but Florida’s and Colorado’s now have an actuarial deficit, meaning they do not have enough money to pay all of their future college tuition obligations. Most are only about 80 percent to 90 percent funded. .
Carol M. Perdue was troubled by a letter she got from Alabama’s treasurer this summer that said the state’s prepaid program had lost about 50 percent of its assets in the stock market. She is suing to force the state to put money into the fund to make up for the losses.
Many states, aware of the allure of prepaid funds, are now keeping an eye on Texas, which opened a fund in the last year after closing another one in 2003 to new enrollments. The new fund shifts the burden of the guarantee from the state to the public university system. If the fund runs short, the universities agree to cover the difference between what is available and how much tuition is in the future. This is a strategy to try saved more found in the market.
Keywords: fund, invest, fees, market, treasure, university
Whole text you can find in
http://www.nytimes.com/2009/10/05/education/05college.html?pagewanted=2&_r=1&hp