Alabama tuition plan paying full rates for fall
MONTGOMERY, Ala. (AP) — Alabama's prepaid college tuition plan will pay full tuition for the fall semester while it waits for a court to rule on the legality of making reduced payments, State Treasurer Young Boozer said Wednesday.
Alabama's plan currently has more than 36,000 participants, and more than 19,000 of them eligible to attend college this fall. Boozer said Wednesday there is no way to know when the court will rule, but full tuition payments will continue for now.
Boozer serves as chairman of the board that oversees Alabama's Prepaid Affordable College Tuition plan. An actuary told the board Wednesday that the program could start running short of money in 2014 if the courts don't approve reduce tuition payments.
For two decades, families paid money into the program when their children were young. The program invested the money, mostly in the stock market. When the children graduated from high school, they got four years of tuition and fees paid at a state university. The program ran into trouble in 2008 when stock values plunged and tuition increased faster than expected.
The financially troubled program reached a settlement with most participants in 2010 to pay tuition in future years at fall 2010 rates to keep the program afloat. Parents would make up the difference between PACT's payments and tuition costs.
Some parents challenged the settlement, saying the state had guaranteed full tuition. The Alabama Supreme Court struck down the settlement in March, saying state law didn't permit reduced payments. The Legislature changed the law in April. That resulted in the Supreme Court directing a judge to consider whether the change can be applied retroactively.
Montgomery County Circuit Judge Johnny Hardwick has a hearing scheduled Monday. When he rules, the case will go back to the Supreme Court, which could take months.
"When we get a ruling from the court, we are going to be in really good shape or really bad shape," actuary Dan Sherman told the board.
Donna Preacher of Huntsville said she and her husband, Ted, paid for their five grandchildren to participate. Two are already in college, but three are not yet old enough. She said she is worried that the Supreme Court won't approve the reduced tuition payments, and the board will have no choice but to close the program and refund participants' money.
"We hope the Supreme Court comes through for us because we want our grandchildren to be able to have a college education," she said.