Edvisors Private Student Loans

Scholarship News

Guaranteed Tuition Plans No Guarantee


September 25, 2009
by Scholarships.com Staff
Personal savings, college endowments and college savings plans all suffered when the stock market took a nose dive last fall. Students, families and even schools who thought they were financially secure soon learned otherwise and had to scramble to come up with alternative plans to pay bills. Now that things are beginning to even out and return to a state of normalcy, those affected by the recession are looking towards recovery and assessing their long-term plans. For some college savings plans, especially guaranteed tuition savings plans, the future looks particularly bleak, even without further financial setbacks.

Personal savings, college endowments and college savings plans all suffered when the stock market took a nose dive last fall. Students, families and even schools who thought they were financially secure soon learned otherwise and had to scramble to come up with alternative plans to pay bills. Now that things are beginning to even out and return to a state of normalcy, those affected by the recession are looking towards recovery and assessing their long-term plans. For some college savings plans, especially "guaranteed" tuition savings plans, the future looks particularly bleak, even without further financial setbacks.

Guaranteed tuition savings plans are one of several types of college savings plans, which allow families to save for college tax-free and often involve other incentives, as well. Prepaid tuition savings plans allow families to pay tuition ahead of time at certain schools, ensuring that bills will be paid for students, even if tuition skyrockets, as it seems likely to continue doing. Many families in states where they're offered have purchased them for young children who may not be attending college for another 15 years or more, but some plans have already begun to run out of money due to losses in the stock market and the sharp rise of college costs.

As a result, states including Texas, Alabama and Pennsylvania are struggling with the prospect of not being able to fund their current obligations to these plans. Several prepaid tuition plans have been closed off to new investors, including the plans in Texas and Alabama. Despite this, Alabama may not have enough money to pay tuition for all students currently enrolled in its prepaid plan. Pennsylvania has introduced legislation to remove "guaranteed" from its tuition savings plan's name and make it clear that the state has no obligation to bail out the plan if it doesn't earn enough money to meet its obligations.

Texas has also announced a rule change for people who currently have money invested in its guaranteed tuiton plan. When they invested, families were told that if their children did not go to one of the state colleges whose tuition the plan will fully fund, they would be able to close their account and withdraw the full amount of tuition at those institutions at that time. Now, the Texas Prepaid Higher Education Tuition Board has said that families whose children do not attend one of the schools included in the plan can only withdraw the amount they invested, minus an administrative fee. State legislators have urged the board to reconsider, but so far it appears that those with money invested have three choices: they can pull their money out before the rule goes into effect on October 30, they can limit their children's college choices to those sanctioned by the tuition savings plan, or they can take a guaranteed loss on their "guaranteed" tuition investment.

To help you avoid the problems currently facing Texas parents, US News has a helpful article on questions to ask before investing in a prepaid college savings plan. Prepaid tuition plans, 529 plans, and other college savings vehicles can still be a good idea, even though they've been through difficult times. As with many things, the trick to being successful in your choice is first doing your research and figure out which plan is best for you and your family.

College is expensive, Scholarships.com is completely free. Pay for your college education with as much free college scholarship money as possible. By applying to all the awards you qualify for, you can be sure to not miss a single opportunity in paying for your college expenses - including tuition, fees, room and board. Get matched to college scholarships instantly and start applying today by conducting a free college scholarship search at Scholarships.com.

Discuss

Share your thoughts and perhaps thousands of students will benefit from your unique insight on the subject!



If you can read this, don't touch the following fields


 
The federal work-study program is a way in which college students can work part- or full-time while simultaneously attending school in order to help pay for college-related expenses. The program, available at the undergraduate, graduate and professional level, may face some changes amid the novel coronavirus pandemic.

College Work-Study Jobs Face Changes During Pandemic

August 4, 2020 4:04 PM
by Susan Dutca-Lovell
The federal work-study program is a way in which college students can work part- or full-time while simultaneously attending school in order to help pay for college-related expenses. The program,
Senator Lamar Alexander of Tennessee, the current chairman of the Senate education committee, has recently proposed the Student Loan Repayment and FAFSA Simplification Act, a piece of legislation that would allow students with no income to forgo federal student loan repayments. His recommendations, which he developed with bipartisan support, would also simplify the FAFSA and reduce the number of federal loan repayment options from nine to two.

Senator Outlines Student Loan Relief in New Proposal

July 30, 2020 11:49 AM
by Izzy Hall
Senator Lamar Alexander of Tennessee, the current chairman of the Senate education committee, has recently proposed the Student Loan Repayment and FAFSA Simplification Act, a piece of legislation
Have your financial circumstances changed due to COVID-19? You’re not alone. Many students and their families have faced unemployment, reduced job hours and general loss of economic stability in the wake of the pandemic. And as the FAFSA determines your Expected Family Contribution (EFC) based on income from the previous year, students may have greater financial need now than they did when they initially filed for federal aid. Unfortunately, the deadline to submit the FAFSA passed at the end of June. However, it is not too late to appeal your student financial aid from your chosen institution.

It’s Not Too Late: Guide to Appealing Financial Aid

July 28, 2020 1:20 PM
by Izzy Hall
Have your financial circumstances changed due to COVID-19? You’re not alone. Many students and their families have faced unemployment, reduced job hours and general loss of economic stability in the
The FAFSA is a critical tool for both applying to colleges and applying to scholarships – in fact, need-based scholarships often require that you submit the FAFSA as part of your application. So, in a time of economic uncertainty caused by the coronavirus pandemic, it’s surprising to learn that many low-income and minority students did not submit the FAFSA for the upcoming academic year even though they would’ve been eligible for federal aid. At Scholarships.com, we don’t want students to miss out on any form of college financial aid. Applications for the next academic year will open soon, so get prepared by reviewing these FAFSA facts.

The FAFSA: Why You Should File (And How!)

July 23, 2020 3:47 PM
by Izzy Hall
The FAFSA is a critical tool for both applying to colleges and applying to scholarships – in fact, need-based scholarships often require that you submit the FAFSA as part of your application. So, in
While the CDC has not finalized their guidelines for reopening schools for the Fall 2020 semester, the New York Times discovered an unreleased document in which the organization reviews the safety protocol of a handful of institutions of higher education. How are the reviewed schools planning on confronting the coronavirus on campus this fall?

CDC Reviews Higher Ed Reopening Plans for Fall 2020

July 21, 2020 11:47 AM
by Izzy Hall
While the CDC has not finalized their guidelines for reopening schools for the Fall 2020 semester, the New York Times discovered an unreleased document in which the organization reviews the safety
A new survey detailing what rising high school seniors think about college amid the COVID-19 pandemic indicates that despite being unable to visit colleges for much of the year, rising high school seniors are already looking toward fall 2021 and are optimistic that higher education will be back to normal by that time. As a general whole, the survey findings show that the COVID-19 pandemic has not dampened prospective students' interest in attending college in fall 2021.

Where High School Seniors Stand on Coronavirus and College

July 16, 2020 9:48 AM
by Susan Dutca-Lovell
A new survey detailing what rising high school seniors think about college amid the COVID-19 pandemic indicates that despite being unable to visit colleges for much of the year, "rising high school
Fraternities and sororities are important institutions that connect young men and women throughout their academic careers, forming close relationships that last into their professional lives. Fall semester is an exciting and busy time for fraternities and sororities as they welcome members back to campus and hold Rush Week events to hand-pick new members. Returning fraternity and sorority students have a big challenge for Fall 2020 — how will they adapt Greek Life and Rush Week for the coronavirus era?

Rush Week/Greek Life for Fall 2020

July 14, 2020 2:41 PM
by Izzy Hall
Fraternities and sororities are important institutions that connect young men and women throughout their academic careers, forming close relationships that last into their professional lives. Fall