MONTGOMERY, AL (WSFA) - Most would agree that prepaid college programs are a good idea. Lock in college tuition at current rates and when you head off to college your costs are covered at future rates.
Unfortunately approximately 30,000 individuals representing 40,000 separate Alabama PACT contracts are in a tough spot right now as the program will not have enough money to cover full tuition at current and future costs.
2008 was a tough year on PACT as investments to fund the program dropped in value and costs for college rose.
A legal settlement has been put on hold by the Alabama Supreme Court that would have offered a solution to keeping PACT alive. The solution came with a steep price tag of almost $5 million in legal fees and tuition being paid only at 2010 rates with parents paying the difference.
This is a bitter pill for those families now having to find ways to fund college. The fact is a lot of things happened in the last 3 years that were unforeseen in the financial markets and we need to deal with the realities as best we can. Good, bad or indifferent.
Behind door number 1 is a legal solution to keep PACT going and behind door number 2 is the program dissolving and participants getting their money back. We would support opening door number 1.
We appreciate and encourage your feedback.