Changes In Alabama Prepaid Tuition Plan Spur Outrage

Compiled By Yaffa Klugerman
December 30, 2009

A major change to Alabama's Prepaid Affordable College Tuition program is causing widespread outrage among contract holders.

WAFF 48 News reports that yesterday, the PACT board approved a plan that would pay a fixed amount of tuition beginning in fall 2010. The amount would be determined annually based on earnings from the program's investments, rather than the rising cost of tuition. Students attending universities with higher-than-average tuition costs would immediately see a financial gap.

"You can't change the terms of the contract when one party of the contract is not in agreement to it," protested Patti Lambert, president of Save Alabama PACT, who was quoted by WAFF. She predicted that many parents will pursue lawsuits as a result.

"Now a class action is possible because there is going to be injury," she told WAFF. "The [estimated] $500 to $550 gap that will be charged to parents, they'll have damages, they'll have every right to sue."

Lambert told the Associated Press that Save Alabama PACT had been pushing lawmakers to pass a bill next month guaranteeing tuition for PACT participants. Yesterday's move by the board, she noted, seemed designed to undercut those efforts.

The beleaguered PACT plan was originally touted as a way to lock in tuition rates years in advance, with the assurance that the state would eventually cover full tuition at state universities to plan participants. But when tuition costs skyrocketed and the economic downturn devalued the plan's assets, it became clear that the fund could only meet its obligations through 2014. As a result, PACT board members were forced to seek alternatives.

Earlier this month, State Treasurer Kay Ivey announced a plan to divide assets in the PACT fund among Alabama universities in exchange for guaranteed paid tuition for PACT participants. But the universities never agreed to her plan, and the Gadsden Times reported that universities had no consensus on how to handle the situation.

"Is there a solution everyone agrees with right now? No," said Carol Garrison, president of the University of Alabama at Birmingham and president of the Council of College and University Presidents, who was quoted by the Gadsden Times. "We also recognize the problem cannot be placed on the backs of universities to solve."

The Alabama PACT woes are unfortunately not unique. Prepaid tuition plans in other states, including Texas and Pennsylvania, are seeing similar financial setbacks.

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