Experts: Prepaid tuition can pose risk

Florida’s Prepaid College Plan for future college education releases its new prices today, and what was once a great deal is now much more complicated, financial experts say.

The cost of tuition is so unpredictable that consumers may end up paying more for prepaid than what it will actually cost to go to college.

And as it stands now, that extra money would not be refunded.

Stanley Tate, one of the founders of the prepaid program, said he is trying to persuade legislators to pass a “fairness doctrine” in which families would be re- funded any surplus funds. But the soonest such a bill could pass in the Legislature would be this spring, after this year’s enrollment has ended

Prepaid officials say they expect costs to be the same as last year, when a four-year university plan for a newborn was $53,729. Enrollment begins Friday, and families must decide whether it’s worth the cost. Here are some

commonly asked questions about the program.

Q: Why is the price so expensive? Isn’t the idea to lock in the current college prices?

A: Prepaid prices used to be similar to whatever tuition at Florida universities was at the time. But that was when the state limited i ncreases to about 5 percent or 6 percent a year. In 2009, the state au- t horized i ncreases of 15 percent a year, prompting higher prepaid prices. Some years, tuition did go up, but other years it stayed flat.

Q: What if my child doesn’t go to college?

A: The recipient has 10 years after high-school graduation to use the plan. It can be a transferred to another family member, or you can get a refund without interest.

Q: What if I buy a fouryear university plan and my child pursues a bach- elor’s degree at a state college, which has lower tuition?

A: The value of the fouryear university plan can be used to fully pay tuition and fees at a state college. Any remaining value in the prepaid plan could be used for additional undergraduate or graduate classes, transferred to another family member or refunded to the purchaser, a spokesperson for prepaid said.

Q: I heard that prepaid sales have been dropping in recent years. Is the program in danger of folding?

A: Last year, 5,933 fouryear university plans were bought, down from 9,348 in 2010. But officials say the current pricing structure allows the program to be sustainable long-term. The program is guaranteed by the state, so if it folds, the state is contractually required to honor existing contracts or issue refunds with interest.

Q: How do I sign up or get more information?

A: Go to myfloridapre paid.com or call 800-5524723.