ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, April 6, 1996 TAG: 9604080017
SECTION: VIRGINIA PAGE: B-1 EDITION: METRO
DATELINE: RICHMOND
SOURCE: Associated Press
Virginia will begin a prepaid college tuition program later this year, ensuring contributing parents that their children's tuition will be covered on enrollment at a public university.
Admission to one of the state's 15 four-year schools, however, is not guaranteed.
How much parents will have to pay, how the Virginia Higher Education Tuition Trust Fund will invest the money, and what happens to a family's contribution should a child not attend a state school have yet to be worked out.
The idea was approved two years ago by the General Assembly as a way of controlling tuition costs for Virginia families.
``You save over time and pay as you go,'' said Ronald L. Tillett, Virginia's treasurer and a key developer of the program. ``Student loans are wonderful. But the objective here is not to borrow, but to save. That's a shift in contemporary thought these days when people borrow for everything.''
A dispute with the Internal Revenue Service over whether the plan would be tax-deductible delayed its implementation. A recent court ruling has state officials confident that the plan will be tax-deductible.
A number of states have such a plan. In Florida, for example, a $48 monthly payment ensures an infant's four-year undergraduate education at a Florida school will be paid in full by 2013. For an 11th-grader, coverage in the Florida plan requires an immediate $5,879 payment.
Coming up with the correct formula for the trust fund will be a complex task. The trust fund board - made up of business leaders and education officials from around the state - recently hired a national accounting firm to begin developing a prepayment plan.
Because tuition varies from school to school in Virginia, the consultants must first calculate future college costs across the state. Then they must estimate the proportion of future students who will attend each of the state's colleges. After that, an investment strategy matching projected returns with future fund needs must be adopted by the board.
``How to price it is very important,'' said Greg Schnitzler, director of cash management and investments at the Virginia Department of Treasury. ``You don't want to overcharge at the beginning and make it too expensive, but you have to guarantee the viability of the fund.''
Virginia will establish a separate price schedule for parents preferring to cover only two years at a community college. A third schedule also is likely to be created that would cover students who attend community colleges for two years and then complete their degrees at one of the state's four-year schools.
Virginia's private colleges will be included in the prepayment program. But the trust fund won't guarantee full coverage of their tuition rates, instead providing participants with a sum equal to the average tuition cost at a public college, Tillett said.
Initially, officials expect 30,000 to 50,000 Virginia families to sign up for the tuition plan.
LENGTH: Medium: 62 linesby CNB