Alabama College Chancellor Bradley Byrne threw a lifeline to the struggling Prepaid Affordable College Tuition plan on Thursday, waiving tuition increases for program participants through the end of the 2012 academic year.
The Alabama Prepaid Affordable College Tuition program, or PACT, allows parents or grandparents to pay for their children’s college tuition at an early age. Because the tuition rate is locked in early, it saves parents money in the long run. The program takes the money it gets from parents and invests it, hoping earnings will grow faster than tuition increases. About 48,000 participants, from newborns to college students, are enrolled in the program.
The PACT program has taken a beating as stock market values have plummeted as a result of the recession. In September 2007, the program’s assets were worth $899 million, enough to cover 97 percent of its future tuition obligations. Since then, assets have dropped to $431 million, barely enough to cover half its obligations.
The PACT program has frozen new enrollment, and several bills have been proposed in the Alabama Legislature to shore up the program.
Byrne’s decision would save the program money by making plan participants exempt from any tuition increases until 2012. Tuition increases in the two-year college system have remained level at $2,700 per semester for the past five years.
According to the Alabama College System, during the fall semester 1,900 PACT students attended one of the system’s community or technical colleges, and 44 attended Athens State University, an upper-level institution offering bachelor’s degrees. About 20 percent of Prepaid Affordable College Tuition students enrolled in all state institutions last fall attended a public two-year college in the state.
Locally, at Wallace Community College, about 50 students are enrolled in the PACT program, said Sally Buchanan, a college spokesperson.
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