Crain’s reported today that College Now, Illinois’ prepaid tuition program for state higher education, has closed to new investors while it sorts its future. It’s not to be confused with Bright Start and Bright Directions, which are the state’s 529 college savings programs.
According to Crain’s, “the Illinois Student Assistance Commission (ISAC), which administers College Illinois, is huddling with state lawmakers on how to fill a gap between the dollars in the investment fund backing the program and the family-purchased contracts” to attend Illinois colleges.”
“The program is marketed as a worry-free way for parents or others to lock in the cost of tuition and pay it gradually ahead of time. But the security of the investment depends on the rate of tuition inflation and the investment performance of the $901 million fund supporting the contracts, as well as the number of new participants in the program, wrote Crain’s” [Emphasis added.]
That italicized part should tell you one reason why this program was ill-conceived from the start.
It will probably need a bailout of some sort. As of June 30, the fund was $320 million short of what it needs, according to Crain’s.
Salute to Crain’s for their coverage on this dog of a program. They’ve been the only ones on top of it. (See what a suck-up I’ve become since they’ve started printing my articles?)
Too bad nobody listened from the start.
-Mark Glennon is founder and Executive Editor of Wirepoints. Opinions expressed are his own.