COLUMBUS - Ohio could suspend new enrollments in its prepaid college tuition program, beset by soaring tuition costs and declining investment returns.
The Ohio Tuition Trust Authority's board is expected to act on the issue today.
Jacqueline Williams, the board's executive director, said solutions could include ending only new enrollment or suspending all sales including those to the 130,000 current account holders.
Colorado, Kentucky, Texas and West Virginia have already suspended enrollments in their prepaid college tuition programs.
Ohio's fund is backed by the full faith and credit of the state, which means that existing investments are secure, Williams said.
In our discussions with elected officials
the basic point they wanted to underscore is that the state would take care of its commitment she said.
Under Ohio's guaranteed program, parents can buy credits for future tuition. The credits, based on average tuition at Ohio's 13 public universities, also can be cashed in at private colleges in Ohio or other states.
Despite an increase in credit prices, a financial report last month predicted that the growing gap between tuition and investment returns will leave the fund unable to meet its obligations without state help by 2014.
Colorado suspended enrollment in its prepaid program in August 2002, giving investors the option of transferring their money to other savings plans, said Marilyn Quinn, chief operating officer for several of that state's college-savings programs. About half of the investors stayed with the prepaid program, but their new benefits are now capped to cover annual tuition increases only up to 5.5 percent, she said.
Williams said she doesn't expect such limits to be imposed in Ohio.
In August, the Ohio Tuition Trust Authority board imposed a $2,000 limit on individual contributions to accounts in the Guaranteed Savings Fund and dropped the discount it had offered on rates for newborns.
The restrictions do not apply to any of the other 17 investment options administered by the agency.
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