Prepaid-College-Tuition Plans Feeling Fiscal Pressure

Worried about a looming funding shortfall in their state’s prepaid-college-tuition plan, South Carolina lawmakers are weighing whether to close the plan to new participants, a course some other states already have taken.

Like those in some other states, South Carolina’s 10-year-old plan is on shaky financial footing because growth in the fund has failed to keep up with rising tuition. At least five states, including Colorado, Kentucky, Ohio, Texas, and West Virginia, have closed their plans—some temporarily—to new enrollees, to avoid worsening the funds’ financial problems. Texas alone is projecting a deficit that could total billions of dollars in the next two decades.

“That seems to be the trend,” said Joe Hurley, the author of The Best Way to Save for College: A Complete Guide to 529 Plans. “I don’t see any new plans opening up. All I...