The Alabama legislature reached a compromise last week aimed at shoring up the state’s prepaid-college-tuition plan with nearly $548 million over the next 17 years and keeping the state’s promise to pay tuition for 44,000 students.
Some legislators complained that the compromise puts a financial pinch on regional universities while exempting the University of Alabama system and Auburn University. But the state Senate voted for it 23-8, and the House voted 85-7.
Alabama’s Prepaid Affordable College Tuition, or PACT, plan began in 1990 with a promise to parents or grandparents that if they paid in a fixed amount for a child, the child would later receive four years of tuition at a state university upon graduation from high school. A state board invested the money and used the earnings to pay the tuition. That plan worked until the stock market plunged in fall 2008 and tuition started rising faster the PACT board had anticipated. By last year, the programs assets were about half the amount necessary to meet its future tuition obligations for 44,000 students.
A version of this article appeared in the April 28, 2010 edition of Education Week as Ala. Moves to Save Program for Prepaid College Tuition