(KMOV) – Students and parents in Illinois are seeing firsthand how the recession is affecting education as the state program that lets parents save for college tuition and lock up current tuition costs is running out of money.
The Illinois Prepaid College Tuition Program, a 529 college savings program, is 31 percent underfunded.
Even after contributing thousands over the years, parents could find out the money won’t be there when it’s time for their kids to go to college.
Nearly 150 students at SIUE pay for their education through the prepaid college tuition program where parents make monthly payments over a 10-year period that guarantees tuition will be covered for their child at any college in the state.
However, the recession and overly optimistic fund performance projections are draining the fund.
Right now the fund has more than a billion dollars, more than enough to pay for those who are in college right now. But if the state doesn’t get many more families to sign up, and because of the recession, by 2021 the fund won’t have enough money to pay the tuition for all participants who are in college.
Any parent concerned about the fund can pull their money out and put it in any other 529 savings plan. State officials are concerned that bad publicity will cause a run on the fund. In the meantime, they’re looking at changing their investment strategy or other ways to stabilize the fund.