Yesterday, I was listening to National Public Radio’s Martketplace. They happened to air a segment discussing the troubles of Pennsylvania’s college prepayment plan.

Here is the link if you wish to read or listen to the story –  State asks parents to save college fund

It is a fairly brief piece, but it reinforces statements that I’ve been making about college prepayment plans. College prepayment plans while good intentioned are destined to fail or expose states to liability due to rising tuition costs and unpredictable financial markets.

The story concludes with a law professor, that has extensively studied college prepayment plans, states that traditional 529 programs are the best investment for families and governments. Traditional 529 programs do not require governments to secure the funds to the detriment of taxpayers, and forward thinking parents still receive the same tax benefits they would receive by participating in a college prepayment plan.

Unlike others, I’ve been consistent regarding PACT. 1) Alabama must immediately guarantee the 48,000 PACT families that the state will uphold its full contractual obligations to all PACT families; 2) PACT administrative costs must be reduced, while investments must be more smartly managed than they have been; 3) Alabama must work collaboratively to develop a long-term financial solution to make PACT solvent; 4) Alabama’s Oil & Gas Trust Fund, which helps pay health care costs for poor, sick children in Medicaid must not be raided; 5) Efforts to stabilize higher education funding, thus stabilizing college tuition, must be made; 6) Beyond resolving the remaining 48,000 PACT contracts, Alabama must shift its college savings efforts to Alabama’s Higher Education 529 Fund.

I will continue to work to honor Alabama’s obligations to the 48,000 families whose college savings were neglected by the Treasury. I will continue to ensure that no one segment of Alabama’s budget or taxpayers are held to be financially liable for “fixing” PACT. I will seek to tap the State’s Unclaimed Property Fund for any monetary “fix” for PACT. And, I will seek to reduce costs and increase investment yields of PACT.