MIAMI (CBSMiami) — Each year, the cost of raising a child increases. At 11 percent a year, however, the Florida Prepaid College Program, is one expense that is rising much faster than the rest.
The new, recently-raised cost of for four years of prepaid classes at a state university: $331.59 a month for the next 18 years, an 11 percent increase over last year’s price.
The South Florida Sun-Sentinel reports officials announced the sixth consecutive year of increases to the program on Thursday.
The program allows parents to select from several packages; each results in paying significantly less for college than they would if they waited to pay once their kids start.
Fewer parents, grandparents and others have enrolled children in the program, which has had its viability called into question by some lawmakers and financial planners.
Kevin Thompson, the executive director of the Florida Prepaid College Board, stressed Thursday that the program remains fiscally sound.
“When you look at projected costs of college, Florida Prepaid provides an easy and secure way to save for college,” he told the Sun-Sentinel during a teleconference explaining the new rates. “Our plan is financially stable. It is guaranteed by the state and we don’t see that changing.”
Buying the program’s most popular package will allow the parents of newborns to purchase 120 credit hours at a state university and pay the required student fees for about $74,000.
Eighteen years from now, Thompson said, those costs are projected to run about $140,000.
The cost of prepaying four years of classes at one of Florida’s community colleges, most of which offer at least a few bachelor’s degrees, is about one-third the price.
The new cost at community colleges is $111.98 a month for newborns. That’s about 7 percent more than last year.
Although lawmakers and education officials are considering revamping Florida’s tuition system — changes that could impact the Florida Prepaid College Plans — financial experts such as Andrew Scheirer are still recommending that families invest in them.
He plans to enroll his 13-week-old daughter in the university plan. Open enrollment starts Monday.
“I think you’ve got more to lose by not doing it than by doing it,” said Scheirer, president of Scheirer Wealth Management/First Allied Securities, which has offices in Orlando and Lake Mary.
On the other hand, some financial advisers have been steering families toward alternative ways to save.
Delta Capital Management in Orlando, for example, almost exclusively suggests that clients invest in 529 college-saving plans sponsored by states or educational institutions. They allow families to invest different amounts, while giving them more control over how the money is invested, said Delta’s president Sean Casterline.
“With the Florida Prepaid, there is just so much uncertainty right now,” he said, adding that if Florida’s tuition system changes, prepaid plans might fail to cover some costs a decade or so from now.
Florida Prepaid, the nation’s largest and longest running prepaid tuition program, was revised a few years ago and costs rose steeply after universities began collecting a second type of tuition referred to as the “differential” fee.
“That’s the big thing — what’s going to be covered?” Casterline said.
Last week, members of a blue-ribbon task force created by Gov. Rick Scott met to discuss possible higher-education reforms, including starting to charge tuition according to students’ majors.
Recommendations will be forwarded to Scott and the Legislature. But State Sen. David Simmons of Maitland, a member of the Senate committee overseeing higher-education finances, said he is confident lawmakers would not make changes that would hurt the prepaid college program.
Nearly one out of 10 Florida children from newborns to high school students have a Florida Prepaid plan, according to the organization.
“We will not be taking some rash course of action that will jeopardize or impair the viability of this important program,” Simmons said.
The South Florida Sun-Sentinel and The Orlando Sentinel contributed material for this report.