 College Illinois administrators and lawmakers are talking about ways
the state can rescue the badly underfunded prepaid college tuition
program.A report released Monday shows the program with a March
2011 deficit topping $559 million, an increase of $28 million since
June 2010. College Illinois officials began their review in April,
but they did not deliver the long overdue report until this week.
State Rep. Jim Durkin, R-Western Springs, said Illinois may have
an obligation to the families who believe their investments in the
program would guarantee a college education for their children.
"I'm not going to use the word ‘bailout,’ but I believe there is
going to have to be a discussion as to what the state of Illinois'
responsibility is to this program," Durkin said.
Parents and grandparents purchased future tuition at current
prices, and the program was expected to invest the money so the
amount would increase to correspond with anticipated tuition hikes
the year the child actually attended a given state university.
College Illinois was marketed in such a way that many families
believed the state would back the program if it ever ran short,
Durkin said. When the prepaid tuition began experiencing financial
problems, those families learned that there was no state guarantee.
Durkin leads a task force investigating the Illinois Student
Assistance Commission, or ISAC, which operates College Illinois.
"It's clear that some changes are going to have to be made, but I
have confidence in the current leadership" at College Illinois,
Durkin added.
On Tuesday, ISAC named Kent Custer to be its new chief investment
officer. Custer, who worked the past four years at the Illinois
Teachers’ Retirement System, will manage investment portfolios for
the tuition program.
But Custer's first job may be to manage the program’s image.
"We have to fix the crisis of confidence," Durkin said.
State Rep. Sandy Cole, R-Grayslake, said she does not believe
Illinois should or can take responsibility for this debt.
"I don't see how the General Assembly can help out ISAC," Cole
said. "College Illinois is not a part of state government."
Created by state law, ISAC is a state commission with some of its
members appointed by Gov. Pat Quinn. But investments in the tuition
program are not protected like other state investments, which are
overseen by the Illinois treasurer's office.
[to top of second column] |
Cole said the misconception that the tuition program is backed by
the "full faith and credit" of the state led to some of the
problems.
"College Illinois misled people into thinking there was a
guarantee," Cole said. "There simply is not."
But before the prepaid tuition program can inspire a new sense of
faith, the program has to start accepting new members.
John Samuels, a spokesman for ISAC, said the commission stopped
selling College Illinois packages to new families on Sept. 30.
He said "it would be unfair" to accept new members before
managers know what to expect.
Closing down the program only makes the financial problems worse.
ISAC's new report assumes 2,500 families will buy a contract,
essentially a semester's worth of tuition, this year and every year
going forward. But only 1,800 families have purchased new semesters,
and no new semesters of tuition will be sold for the rest of 2011.
Ginnie Flynn, a Chicago mother who bought two semesters through
College Illinois last year for her oldest daughter, said she can't
blame families for shying away.
"Who would want to buy into this program when there are all of
these questions?" Flynn asked.
Flynn said she "does not believe we'll get what we paid for," and
she doesn't believe in a possible state guarantee either.
"I'm not even sure that the state could make that kind of an
offer," Flynn said.
Her hope, she said, is that lawmakers can find a middle ground
with the program and that universities in the state will make the
future cost of a college education more affordable.
But Flynn said she's not putting all of her eggs in any one
basket anytime soon.
[Illinois
Statehouse News; By BENJAMIN YOUNT]
 |
