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State officials dropped plans Thursday to slash refunds to parents and others who invested in a troubled state prepaid college-tuition fund.
The Texas Prepaid Higher Education Tuition Board voted 5-0 to approve Texas Comptroller Susan Combs’ recommendation to reverse a May decision that refunds given after Nov. 30 contain only the money people put into the fund. Investors in the Texas Guaranteed Tuition Plan would have received no earnings, no matter how long their money had been in the program. The fund was facing a shortfall.After Thursday’s decision, refunds will again contain earnings. And those who withdrew their money before the Nov. 30 deadline can get back into the plan, said R.J. DeSilva, Combs’ spokesman. Parents interviewed Thursday hailed the board’s decision. Combs, who heads the tuition board, faced intense pressure from investors and state legislators angry over the May vote, which they characterized as breaking a promise. "I think it’s wonderful. I’m glad they’re living up to the original terms of the agreement," said Brett Van Hoosier of Magnolia, north of Houston. He has two children in the program, ages 8 and 10. Robert Shirley of Keller, who has two sons in the program, said the responsibility to fix the problem lies with those whom residents elected."I think it was the right thing to do, especially the part where 'Let’s let the Legislature take care of this,’ " Shirley said. From 1996 to 2003, state residents could invest in the Texas Tomorrow Fund, later called the Texas Guaranteed Tuition Plan. Through lump sums or installments, people could lock in tuition and required fees at about what they paid when enrolling in the program. As of September, the program had 109,000 active contracts. No matter how much tuition increased, the state guaranteed full payment.Additional costs were expected to be covered by gains the state earned from investments. If a student was at least 18 and decided against college, investors could cash out. The refund would equal the current average tuition and fees of the colleges in their plan. But the May vote would have changed that. In 2003, the Texas Legislature deregulated tuition at public colleges. Tuition and fees rose well past the rate of inflation, increasing 69 percent between fall 2003 and fall 2008, the Texas Higher Education Coordinating Board reports. Then the woes on Wall Street took a toll. The double whammy has led to a shortfall that will reach $1.7 billion to $2.1 billion by 2030, state officials said. To keep the program solvent, the board voted to cut refunds. Investors were sent letters in August, saying the change would take effect Nov. 1. The deadline was extended in September to Nov. 30. About 5,300 families have received refunds since the letters went out, DeSilva said. In September, state Sen. Jane Nelson, R-Flower Mound, wrote to Combs, expressing "deep concern." More than 40 Democratic House members called on Combs to ask the board to "immediately reconsider its actions." The Democrats noted that the state had an $8 billion rainy day fund.Having reversed the board’s decision, Combs expects state lawmakers to fix the shortfall. An interim legislative study is expected before the Legislature convenes in 2011, DeSilva said.
DetailsTexas Guaranteed Tuition Plan investors who withdrew their money after receiving letters in August can get back into the plan. Specifics will be available today at www.tgtp.org
GENE TRAINOR, 817-390-7419
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