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College Illinois! contract holder Richard Cherico on the mismanagement of the 529 plan’s funds.
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In focus tonight prepaid college 529 plants.
Now they were originally created as insurance against tuition inflation.
Allowing you to lock in today's college tuition costs parents even grandparents have pulled more than a hundred billion dollars into these funds nationwide.
Only to find many are greatly under performing my next guest.
One of those grandparents.
Richard Jericho is -- college Illinois 529 contract holder Richard welcome to the show can you start by telling us your story.
Your experience of investing in this fund.
Yes my wife and I decided that when our two grandchildren were warned that we would provide a plan.
For them to complete their education now.
Our grandson is now eight years old we bought the plan soon after he was born.
Our granddaughter is five years old and she received the plan after she was born.
We're talking about 40000.
Hour roughly actually 41000 our program for her granddaughter.
And 30000 hours plus for the grandson.
If I understand you have a copy of my testimony that I gave out last August to -- house representatives committee.
It is very clear.
What all of the language in the exhibits that I provided from their marketing brochure that we were guaranteed.
Then at the time that he -- youngsters would be finished with high school and ready to go to college.
There education would be paid for up to eight semesters in both cases.
And we come to find out that there has been problems.
With the management of the money.
And they enacted I had a very disappointing returns.
Let me read some of that deceptive marketing so we -- -- parents out there an idea of what they're up against this was the brochure that you would have -- said with college Illinois you have no worries about the performance of your investment.
It truly is a secure and worry free way to manage one of your most important financial goals.
Richard and did that turn out to be true.
-- -- it it didn't turn out to be true -- the present time now I understand.
It is 70% funded at this time.
And anyone who is eligible to go to college within the next five years they're supposed to be sufficient money for them.
But others including our grandchildren right now the money isn't there.
We know makes me crazy about something like this -- the kind of person who's done the right thing you're trying to save for your grandkids you put away -- -- -- -- Just sitting get a great education I mean how doesn't make you feel you get yourself in a situation where the money's not there when you need it.
Well for one thing I'm disappointed but on the other hand I'm a very positive person and I feel the problem can be corrected.
Now what I appreciate it is our state representative Jim Durkin who is chairman of -- committee to try to recover and correct the problems here.
And the one that I testified last August about he's already submitted to -- -- and have passed the legislature waiting for the governor's signature.
To correct some of the problems making sure -- in the open meetings act.
They cannot for example.
Buy or sell any investments.
What dollar in secrecy that kind of thing and a public foundation trust.
That there is a dog board of advisors scared that are going to meet with -- commission members to review investment.
Well and the -- -- minute correction to take catch up our viewers on this story what's happened is they've wiped out they've completely overhauled management of these funds.
Completely change -- they're trying to improve the returns.
And their investing in some less risky investments.
Richard I helped -- get your money back and I think it serves as a warning signal to everybody out there who might be invested one of these prepaid plans.
You have to pay attention to the.
Richard thanks for various show tonight into Gerri if I can I'd like -- add one thing chart I think debt.
I think that -- is very important is that this could be corrected over a period of time and one of the things that should be created is a 501 C.
-- foundation.
Where people can make contributions.
To support this kind of cost so someone like myself in my wife.
If this thing turns out to be are right for our grandchildren we could make a contribution to help other children well there's an avenue dared to correct this over a period of time.
And we'll certainly continue to follow this story Richard thanks for coming on with us tonight we appreciate your time.
