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Universities taking -- hit from the downturn in the markets.
Are funds running low for statewide programs that help people save for college by prepaid.
These are pretty popular programs so they in jeopardy of going away joining us now.
-- -- -- staff writer -- state line and he joins us now Stephen welcome to Fox Business thank you.
These program I I know just.
Just -- again my -- five point nine plans is hurting.
How -- these prepaid programs do.
There's two in -- -- there's two men programs -- the -- going on programs the first one which is in about nineteen states.
Families pre pay.
They essentially pay for college education at today's prices.
So -- like my son for example was born in 1993.
And I joined Virginia's prepaid program.
I locked in the 1993.
Tuition rates so when he's ready to go to school on a couple years.
I'm all have paid the tuition at the 1993 -- In the second program which is in 33 states.
It's there you pay into an investment find and it's like a college savings fund and there's some tax advantages for doing that.
In that in those in that case.
Then again in my own in light on experience they asked me what year my son was starting.
College and I gave -- here.
And they tie the investment -- -- that with that in mind.
So there's 33 states that have those what's the risk you are obviously the risk is people you know the -- the money follows their may not be there in its entirety.
But can some of these programs just.
-- Well the problem right now is.
Just like state employee pension funds and our -- 401K is.
The value of these funds has dropped dramatically since the Wall Street meltdown in September.
And what's happened is.
In some states they've lost double digit percentage.
Double digit percentage losses.
And on top of that.
Almost every state is raising tuition right now because state governments are trying to balance their budgets.
And to do that they're raising taxes and fees and they're cutting services what one of the things they're raising his tuition to pay for that.
So that -- at a time you have that the value of the find -- managing you have tuition going.
How well they have to right Stephen to pay back or pay for the gap and in other words some of the people I got pinched.
-- got to make up the money somehow I know they're getting some that they crowds but they got to make so you're gonna have in other words some some.
Knew I guess college interns perhaps -- effect subsidizing others.
Right you have you basically have three choices if you're state policymakers.
You can increased the fees for the program.
You can limit the enrollment.
Or you can ask for direct state aid.
Which has happened in some states Alabama is probably the worst right now they've lost a 150 million in their investment -- since September.
And they're wondering whether they're gonna have enough money to pay for tuition this fall for all the people that are in this program.
And so that legislature there has spent the better part of this year trying to come up with a bailout plan which is -- -- about.
25 to thirty million dollars and they're gonna do it because next year there's.
Open governor's -- in Alabama.
And already a lot of the candidates the probable candidates for governor have been going around the state.
Saying I'll save the tuition program so it's it's become a really big issue down there.
Yeah you know they didn't say -- -- -- the funds you know we we that we know is we will that we you covered Virginia politics for a while I know.
Off of the Washington Post you know oftentimes is different -- politicians say.
What they're able to do.
I'm in this case it's 25 to thirty million in Alabama -- it's not a huge amount.
West Virginia's got the same problem and -- it's an eight million dollar problem for them.
That this thing is now and no politician wants to give up on this program because now what -- -- wanna kill letter.
Or -- be tied to.
You know somebody who is because they're so politically popular that's why they're set in the first place time to help low income low and middle class people.
Afford a college education it's also priority of the Obama administration.
Vice President Biden was -- in Saint Louis last Friday talking about this.
You know bombs that this middle -- Middle Class Task Force.
And this is a big component of it is is making college tuition more affordable.
All right Stephen -- staff writer state lines -- it was a pleasure thank you thank you Arctic air.
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