The Florida Prepaid College Board is lowering prices for the state’s prepaid tuition plan by $1.3 billion. The Board is offering refunds and lower monthly payments to current customers, and lower prices for families who sign up during the next enrollment period.
Each year, the Prepaid Board and a team of financial experts review the program costs, specifically looking at current and expected future tuition costs and projected return on investment. In previous years, rising costs of college tuition and fees caused the Board to increase program rates. But, the most recent review indicated that over the past six years college costs in Florida have essentially remained flat.
The Board expects this trend to continue and made adjustments to current program rates, benefitting Florida families who are saving for college. Beginning with the February 1 enrollment period, prepaid program rates will be the lowest they have been in 5 years.
Savings for Florida families
The surplus affects 224,000 Florida Prepaid customers with plans purchased in 2008 or later. Almost half of the affected customers are receiving refunds totaling over $500 million, with an average payout of $4,700. The remaining customers who do not get a refund will instead see lower monthly payments going forward and, as a result, may be able to pay off their plan balances earlier.
Lower prices for 2020 open enrollment
Florida families may enroll in the Florida Prepaid program at any time, but new lower prices are available during the next open enrollment period, which runs from February 1 through April 30, 2020. Parents can lock in prepaid tuition rates for a little as $44 a month.
Florida Prepaid tuition plans allow families to lock in future college costs at today’s prices. Payments can be made monthly or as a lump sum and cover the cost of a Florida college or university. There are five different Florida Prepaid options to choose from, based on the type of school you are saving for. Families may add dormitory housing coverage to a prepaid tuition plan when they enroll or at a later date. The value of a Florida Prepaid tuition plan can also be used to pay for tuition and fees at an out-of-state or private university.
Options to invest refunds
Florida families who receive a refund or lower monthly payment from their prepaid tuition plan could reinvest the savings to prepare for other college costs. For example, families who are only using a Florida Prepaid Plan may purchase a University Dormitory Plan for their child. Dormitory housing coverage can only be purchased for students who are juniors in high school or younger.
Another option is to invest the savings into the Florida 529 Savings Plan. The Florida 529 Savings Plan is only available to Florida residents and offers low costs and investment options designed to meet a variety of needs. Investments grow on a tax-deferred basis and distributions are tax-free when used to pay for a broad range of college expenses, including:
- Tuition and fees
- Room and board for students who are enrolled on at least a half-time basis
- Books, supplies and equipment
- Equipment for beneficiaries with special needs
- Computers, software and internet access
- Student loan repayments (up to $10,000)
Students who decide to attend an out-of-state or private college can apply Florida Prepaid Plan toward the cost and use a Florida 529 Savings Plan to cover the difference. Funds saved in a Florida 529 Savings Plan can be used to pay for any eligible post-secondary education institution, including in-state and out-of-state public colleges, private colleges, community colleges and trade schools.