Parents upset over TX Tomorrow Fund

September 4, 2009 8:05:06 AM PDT
Thousands of parents who spent years investing in what was once called the Texas Tomorrow Fund are getting a big surprise in the mail.[READ IT: Letter to Tomorrow Fund investors]

It's a letter detailing a major policy change regarding money set aside for their children's college education. The guarantee is not what they thought it would be. The change primarily affects those who paid in the plan, but are not sending their kids to school, or students who get a scholarship.

This letter from the Texas Guaranteed Tuition Plan tells parents they will no longer get all the money they were initially due if they cancel the contract.

For instance, a parent who has paid $11,000 into the fund, but whose child is not going to college, could have been eligible to get about $30,000 back. Now those parents will only get about what they have paid into the fund.

Financial experts say students who get a scholarship will also see reduced payouts.

"Their original contract said that if they asked for a refund of their money they would get the value of the current tuition and fees at a university in Texas. Now they are being told they are only getting the amount of money they put in, which means they lost the investment aspect of it," said Rep. Garnet Coleman (D) of Houston.

Rep. Coleman says the problem started when the Texas legislature removed caps on tuition and allowed the Board of Regents to set costs. He says since then, tuition on Texas campuses has gone up 69% and there was no way the Texas Guaranteed Tuition Plan could keep up.

The plan allows parents to get their full reimbursement if they opt out by October 31, but should they?

"If you stay in the plan, that amount of money, the amount of tuition and fees, is guaranteed at the time when your child goes to college," said Rep. Coleman.

Again, if you know for certain your child will not go to college, getting out now may be the best option. However, if you think your child will go to college, then stay in the plan.

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