By Kristina Goetz
The Cincinnati Enquirer
and The Associated Press
The day after Ohio's guaranteed prepaid tuition plan was suspended, officials were fielding calls about the changes despite mailing to participants assurances that money invested in the program is secure.
The Ohio Tuition Trust Authority board voted Wednesday to close the program immediately to new investors and allow current investors to continue buying credits only until the end of this year. After Jan. 1, 2004, no contributions can be made for 12 months while officials evaluate the program's future.
"Tuition is growing far beyond our ability or anyone's ability to earn sufficient returns in the investment market to offset a growth in tuition," said Jackie Williams, the trust authority's executive director.
The program allows participants to buy tuition units - in effect, paying for tomorrow's tuition at today's prices. Roughly 100 units pay tuition and general fees at an average-priced public college in Ohio for a year.
The units may be redeemed when the child is 18 for tuition at any accredited college, including private schools or institutions in other states. The fund has 130,000 existing accounts.
Funds will stay in participants' accounts unless they elect to roll the money over to one of the 17 other investment options offered by the trust authority, or redeem the tuition units for a student. That cannot be done until the student reaches age 18.
Investors may also transfer funds to another beneficiary, a younger sibling, for example.
The board has said it will review its predictions regarding tuition increases and financial markets next year.
But officials say it is entirely possible that another suspension will be implemented after Dec. 31, 2004.
The program was started in 1990. By October 2001, the cost per unit was $56. In 2002, costs increased twice, reaching $78 a unit by July of that year. In August 2003, costs rose 16.5 percent to $95 per credit and officials warned that the fund could have a cash shortfall in about 15 years if current trends continue.
Ohio joins Colorado, Kentucky, Texas and West Virginia, which all suspended their programs in recent months.
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