SENATOR DON GAETZ REPORTS: FLORIDA PREPAID CONTRACTS FOR NEWBORNS DROP $20,000, CERTAIN REFUNDS AVAILABLE FOR CURRENT CONTRACTS
As part of the Work Plan Florida 2014 joint legislative agenda, the House and Senate passed, and Governor Scott recently signed in to law, legislation to reduce the cost of Florida Prepaid Contracts.
As too many of our neighbors know, the cost of a Florida Prepaid Contract for a university had grown to more than $50,000 for a four-year newborn contract, pricing many families out of dreams to provide their children with financial resources to earn a higher education. Fortunately, through a bipartisan, bicameral effort to reign in this skyrocketing cost, the Florida Prepaid program is now more affordable, enabling families to predict costs and plan for the future.
As a result of this legislation, the cost of a 4-Year Florida University Plan for a newborn child is anticipated to drop nearly $20,000. In fact, according a news release from the Prepaid College Board, the law will bring the 4-Year Florida University Plan and 2 + 2 Florida Plan prices down to levels not seen in the past five years. The lump sum price of the 4-Year Florida University Plan for a newborn is anticipated to decrease from its current price of $54,000 to $35,000 or less. Monthly payments for the same plan are expected to drop at least $100, from $350 to $250 or less.
The Prepaid Collage Board also announced that approximately 50,000 existing Prepaid Plans will see refunds and/or payment reductions because of the new law. Refunds and/or payment reductions are expected for 4-Year Florida University Plans and 2 + 2 Florida Plans purchased from Contract Year 2011 to 2014, as well as Tuition Differential Fee Plans purchased from Contract Year 2008 to 2014. The Prepaid Board wrote that they would like to assure all existing Account Owners that they will not have paid more for their Prepaid Plan than the reduced costs of future Prepaid Plans.
The Prepaid Board also states that account owners eligible for a refund can expect to receive notification in September regarding their specific refund and/or payment reduction information. It is anticipated that payment reductions will be applied to Prepaid Plan payments beginning September 20, 2014, and refund checks will be processed and mailed within 4-6 weeks of that date. No action from account owners is necessary at this time.
For more information, go to myfloridaprepaid.com/need-help/lower-prices/. Additional information provided by Florida’s Prepaid College Board is below.
About the Tuition Differential Fee Effect on University Prepaid Plan Pricing
In 2007, the last year before the introduction of the tuition differential fee for State Universities, the parent of a newborn could guarantee the cost of college tuition and most fees at a state university in Florida with Florida Prepaid College Plans for less than $15,000. In 2008, the newborn plan cost, including the tuition differential fee, rose to just over $21,000. In 2010, after the cap on the tuition differential fee as percent of tuition was removed, the newborn plan cost almost doubled to just under $41,000. In 2014, after several years of double digit increases in the tuition differential fee, the newborn plan cost was nearly $54,000. For the 2015 Contract Year, beginning this fall, the new law will allow newborn plan costs to be an anticipated $35,000 or less.
About Setting Prepaid Plan Prices and Open Enrollment
There are three basic components used to establish Prepaid Plan prices – current college costs, assumptions about future college costs and investment yields (as of July 31st). The current cost of college is known and, because of the new law, future college costs are lower and more predictable. An actuarial analysis of these three components is performed to set prices for the annual fall Open Enrollment. Prepaid Plans will be available for purchase at the start of the annual Open Enrollment period, which is scheduled to begin October 15, 2014.
About the Florida Prepaid College Board
The Florida Prepaid College Board manages the Stanley G. Tate Florida Prepaid College Program and the Florida 529 Savings Plan. Both are tax-favored 529 college savings plans authorized by Section 529 of the Internal Revenue Code. In 1987, the Florida Prepaid College Program was created by the Florida Legislature and the commitment and dedication of Mr. Stanley G. Tate to provide Florida families with an affordable means to save for their children’s future college education. The first Florida Prepaid College Plans were sold in 1988, and were augmented with the addition of the Florida 529 Savings Plan in 2002. Florida Prepaid is the largest, longest running and most successful prepaid plan in the nation with more than 1.6 million Florida Prepaid College Plans purchased and more than $6.7 billion invested in Prepaid Plans by Florida families. The 529 Savings Plan has more than 35,000 active accounts with a market value of more than $360 million.
For more information about this or any other issue, please contact Senator Don Gaetz, by e-mail at firstname.lastname@example.org, by letter, 4300 Legendary Drive, Suite 230, Destin, FL 32541 or call 1-866-450-4DON toll free from anywhere in Florida.
CONTACT: Katie Betta, (850) 487-5229