Tuesday, February 20, 2018
Politics

PolitiFact Florida: Gov. Scott and cutting the cost of prepaid tuition

Students, teachers and a mom praise Gov. Rick Scott's record on higher education and bash that of Democratic front-runner Charlie Crist in a TV ad released this month by the Republican Party of Florida.

"You know, college has become so expensive. Gov. Crist was a governor that was not looking out for Florida. Tuition skyrocketed. You know, Charlie Crist made college cost more. Charlie Crist did not make education a priority," states the ad, as a 2009 Tampa Bay Times headline flashes on the screen, citing a tuition increase of up to 15 percent.

"Rick Scott has put a lot of money back into education," the ad continues. "Gov. Rick Scott cut the cost of prepaid college tuition by nearly $20,000. A lot of my students now see hope. Rick Scott has made college more affordable."

Has Scott cut the cost of prepaid college tuition by nearly $20,000?

The Florida Legislature created the Stanley G. Tate Prepaid College Program in 1987.

Here's how it works: Families set up an advanced payment contract, typically paying a monthly fee. This allows families to lock in to many of the costs associated with college and apply that when their children head off to college.

For example, someone who purchased a contract earlier this year for a newborn would lock in to pay $350 a month, which would generate enough money to cover college tuition when his or her child enrolls in 2032. (Parents can also sign up children in later years, though that increases the monthly cost.) While the plans are designed to cover tuition at universities and other schools here in Florida, the money can be applied to schools in other states.

About 80 percent of families choose the monthly option, which includes interest, so they end up paying more over 18 years than those who pay the lump sum up front. (It operates much like a mortgage — homeowners pay less over the term of a mortgage if they pay it off more quickly.)

More than 1.6 million prepaid plans have been purchased, and nearly 350,000 students have attended college using these plans.

The program is popular, but the amount for new plans skyrocketed in 2008 and again in 2010 — for example, the lump-sum payment rose from about $22,000 in 2009 to $40,000 in 2010. The hikes were a result of the Legislature's approval of the "tuition differential" that allowed universities to tack on an extra increase in tuition of up to 15 percent. The prepaid college board assumed that universities would use that maximum amount, sending the costs into an upward spiral.

In 2014, the Legislature passed HB 851, which will cause the prepaid program to drop in cost, starting with the enrollment period that begins Oct. 15. The bill lowers tuition costs because it does the following:

• It eliminates automatic annual rate-of-inflation increases for all universities.

• It gets rid of the tuition differential for all but two universities (the University of Florida and Florida State University).

Also, for UF and FSU, the tuition differential drops from an annual maximum of 15 percent to 6 percent.

The bill passed the House 84-32 and the Senate 26-13, and Scott signed it June 9.

For the prepaid plans, the price of the four-year university plan will be reduced by "at least $10,000" for future participants, according to a House staff analysis of the bill. Additionally, thousands of families already participating in prepaid plans will get refunds or reductions, depending on the plan.

The Florida Prepaid College Board cites an even bigger savings on its website: The lump-sum price of the four-year Florida university plan for newborns is anticipated to drop nearly $20,000 from its current price of $54,000 to $35,000 or less.

For those who choose the monthly payments for the same plan, the board anticipates that the monthly payments will drop at least $100, from $350 to $250 or less. Over the life of a plan, that could add up to about $22,000 less than before the Legislature passed this bill, a spokeswoman for the prepaid board told PolitiFact Florida.

More precise figures under both scenarios will emerge in September, when the board sets costs for the new enrollment period.

We asked Ryan Duffy, a spokesman for Florida House speaker Will Weatherford, why the House staff analysis cited a savings of "at least $10,000," while the prepaid board said savings would add up to "nearly $20,000."

The $10,000 figure was a conservative estimate provided by the prepaid college board in February, based on an earlier version of the bill, Duffy said. That lower figure did not include the changes to the tuition differential.

The main caveat here is that Scott doesn't get full credit: the Legislature signed off on the bill, too.

We rate this claim Mostly True.

Read the full version at PolitiFact.com/florida.

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