Many middle-class families worry about increased inflation, student loan costs and the credit squeeze as they plan for their children's college education. But Texas state officials hope their new prepaid tuition plan, Texas Tuition Promise Fund, will help families get a head start on saving for college.
The prepaid plan will cover only undergraduate education, allowing families to lock in tuition and required fees at the current prices of Texas' public colleges and universities according to the Dallas Morning News. The money placed in the fund may also be used for private and out-of-state schools (with some penalties), helping to decrease future student dependency on burdensome student loans and credit. The way it works is that a family buys tuition "units" at current prices. Each set of 100 units equals one year of college, or 30 credit hours.
There are three types of plans:
•Type I - The units are priced to consider the costs of attending the most expensive public four-year universities-- University of Texas at Austin and Texas A&M University. The current price is $98.50 per unit, or $9,850 a year.
•Type II - Unit prices are pegged to the average cost of tuition and fees at all public four-year colleges in Texas. The current price is $67.65 per unit, or $6,765 a year.
•Type III - This plan's prices are fixed to reflect the average cost to attend any public community college in Texas. The current price is $16.99 per unit, or $1,699 a year.
The price of units will be adjusted each year. Prepaid tuition accounts must be paid in full and open for at least three years before tuition benefits can be redeemed.
The fund is an excellent idea that helps families beat inflation that causes the cost of college to go through the roof every year. Also, families can help the next generation's debt load by reducing or even eliminated the need student loans to pay for college.