The Florida Prepaid tuition program announced this week it will offer its lowest prices in 10 years due to multiple years of lower-than-anticipated tuition and fee increases for the state’s public colleges and universities.
The announcementis the plan’s third price cut during the past decade.
It follows a class action lawsuit filed in early January that cites a disparity in the value of plans purchased during or before the 2006-2007 enrollment period. It also criticized the plan for having billions of dollars in surpluses.
The plan, which started in 1988, allows Florida residents to make monthly or lump-sum payments to cover the future costs of college tuition and fees, with an option to include some housing costs. Depending on the plan type, Florida Prepaid covers costs at any in state college or university even if the cost is higher than anticipated when the plan prices were set.
If a student decides to go to an out-of-state or private college, the plan will pay the same amount as it would at a public in-state college or university. The plans can be used up to 10 years after a student graduates from high school.
“Florida families have been squeezed by housing and food costs over the past few years, and we are glad to be able to ease their budget concerns by providing even more affordable plan prices,” executive director Kevin Thompson said in a news release. “Florida Prepaid is the largest and longest-running prepaid program in the nation, and we hope that with the reduced prices even more Florida families can start saving for their children’s future.”
This year’s open enrollment period begins Feb 1 and ends on April 30. Plans start at $34 a month for newborns, covering one year of college. Four-year university plans start at less than $135 a month, and two-year college plans at less than $39 a month.
Existing customers who bought plans from 2008 onward and have not used it yet will also receive a lower plan price. Florida Prepaid expects more than 280,000 customers to have prices reduced by a total of $1.3 billion, according to the release. Half of those who have fully paid their plans will receive refunds totaling more than $350 million, with the average customer expected to receive around $2,600.
Families are encouraged to use Florida Prepaid’s online price calculator to find out their rate.
The recent lawsuit against Florida Prepaid alleges that, while tuition has remained flat, the Legislatureallowed universities to charge additional “differential fees,” which are said to cover extra services. Those with Florida Prepaid plans are exempt from paying that fee.
While Florida Prepaid pays less than a Florida resident paying out-of-pocket due to this exemption, the lawsuit states those who went to out-of-state schools and bought a plan prior to 2007, got a lower value.
In addition, the plan has been criticized in the lawsuit for having $4 billion in surplus funds.
A spokesperson for the plan said the organization doesn’t comment on pending litigation.