By Jeff Wentworth
State Senator District 25
Published: 07-20-07
In 2008 Texas parents may start saving for their children’s college tuition by investing in the Texas Tomorrow Fund II (TTF-II).
State Senator District 25
Published: 07-20-07
In 2008 Texas parents may start saving for their children’s college tuition by investing in the Texas Tomorrow Fund II (TTF-II).House Bill 3900 which we passed during this year’s 80th Legislative Session creates a saving plan for families that allows them to lock in today’s tuition rates and required fees for their children’s future higher education needs.
TTF-II differs significantly from the Texas Tomorrow Fund (TTF) the Legislature created in 1996 and that has been closed to new investors since 2003 when tuition rates were deregulated at state colleges and universities. Our intentions were good when we established TTF and when a revenue shortfall necessitated deregulating tuition.
TTF-II differs significantly from the Texas Tomorrow Fund (TTF) the Legislature created in 1996 and that has been closed to new investors since 2003 when tuition rates were deregulated at state colleges and universities. Our intentions were good when we established TTF and when a revenue shortfall necessitated deregulating tuition.
The results however were not as good as our intentions. Deregulation set college and university tuition rates skyrocketing resulting in the state’s having to close the Texas Tomorrow Fund to new investors.
The almost 160000 Texans enrolled in the TTF program will receive their guaranteed tuition rate but the more than $3 billion shortfall that occurred when tuition rates rose will have to be made up out of the state budget. To ensure that current TTF enrollees’ contracts are secure we had to close the fund to new enrollees.
I believe we learned from our first effort to establish a savings plan that would help families pay for higher education. This time we created a plan that shifts the burden of absorbing any additional tuition costs from the state to colleges and universities. As a result we believe that colleges and universities will be more careful about increasing tuition costs if they have to make up the difference.
TTF-II is not quite as good a deal as the first tomorrow fund. Families will invest in the TTF-II by purchasing “weighted” units of education with one unit equaling 1/100 of the tuition for one year of college. There are three types of units.
Type 1 is for tuition and fees at the highest priced public university. For example a unit at either Texas A&M University or The University of Texas could cost about $120. Type 2 is for a mid-priced institution that could cost about $90 while Type 3 is for tuition at a community college and could cost about $55.
When students redeem their units colleges and universities are required to honor their value. After the third anniversary of the date of purchase a beneficiary may redeem any type of tuition unit.
Once a student enters a college or university TTF-II pays that institution the money initially invested in the account plus any returns made on that investment. If there is a shortfall between the investment made and the current tuition universities and colleges must absorb the difference.
This legislation which I supported not only gives Texas families the opportunity to invest in their children’s higher educational future it protects the state from having to make good on any shortfall between current and tomorrow’s tuition costs.
