The Alabama pre-paid college tuition plan apparently isn't what it was sold as. We got "the letter" this week that says the PACT plan is running out of money and the board that runs it just isn't sure what to do. The fact that we were promised that our child's college tuition would be paid (I have the letter, "signed" by Lucy Baxley which tells you how long ago we paid for the plan), apparently is of no use to us now.
An interesting fact: on the PACT home page now, the plan is described as a "529" plan. But that is not what it was when it started. In fact, we got a 529 plan from out of state because Alabama did not have one at the time. Folks, pre-paid college tuition is not the same as a 529 investment plan and the PACT folks are stretching the truth by describing it that way.
Now to inject a little politics into the discussion: Our Republican state Treasurer, as head of the PACT program, apparently drank the Wall Street kool-aid and thought the market would always go up. When I was googling around earlier today, I came upon this newspaper article from the Decatur Daily during the last campaign, when the Democratic candidate sounded the alarm. But no one was listenting.
Segrest seeks PACT changes: State treasurer candidate says tuition program in trouble.
Article from: Decatur Daily (Decatur, AL) Article date:October 17, 2006
COPYRIGHT 2006 The Decatur Daily.
Byline: Bayne Hughes
Oct. 17--State treasurer candidate Steve Segrest believes Alabama's prepaid college tuition programs need a management change. The Montgomery Democrat told THE DAILY editorial board that Republican incumbent Kay Ivey is wrong if she believes the Prepaid Affordable College Tuition fund is in good shape financially and is one of the nation's top prepaid tuition funds. Segrest, a real estate agent and businessman, said Joe Hurley of Bankrate.com gives Alabama's PACT a two-star rating, while at least 15 other states' funds get a three-star or better rating.
We bought the PACT contract and finished paying for it more than 10 years ago. We got it because we figured that if we got a regular investment plan, and the market crashed the day before we wanted the money, that we were screwed. Prepaid tuition would guarantee that our children would go to college. They might have to live at home and go to the hometown university, but they would go. Now it looks like the whole thing was premised on a fabrication.
We're not taking our money out. That would be foolish - the amount we put in ten years ago wouldn't cover a year of college. And there's no way we could invest it and get a return that would cover tuition for a child who starts college in 2010. But my faith in the state of Alabama is shaken.
3 comments:
I too, am a parent who invested for my two children in 97 and 92. We didn't think twice about saving any additional funds for their college. Now, with one starting in 2010, it seems we are in deep trouble.
Can't the 48,000 families in Alabama file a Class Action Lawsuit against somebody? It appears they want us to believe that "no one is legally or morally obligated to fulfill the contract". How can that be? Of course, their are disclaimers all over the internet site now but 16 yrs ago, when we signed a paper contract, there were no such disclaimers.
Nonetheless, let us parents band together to fight this. Count me in.
Ruth Gray
(205) 758-4709
We too invested the first year the PACT plan was offered for our daughter and 3 years later for our son. The Alabama PACT was marketed and sold as a guaranteed tuition plan which was backed by the state. I consider the State's attempt to default on these tuition plans to be nothing short of fraud. Is the state of Alabama exempt from regulations requiring full disclosure? I for one would of never invested in the PACT program if it were not guaranteed. My wife and I have always invested prudently for the future and are incensed that the state of Alabama would treat their citizens with such contempt. If the state does not take responsibility for this situation then I agree that a class action suit should be pursued against those individuals and state agencies who have acted so reckless with our children's future. Count me in too!
PO'd in Huntsville
Check out a blog we created specifically for PACT people: www.alabamapact.blogspot.com. We hope we can use it as a clearing house and information center.
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