State college tuition plans struggling

WASHINGTON, April 20 (UPI) -- The ailing economy could jeopardize college tuition programs that allow prepayment of future tuition costs at today's prices, analysts said.

Stateline.org reported Monday that many state tuition programs are in trouble because of rising tuition costs and a decline in the stock market. The Web site reported that troubles on Wall Street have diminished the value of many investment funds from which prepaid tuition plans disburse tuition and fees.

"Just about all these programs are going through similar turmoil," said Joseph Hurley, founder of savingforcollege.com. "It's the same dynamic: investments are not keeping up with tuition increases. The irony is, it makes demand for these programs even stronger for families but that popularity translates into more financial stress for these programs."

Under the tuition programs, discounted tuition costs are paid either as a lump sum or over time through monthly payments into a state-managed investment fund. When a child is ready to attend a state college, the tuition and fees are paid from the fund.

The funds have been the subject of recent lawsuits. Last week, Oregon sued OppenheimerFunds over its handling of the state's college savings program, Legal Newsline reported.

Oregon Attorney General John Kroger sued the investment company for allegedly investing program participants' money in risky securities. He is seeking more than $36 million in lost fund values over the past year, the legal news service reported.