(The Center Square) – Florida’s prepaid college tuition plan is generating enough revenue to provide refunds to parents in part because of strong earnings on the plan’s investments and low tuition statewide.
Gov. Ron DeSantis said this week part of those savings is how the state has held down tuition and other costs at the state’s colleges and universities. The plan factors in future tuition costs and when those costs don’t reach predictions, families can receive a refund.
According to state officials, there have been two rollbacks in Florida Prepaid Plan rates, one in 2020 and another earlier this year. The cumulative amount of these rollbacks add up to $2.6 billion, and, according to state officials, 40,000 families have yet to claim $130 million in refunds.
The Florida Prepaid College Board manages what is known as a 529 plan, where parents can pay into a fund for their child’s college tuition that can be used at colleges and universities nationwide. Earnings from the plan are tax-free when used for higher education expenses.
The plan managers then invest these funds into the stock market, real estate and global markets to provide a rate of return.
According to Florida Prepaid data, 13 of the 15 individual fund plans, where parents choose the investments, are generating income, while two have lost income. Several of these fund plans are generating double-digit returns with a high of 13.41%.
All of the plans where managers guide the investments are generating returns up to a maximum of 10.75%.
“Because of our focus on academic achievement and fiscal responsibility, Florida has both the No. 1-ranked higher education system and the lowest tuition in the country,” DeSantis said in a news conference earlier this week. “Florida’s flexible college savings options like the Florida Prepaid program allow parents to get a head start on paying for the future, and even get money back when tuition stays low.
“And because I have ensured tuition has not been raised in Florida since I’ve become governor, we have another round of refunds available for parents now.”
Ray Rodrigues is the chancellor of the State University System of Florida. He says that there is a national narrative that higher education is extremely costly and not worth it.
“As the No. 1 state for higher education for eight years in a row, Florida universities are a great return on investment,” Rodrigues said at the news conference. “Florida has held tuition and fees flat and continues to prioritize textbook affordability.
“National College Savings Month provides an opportunity to highlight the affordability of our public institutions and the benefit Florida’s Prepaid College Savings Programs offer to families.”
