The College Illinois program, with about 52,000 participants, allows families to buy contracts that lock in today's prices for future tuition and fees at the state's public universities.
To jump-start sales, the state agency that administrators the program announced Monday that it will sell contracts at 2011 prices until the end of the year.
Families pay different amounts depending on a child’s age and whether the contract is for the University of Illinois, another four-year state university or a community college. An eight-semester contract bought today for a newborn to attend U. of I. costs $95,521. A contract for a community college education can cost as little as $42 a month, said Eric Zarnikow, executive director of the Illinois Student Assistance Commission, which oversees the program.
“You are able to pay today and get future tuition and fees,” Zarnikow said. The ISAC board will set contract prices for 2013 at its November meeting.
If students choose to go to college outside Illinois, the plan pays the state's average public university tuition at the time. Unlike a traditional 529 college savings plan, families do not select how the money is invested.
The $1.1 billion program still is about 30 percent short of the funding needed to meet its projected obligations, Zarnikow said.
He said, however, the families should feel confident putting their college savings into the program following an overhaul of the agency's board and new investment policies.
Critics had questioned the agency's past decisions to make alternative — arguably riskier investments — done partly as an effort to balance out higher-than-predicted tuition increases. The fund is dependent not only on market fluctuations, but also on how much Illinois' public universities raise tuition, and therefore how much the fund will have to pay out as its beneficiaries attend college.
“We have much stronger governance, transparency and an improved investment policy in place. The funded status of the program we expect will improve over time,” Zarnikow said.
Sales were suspended Sept. 30, 2011. The ISAC board voted in August to begin the program again.
Launched in 1998, College Illinois has paid out nearly $400 million in tuition and fees for 22,000 students who had prepaid tuition contracts.