The investments that make up Maryland’s statewide college savings plan took an enormous hit last year, increasing the pressure to hold college tuition steady even as the state budget demands otherwise.
Money in the state’s prepaid college trust, a savings program that allows families to lock in tuition rates long before their students attend college, declined by more than 20 percent, resulting in a deficit of more than $52 million, according to its 2009 annual report.
That means that if all of the more than 16,000 enrollees, newborns to high school seniors, were to tap their tuition tomorrow, the fund would come up $52 million short.
Virginia’s version of the savings plan, the Prepaid Education Program, saw total net assets fall to a $52 million deficit in June 2008 from a $122 million surplus in June 2007. About 72,000 people are enrolled in the program, commonly known as a 529 plan. Officials expect the deficit to increase when the 2009 figures are released in December.
Maryland’s report emphasized that the state’s four-year freeze on tuition rates — a campaign platform for Gov. Martin O’Malley — has kept the deficit from appearing even worse.
“The investment loss was mitigated by the fact that the weighted average tuition at Maryland’s public colleges increased by 1.2 percent for the 2009-10 academic year,” as opposed to the expected increase of nearly 8 percent, the report said.
Maryland’s steady tuition contrasts sharply to schools around the country. A recent report by the College Board revealed that the average cost of tuition, fees, room and board at a four-year public college rose to $14,300 this year nationwide, up nearly 6 percent from 2008 and up 38 percent from 10 years ago. Maryland’s in-state tuition is much higher — about $17,000 including room and board — but stable.
That stability soon may end, as the state is facing a $2 billion shortfall, or about 15 percent of its annual budget.
“The governor has also said that the tuition freeze was never meant to last forever,” O’Malley spokesman Shaun Adamec said. “And as we consider future budgets, that item along with many other difficult decisions will need to be weighed.”
