House of Delegates passes legislation to lower the cost of Prepaid529 college savings plans

HouseGOP2019 General Assembly, Press ReleasesLeave a Comment

The Virginia House of Delegates on Tuesday passed HB 1611, legislation to make it easier for middle class students and families to afford college by lowering the price of Prepaid529 plans. The legislation will lower the current cost of an eight semester contract by more than $3,000.

“Lowering the cost of college has long be a priority for the House of Delegates,” said Speaker Kirk Cox (R – Colonial Heights). “Virginia students borrow more than $1 billion per year to pay for college, a staggering burden that hurts our economy and makes it harder for young people to get started after college. This legislation will go a long ways to helping middle class students and families be able to afford a quality education at one of Virginia’s colleges or universities.”

Currently, families pay a 10 percent “pricing reserve” on top of the semester contract prices. The pricing reserve  is on top of the amount needed to pay future contract benefits and is used to mitigate risk to the fund. A June 2018 analysis by the Joint Legislative Audit and Review Commission (JLARC), found that Virginia’s Prepaid529 program is 138% funded and actuarially sound. This means that the program is more than capable of meeting all of its benefit commitments. 

The legislation, introduced by Delegates Steve Landes and Tim Hugo, would cap the pricing reserve at five percent if the program is more than 105 percent funded, as it is currently. The program’s relatively high funded status and actuarial soundness prompted JLARC to recommend the General Assembly consider measures to improve program affordability. JLARC estimates that reducing the pricing reserve from 10% to 5% would lower the current cost of an 8-semester contract by more than $3,000.

“This commonsense proposal will have a significant impact on families’ being able to keep more money in their pockets and attend college at a lower cost,” said Landes, the bill’s chief patron. “The Prepaid529 program was created to make attending a college or university more accessible and affordable; we should be striving to do everything we can to achieve that goal.”

“With the passage of HB 1611 we have taken a major step towards helping hard-working, middle-class parents afford to send their children to college,” said Hugo, chief co-patron of the legislation. “Higher education tuition has outpaced wage growth drastically over the past decade and we must be focused on doing our part to reign in those expenses.”

Leave a Reply

Your email address will not be published. Required fields are marked *