51 by 51: Lowering the Cost of Prepaid Education Plans

HouseGOP2019 General Assembly, 51 by 51

51 by 51

Lowering the Cost of Prepaid Education Plans

This year the House of Delegates passed legislation to make it easier for middle class families to afford college by lowering the price of these Prepaid529 plans.

The legislation will lower the current cost of an eight semester contract by more than $3,000.

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 caps the pricing reserve at five percent if the program is more than 105 percent funded, as it is currently.