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style="font-size: 12px;">Illinois lawmakers are considering paying the tuition of students who paid into a troubled state-run prepaid tuition program using taxpayer funds and removing provisions on who would get refunds and who get tuition to state schools.
The College Illinois prepaid tuition program is estimated to be in need of $300 million. If not, officials expect to be unable to pay tuition for participants beginning in 2026. The program allowed parents to prepay tuition for a state university as a way to hedge against the rising cost of college. It has twice had to stop accepting new participants because it didn't have the money to cover its obligations.
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Under state Senator Scott Bennett’s legislation, the state would transition from just being “morally obligated” to pay for guarantees if the program defaults to having an “irrevocable and continuing appropriation from the General Revenue Fund” that would be automatically removed from the state’s coffers if lawmakers don’t appropriate the funds needed that year to make students with contracts for prepaid tuition whole.
Bennett, a Champaign Democrat, said in a Senate Higher Education Committee hearing that families are afraid that their contracts won’t be honored unless it’s guaranteed.
“They’re hoping that there’s some reassurance that the money that they put in the state will not leave them without that same commitment,” he said.
State Sen. Dan McConchie, R-Hawthorne Woods, supported the bill. He said College Illinois lacked safeguards that controlled for tuition inflation and loss of investment income.
“I favor shutting the program down, but providing full faith and credit for those who bought into this,” he said.
Illinois Student Assistance Commission Executive Director Eric Zarnikow said lawmakers are only morally obligated to honor those contracts today.
“The program, as it’s currently structured with the current moral obligation backing, does not provide enough support from the state,” he said.
The committee never addressed the removal of a provision that would have limited reimbursement to participants planning to matriculate in five years or less, others simply being refunded what they invested if the program was deemed “infeasible.” Guaranteeing reimbursement to everyone invested in the program as recently as two years ago when ISAC halted new participant contracts could extend the state’s mandatory payouts for years beyond the original provision of the bill.
Actuarial analysis showed that paying benefits for all existing contracts as they come due would not increase the present value of the unfunded liability, according to an ISAC spokesperson.
Zarnikow told lawmakers in committee that the commission would like to continue selling contracts, but agreed to discontinue sales if Bennett’s legislation passed. As it’s currently written, the bill doesn’t stop ISAC from continuing to sell prepaid tuition contracts.