As you may know, the option to opt into the Alabama Prepaid Affordable College Tuition (PACT) program has been closed since 2009 due to its near collapse following the economic recession of 2008. That, in addition to the steady increase in tuition rates, has left PACT unable to fulfill its original promise to pay in full the annual tuition of students whose parents invested in this prepaid program.
Instead of shutting the program down completely, however, PACT representatives determined that they would be able to continue paying the tuition in full, if tuition rates showed no increase after the fall of 2010, “the point of no return.”
Following a settlement made in 2013, courts ruled in favor of PACT, deeming them responsible for paying the full annual amount of tuition rates established in 2010 by public institutions (and weighted average of public tuition and mandatory fees to private institutions). Parents and students are responsible for covering the difference if tuition rates have increased since then.
“I am sure each school handles PACT differently,” said Martin Weldon, Assistant Director of Student Financial Services at Jacksonville State University. “We require a copy of the pre-paid college tuition plans (PCTP) eligibility letter be on file. We will bill PCTP sometime near the end of the semester. That way, it will include your completed schedule.”
Knowing Your Rights:
PACT program participants have the right to cancel their contract and get their money back at any time.
Other states outside of Alabama provide similar college savings plans. If parents choose to invest in a plan outside of their state of residence, they should be mindful that tax breaks vary from state to state. Visit savingforcollege.com to compare other state's college plans.
Some non-accredited schools don't meet the qualifications to accept PACT due to IRS regulations. For a full list of PACT colleges and universities in Alabama and an overview of the tuition rates PACT will cover at each institution, visit treasury.alabama.gov/pact/Tuition&FeePayments.html