Section 529 Prepaid College Tuition Scholarships: Help in Uncertain Economic Times

Abstract

The economy is wretched. The United States’ economic recovery is dependent, in part, on the country’s position in a global economy. If we as a nation wish to remain competitive in a knowledge-based economy that requires a higher level of education, we must facilitate greater access to post-secondary education. Unfortunately, in the last two decades, the United States has fallen from first to tenth place in the world in the proportion of its population that has obtained that all important post-secondary education. President Obama has set a goal of restoring the United States to first place by 2020.

The United States faces a number of problems when it comes to facilitating access to higher education. For many years, children in a large segment of our society, the economically disadvantaged, have not even dreamed of graduating from high school and going to college.

If we are to make any serious inroads into the proportion of our population that has attained post-secondary education, we must prepare children within this group for post-secondary education and provide access for them. Now we have a new problem hampering students from families whose children have traditionally attended college. Their families’ college savings have been decimated just as these children are about to attend college. We, as a nation, cannot afford to lose these children from the proportion of our population that has attained higher education.

While there is no single silver bullet for the nation’s educational woes, this Article proposes a model that will prove effective for both cohorts of students. It is based on Florida’s highly successful, cost-effective prepaid college tuition scholarship program, a jewel that has gone largely unnoticed. This Article evaluates and recommends the existing program for economically disadvantaged children, and suggests how it can be adapted to assist students whose college savings have recently evaporated, especially in those states that already have prepaid tuition plans.

Keywords: economy, prepaid tuition plans, Section 529