Short-fall in state programs - shocking!
Posted by aogMonday, 16 December 2002 at 22:38 TrackBack Ping URL

The WSJ has a story about the failure of Colorado's pre-paid tuition plan. This was the scam program parents would give the state money on behalf of a child and the state promised to pay tuition when the child was in college. Colorado's plan has collapsed on the twin wrecks of the dot com die off and rocket assisted tuition costs. Of course, these costs are at state schools, which presumably are controlled in some way by the state government. But there is a simple solution - the state has told the parents to either take their money back (no mention if they get more than the principal) or take their chances on whether the fund will cover tution without any promises by the state. And there's a further news flash - other states may have the same problem! How in the world could multiple state governments behave in a fiscally irresponsible, deceitful and self-defeating manner? Yes, you in the back? What, they're governments, what did I expect? Actually just about what happened. I didn't drop any of my cash into one of these.

Most states are pursuing a program of rapidly raising the entrance fees. But there is worry that not as many parents will participate. Reality dysfunction. If the problem is not being able to make payments, i.e. it's a money loser, why is less participation a problem? The article isn't clear on why exactly there is worry. Could it be that, despite the claims of self-funding, some of these are really Ponzi schemes? Or could it be that they are worried that parents won't be able to afford college for their children and the fix for that is to play financial games with these funds rather than address the rapid tuition increases? Where is root cause analysis when you need it?