JACKSON, Miss.--We're learning more about how a freeze on the state's prepaid college tuition will affect you. First off, State Treasurer Lynn Fitch says everyone who has already enrolled in the program is safe and your money is still working for you and you student(s).
But, if you want to enroll right now, you're out of luck. On a week when the state budget hearings are in full swing, it was revealed that the MPACT program is being audited and there is a freeze on new enrollments.
"It's a tough time across the country. There are very few prepaid plans left because sustainability is not there," said Fitch. She says there are no problems within the program, but the audit is meant to assess MPACT's status and find out what can be done to make it more sustaiable going forward.
States like Alabama are having major legal trouble and class action lawsuits with their programs, which are structured in a different way than Mississippi's. Our program is backed by the full faith and credit of the state.
One of the problems here, though, is the economy and its impact on anything that is sustained by investments. In that sense, it works a lot like your 401K.
"With investment earnings so low and tuition continuing to rise, it creates a very wide gap to be able to stop," said Fitch.
We asked just how wide that gap is.
"The actuary where we get information said we would need to get a 7.8 percent return. Our most recent investment returns were at .6 percent. So at some point you've really got to stop and look at this," she said.
Fitch was reluctant to put a time frame on just how long the audit is expected to take and how long the freeze may last.
"It's gonna take probably a minimum of two to three months because you want a quality work product. You certainly don't want an audit team to come in and quickly make an assumption without having all the layers of knowledge and options available."