The state agency that administers the Virginia 529 college savings plan is considering changes to its signature prePAID (VPEP) plan amid rising tuition costs and year-after-year decreases in state funding for higher education.
The program currently allows families to pay in advance to lock in college tuition and assessed fees at any 4-year or 2-year state university.
The proposed change under consideration would turn the current system, which guarantees payouts for the entire cost of school, regardless of which university the student chooses to attend to a system that would pay the weighted average of tuition and mandatory fees at Virginia universities.
This change wouldn’t affect students who are currently enrolled in the program, according to statement Virginia529 released last Tuesday; it would apply only to future contracts.
“VCU has about 1,500 students each fall and spring semester who receive VPEP funds,” said Director of Student Accounting Danielle Mitchell in a statement.
According to Mitchell, VPEP payouts to VCU students in the 2015-16 academic year totalled roughly $13.5 million.
These figures rank VCU third in overall VPEP payouts, behind University of Virginia with $20.2 million paid for 1,522 contracts and Virginia Tech with $22.1 million paid for 1,872 contracts, according to the Richmond Times-Dispatch.
VPEP is the largest such plan in the country, with $55 billion in assets and a 21 percent share of the national market, according to a Joint Legislative Audit and Review Commission oversight report released in July.
A statement on the Virginia529 website attributed the considered changes to consistent increases in the cost of tuition and fees at state schools in the 20 years since Virginia529 was chartered, which have rendered prePAID contracts far too expensive for some families.
Virginia’s public universities also use tuition models which have increased disparity between the cost of the least and most expensive institutions. This has also lead to a need for a change in the way VPEP operates, according to the statement.
The cost of tuition at 4-year universities in the commonwealth has increased by a third since the recession, according to Sarah Schultz, press secretary of Young Invincibles, a national nonprofit that focuses on providing young Americans with information regarding tuition and student debt.
The agency plans to further explore the proposed changes before any final decisions are made. That process will include gathering input from customers, the State Council of Higher Education for Virginia, members of the General Assembly, and institutions of higher education.
“After those conversations and further study,” read the statement on the VPEP website. “The next step in the process would be to request a legislative change by the Virginia General Assembly no earlier than the 2018 Session.”
Jim Thomma, Staff Writer