The Prepaid Alabama College Tuition fund program is seeking a lending hand. However, the recession has most individuals and organizations working ambidextrously.
Recently, the PACT Board asked schools throughout Alabama to offer a tuition discount for students involved in the PACT program.
Officials at University of South Alabama, the University of Alabama System and Auburn University declined the proposal because they are not in a stable financial position to help out.
Deedie Dowdle, executive director of the Office of Communications & Marketing, said as everything stands right now, Auburn University is expecting a $39 million shortfall for the upcoming fiscal year.
With this potential loss, Auburn students should expect an increase in tuition this fall. However, the shortfall will be taken up elsewhere, and the bulk of it, Dowdle said will not be taken from tuition.
Dowdle said the University is working to try and offer counseling for families and students of the PACT program.
Auburn University President Jay Gogue said PACT Board members asked to meet with the financial experts of the universities for recommendations on the program's depleting investments. Gogue also said the program's investment losses are not something that can be replaced quickly.
"Based on their losses we're talking about like $40 million, so it's not a few thousand dollars here and there," Gogue said.
Gregory Fitch, PACT Board member and executive director of the Alabama Commission on Higher Education, explained exactly how the PACT program works.
"You give me $2 to do something because you plan to do it in 15 years," Fitch said. "Well the time you get ready to do it in 15 years its $10, but your $2 covers that. It has just been invested to make up the $8 difference."
The program works through its investments in the stock market. Fitch said the PACT program owned stock in real estate, utilities and international trading companies. Through these investments, the $2 will turn into $10 to pay for a student's tuition at the price set when he or she enters college.
Recently Kay Ivey, Alabama State Treasurer and chairman of the PACT Board, sent notices to all participants within the program. The letter explained the PACT program's status as well as what proposals and options the Board is looking at to help in this recession.
The tuition increase and the slump in the stock market are not the only problematic factors hurting the program.
Just like the baby boomers of the '50s, students of the PACT program entering universities now are at an all-time high.
"The demand is right now," Fitch said, "and for the next year and after that it will be slowly dropping off. And the students that are presently enrolled at Auburn and those in the future, they need to be concerned and monitor this."
Susan Fuller, 51, of Mobile, said she had not known much about the program's struggle until the notice she received in the mail at the end of February. Fuller's daughter Marci is a sophomore at Auburn with the help and preparation of the PACT program.
Fuller's other daughter will be an incoming freshman in the fall and will also be able to attend because of the family's investment with PACT.
Fuller said this has been a set plan in both of her daughter's future.
Because of the recent notice of the program's struggle, families who are just now starting to enter into the PACT program have time to set up a plan B. However, for the Fuller family, there is no other option.
"I'm mortified from it," Fuller said of the program's uncertainty.
Gogue said right now the program's next steps are tentative.
"Until they do the analysis and come up with hard numbers you don't know," he said. "These plans started in the '70s and some universities started them, but they got out of them quickly because they saw the risk.
Some states started them, but they got out of them. And so they may be in the position to make some appeal to the Legislature."
According to the program's Web site at http://www.treasury.alabama.gov/pact/, the board will be hosting a public hearing today from 1:30 p.m. to 4 p.m. at the Wesley Hall of Frazer Memorial United Methodist Church in Montgomery.
This hearing is specifically for the public to voice their concerns; however, the board will not "engage in discussion."
The board will also meet March 24 to examine all its options and determine the program's next move.
For more information and updates, the Board has created a Web site, www.800alapact.com, that is updated each Friday by 2 p.m.
Do you like this story? The Plainsman doesn't accept money from tuition or student fees, and we don't charge a subscription fee. But you can donate to support The Plainsman.
