California Assembly Passes Prepaid Tuition Bill
The California State Assembly passed Assembly Bill (AB) 152 by a vote of 48 to 30. Assembly Member Jim Beall, Jr. (D - San Jose) authored AB 152 to help California’s families invest for college by establishing the California Prepaid Tuition Program.
In 2002, a year’s fees at the California State University (CSU) cost $1,428. At the UC, fees cost $3,564. Next school year, fees at the CSU will cost $2,772, a 94% increase. UC fees will cost $6,636, an 86% increase. By allowing families to buy their children’s future tuition now, AB 152 insulates families from the effects of future increases.
“AB 152 helps families pay for their children’s higher education by encouraging them to begin saving for college earlier in their children’s lives, guaranteeing that rising student fees will not outpace their investments,” said Assembly Member Beall.
AB 152 enables parents, grandparents, and family members to buy units of their children’s future university tuition today. The price for units is based on one year’s mandatory fees at the University of California (UC), plus a premium to sustain the fund. The total is then cut into one hundred units. The value of these units are guaranteed to equal what UC fees have become when the child attends college. AB 152 also offers significant tax benefits by ensuring the program conforms to the IRS code section 529 requirements.
Students can use this money at any college that qualifies for federal student aid programs. This includes the vast majority of public and private colleges in the country. If the tuition is less than the value of the units bought, the extra money can be used for other school expenses.
“AB 152 allows parents, grandparents, family members and guardians to buy their children’s future higher education today, helping them realize their dreams of going to college,” said Assembly Member Beall.
AB 152 heads to the Senate Education Committee next.