Nevada treasurer on prepaid tuition program: It’s a ‘win-win’

Steve Marcus

State Treasurer Kate Marshall says some states have shuttered their prepaid tuition programs, but Nevada’s is going strong.

By Emily Richmond

Monday, Feb. 8, 2010 | 2 a.m.

Last week, President Barack Obama commented about the need for people to save for college tuition as opposed to throwing money away on, well, other diversions.

On that point, Nevada Treasurer Kate Marshall notes that with the possibility that funding shortfalls will translate into higher student costs at Nevada’s public colleges and universities, a prepaid tuition program offers a way to remove some of the uncertainty.

The program allows parents to pay money monthly, getting a locked-in tuition rate and tax deferment until their children enroll in college. The plan, which started in 1998, has about 13,000 accounts with assets topping $103 million. Families have until the end of the month to enroll and lock in this year’s tuition prices, which will be adjusted before the next enrollment period opens in December. Families with newborns have until June 30 to lock in this year’s prices.

Most states have prepaid tuition plans. How does Nevada measure up when it comes to participation?

A lot of states are having a difficult time and have actually closed their plans. Ours is actually doing very well.

Some people say Nevadans don’t place enough value on going to college. Does the popularity of the prepaid tuition plan counter that claim?

The people in Nevada do value higher education, but they need to find a way to make it more affordable, and this is one way to do that. Part of my job is to facilitate a way for people to pay for their children’s education.

How good a value is prepaid tuition?

We have a variety of payment options, including one-time lump sums and long-term monthly schedules. For $35 per month (over five years), your child can have two years of community college. For $42 per month (over five years), your child can have a year of university tuition in Nevada. And it’s not just parents — we have plenty of grandparents, aunts and uncles who contribute.

For students cashing in their plans this year, how much are they actually saving on in-state tuition?

If your family joined the plan when you were a first-grader in 1998, they would have a contract to pay $59 per university level credit hour. That’s less than half the actual current rate $142.75 per credit hour at UNR and UNLV, which is set by the Board of Regents.

What if students opt for an out-of-state school?

We take the value of the purchased plan and pay it out to any school that’s accredited by the U.S. Education Department. We’ll pay it to Harvard, we’ll pay it to a culinary school. Your dollars aren’t going to go as far at Harvard as they would if you have if you stayed in-state, but the value of the plan is exactly the same. Right now about a quarter of the plan’s participants opt to go out of state.

With people struggling to pay their day-to-day bills, how do you make the case that saving for college is a good idea?

It’s never been a better time to save. When I talk to parents and grandparents, I encourage them to think of it as lowering your child’s future debt. You don’t want them coming out of college with a huge burden of student loans. It’s great for the students and it’s great for Nevada — they can focus on getting their education, and then we get a great workforce. All the way around, it’s a win-win for everyone.