Florida lowers cost of prepaid college plans....

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Broken Man 1999
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Florida lowers cost of prepaid college plans....

Post by Broken Man 1999 » Tue Jan 14, 2020 2:14 pm

College tuition can come down, after all!

For those who have purchased Florida Prepaid College Plans, or are considering purchasing one of the plans, good news!

Our governor announced that tuition for the plans was being cut, and refunds would be made for those who had already purchased them, in some cases.

It turns out all the plans for our grandchildren fall into the period of time when refunds are eligible.

Our previous governor cut the rates as well, and I took that opportunity to pay all the plans off to save the interest payments that were charged on my monthly payments.

The refunds are estimated to be about $5O0 mil, so this is serious money. Average refund of about $4700.

The new plans going forward will reflect the tuition cuts being made.

I believe the window to purchase new plans opens February 1, so anyone considering buying a plan might be pleasantly surprised by the new rates.

Now I have to figure out what to do with the refunds. Maybe I'll just throw the $$$ into their 529 plans.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

nolesrule
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Re: Florida lowers cost of prepaid college plans....

Post by nolesrule » Tue Jan 14, 2020 2:47 pm

You prompted me to check the accounts for my daughters. We still had five years of payments left.

Not anymore! We're getting about $5000 refunded and the payments end.

We could not afford lump sum when we signed them up. We could have paid it off at any time these days, but it doesn't change the total if you pay it off early.

We didn't go the 529 route. I've been putting money in UTMA accounts for them and tax gain harvesting. I'll likely split the refund and put it in their brokerage accounts.... but need to run it by the wife.

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Broken Man 1999
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Re: Florida lowers cost of prepaid college plans....

Post by Broken Man 1999 » Tue Jan 14, 2020 3:51 pm

Sweet!

If the figures are correct in the online accounts for the grandchildren, I will get a tad bit over $29,000 refunded.

I have already asked for the refunds, should take a couple of weeks to receive them.

I used the Florida Prepaid Tuition accounts for DDs. Made college very affordable, at the least they had full tuition paid at any Florida public university. One went to a private university with a tuition scholarship.

The tuition plans sold today will cover the highest tuition at any public university, and since the tuition varies across the university system, the grandchildren might get some $$ refunded if they go to a public university that has lower tuition.

I've told the grandchildren the same thing I told our DDs, private universities will require additional funds, their parents and I might be able to help, but no guarantees.

I would love for them to be able to attend University of Florida, the flagship of the university ststem, but it is not easy to be admitted. My alma mater USF, is OK, and local, but who knows where they will end up.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

nolesrule
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Re: Florida lowers cost of prepaid college plans....

Post by nolesrule » Tue Jan 14, 2020 5:30 pm

My wife and I both attended FSU (hence my screen name). She had Florida Prepaid + Bright Futures. i had $12,000 or so in student loans.

We don't live in Florida anymore, but I still think it was worth it. We have plenty of family there, and they get the in-state rates (covered by the plan) even as out-of-state students. And if they don't go to a public university it's portable enough to pay some or most of the tuition costs depending on where they chose to go.

Miriam2
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Re: Florida lowers cost of prepaid college plans....

Post by Miriam2 » Tue Jan 14, 2020 5:55 pm

Broken Man 1999 wrote: College tuition can come down, after all!

For those who have purchased Florida Prepaid College Plans, or are considering purchasing one of the plans, good news!

Our governor announced that tuition for the plans was being cut, and refunds would be made for those who had already purchased them, in some cases. . . .
Why was the tuition cut? Do you mean the Prepaid Plan calculated the cost of tuition higher than it actually will be?

How can they know that years in advance?

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Broken Man 1999
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Re: Florida lowers cost of prepaid college plans....

Post by Broken Man 1999 » Tue Jan 14, 2020 6:07 pm

Miriam2 wrote:
Tue Jan 14, 2020 5:55 pm
Broken Man 1999 wrote: College tuition can come down, after all!

For those who have purchased Florida Prepaid College Plans, or are considering purchasing one of the plans, good news!

Our governor announced that tuition for the plans was being cut, and refunds would be made for those who had already purchased them, in some cases. . . .
Why was the tuition cut? Do you mean the Prepaid Plan calculated the cost of tuition higher than it actually will be?

How can they know that years in advance?
Per the link below:

http://www.sun-sentinel.com/local/schoo ... story.html

"....The refunds are possible because the actual cost of tuition in Florida has risen at a slower rate than expected when the rates were set. Former Gov. Rick Scott made it a priority to keep tuition low after he was elected in 2010, and costs have been frozen or increased slightly most years since then...."

The rates were also cut in 2016, I think. I paid all the plans off shortly after Scott cut the rates.

Works for me.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Miriam2
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Re: Florida lowers cost of prepaid college plans....

Post by Miriam2 » Tue Jan 14, 2020 6:28 pm

Broken Man 1999 wrote: Per the link below:

http://www.sun-sentinel.com/local/schoo ... story.html

"....The refunds are possible because the actual cost of tuition in Florida has risen at a slower rate than expected when the rates were set. Former Gov. Rick Scott made it a priority to keep tuition low after he was elected in 2010, and costs have been frozen or increased slightly most years since then...."
Thank you for this information. I wonder how the governor can "force" or "require" even a state university to lower or not raise tuition. There are marbles in my head suggesting that out-of-state tuition has not been reduced, and perhaps that's where the state universities make up their shortfall, from out-of-state students.

nps
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Re: Florida lowers cost of prepaid college plans....

Post by nps » Tue Jan 14, 2020 6:34 pm

Miriam2 wrote:
Tue Jan 14, 2020 6:28 pm
Broken Man 1999 wrote: Per the link below:

http://www.sun-sentinel.com/local/schoo ... story.html

"....The refunds are possible because the actual cost of tuition in Florida has risen at a slower rate than expected when the rates were set. Former Gov. Rick Scott made it a priority to keep tuition low after he was elected in 2010, and costs have been frozen or increased slightly most years since then...."
Thank you for this information. I wonder how the governor can "force" or "require" even a state university to lower or not raise tuition. There are marbles in my head suggesting that out-of-state tuition has not been reduced, and perhaps that's where the state universities make up their shortfall, from out-of-state students.
Does Florida have tuition differentials for more expensive majors? I know Maryland does.

Topic Author
Broken Man 1999
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Re: Florida lowers cost of prepaid college plans....

Post by Broken Man 1999 » Tue Jan 14, 2020 6:52 pm

Miriam2 wrote:
Tue Jan 14, 2020 6:28 pm
Broken Man 1999 wrote: Per the link below:

http://www.sun-sentinel.com/local/schoo ... story.html

"....The refunds are possible because the actual cost of tuition in Florida has risen at a slower rate than expected when the rates were set. Former Gov. Rick Scott made it a priority to keep tuition low after he was elected in 2010, and costs have been frozen or increased slightly most years since then...."
Thank you for this information. I wonder how the governor can "force" or "require" even a state university to lower or not raise tuition. There are marbles in my head suggesting that out-of-state tuition has not been reduced, and perhaps that's where the state universities make up their shortfall, from out-of-state students.
I'm pretty sure governors have many ways to persude people to support their efforts. After all, they are first, and foremost, politicians.

Out of state students generally pay higher tuition than instate students in many states. I'm fine with that. Just think of it as a sunshine tax!

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Topic Author
Broken Man 1999
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Re: Florida lowers cost of prepaid college plans....

Post by Broken Man 1999 » Tue Jan 14, 2020 7:00 pm

nps wrote:
Tue Jan 14, 2020 6:34 pm
Miriam2 wrote:
Tue Jan 14, 2020 6:28 pm
Broken Man 1999 wrote: Per the link below:

http://www.sun-sentinel.com/local/schoo ... story.html

"....The refunds are possible because the actual cost of tuition in Florida has risen at a slower rate than expected when the rates were set. Former Gov. Rick Scott made it a priority to keep tuition low after he was elected in 2010, and costs have been frozen or increased slightly most years since then...."
Thank you for this information. I wonder how the governor can "force" or "require" even a state university to lower or not raise tuition. There are marbles in my head suggesting that out-of-state tuition has not been reduced, and perhaps that's where the state universities make up their shortfall, from out-of-state students.
Does Florida have tuition differentials for more expensive majors? I know Maryland does.
No idea. I haven't crossed the door of a Florida university since 1981. And I was leaving, not going in.

At the present time the tuition varies from one university to another. I would think there would be some premium for limited seats for popular programs.

All the colleges and universities in the system have websites, if you are looking for info for a particular major.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Cash
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Re: Florida lowers cost of prepaid college plans....

Post by Cash » Wed Jan 15, 2020 8:46 pm

This recent rate cut prompted me to revisit a lump sum payment for our child. The prepaid plan seems like a decent hedge. But what about room and board? I see that there is a dormitory plan for ~$7k, but it’s not clear whether that is for the entire 4 years or for only one year. If only 1 year, that seems like a very bad deal as 4 years would exceed the cost of the entire lump sum tuition payment for 4 years.

Planner01
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Re: Florida lowers cost of prepaid college plans....

Post by Planner01 » Wed Jan 15, 2020 10:11 pm

Thank you for posting this. I just checked our acct and we are getting back almost $3k!!!

Planner01
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Re: Florida lowers cost of prepaid college plans....

Post by Planner01 » Wed Jan 15, 2020 10:12 pm

Cash wrote:
Wed Jan 15, 2020 8:46 pm
This recent rate cut prompted me to revisit a lump sum payment for our child. The prepaid plan seems like a decent hedge. But what about room and board? I see that there is a dormitory plan for ~$7k, but it’s not clear whether that is for the entire 4 years or for only one year. If only 1 year, that seems like a very bad deal as 4 years would exceed the cost of the entire lump sum tuition payment for 4 years.
It’s for 1 year. I know because that is what we paid too.

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Taz
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Re: Florida lowers cost of prepaid college plans....

Post by Taz » Thu Jan 16, 2020 5:37 am

Planner01 wrote:
Wed Jan 15, 2020 10:12 pm
Cash wrote:
Wed Jan 15, 2020 8:46 pm
This recent rate cut prompted me to revisit a lump sum payment for our child. The prepaid plan seems like a decent hedge. But what about room and board? I see that there is a dormitory plan for ~$7k, but it’s not clear whether that is for the entire 4 years or for only one year. If only 1 year, that seems like a very bad deal as 4 years would exceed the cost of the entire lump sum tuition payment for 4 years.
It’s for 1 year. I know because that is what we paid too.
For 2019-2020 at UF, annual Room and board (10,220) costs more than tuition and fees (6,380). For a newborn, FL Prepaid lump sum tuition and fees for the entire 4 year university plan is $27,998.65. Each year of the dormitory plan is $7,576.71.
https://www.myfloridaprepaid.com/prepai ... d-pricing/#

I would offer that most kids who attend the top universities such as UF probably would also receive the Bright Futures scholarship. The highest award covers 100% tuition (not fees) + $300 for books. The prepaid tuition is still sent to the school which refunds the extra to the student. We treated that as a qualified distribution as we used it to pay for room & board.
The destination matters.

Cash
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Re: Florida lowers cost of prepaid college plans....

Post by Cash » Thu Jan 16, 2020 2:30 pm

Fascinating. Now I’m back to wondering what’s the point. Why prepay tuition and lock in a low (projected) rate of return when that doesn’t even cover the majority of the cost of attendance? Just put it all in a 529 and pay tuition plus room and board.

Cash
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Re: Florida lowers cost of prepaid college plans....

Post by Cash » Sun Jan 19, 2020 6:19 pm

I'm still weighing the pros and cons. For my child, the lump sum payment would be $27,848.38 and the 55-month payment plan would be $534.16/month ($29,378.8 total). Am I correct that that comes out to about a 2.3% interest rate?

miamibeachdentist
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Re: Florida lowers cost of prepaid college plans....

Post by miamibeachdentist » Sun Jan 19, 2020 7:43 pm

Now I’m confused as well.

I did some research 5 years ago when my child was born.

I decided to get a vanguard 529 plan instead of Florida prepay. Now I’m wondering if I made the right decision.

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Taz
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Re: Florida lowers cost of prepaid college plans....

Post by Taz » Sun Jan 19, 2020 9:00 pm

miamibeachdentist wrote:
Sun Jan 19, 2020 7:43 pm
Now I’m confused as well.

I did some research 5 years ago when my child was born.

I decided to get a vanguard 529 plan instead of Florida prepay. Now I’m wondering if I made the right decision.
If the market goes up and tuition rates don't rise too much then I think a 529 would be preferred. It is more flexible. But, I don't have a crystal ball.

For us, I did the lump sum prepaid ($13k) in Jan 2007 and the markets dropped so I felt good. (Some states cut payments or modified their plans in response to the recession). We also had some in 529/ESA plans. Good to cover your bases.
The destination matters.

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