SPRINGFIELD — Illinois’ prepaid college tuition program has lost $68 million in a year, mainly because of the higher cost of tuition statewide.
The fund dropped from $1.13 billion a year ago to $1.06 billion at the end of May, despite investments turning a profit.
College Illinois! paid out $92 million for tuition during the past year, while making just $25 million on its investments, according to a report presented at a Monday meeting of the Illinois Student Assistance Commission, which oversees College Illinois!
The prepaid tuition program has been a source of consternation for legislators and parents because of controversial investment decisions and an unfunded liability of more than $500 million, or about 70 percent.
So far this year, investment returns are about 3 percent, much less than the 7.5 percent the fund predicted, according to John Samuels, spokesman for the Illinois Student Assistance Commission.
Samuels attributed the underperformance to “the overall weakness of the market.”
College Illinois! will be undertaking an annual review of its assumptions at the end of its fiscal year, this month.
“It’s possible that we’ll be changing some of the assumptions in terms of what the market is showing,” Samuels said.
Additionally, tuition for a year at a state university has increased by an average of 12.5 percent annually over the past decade, outpacing any gains on investments.
State Rep. Jim Durkin, R-Western Springs, has been a leader in working to reform College Illinois so that it doesn’t become insolvent.
Durkin said College Illinois! needs a holistic approach to remain healthy, including universities.
“Universities cannot sit on the sidelines, they have to participate. At some point there has to be a broader discussion about how universities have justified increasing their tuition costs. You can’t just say it’s the Legislature’s fault,” Durkin said.
Talks will happen this summer and fall between College Illinois! and the universities to find some kind of solution to the increasing cost of tuition, Durkin said.
The program stopped taking new contracts last year after media reports about risky investments by the program and the size of the unfunded liability.
Samuels and Durkin say College Illinois! could start selling plans again as early as this fall. New plans could bring in more money, but only if parents are willing to invest in a program that’s had a rough few years.
“We will not let this program fail,” Durkin said.
Andrew Thomason can be reached at firstname.lastname@example.org