Program set to run out of money by 2017

Don Henderson bought a contract in South Carolina's pre-paid college tuition program for his daughter seven years ago, feeling secure enough in that financial decision to retire from his job as a Charlotte firefighter.

Then, Henderson, who lives in Columbia, started hearing whispers about the plan's finances.

The reality behind those whispers could mean the pre-paid tuition program will run out of money before Henderson's daughter is old enough to go to college.

Henderson is not alone.

More than 6,000 other S.C. parents also have invested in the pre-paid tuition program.

State officials say that, due to rising tuition costs and low investment returns, the pre-paid tuition program is $64 million short of the money it will need to pay its current contracts.

Today, it is still paying college tuitions. But the program will run out of money in 2017, according to current estimates, Deputy State Treasurer Scott Malyerck said.

Henderson's daughter, now in fourth grade, will be a high school junior then. Unless lawmakers act, the program will run dry before she can collect the benefits Henderson paid for.

Lawmakers said they have no plans to end the program early -- refunding the money paid in with only a small amount of interest added -- having already added $20 million in state money to it in 2007.

But Henderson, 56, and about 6,100 other parents, who are depending on the program, are nervous they might have to find another way to pay for college.

"I made life-altering decisions," Henderson said, "based upon my daughter's college being paid for.

"I don't think they should back out of the agreement," he said.

The tuition prepayment plan allowed any S.C. parent or guardian to buy up to four years of college at existing tuition rates for their children who are in 10th grade and under. The prepayment shielded the parents from the added cost of subsequent tuition increases, sometimes double-digits in recent years.

Lawmakers closed the program to new participants in 2007. Similar programs across the country are struggling to remain solvent. In Alabama, for instance, parents are fighting to force the state to fulfill its contracts.

South Carolina now only offers the Future Scholar 529 College Savings Plan, which provides tax breaks on contributions but does not require any state funding.

House Majority Leader Kenny Bingham, R-Lexington, is one of a handful of lawmakers with children or grandchildren in the pre-paid tuition program.

Lawmakers considered ending the program early several years ago, Bingham said, before ultimately deciding to add $20 million, close the program to new applicants and cap the rate of tuition increases schools can charge those in the program.

"While it may be an option," he said of canceling the outstanding prepayment contracts, "I don't think it's one that will gain traction.

"The decision was made to honor the commitment. ... It's not fair to go back and say, 'You're only going to get interest on your money.' "