Richmond, VA – Yesterday, the Virginia General Assembly passed legislation introduced by Delegates Steve Landes and Tim Hugo to make it easier for middle class students and families to afford college by lowering the price of Prepaid 529 plans.
“With so many students graduating with crippling debt, lowering the price of prepaid 529 plans is a step in the right direction to make college more affordable and attainable for thousands of Virginia families,” said Delegate Hugo. “I will continue to work to increase access to higher education programs and make them more affordable.”
Currently, families pay a 10 percent “pricing reserve” on top of the semester contract prices. The pricing reserve has been used to mitigate risk to the fund, but a recent JLARC study found that Virginia’s Prepaid 529 program is 138% funded and actuarially sound. This means the fund is more than capable of meeting all its benefit commitments.
As a result of JLARC’s study, Delegates Steve Landes and Tim Hugo introduced HB 1611 which would cap the pricing reserve at 5% so long as the program remains more than 105 percent funded. With a well funded status, JLARC recommended to the General Assembly that it focus on measures to improve program affordability. JLARC estimates that reducing the reserve from 10% to 5% would lower the current cost of an 8-semester contract by more than $3,000.
“This is a commonsense measure to lower the cost of a college education, and I urge the Governor to promptly sign it into law” Delegate Hugo stated.