Investing in the Future

Parents who can afford to do so buy savings bonds or make other investments when a baby is born so that the child can go to college, but the cost of a diploma keeps getting higher and higher--well beyond the means of many families. A bill sponsored by Assemblyman Tom Hayden (D-Santa Monica) would provide some insurance that tuition would be covered.

The measure (AB 278) would guarantee tuition at California’s public universities and colleges whatever the cost, provided that parents, grandparents or other benefactors buy into a state trust fund on behalf of a prospective student.

The California Assembly approved the tuition legislation last week. The Senate and Gov. George Deukmejian, an ardent supporter of the state’s public universities, should do likewise to guarantee more youngsters a chance at college--no matter how expensive it becomes.

A similar program is already in place in Michigan. Parents can deposit about $3,000 into a state trust fund when a child is born, and the state guarantees that the principal and interest will cover tuition at the University of Michigan or another state school 20 years from now. By then, tuition is expected to be $20,000 for four years. Parents can also buy into the program at a higher amount if their children are older. If trust funds do not grow fast enough to keep pace with rising college costs, the state will make up the difference.

Hayden’s bill would make the same guarantee, but would prevent California officials from making up any shortfall with money designated for scholarships or grants. If the fund outperformed projections, however, Hayden’s measure would use the excess interest to finance higher education for poor students. Both provisions would benefit youngsters who want to go to college.

If a student covered by the plan decided to attend an independent college or a school in another state, the parents would get a refund plus the interest on their original investment. If a youngster decided not to go to college, the parents would also get their money back.

Under existing student-loan programs, millions of students study now and pay later. They borrow, sometimes quite heavily, against future earnings. California’s prepaid-tuition bill would allow relatives, friends, corporations, churches, school districts--anybody or any organization--to pay a little today so that a student could study tomorrow, no matter the cost. That college insurance is certainly a worthy investment for the student and the state. AB 278 merits approval.