A state fund set up to help families cut the cost of college tuition by paying in advance has been found financially unsound and will close later this year, affecting more than 1,500 investors.
The Colorado Prepaid Tuition fund is telling investors to pull out their money by Nov. 1. The 1,500 households enrolled have invested about $24 million.
Prepaid tuition funds allow investors to pay for future college tuition costs at present-day rates. State-based plans typically guarantee a rate of return that varies with changes in tuition. As the tuition rate increases year to year, so does the rate of return.
CollegeInvest, which provides multiple college savings plans, is a not-for-profit division of the Colorado Department of Higher Education. CEO Angela Baier said there are 320,000 enrollees in other 529 plans that allow people to set aside money for college and get tax breaks, the Denver Post reported Thursday.