Pre-paid college tuition program under-performing and under investigation
A program that aims to offset college education costs is under-performing and under investigation. The Illinois Student Assistance Commission (ISAC) sells contracts to parents so they can lock in today's tuition prices at state schools for their kids in the future. But the program might not offer the security it promises.
The commission hasn't been able to keep up with big bumps up in college tuition prices. So in trying to raise more money, it moved nearly half its assets from traditional stocks and bonds to real estate, private equity and hedge funds.
State Rep. Jim Durkin (R-Countryside) wants the state auditor to look into what he thinks is risky investment of public funds.
He said, "There is a bit of a confidence problem with the integrity of the fund. And I think I can speak collectively that we do not want this to fail."
About 70,000 Illinois students have contracts to help them pay for college. If the fund runs out of cash, the losses aren't backed by the government.
John Samuels is communications officer for ISAC. He said the state doesn't guarantee to make-up for any losses, but it does have a "moral obligation" to support the plan.
On top of the investment controversy, the commission has sold only about a third of the tuition contracts it had hoped to this year.