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State may pick up tab from college tuition plan

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SPRINGFIELD — Illinois may have to take responsibility for another huge debt. College Illinois! administrators and lawmakers are talking about ways in which the state can rescue the badly underfunded pre-paid college tuition program.

By Benjamin Yount

SPRINGFIELD — Illinois may have to take responsibility for another huge debt. College Illinois! administrators and lawmakers are talking about ways in which the state can rescue the badly underfunded pre-paid college tuition program.

A report released Monday shows College Illinois! with a March 2011 deficit topping $559 million, an increase of $28 million since June 2010. College Illinois! officials began their review in April, but they did not deliver the long overdue report until this week.

State Rep. Jim Durkin, R-Western Springs, said Illinois may have an obligation to the families who believe their investments into College Illinois! would guarantee a college education for their children.

"I'm not going to use the word bailout," Durkin said. "But I believe there is going to have to be a discussion as to what the state of Illinois' responsibility is to this program."

Parents and grandparents purchased future tuition at current prices, which College Illinois! was expected to invest so that amount would increase to correspond with anticipated tuition hikes the year the child actually attended a given state university.

College Illinois! was marketed in such a way, Durkin said, that many families believed the state would back the program if College Illinois! ever ran short. When the pre-paid tuition began experiencing financial problems, those families learned that there was no state guarantee.

Durkin leads a task force investigating the Illinois Student Assistance Commission, or ISAC, which operates College Illinois!.

"It's clear that some changes are going to have to be made, but I have confidence in the current leadership" at College Illinois!, Durkin added.

On Tuesday, ISAC named Kent Custer to be its new chief investment officer. Custer, who worked the past four years at the Illinois Teacher's Retirement System, will manage investment portfolios for College Illinois!.

But Custer's first job may be to manage College Illinois!'s image.

"We have to fix the crisis of confidence," Durkin said.

State Rep. Sandy Cole, R-Grayslake, said she does not believe Illinois should or can take responsibility for this debt.

"I don't see how the General Assembly can help out ISAC," Cole said. "College Illinois! is not a part of state government."

Created by state law, ISAC is a state commission with some of its members appointed by Gov. Pat Quinn. But College Illinois! investments are not protected like other state investments, which are overseen by the Illinois Treasurer's office.

Cole said the misconception that College Illinois! is backed by the "full faith and credit" of the state lead to some of the problems.

"College Illinois! mislead people into thinking there was a guarantee," Cole said. "There simply is not."

But before College Illinois! can inspire a new sense of faith, the program has to start accepting new members.

John Samuels, a spokesman for ISAC, said the commission stopped selling College Illinois! packages to new families on Sept. 30.

He said "it would be unfair" to accept new members before managers know what to expect.

Closing down College Illinois! only makes the financial problems worse. ISAC's new report assumes 2,500 families will buy a contract, essentially a semester's worth of tuition, this year, and every year going forward. But only 1,800 families have purchased new semesters, and no new semesters of tuition will be sold for the rest of 2011.

Ginnie Flynn, a Chicago mother who bought two semesters through College Illinois! last year for her oldest daughter, said she can't blame families for shying away.

"Who would want to buy into this program when there are all of these questions?" Flynn asked.

Flynn said she "does not believe we'll get what we paid for," and doesn't believe in a possible state guarantee either.

"I'm not even sure that the state could make that kind of an offer," Flynn said.

Her hope, she said, is that lawmakers can find a middle ground with College Illinois! and universities in the state that will make the future cost of a college education more affordable.

But Flynn said she's not putting all of her eggs in any one basket anytime soon.

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