Start-up nearing for college tuition pre-payment plan

CARSON CITY -- If you have a newborn and an extra $6,300, you might consider pre-paying your baby's college tuition.

Or you could sign up to pay $55 to $60 a month to cover the costs for an education at UNLV or the University of Nevada, Reno.

That price is a bargain, says state Treasurer Bob Seale who estimates it will cost $22,000 in 18 years to attend either of Nevada's universities. Currently it costs $8,280 to earn the 128 credits to graduate. And that doesn't include books, which are covered in the pre-paid plan. The current cost of textbooks average $400 to $600 every two semesters.

At the request of Seale and Gov. Bob Miller, the 1997 Legislature authorized $1.2 million to start this savings plan -- the 16th state in the nation to enact one.

"There appears to be a pent-up demand," said Seale, who added there already have been 200 inquiries about the program without any publicity. The cost of college is rising and this is one way to keep ahead of the game.

Seale says these costs are only preliminary and the board of trustees of the college trust fund will meet Sept. 2 in Las Vegas to approve the final numbers. The board also intends to launch a publicity campaign to interest people in signing up for the plan.

Private firms will be encouraged to allow workers to have money deducted directly from their paychecks and funneled into the trust fund, which would be administered by the treasurer's office.

State government workers will be able to approve the automatic payroll deduction.

"We're targeting 3,000 contracts the first year," Seale said.

Enrollment in the plan starts Oct. 1 and will end Nov. 15. There will be only one enrollment period a year during the same time frame.

The payment schedule has been worked out by actuaries and the costs are higher as the child grows older.

For instance, a lump sum of $7,100 to $7,200 would be required for a 6-year-old who wants to go on to one of Nevada's universities. The monthly payment plan would be $75-$85 a month.

There's also a five-year payment plan. For a newborn it would be $125 to $130 a month for 60 months. For a 6-year-old, the payments would be $140-$150 a month.

The five-year payment plan must be started by the time the child is in the seventh grade.

Investing in a community college education is considerably less. For a new baby, it would be a lump sum payment of $1,950 to $2,050. For a 6-year-old, the cost would be $2,100 to $2,200.

As the child gets older, the price goes up. Monthly payments for a new baby would be $19 to $25 and for a 6-year-old $25-$30 for tuition at Nevada's community colleges.

The board of trustees has decided to use a money manager to invest the money collected. The law allows investments in stocks, bonds, real estate and foreign opportunities. But Seale said the foreign investments would not be large and he added, "I would not invest in Japanese equities now."

If the child does not go on to the community college or university, the parent or whoever paid the tab, will get the money returned with interest. Seale said the board of trustees will determine what rate of interest to pay.

The $1.2 million authorized by the Legislature must be repaid from the interest earned on investments.

The board consists of chairwoman Laura Fitzpatrick who is Clark County treasurer; former Assemblyman Larry Spitler of Las Vegas; state Budget Director Perry Comeaux; University Chancellor Richard Jarvis; and Seale.

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