Q&A of the Day – Florida Prepaid refunds & the cost of Florida’s college education
Each day I’ll feature a listener question that’s been submitted by one of these methods.
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Today’s entry: Do I have to do anything to get the Florida Prepaid refund? You reported the refunds are due to the lower cost of college education. As far as I’m aware college costs are still rising...how is this possible? Don’t get me wrong. I think it’s great but don’t understand how it’s happening. Sounds too good to be true!
Bottom Line: Every now and then something that sounds too good to be true...isn’t. This is one of them. Earlier this week we learned Florida Prepaid reduced prices for participation by $1.3 billion statewide. $500 million is in the form of refunds with $800 million coming in the form of a near 5% reduction in monthly costs to participate going forward. Based on their analysis everyone who participated starting in 2008 overpaid. The net result is that 224,000 families will receive average refunds totaling $4,700. So, this is a really big deal and not just for those families but for all Floridians who will seek a college education in our state going forward. To answer your first question...
Of the 224,000 families receiving refunds, 95,000 are in South Florida. This includes 33,000 in Broward, 38,000 in Miami-Dade and 24,000 in Palm Beach County. You don’t have to do anything to obtain a refund if you’re eligible as of now. Those set to receive a refund will be contacted by the Florida Prepaid Board. If you want to see how your plan is impacted going forward the website is: myfloridaprepaid.com/lowprices
Addressing your second question... The reason for the refunds isn’t because the cost of tuition is dropping, but because the rate of increase has been much lower than plan projections going back to over a decade ago. Florida Prepaid accounts for estimated increase in tuition costs. Governor Scott made it a priority to reduce the rate of increases in college education during his time as governor effectively. The average cost of Florida tuition rates has averaged only 1% annually over the past decade, less than the rate of inflation and in fact the average 2019-2020 tuition rates reflected no price increases. This allowed for plans to become fully funded much quicker than estimated previously. There’s no downside to this story. It’s all good news.