Greg Caldwell sits at the kitchen table with his 14 year old son, Luke. They pour over algebra homework. Greg and his wife Tracy want Luke and his sister Lydia to make good grades, so they can go to a good college. To pay for that college, Luke and Lydia’s granddad purchased PACT contracts for both of them. But Greg Caldwell says things changed last week when PACT sent letters to 48,000 participants explaining the fund was in trouble.
“My first reaction was what’s the backup plan? What are we going to do? We have a fourteen year old son who’ll be looking at college in four years. Four years isn’t a lot of time to make up the difference, this deficit we’re in.”
Some people have even less time. Trussville resident Michele McDonald has two daughters who attend the University of Alabama. Like many others, when McDonald opened her PACT accounts she assumed the money was guaranteed. In fact, only seven of the 18 states with pre-paid college tuition plans insure them. Alabama’s PACT plan is not insured and Michele McDonald is fighting mad.
(mcdonald) “This is the state’s mismanagement of a program that people have put their hard earned money in. That’s really how I feel.”
(fitch) “The PACT has been operating for 18 years extremely successful and put hundreds of students through hundreds of millions of dollars.”
Gregory Fitch is Executive Director for the Alabama Commission for Higher Education. He’s also on the PACT board, which he defends against accusations of mismanagement.
“They are able to withstand, for example, the tech bubble burst back in the nineties, and also the recession in 2001 and 2002.”
And, Fitch says, even today, with the struggling economy, PACT has enough money to reimburse any of the 48,000 participants if they wanted to withdraw from the program. But all those assurances don’t mean much to Michele McDonald. She wants to know what officials are going to do about it.
“They should be fighting tooth and nail to rectify this. And, to be able to answer people’s questions.”
But, PACT is not answering questions – at least not at this afternoon’s public meeting in Montgomery. Participants are only allowed to make 2 minute statements. Board members aren’t answering questions or making a statement of their own. Still, Gregory Fitch says the PACT board is working hard, behind the scenes, to resolve the crisis.
“The board members and the Treasurer have talked to several different people. They’ve gone to the governor’s office, worked with the Director of Finance. They’ve gone to legislators. They have gone to the presidents of the institutions and have talked to them about partnerships.”
At Samford University, Director of Financial Aid Lane Smith says current students can apply for loans, work study or grants. And, they can look for scholarships.
“The important thing is not to panic at this point.”
But, sitting at his kitchen table in Homewood, Greg Caldwell says it’s hard not to. And, he’s not happy with his back up plan.
“Wife gets a full time job. Hope the son gets a scholarship. You know there’s no where does it say that the parent has to furnish the children their education. You’d like to think that you can give that to your child something they don’t have to take of on their own.”