Class Sues Florida College Savings Plan

     (CN) – Parents in Florida who entrusted their children’s educational future to a state-authorized college savings plan claim in court that they were misled about how the funds could be used to pay for out-of-state schools.
     The Florida Prepaid College Board manages the Stanley G. Tate Florida Prepaid College Program and the Florida 539 Savings Plan. Both are tax-favored 529 college savings plans authorized by the Internal Revenue Service.
     The program was established in the late 1980s with the support of the Florida Legislature, and since at least 2005, it has been the largest program of its kind in the nation, according to the board’s website.
     But Susan Snyder, the lead plaintiff in a class action filed in Leon County, Fla. on September 17 says the program is not all it is cracked up to be.
     “Many … parents purchased these plans as a hedge against increased tuition costs and based on the promise that the full cost of an in-state school would be fully paid and the value of the full cost to send their kids to an in-state Florida state college would be transferred to a non-Florida state college,” the complaint says.
     “Unfortunately, after their children were accepted and decided to attend these non-Florida state schools, the parents learned that they would be receiving substantially less than the actual cost to attend an in-state college,” it continues.
     “In layman’s terms, when the parents bought the Florida Prepaid College Plan, they bought a plan that supposedly insulated the purchaser in paying for college in the future,” Snyder’s attorney, Edward Zespersky, told Courthouse News.
     “What we found was that students going to non-state schools were being given about $1600 a semester, when Florida state students were given about $3000,” he said.
     The discrepancy is because of “a 2007 change to Florida Statutes which permits university Boards of Trustees to raise tuition and mask the tuition increases as what was called a ‘Tuition Differential,'” the complaint says.
     According to Zespersky, Florida Prepaid’s position has been that the new costs are technically fees, and therefore not included in the calculus for determining the amount to pay an out-of-state college under the Florida Prepaid Plain.
     
     Snyder claims that despite this, the Florida Prepaid College Board continued to promote its services by saying money in the plans could be applied to any “regionally-accredited, not-for-profit, degree-granting, out-of-state community college, college or university.”
     The board also promised: “What you pay now is guaranteed, no matter how much college costs increase in the future!” the complaint says.
     “In essence, people thought they were buying something of value and it ended up being something quite different,” said Zespersky.
     The class seeks declaratory and monetary relief for parents whose damages exceed $15,000.
     “We want to bring some justice to people trying to pay for their kids’ school, and got a shock,” Zespersky said.
     Florida Prepaid College Board spokesperson, Shannon Colavecchio, told Courthouse News, “We are not aware of any lawsuit at this time.”

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