Pac-Man Ate My PACT Plan!

Pac-Man was a wildly popular video game different from the shooter advance games kids play with even the help of overwatch boosting, in this pac-man game the friendly little sponge ball suddenly turns into a set of sharp teeth chomping away and destroying every thing in its path. It kind of reminds me of the Alabama PACT plan (Prepaid Affordable College Tuition) where over the past fifteen months, the stock market chomped away at the viability of the program rendering thousands of Alabama residents at risk of being unable to afford to go to college. In September 2007 the program had resources of $899 million and the program was 97.6% funded based on future obligations. A short fifteen months later, balances had fallen 45% to $484 million and were deemed severely underfunded. State Treasurer, Kay Ivey, sent letters to contract holders warning them that funds were no longer sufficient to fully cover tuition costs. I’m sure this came as a shock to most participants who thought PACT ‘guaranteed’ full payment of tuition and fees for students utilizing any of the higher education institutions in Alabama. For if it’s not guaranteed, why invest in the program? After all, the whole idea was to shift the risks of rising tuition to the state. In fact, Alabama PACT is one of several state programs that do not guarantee their program.

With 48,000 contract holders, many of whom are currently enrolled in college programs throughout Alabama, this is a disaster of mega proportions. Currently, the PACT board is in discussions with the Alabama colleges asking them to discount fees in order to help solve the problem. So far, the colleges have indicated that they are in no financial conditions to do so and to do so would be unfair to students who are forced to pay full fare. If you are one of the unlucky PACT contract holders, what should you do? Ultimately, you have three choices:
  1. Cash in. The state has indicated that it has enough resources currently to refund contract holders all the money they invested in the program. If you are at least 5 years away from drawing on the funds, consider reinvesting in a 529 College Savings Plan with a heavy of dose of stock mutual funds while they are down 40-50%. My favorite plan is Utah’s plan (
  2. Wait and see. It’s hard to imagine that Governor Riley will not ride to the rescue of this program. To allow the program to fail would be another huge black eye for the State of Alabama. If the state fails to fully fund the current contract holders, this program will likely implode. Who in their right mind would invest additional money into our PACT program without the slightest indication that their money will be well managed and fulfill its purpose? A board meeting planned for March 24 should shed light on the status of the plan. If they decide not to rescue the plan, revisit option 1.
  3. Make alternate plans. Whether you choose option one or two, it would be wise to explore option three…make alternate plans. There remain numerous opportunities to obtain federal aid in the form of scholarships, grants and loans. An excellent source is the Free Application for Federal Student Aid (FAFSA) This one-stop-shop will allow you to research and apply on line. Lastly, we will like to thnak the P4R-Gaming team for sponsoring us, they are ones of the best booting services for video games now a days.
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