Imagine locking in university tuition rates years before a child applies for college.
State Assemblyman Mike Gatto introduced an idea he calls “California Covenants” that would allow families to lock in current rates for future attendance at universities in California.
"We’re encouraging people to save money for their kids' education, and we're giving them a little bit of a guarantee so they feel that the state is a partner with them in this endeavor," Gatto told 10News.
According to Gatto people would be able to purchase tuition certificates based on current rates.
Gatto’s website says, “The state will pool these funds and use its formidable extant investment infrastructure to invest the proceeds. All earnings on the proceeds will accrue tax-free. The state will guarantee tuition rates at the levels when a certificate or portion thereof was purchased, and the state's exposure will be capped at an annual rate of 7.5%.”
Gatto says the program would only be open to California residents but the funds could be used at any university that participates in the program.
“If a parent does the right thing and puts that money away for their child, they are going to get today's rates even if their kid goes to school in 20 years,” he said.
If the certificates were unused, they would be refundable.