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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Knighty Tin who wrote (13841)	5/13/2004 3:10:15 PM
From: Wyätt Gwyön	Read Replies (2) of 110194

they mentioned tuition and fees, which have increased by a compounded 14% a year the past five years and I think that is a high rate. Texas used to have a program where you paid for tomorrow's tuition in today's dollars. you could literally buy 4 or 5 years of private or public tuition starting 18 years from now. but after a few years, they realized tuition was inflating at a much higher rate than the return they could expect on the monies received, so they nixed the program. fortunately this did not cancel earlier contracts, which are protected by the full faith and credit of the state of Texas (as opposed to riskier "revenue backed" bonds). so they were basically selling state credit for about 900 basis points below market value. i think the tuition at Texas state universities in particular is likely to rise faster than the national average, since the tuitions were extremely cheap. now the Texas 529 plans are just the same type of mutual funds all the other states sell, with no guarantee that tuition will be covered by the investment.

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