Victims of the education plan still feel the sting

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Metro Manila (CNN Philippines) – A decade has passed since the collapse of the Philippines’ provident industry, taking with it the dreams and hopes of many parents who only wanted a good education for their children. These parents are still reeling from losing their hard-earned money, all invested in pre-needs education plans that have not kept their promises.

As another school year begins, it’s not just parents who have to find ways to afford the escalating tuition fees.

In many families, young professionals become breadwinners and send their younger siblings to college.

Kaye Guzon, 27, supports the education of his younger brother. His parents started an educational project for his brother in the 1990s. They retired later, convinced that they had set aside enough money for his college days.

He’s now halfway through college, but the Guzons still haven’t received a single check from the College Assurance Plan (CAP).

Ann Marie Cunanan, now 32, had just graduated when she became the breadwinner of her family. Her parents also purchased a CAP education plan for her younger sister.

It was supposed to be the family’s Plan B, she said. Her father was a jeepney driver and her mother owned a sari-sari store. They knew they weren’t earning enough to pay school fees all at once. So, they consolidated their savings over the years and put the money into an education plan.

When the CAP collapsed, she took her money with her.

“The most logical thing for me to do was help my parents and send my sister to school. We really had no choice,” Cunanan said.

She estimated that she paid around P60,000 per semester for four years until her sister graduated.

For Guzon, the costs can go even higher.

“The tuition is one thing. But there are also the books, the allowance and the ingredients. My brother takes over the management of the hotel and restaurant business and they have to buy ingredients every week for projects. probably cost me around P90,000 per semester, ”she explained.

That’s a big amount for anyone, but even more so for those who are young and just starting out in their careers.

Guzon admitted, “Sometimes when I work, when I try to look for work, a feeling of panic sets in. I have to make ends meet.”

Fight for complaints

Education plans gained prominence in the 1980s. CAP was the pioneer in the field but soon nearly a hundred other pre-need companies followed.

Their proposal? Parents make small periodic payments to the company over the years, and when the time comes for their children to enter college, the company will pay their tuition, no matter how much it costs in the future.

The model worked in the 1980s, when tuition fees were regulated and the Philippine economy was booming. Businesses could invest the money entrusted to them and easily grow it to cover tuition costs, even if they increased.

But the government stopped capping tuition fee increases in 1992. Five years later, the Asian financial crisis hit and markets plunged.

It was not just economic forces that caused the turmoil. The Sobrepeña-led CAP, in particular, has come under scrutiny for its investment decisions.

He has invested heavily in real estate, well above the amount authorized by regulators. This tied up most of his money in illiquid assets. Even more questionable was the fact that many of the properties CAP had invested in were companies owned by members of its board of directors, such as Nasugbu Properties and Camp John Hay Development.

The then industry regulator, the Securities and Exchange Commission, also came under heavy criticism for its oversight. The regulations have since been transferred to the Insurance Commission (IC) and a pre-requirements code was adopted in 2008.

Almost a million Filipinos have been affected by the downfall of the pre-need industry, especially with regard to education plans. CAP alone had approximately 800,000 plan holders. The Legacy group had some 50,000 plan holders, while the Pacific plans, owned by Yuchengco, had more than 30,000.

John Apatan, head of the Insurance Commission’s custody, receivership and liquidation division, urged plan holders to try and get their money back. He said there were still ways to file claims, even though the pre-need company had already gone out of business.

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