Parents and others signing up for Maryland's prepaid tuition plan may be in for sticker shock, with the price of contracts this year going up as much as 30 percent for four years of college.

Officials with the Maryland Prepaid College Trust blame the price jump on tuition inflation.

"We're in line with what the other states have been doing," said Ed Crawford, chairman of the Maryland Higher Education Investment Board, which oversees the plan.

Crawford said the higher prices this year have nothing to do with last year's investment losses, which are largely responsible for the 4-year-old plan reporting its first actuarial deficit.

The plan allows people to pay college tuition and fees in advance through installments or a lump sum. The contract price is largely based on the child's age, expected investment returns and tuition charged by Maryland's public colleges.

This year, a lump-sum payment to cover four years of college for an infant jumps 30.5 percent to $25,022. For a ninth-grader, the payment is $25,638, a 20.2 percent increase. The two contracts are close in price because the long-term investment earnings for an infant will be needed to pay for the higher projected tuition cost.

The increases apply only to new contracts; previously sold contracts are not affected.

One reason for the big price jump was last spring's surprise tuition increase after contracts had been sold, Crawford said. The cost of that increase will be included in the price of new contracts over the next five years.

Also, new contracts project a 9.75 percent tuition boost for the 2003-2004 academic year, and a 6 percent annual increase thereafter. Last year's contracts were based on tuition rising 5 percent a year, plan officials said.

Enrollment in the prepaid plan began this month, after being postponed a few weeks while officials gauged where tuition is headed.

Rob Noble of Baltimore compared the prices of contracts from year to year and called the price increase "outrageous." The financial consultant said he is weighing whether to buy a contract for his 3-year-old daughter.

"You don't expect a 30 percent increase. Who does?" he said. "I've got to crunch the numbers and just compare. You have a lot of investment alternatives out there."

Joan Marshall, executive director of the prepaid college trust, said the plan is still a good deal. Tuition and fees for four years at a Maryland public college are expected to be $87,245 in 18 years, more than three times the cost of a contract for an infant today.

In addition to tuition inflation, plans in Maryland and other states also are dealing with investment losses as the stock market closes in on its third year of negative returns.

Many plans will be reporting actuarial deficits or substantial declines in surpluses for their past fiscal year, said Diana Cantor, head of Virginia's plan and chairwoman of the College Savings Plans Network. She said she knows of no state that doesn't intend to honor its contracts, although some are thinking of suspending new enrollment because of uncertainty over tuition inflation and reluctance to add to their plans' potential obligations.

Maryland's plan has a legislative guarantee, which means if it can't meet its obligations, the shortfall must be included in the governor's budget, which is subject to legislative approval.

Crawford said Maryland's program "fared better than other prepaid" plans.

At the end of its fiscal year on June 30, the plan had $237.8 million in assets, but an "actuarial" deficit of $30.5 million. That means, based on the projected value of assets and liabilities, the plan would be short $30.5 million in meeting future tuition obligations.

The year before, the plan had $156.5 million in assets and a $52,576 surplus.

Overall, the plan's portfolio of stocks, bonds and cash fell $6.4 million, or 7.8 percent, to $91.3 million in the fiscal year. The previous year the portfolio dropped $3.7 million, or 8.8 percent, to $68.5 million.

The plan hasn't sold securities to pay for tuition, so losses and gains are on paper.

Thomas Lowman, an actuary with Bolton Partners Inc. in Baltimore, said the deficit is "significant both in dollar terms and percentage" of assets and it's "unlikely to be fixed by investment performance."

Lowman suggests that the plan could use a cash infusion from the state. "It doesn't need it all at once; there is no cash problem," he said. But an infusion of cash that can be adjusted each year depending on the portfolio's performance can keep the plan from falling too far behind, he said.

Warren Deschenaux, the General Assembly's chief fiscal analyst, said that because of the adjustments made to the contracts' prices, the plan won't need extraordinary investment growth to eliminate the deficit, "but it would take growth."

The deficit, he said, is "always something to be concerned about, but we'll have to see how well the product sells, and the extent to which their revised assumptions are realized."

Deschenaux said that, because of the legislative guarantee and the potential cost to the state if the deficit doesn't go away, "we would certainly be prepared to suggest this is something that needs to be monitored and see how things develop."

Indeed, he said, if the plan's finances worsen, the state may have to question whether "it continues to be wise to offer the guarantee" on future contracts.

But Carol Kaiser, chief financial officer of the prepaid college trust, said the deficit is nothing to worry about at this point.

"We are unhappy we have a deficit. We would prefer a surplus," she said, but "we have enough cash to pay benefits until 2018."

Besides, Kaiser said, the plan has been conservative in its investment assumptions, expecting an annual return of 7.5 percent, while stocks over time have averaged 10 percent to 13 percent. If the market reverts to its long-term average, the deficit will disappear, she said.

The majority of the 14,400 accounts are for children who are now in middle school and won't be needing the money for about 10 years, Kaiser said. That gives the market plenty of time to recover, she said.