Editorial: State to offer second option for college savings
Published 1:30 am Tuesday, November 29, 2016
By The Herald Editorial Board
You don’t have to be a financial analyst to save for a child’s college education, but it wouldn’t hurt.
The state of Washington will lift some uncertainty — although it might raise other questions — when it rolls out a new 529 college savings plan next year. The state had hoped to have the plan in place by the end of this year but now says the new savings option won’t be ready until summer.
Because of the delay, those who had put away money in the state’s Guaranteed Education Tuition plan will have until Sept. 1 to pull what they had already invested without penalty. The state froze new enrollments and credit purchases in the GET plan in 2015 when the Legislature passed a groundbreaking tuition cut, reducing tuition and fees at the University of Washington and Washington State University by 5 percent for the 2015-16 school year and by another 10 percent for the current school year. Likewise tuition was cut by 20 percent over the last two years at the state’s regional schools and 5 percent for the 2015-16 year at community and technical colleges.
The tuition cuts have met with wide approval, even from college officials who were initially concerned the state wouldn’t fully reimburse higher education for the reduction in tuition revenue. Most universities report that the Legislature has made them whole after the tuition cuts, according to an August report by the Spokesman-Review.
But those tuition cuts also threatened to reduce the value of what parents had socked away in the GET program. Unlike a 529 plan, which invests contributions in mutual funds and gathers earnings tax-free, the state’s GET program essentially allowed parents and others to purchase tuition credits for later use at today’s prices.
That was a bargain during the last decade when tuition at the state’s two public research universities was increasing nearly 9 percent each year, with annual increases of 13 percent to 19 percent between 2009-10 and 2012-13 school years.
As part of the tuition cuts, the GET program was suspended and reviewed. Following that review, the Legislature voted to resume the GET program by July 1, but also agreed to add a more traditional 529 savings plan.
With that second option comes some decisions for those who are saving for their children’s educations and some consideration of what could come in the future.
While the Legislature cut tuition for the last two school years, fees will likely begin to increase again next school year, although at a more controlled rate. As part of the 2015 legislation, state colleges and universities can’t increase tuition costs faster than the rate of growth in the state’s average wage, although we’ll note that the voters’ approval of Initiative 1433 to increase the minimum wage will have its own effect on that average.
Those who expect to be paying for a college education in the future should consider either the GET program or the 529 program once it becomes available.
More on Get, 529 programs
To learn more about Washington state’s Guaranteed Education Tuition savings plan go to www.get.wa.gov.
For more about 529 plans and more about saving for college go to www.savingforcollege.com.
Correction: An earlier version of this editorial incorrectly stated the eligibility of GET credits for use outside of Washington state. They can be used at any college, university or technical school in the U.S. and in some colleges in other countries.
