The piggy bank is again open for business.
Actually better than a piggy bank, Washington state’s Guaranteed Education Tuition plans allow parents and family members to buy prepaid college tuition and fee credits for children. The program is again accepting new accounts and contributions from those with existing accounts after the Legislature suspended it two years ago.
The GET plans guarantee a college education at today’s prices by allowing tuition and fees to be paid in advance, years before students have even chosen a college or field of study. With the resumption of the plans, GET credits can be purchased for $113 a unit, with 100 units equal to the cost of a year’s resident undergraduate tuition and fees at the state’s highest-priced public university. Currently, that’s the University of Washington’s Tacoma campus.
Regardless of what college tuition might cost in the future, students with the GET program are already paid up in full. One benefit of the GET program is that the prepaid credits are assured, and are not subject to ups and downs in the stock market, as other investments can be. Units can be purchased in a lump sum, locking in the current rate, or over time.
The credits can be used for qualified higher education expenses — including room and board — at college, universities and technical schools, not just in the state, but nationwide and even abroad. In addition, after-tax money contributed to the accounts can grow tax-free and remains so as long as it’s withdrawn for qualified educational expenses.
Since the program started in 1998, more than 50,000 students have used more than $1 billion in GET benefits to pay for their educations.
Prior to the program’s suspension in 2015, the program was squeezed between market losses during the Great Recession and fast-rising tuition increases in the state and nation, leaving the program with an unfunded liability of $631 million in 2013. Although a shutdown of the program was considered, state lawmakers instead suspended the program in 2015 and allowed those who wanted to cash out of their accounts. But lawmakers also froze tuition in the state in 2013, then cut tuition in 2015, which allowed GET time to regroup, rebuild its reserves and reassess the cost of units for accounts.
The state also is preparing to offer a more traditional 529 investment program, which is akin to a 401(k), accounts for education expenses that give investors control over funds. The 529 accounts are expected to be available by early next year.
While GET is back in operation, it’s still facing scrutiny. Earlier this summer, a former associate director for the GET program, Michael Bennion, alleged that the program was overcharging investors for administrative fees. Bennion, according to a report in The Seattle Times, was let go from his position with the program and wrote state lawmakers about his allegations.
The charges by Bennion, who is also pursuing a whistle-blower complaint with the state Auditor’s Office, resulted in an ongoing investigation by the Auditor’s Office that could be completed by May.
The state audit of the program should answer whether the administrative fees charged for the program are fair and reasonable and provide additional transparency. But the current audit shouldn’t discourage parents and other family members from starting a GET account or adding to an existing account.
With U.S. students facing a total student loan debt of $1.4 trillion, investment in the GET program or a 529 account will mean less reliance on student loans for young adults who can start careers and families without that burden.
More about GET
For more information on the Guaranteed Tuition Education plans, go to www.GET.wa.gov.