Posts tagged: Guaranteed Educational Tuition Program
Washington state has to change its popular prepaid college tuition program or risk financial problems down the road, a legislative panel was told Wednesday.
The Guaranteed Educational Tuition Program, known to most parents simply as GET, could face insolvency in the long-run because the fund’s return on investments isn’t keeping pace with rising tuition costs.
“I don’t think we have a serious problem at this time,” Senate Majority Leader Lisa Brown, D-Spokane, said. “We are trying to avoid creating some kind of unfunded liability problem in the future.”
Since 1998, nearly 120,000 families have opened GET accounts, buying future tuition for Washington colleges at current prices. Under the program, participants buy a GET unit with a price calculated on the current cost of tuition, so that 100 units equals one year of tuition at the University of Washington. They can “cash” the units at some future date and the state guarantees they will be worth the comparable value at that point. In other words, the state guarantees that 100 units bought in 2011 for $11,700 will be worth a year’s tuition at UW in 2021 or 2041, regardless of how much tuition rises or what school the student attends.
Money used to purchase GET credits go into a fund managed by the state investment board, which averages a return of about 8 percent. But some years, college tuition has gone up faster than that.
A state actuarial report released earlier this year says that under the some scenarios, that fund could run short of money, and the state would be on the hook for the difference. . .