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Spokane, Washington  Est. May 19, 1883

Lowry Proposes Tuition Plan Measure Would Set Up State-Run Savings Account For Education

Associated Press

Parents would be able to pay into a state-run savings account for their children’s college education under a proposal to be considered by the 1997 Legislature.

Lame-duck Gov. Mike Lowry’s office released his “prepaid tuition” proposal Wednesday. Similar proposals have been rejected twice in recent years.

The measure would allow parents to enter into a contract with the state under which parents could buy as much as four years’ worth of college tuition at today’s rates to be redeemed when the child is ready to attend college.

The prepaid tuition would be purchased in $30 units and managed by the state. The units, along with the interest they earn, could be used at any public or private four-year college, community college or technical school in or out of state, Lowry’s staff said.

The proposal carries an advantage for those who would use their accumulated savings and interest to attend a public university in Washington state. In that case, the state would cover any difference if the savings and interest fail to cover the tuition rate at the time.

In the case of private and out-of-state schools, there would be no such guarantee.

The savings program would carry some federal tax advantages, said John Klacik, an official with the state Higher Education Coordinating Board. Prepaid tuition would not be subject to a gift tax, and taxes on interest earnings would not be due until the money actually is used.

State budget officials say the program would cost the state very little. Start-up costs would come from a $1 million loan from the state’s general fund, they said.

Lowry and other backers are optimistic that lawmakers will approve the proposal now that several other states have adopted similar programs with great success.

The program would cover only tuition costs - not the cost of books, lodging, food and other expenses. Tuition at state institutions now ranges from $3,141 per academic year at the University of Washington down to $1,402 per year at a state community college.

Non-tuition costs at all state schools are about $8,600 a year per student.