SEATTLE — Thanks to a record number of new enrollments at the same time the stock market was bottoming out, Washington’s prepaid tuition program saw its assets reach a new high by the end of the fiscal year.
The assets of the Guaranteed Education Tuition program dropped to 2007 levels this past spring, but GET program director Betty Lochner said Wednesday a record number of people also joined the program then.
A combination of record enrollments and a stock market that is now recovering has helped the program’s assets improve as well, with its assets improving 20 percent in the last quarter of fiscal 2009 and the upward trend continuing in July, Lochner said.
“The timing was very good for the program,” she said, adding that two-thirds of the money invested in the GET program this past year come in during the last few weeks of the enrollment period.
Program assets dropped from $1.04 billion at the end of June 2008 to $769 million at the end of February 2009. The fund was back up to $1.07 billion by the end of June 2009.
Parents use the program, which began in 1998, to pre-pay for their children’s tuition by buying units at current prices. When college tuition goes up, the value of the units goes up as well. The state invests the money to cover the costs of future tuition.
One hundred units equals a year’s tuition at the state’s most expensive universities; it takes fewer to pay for the regional universities and community colleges.
Lochner said the program has come out of two economic downturns in good financial shape.
“It has ridden two bumps — 2002 and this one — and recovered very well and really demonstrated that this is a long-term program,” she said.
The state investment board set a conservative goal for the program’s investments — 6.89 percent average year increase — so Washington has been able to avoid some of the pitfalls other states have run into with their college savings programs.
Some states diversified their investments into the real estate market shortly before that investment bubble burst and hurt their prepaid tuition programs, Lochner said.
When the program’s board met Monday, they confirmed the $101 unit price, up from $76 in May to mirror tuition increases at the state’s four-year universities.
“It’s still a great deal and a great way to save, especially for younger children,” said Lochner, who saved for her two children’s college education through the program.
Her son graduated from Washington State University two years ago, without a single student loan. Her daughter is using her GET money to attend a private college, so she may need some loans, Lochner said.
The University of Washington and WSU both are increasing tuition about 13 percent this fall. The Legislature authorized up to 14 percent tuition increases at the state’s universities for the following school year.
The next enrollment period for the program is Sept. 15-March 15, although starting this fall, children from birth to 12 months can be enrolled in the program year-round.