Washington state suspends popular GET college savings program
Wed., Aug. 19, 2015
OLYMPIA – The state will suspend sales of prepaid college tuition units – called the GET program – for as long as two years while the group overseeing them wrestles with the downside of what many Washington lawmakers saw as a major legislative success: lower tuition at state colleges.
The Guaranteed Education Tuition committee also signaled Tuesday the state would likely waive fees and penalties for investors who demand a refund of units purchased in recent years that are worth less now than when they were bought. That’s happening because the Legislature froze tuition for two years in 2013 and last month cut tuition between 5 percent and 20 percent for different schools over the next two years.
Such a decision can’t come soon enough for Carrie Petz, a Vancouver mother who said she bought $75,000 worth of GET units four years ago for her 11-year-old son. They are now worth little more than $50,000. By the time he’s ready for college in four years, they may not have regained their original value, she said.
Her situation is not unique, GET staff told the committee. There may be thousands of families like Petz’s that bought GET units in recent years and whose children will start college before their units are worth the initial investment. The staff recommended the committee approve refunds without monetary penalties for anyone in that situation, but members said they wanted two weeks to study some of the impacts.
The GET program allows a person to buy tuition for a future student at current rates. The program sells units, with 100 units being equal to the cost of one year of tuition and fees for a resident undergraduate student at the University of Washington, the most expensive public university in the state. The units can be purchased in a lump sum or on a payment plan and can be redeemed years later for the value of the current UW tuition at any college in the state, and most outside of Washington.
Since it began in 1997, the program has been popular as tuition rose faster than inflation. A GET unit went gradually from $42 in 2001-02 to $76 in 2008-09, and then began some rapid jumps so that the most recent price was $172 per unit.
In the recession, tuition rose much faster than inflation because the Legislature reduced state aid to its colleges and universities, and allowed the institutions to hike tuition to cover some of the difference. It went up so quickly that starting in 2011, the program charged an “amortization fee” to new GET buyers because of fears that the program wouldn’t have enough money to redeem all units in the future.
In 2013, however, under a push by Senate Republicans, the Legislature froze tuition for two years. This year, they went even further and pushed through tuition cuts of 5 percent for all state colleges and universities this fall, to be followed by 10 percent cuts at UW and Washington State University, and 15 percent at Eastern, Western and Central Washington universities in the fall of 2016.
That removed fears the program wouldn’t cover future redemptions. On Tuesday, the board voted to refund the amortization fees paid by new buyers since 2011.
“We thought we were doing the right thing,” Beth Berendt, a committee member, said of the fee. “It was an effort to calm the fears of legislators, many of whom are no longer in office. In hindsight, we should have just stayed the course.”
The committee then agreed to delay sales of new GET units for as long as two years, while the state colleges and the Legislature work with the new tuition reductions. New units bought since July 1 will be refunded. The panel also will study the feasibility of opening a different kind of savings program for college education that could be guaranteed by the state.
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