The program director of Washington state’s prepaid college tuition plan told The Olympian’s editorial board last April that this summer’s annual actuarial report would show the plan is 100 percent fully funded. She was right – it’s actually 106 percent funded -- and that’s good news for the families of college-bound kids, as well as state taxpayers.
A little over one year ago, the Guaranteed Education Tuition program was underfunded by several hundred million dollars. The program is guaranteed by the state, so taxpayers would have been on the hook. That caused some Republican state legislators to question the programs’ solvency and, at one point, proposed to terminate it.
That would have been a huge loss. The program provides middle-income families with a relatively painless long-term method of saving for their children’s higher education.
The GET program ran into trouble during the height of the Great Recession partly because the value of its investments fell, along with the rest of the stock market, and provided lower than anticipated returns.
But the Legislature contributed to GET’s woes as well. In its rush to cut general fund spending, lawmakers shifted the burden of higher education costs from the state to students and their families. The Legislature cut funding for public colleges and universities and allowed them to fill the gap with double-digit tuition increases.
That double-whammy of funding cuts and tuition hikes sent our state’s average tuition toward the highest in the nation, and state support for higher education down to the bottom. No state wants to be there, especially not a state such as Washington whose technology and aerospace industries need highly educated workers.
The GET program’s fortunes have reversed in the past year. The stock market has rebounded and in the last two legislative sessions, lawmakers have not made further cuts to higher education funding. That has allowed colleges and universities to keep tuition rates flat.
Here’s how the program works: families purchase GET units at today’s price, and 100 units will pay for a year’s tuition (or other higher education expenses) at one of the state’s two largest public schools some time in the future. It’s a red-hot deal.
Those who purchased units for around $42 per unit when the program first started in 1998 are redeeming them today for the going tuition rate of $117 per unit. That’s nearly a 300 percent return.
Despite the hysterics surrounding the GET program, Program Director Betty Lochner never doubted its solvency would return. And neither did the families of future higher education students. Amid all the foofaraw, 10,000 new families were signing up each year, and those already in the program were buying additional units.
That speaks volumes about Washingtonians desire for higher education. We hope legislators are listening.