GET program best option for education

If history is any indicator, hefty tuition rate increases to attend state colleges and universities loom on the horizon.

Gov. Chris Gregoire has proposed 7 percent annual increases in tuition in the 2009-11 budget she'll present to the state Legislature. For community colleges, the governor proposes 5 percent annual increases in tuition.

But there's a good chance the cost of higher education in this state could climb much higher. Consider this:

State legislators have approved double-digit increases in tuition several times since the early 1980s, usually to help plug holes in the state budget.

The last double-digit boost was in 2002, when the state budget deficit was $1.6 billion and tuition fees climbed a whopping 16 percent for undergraduates at state colleges and universities.

Heading into the 2009 legislative session, the gap between revenue and state spending could be as much as $6 billion, a mind-numbing budget shortfall that is bound to make tuition increases look desirable to legislators.

Just how desirable remains to be seen. But officials from the University of Washington and Washington State University are already lobbying legislators about the possibility of even higher tuition increases to help offset the budget cuts the universities will be asked to make.

And it's a lot easier to raise tuition than it is to raise taxes. Tuition is considered a fee, which can be adjusted by a simple majority vote of the Legislature. On the other hand, tax increases require a two-thirds majority, or, short of that, a public vote, as required by Tim Eyman's Initiative 960.

All this talk of tuition increases comes at a time when middle- and low-income families are finding it more and more difficult to save money for their children's college educations. Family savings have eroded with the plunge in the stock market. The option of taking out a second mortgage on a home to pay for college has slipped from sight for many homeowners living with depressed home values.

Another concern is the governor's proposal to cut student financial aid designed for students of families in need.

And then there's the shrinking job market. It's getting harder and harder for high school and college students to find work to help foot a share of their higher-education bill.

Despite the obstacles and costs, obtaining a college degree pays dividends for life.

For those who do have the financial wherewithal to save money for their child's college education, the state's Guaranteed Education Tuition program has never looked better.

GET is the state's prepaid tuition program allowed under Section 529 of the Internal Revenue Code. There are two types of state 529 programs where money can grow tax free and withdrawals are tax free when used for the intended purpose of paying for tuition, books, and room and board.

One is a college savings plan where you pick the investments and accept the risks of the market place.

The second is the GET program, where the money you invest keeps pace with tuition rate increases at the state's most expensive public university — the University of Washington.

Explained another way, 100 units of GET tuition credits equals the cost of one year of tuition and fees at UW. By comparison, it takes 75 GET units to attend for a year at The Evergreen State College.

GET units sold for $38 when the state Legislature approved the program 11 years ago. In the current enrollment period, which ends March 31, 2009, GET units are priced at $76. That's a pretty healthy return on investment.

The GET program has 93,000 accounts and $820 million invested, and has doled out $104 million for students attending 424 different higher-education institutions across the country.

The GET funds are invested conservatively in federal government bonds and United States and international equity funds. Even if the funds were to take a severe hit in the investment market, GET's tuition guarantee is backed by the full faith and credit of the state. In other words, if future tuition increases ever require the program to pay out more money than it has available, the state Legislature is required by state law to fund the shortfall.

It's never too early to start investing in the higher education future of today's youth. And the GET program (www.GET.wa.gov) has never been a more attractive option.