The Washington state Guaranteed Education Tuition (GET) program opened its annual enrollment period November 1 with a new per unit price of $172.
We’ve written here, here and here about historical rate increases and the underfunded program but the state continues to assure investors that there is a very low likelihood of the program failing to meet future obligations.
In order to meet guarantees to keep up with tuition increases, the current unit price includes a large premium over the 2012-13 school year payout value of $117.82. This year’s purchase price of $172 means a 46% premium over today’s cost.
“This ‘premium’ over current tuition assures stability for the program,” GET material indicates. “It will take about four or five years to realize a gain on your investment, but GET’s increase in value is steady and guaranteed over the years.”
Because of this premium, in order to get a worthwhile return on participation in the program, it’s beneficial to invest only while future college students are young. The GET program material is even making it more clear that savings after the elementary school years won’t be as valuable as contributions made early in life.
GET material says: “If you begin saving with GET before your kids or grandkids reach middle school (the earlier the better), you will save substantially on future tuition costs and benefit from the security of the guarantee.”
State actuaries estimate that tuition increases at Washington state universities (which the value of GET units are based on – even if the student redeems GET units to fund costs at a private or out-of-state college) are expected to continue 10% annual increases over the next few years.
Annual Washington state colleges tuition increase
Based on tuition and state-mandated fees at the most expensive Washington public university, generally either the University of Washington or Washington State University.
The rapid rise in costs for GET units and the underfunded nature of the program have led to some speculation that a GET version 2.0 may be unveiled. It would have a different pricing structure and could have its coverage reduced.
Do you own GET units?
Do you expect the value of GET units to keep up with their rising costs?
What concerns do you have about funding college costs?
By Gary Brooks, CFP® — Brooks, Hughes & Jones, Partners in Wealth Management – Tacoma, WA