The Washington Guaranteed Education Tuition (GET) program has decided to keep the 2013-2014 unit payout rate the same as the rate for the 2012-2013 school year ($117.82 per unit).
The lack of an increase correlates with the tuition freeze at Washington State University for the 2013-2014 academic year.
Relief from tuition increases is welcome, but not exactly for all GET participants. If your child attends an out-of-state college or a private university, in most cases, the tuition of those schools did rise. Since GET unit values are only tied to Washington state colleges, you’re unit value will have fallen behind the pace of tuition growth at other schools.
Also, since purchasers of GET units pay a large premium over this year’s tuition and need to hold the units for several years before they essentially “break even,” a year without gain in the unit value postpones the breakeven period.
The purchase price for new units will be announced mid-September. If the purchase price rises above the $172 per unit of the past year – while the payout value has not increased – this is another factor that could extend the breakeven period. GET units cannot be redeemed within two years of purchase and the GET literature suggests that “it will take four to five years before you realize a financial gain on your account.”
For early savers who purchase GET units while their children are infants, the GET program has been a very good investment over the past decade.
It’s hard to say whether this tuition freeze at some Washington state colleges will be a one-year hiatus before returning to increases in the teens as we’ve experienced over the past four years.
According to the College Board®, the average 2012-2013 tuition increase was 4.2% at private colleges and 4.8% at public universities. Over the past 10 years, the inflation rate in U.S. college tuition as a whole has averaged around 6% per year.
Longer term, investment in GET units has been a much better proposition averaging 10% growth.
The College Board also published a list of the 5-year tuition increases at “flagship” universities around the country. These flagship colleges are the largest or most prominent public institutions in each state.
This survey showed that the 5-year increase between academic year 2007-2008 and academic year 2012-2013 in tuition at University of Washington was 77% in 2012 dollars. This was the second highest growth rate behind only University of Arizona at 81.1%. The average large state university in this survey had inflation adjusted tuition increases of 27.4% in 2012 dollars during this academic period.
~ Brooks, Hughes & Jones — Partners in Wealth Management — Tacoma, WA