The state’s prepaid college-tuition plan could open again to new investors by this fall, and a new savings plan could open by January.
Washington’s prepaid tuition plan has been frozen for nearly two years — closed to new investors and lump-sum investments.
But if a state committee votes to revive it this week, it may soon come back to life.
On Thursday, the committee that oversees the Guaranteed Education Tuition plan (GET), will meet in Olympia to discuss reopening the fund, picking a new price for GET units, and offering a kind of stock split for those who stay in the program.
The committee is also negotiating with a fund-management company to open a new kind of college plan, a 529 savings plan similar to a Roth IRA, by January.
Education Lab is a Seattle Times project that spotlights promising approaches to persistent challenges in public education. It is produced in partnership with the Solutions Journalism Network and is funded by a grant from the Bill & Melinda Gates Foundation.
GET is sort of like an insurance plan — a conservative investment that guarantees its customers that 100 units will pay for a year’s worth of tuition and fees at the state’s most expensive public university, no matter how fast tuition rises. It’s been a popular investment for the parents of young children, especially those who don’t want to have to worry about stock-market fluctuations.
But because the state froze tuition in 2013 and cut it in 2015, the payout value of 100 units of GET is currently higher than the cost of one year at the state’s most expensive university. It’s been frozen at $117 per unit for several years now — or $11,700 for 100 units. (A year of tuition and fees at the state’s most expensive university this year was $10,171. Next year’s tuition has not yet been set.)
And because the stock market has been on a steady rise since the end of the Great Recession, GET is overfunded by about 135 percent. The fund contains about $615 million more than it needs to pay its projected obligations — obligations that are based on the cost of the most expensive four-year public university.
The GET committee may decide Thursday to do something it is calling “rebasing,” which would work somewhat like a stock split. Under rebasing, the value of each GET unit would drop, but investors would get more units. The value of each account would remain the same. One hundred GET units would once again line up with the cost of a year’s worth of tuition and fees at the state’s most expensive public four-year university.
Also on the agenda is the new 529 savings plan. Last year, a state request for proposals (RFP) for a management company failed when no qualified bids came in. This month, a second RFP was successful when the global investments firm BNY Mellon met the state’s criteria.
GET staffers will now begin negotiating with the firm. If that effort is successful, the 529 plan could launch in January.
Finally, a bill proposed by state Sen. Mark Mullet, D-Issaquah, that would have given GET investors a bonus for transferring their money into the new 529 plan didn’t make it out of committee in the Legislature this year. Mullet had touted the plan as a win for investors because it would give them some of the fund’s surplus.
The GET committee meets at 2 p.m. Thursday in Olympia, and the meeting is expected to be broadcast live on TVW.