Washington state's Guaranteed Education Tuition (GET) program is a good way for families to save for college, but a bad deal for a state worried it won't be able to meet future tuition payments.
A LOOMING financial cloud over the successful Guaranteed Education Tuition program should spur the Legislature into action.
The program’s future solvency is too important, and precarious, for lawmakers to dawdle.
The fund is currently solvent. But its $1.4 billion in assets are invested in stocks, bonds and other investments that took a financial beating in recent years. A rapid rise in tuition, and promise of future hikes, exacerbates the problem.
If the program’s 120,000 families tried to cash in now, the state would be able to pay out only 86 percent of benefits, leaving a $255 million shortfall, according to a state study. The solution is not to expand GET to raise more cash. That would be a Ponzi scheme.
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Instead, lawmakers must turn to thoughtful bills in the House and Senate seeking to change the structure and terms of the program.
The sense of urgency lawmakers are attaching to this issue is conveyed in a bill sponsored by Senate Majority Leader Lisa Brown, D-Spokane, the Senate’s Republican leader Mike Hewitt, R-Walla Walla, and Paull Shin, D-Edmonds.
Brown and Hewitt are odd political bedfellows who get the importance of addressing a potentially huge problem. Their plan will have a public hearing Wednesday
In the House, a higher-education funding bill by Reps. Larry Seaquist and Reuven Carlyle ponders the creation of a second phase of the fund, or a GET II.
In having this discussion, Washington is following a trend set by other states forced to close their prepaid-tuition plans or change the terms to address rapidly rising tuition costs. In this new fiscally sobering era, Washington legislators are right to question whether state-backed tuition guarantees are feasible.
It is unlikely this state will return anytime soon to robust economic growth and moderate tuition increases. Changing the GET program before it lands in financial trouble makes sense.