What a difference a tuition freeze and a surging stock market make.
Washington’s embattled prepaid college-tuition plan — once threatened with a shutdown by state lawmakers who worried it would go belly-up and cost the state millions of dollars — is now fully solvent, State Actuary Matt Smith announced Thursday.
The Guaranteed Education Tuition plan, or GET, has a funded status of 106 percent, meaning it can meet all of its financial obligations for current enrollees, and then some.
It’s the first time since the beginning of the recession in 2008 that the program’s funded status has been at or above 100 percent. GET’s assets are now valued at $2.93 billion — up $371 million from last year.
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A two-year freeze on state tuition rates, combined with a robust improvement in the stock market, helped GET recover, Smith told the GET committee.
Program director Betty Lochner said the program has surpassed its 2021 projected funding status seven years earlier than expected. The program also earned an A rating for solvency from Smith.
GET ran into trouble when the value of stocks it owned plunged during the recession, and when tuition rose many times faster than GET’s managers had anticipated.
At one point in 2012, GET’s unfunded liability — the gap between the value of all units sold and the market value of all of its assets — was $631 million. In 2013, a legislative committee studying the program recommended that the program be shut down to new contributions and eventually closed when the last of the account holders had been paid off.
But in 2013, even as the market was surging, the state Legislature froze tuition for two years, giving the GET fund a chance to recover. Last year, the unfunded liability had shrunk to $160 million, and Smith predicted that GET would be fully funded by 2018.
On Thursday, the GET committee set the purchase price for new GET units at $172, unchanged from the previous two years. The enrollment period for new purchases opens in November.
The current payout value for the upcoming academic year is $117.82 per unit. The payout value is tied to the cost of one year of tuition and fees at the state’s most expensive public university.
The program, in its 17th year, lets families buy tuition units at a set price and cash in those units when their children go to college.
One hundred units is guaranteed to be worth a year of tuition at the most expensive school.
In the past year, GET added more than 5,500 new accounts and sold more than 741,000 units.