A legislative committee is expected to recommend against allowing the University of Washington to charge different tuition rates for different programs.
Nearly two years ago, the Legislature gave state universities the authority to charge different tuition rates for different programs to in-state students — more for an engineering degree than an English degree, for example, because engineers are more expensive to train.
There’s just one problem: The state’s prepaid college-tuition program, which has 120,000 active accounts, pegs the payout to the highest tuition charged by a state institution to in-state undergraduates.
If the UW charged extra for an engineering degree, the payout on Guaranteed Education Tuition (GET) units would have to be pegged to that new, higher rate.
After spending months parsing the legal language of the GET program in an effort to resolve the dilemma, some lawmakers say they’ll recommend against allowing differential tuition for the UW.
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“Obviously, I’m a huge UW supporter, but it’s not going to work for the UW to have differential tuition because of its impact on GET,” said state Sen. Rodney Tom, D-Medina, who chairs a legislative advisory committee studying differential tuition.
Tom’s committee will meet Tuesday in Olympia to discuss GET. No Washington universities charge differential tuition rates now; the Legislature temporarily suspended the authority to charge differential tuition in 2012 because of concerns about GET.
GET is the second-largest prepaid-tuition program in the nation, both in number of accounts and value of assets.
But it’s underfunded by more than $600 million; its investments lost money during the recession even as universities raised tuition steeply to counter state budget cutbacks.
Washington state guarantees the value of GET credits. If there is a shortfall, the Legislature — and taxpayers — must make up the difference.
GET administrators expect the program to make up the shortfall in about 20 years; it is recovering the losses by raising the price of GET units and charging a fee to new purchasers to help make the program solvent.
“We believe we’ve come up with a way to appropriately price the GET program,” said state Treasurer James McIntire, a member of the program’s board.
State risk analysts have said differential tuition could make the program’s insolvency woes worse, either extending the time it would take to make it solvent or raising the risk that the state would have to prop it up with an infusion of cash.
At the same time, the UW doesn’t want to give up on differential tuition because it’s a way to grow programs that are expensive to run and are in high demand, such as engineering and business degrees, said Margaret Shepherd, director of state relations for the UW.
“We don’t feel it’s appropriate for GET to dictate tuition policy,” she said.
Tom said it might be cheaper for the state to give universities money to pay for expansion of high-demand programs. Shepherd said that’s an idea the UW would welcome.
The committee might decide to recommend that only the UW cannot charge differential tuition, Tom said. Other schools, which already charge less, might be allowed to increase the price of some degree programs.
So far, only the UW has expressed an interest in using differential tuition to grow high-demand programs.
The committee also will try to address GET’s long-term solvency during Tuesday’s meeting, but Tom said members haven’t come to a consensus.
Some members want to keep GET the way it is, in hopes the shortfall will be made up over time.
Others, including Rep. Chris Reykdal, D-Tumwater, would like to close the program and pay off all investors. Reykdal recently called GET a “ticking time bomb” because of underfunding.
Tom said he favors creating a second program, GET 2, that would have a payout pegged to the average cost of tuition at state colleges and universities. It would be separate from the old program.
But less-generous prepaid tuition programs are often not as popular as the programs they replace, said Betty Lochner, director of GET. Texas shut down an old tuition plan and replaced it with a less-generous alternative, and it’s getting only about 25 percent of the sales the first program received, she said.
The committee has a deadline of Jan. 14 — the first day of the legislative session — to make a recommendation to the Legislature on differential tuition.
Katherine Long: 206-464-2219 or firstname.lastname@example.org. On Twitter @katherinelong.