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GET’s Response to Lowered Tuition

6 Comments

Last night the Washington State Legislature passed a budget and accompanying legislation to lower tuition at the state’s colleges and universities. This legislation is expected to be signed into law by the Governor today. This historic event will make college more affordable and accessible for more Washington families and current students. Below you will find responses to questions arising from this legislation in order to provide you with more information about the impacts to the GET program.

In the meantime, customers with account-specific questions can call the GET Contact Center at 800-955-2318 or email getinfo@wsac.wa.gov. As information becomes available, updates will be shared on the GET website.

What does lower tuition mean for students today?

  • This historic event will make college more affordable and accessible for more Washington families and current students.
  • More specifically, tuition will be reduced at the state’s two research institutions (UW & WSU) by five percent in the 2015-16 academic year and by another ten percent in the 2016-17 academic year for a total two year reduction of 15 percent. This is important because these are the two institutions for which GET’s payout value is based upon.
  • The legislation goes on to say that beginning in the 2017-18 academic year, tuition operating fees for resident undergraduates at community and technical colleges, may increase by no more than the state’s average annual growth rate in median hourly wage as determined by the Federal Bureau of Labor Statistics.

How will this impact my student if they are needing to use their units in the next two years?

  • In response to lower tuition, the legislation states that for the 2015-16 and 2016-17 academic years, the GET Committee shall set the payout value for units redeemed at the 2014-15 rate of $117.82 per unit.

What happens to the value of my account if I am not going to use my units in the next two years? Will I lose money?

  • Beginning in the 2017-18 academic year, the GET Committee is required to make the necessary program adjustments to ensure GET customer accounts are not decreased or diluted as a result of lower tuition. This may include a cash refund, additional units, a minimum payout value, or another solution that is deemed appropriate. Part of a feasibility study the program will be conducting during the next 18 months is to develop a resolution to this issue.

What is the GET Committee going to do about the future of the program?

  • By December 1, 2016, the legislation calls for the GET Committee to review and report to the legislative fiscal and higher education committees on the following:
    • The impact of reducing tuition on the funded status of GET and future unit prices;
    • The feasibility of establishing a traditional 529 college savings program;
    • Alternatives of linking GET to tuition and fees and linking GET to a cost of attendance metric;
    • And the current state penalty for nonqualified withdrawals
  • Details regarding next steps for the GET program will be discussed at the GET Committee meeting on Monday, July 13 from 2 to 4 p.m. at Senate Hearing Room 3 on the Capitol Campus in Olympia. As information becomes available, updates will be shared on the GET website.

Does the two year freeze in payout also mean a two year freeze in unit cost? Does this mean the current unit cost is now calibrated to a tuition cost 15% less than today?

  • These are good questions and issues the GET Committee will be addressing. The Committee will be meeting on Monday, July 13 to begin conversations around future unit pricing; however, a great deal of analysis will need to be done by the State Actuary and other financial experts before any future pricing formulas will be considered.

6 Comments

  1. Don Carlson

    I think there is a fundamental problem with freezing the payout at $117.82 for the next two years as it relates to students that ended up going to a private or out-of-state university, of which was always clear as an option with the WA GET implementation. With freezing the payout, all in-state students will get a 5% discount for the 2015-2016 year, then a 10% discount the following year. With keeping the payout fixed to $117.82, these students will essentially receive a 5% and 10% increase to their GET payout, since tuition will be lowered and covered by the state. Where as, if a student is attending a private or out-of-state school, their tuition most likely will go up. Understood that the purpose of WA GET was to cover rising in-state tuition over time, but it was never designed to account for a state funded lowering of tuition. WA GET (as a 529 plan) is still investing the vested funds and making money, but freezing payout over the next two years of which we are all already operating under an existing state mandated tuition freeze. If the tuition lower did not happen, most likely UW tuition would have been raised above $12k for the 2015-2016 school year. Although I do appreciate the state covering cost and lowering tuition, I see the WA GET (529 plan) as a separate issue and see only a downside for those students that decided to attend a private or out-of-state university.

    • get529plan

      HI Don,

      While the payout value is frozen, the GET Committee will continue to discuss necessary program adjustments to ensure GET customer accounts are not decreased or diluted as a result of changes to tuition. This may include a cash refund, additional units, a minimum payout value, or another solution that is deemed appropriate. This is part of a feasibility study the program will be conducting during the next 18 months is to develop a resolution to these issues. We will continue to keep customers updated throughout the summer as we receive more details.

  2. Melvin

    This is not a good investment at all. I am not sure why people still have not figure it out. You are paying for $172 per unit for a current payout of $117. Put your money into a regular 529 plan instead. At least you are not paying a premium.

  3. Peter

    Hi I realize this is something you want to analyze carefully but do understand that existing GET investors are anxious. Given the drop in tuition levels plus the limit on future tuition increases the gap between payout value and unit price is absurdly large and certainly the longer the gap exists the less likely that anyone will purchase new units. Also please be sure to give a refund option in lieu of a stock split option. I purchased 400 units and I do not want additional units and so please give customers a choice on that. Thank you.

    • get529plan

      Thank you for your input, Peter. Your comments will be brought to the discussion. While the feasibility study will be conducted over a long period of time, we hope to be able to provide some clarity after the GET Committee meets on July 13. We understand that waiting for information on this subject is difficult. We appreciate your patience.

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