Wednesday, September 11, 2013
SEATTLE — A new financial analysis of Washington's prepaid tuition program says the Guaranteed Education Tuition program has improved its financial stability and should be able to take cover all its obligations many years into the future.
The report from State Actuary Matt Smith says he expects the program will return to fully funded status by 2018. The report said it is now 94 percent funded.
"The program's on-going success depends on maintaining a delicate balance between risk and affordability," Smith wrote in the report he presented to the GET committee on Monday.
In addition, the GET committee decided to leave the unit purchase price at last year's rate.
In 2012, the actuary estimated the probability of insolvency for the program in the next 50 years at 1 percent. This year, that probability has improved to 0.1 percent. Smith warns in his analysis, however, that changes to the program could change the results.
Washington's prepaid tuition program is a state-run 529 college savings plan. Investors are guaranteed that no matter what happens to the stock market or state tuition, they will be able to pay for an academic year of tuition and mandatory fees at the state's most expensive public college or university with 100 units. Tuition and fees at less expensive schools cost fewer units and housing is extra.
GET program director Betty Lochner also was happy with the actuarial assessment that the program was now 94 percent funded, which means it is solvent enough to take care of 94 percent of its obligations, including accounts set up for the babies who won't be going to college for a long time.
The committee that sets the unit price for the Guaranteed Education Tuition program has decided to keep the price at $172 for a second year, which translates into $17,200 for a year of tuition and state mandated fees at the University of Washington or Washington State University.
The unit price will be in effect until the end of May 2014. This is the first time in the program's 16-year history that the unit price has not gone up, but it is also the first time in-state tuition has not gone up since the GET program opened.
Lochner said the GET board did not consider lowering the unit price, although the actuary report include a price drop among the possibilities that would still keep the program stable.
"It didn't come up because it wasn't an option that made sense," she said, noting that state tuition did not go down.
Two years ago, one tuition unit cost $117, which at $11,700 for 100 units would be slightly less than this year's tuition and fees at UW and WSU.
Lawmakers have debated changing or closing the GET program several times during the past few legislative sessions, but decided instead to leave the program as it was. They made a few decisions in 2013 that strengthened the GET program, including pulling back on a plan to allow colleges to charge different tuition for different majors.
Lochner said she expects more families will now buy GET units.
"There's no confusing messages going on like there were last year," she said. "We're going to have a great year because people know this program is here to stay.