One of our state’s model programs for the middle class and our youth is under attack for spurious reasons.
The Guaranteed Education Tuition program (GET), allows people to invest in credits today with a guarantee their savings will cover residential undergraduate tuition at Washington’s most expensive university, currently UW, when a child is ready to enroll.
Investor payments cover the cost of administration and the remainder of the funds are invested in the market through private industry investment firms. GET adjusts fees annually to keep it solvent. The GET website states 144,000 accounts have been opened and used by over 27,000 students nationwide.
With that as background, some legislators talk about closing it down. One of the reasons is the legislature is required to guarantee the difference between available GET funds and guaranteed tuition rates for students attending school during a biennium.
Reduced state funding has escalated tuition rates and increased GET’s funding requirements. The UW has announced tuition increases of 16 percent last year and 20 percent the year before, until tuition stands at $12,385 compared to $6,280 in 2007-8.
GET adjusts fee based on stock market performances, which had declined. Right now GET funds are below the level of insolvency for future years
The remedy to restore solvency has been approved and is in effect. An October 2011 report from a legislative advisory committee described four options for GET, including closing it down, changing payout calculations, creating a second GET with lower payouts (called GET2) and maintaining GET as it is. The committee agreed on an actuarial plan to keep GET open and raise the rates plus an adjustment fee to restore the deficit in thirty years.
Despite that report, despite implementing the recommendations and despite increased enrollments at increased fees, Sen Rodney Tom, the Chair of the Legislative Advisory Committee and now head of the Senate, told reporters at a January 2013 Associated Press Legislative Review he wants to shut down GET. He emphasized the current insolvency deficit of $631 million.
“We just don’t want to make that hole any bigger,” Tom said, according to Associated Press Reporter, Dona Gordon Blankinship.
His deficit is an imaginary hole.
It “is the estimated shortfall the program would face if every participant—including babies and kindergarten students—decided to go to college this year and use their GET savings to pay tuition,” said Blankinship.
Betty Lochner, Director of GET, told Blankinship nothing has changed about the solvency since the legislative 2011 report. She emphasized that the state actuary has repeatedly said there is no more than a one percent chance over the next fifty years that the fund could not pay students their tuition savings. Keeping GET open and charging the appropriate fees are the keys to remaining solvent and it won’t cost the state anything. In fact, closing it down would cost the legislature $1.7 billion in the future.
Something else is also driving Tom.
University Presidents want to charge differential rates for more popular programs such as health and engineering that lead to higher paying jobs, a nationwide trend called differential tuition. GET’s legal requirement to match the highest tuition rate is interpreted by the Attorney General’s office to require GET funding to match the highest rate assuming every student would enroll in that program. Tom apparently feels the pressure and blames GET.
“The GET is the 800-pound gorilla and the tail is wagging the dog,” Tom said.
A better proposal was offered in early January by the Washington’s public-university presidents. If the legislature would restore $225 million for higher education in the next biennium, they wouldn’t raise tuition for two years and adjust GET to allow differential tuition.
“Do I think it would be difficult to find $225 million? Yes. ” said Rep (D) Ross Hunter, chair of House Appropriations committee to the Seattle Times. “But can we continue to do this long-term destruction of the higher-ed system? No.”
GET should be protected.
“The more expensive tuition gets, the more important this program is,” Lochner told Blankinship. “That’s the piece I wish they would talk about.”
Tell legislators to get going and keep GET going.