Parents GET more bang for their college buckState’s prepaid tuition plan tops $1 billion BY PAM STEVENS | EDITOR It’s never too early to start planning for your child’s future and parents concerned about rising tuition costs are pouring money into Washington’s prepaid college tuition plan.
Families opened a record number of savings accounts last year and state officials are predicting another booming year as the program kicked off its tenth enrollment year on Sept. 15.
“Parents who don’t want to risk their kids’ college money in a volatile stock market appreciate the peace of mind that comes with a state guarantee,” said Betty Lochner, director of Washington’s Guaranteed Education Tuition Program or GET.
The GET program allows families to prepay for their children’s college tuition today and the state guarantees that the value of their accounts will keep pace with rising tuition.
In the past 15 years, undergraduate tuition has climbed an average of seven percent annually at the University of Washington and Washington State University, outpacing inflation and family incomes. If tuition continues to increase at this rate, parents with a newborn today can expect to pay more than $100,000 for four years of college tuition at these schools.
One of the key goals of the GET program is to encourage parents to start saving today while their children are still young.
“A little cash goes a long way if you start when your children are in diapers,” Lochner said.
Families who put money into the GET program in its first year, 1998, have seen an 80 percent return on their investment. That’s better than most stocks or other investments.
Ben and Heather McCullough, who live in Lake Stevens, starting putting money into the GET fund as soon their twin daughters, Natalie and Claire received their Social Security numbers.
“My parents had helped me out with college and it was a big help. I decided early on that I wanted to help out my daughters too,” Ben said. “I’m a planning type of person and that’s why I’m rushing to buy the girl’s tuition now.”
Kevin and Christy Kosche, also of Lake Stevens decided to make a one-time contribution to the fund for their daughter Emma when she was just one.
“I wanted my daughter’s education to be assured and not worry about it,” Kevin said. “I looked at different ways and the GET program was already set-up and guaranteed by the State.”
The GET program works on a unit system, with 100 GET units equal to one year of resident undergraduate tuition and state-required fees at the most expensive Washington public university, either the University of Washington or Washington State University. The state guarantees that a family that buys one year of college tuition today, or 100 GET units, will have one year of college tuition when it’s time for college, no matter how much tuition increases in the future.
“I have the lump sum plan. I buy a large chunk twice a year right before they set a new price point,” McCullough said. “My plan is to pay 500 credits which would be enough for five years of college.”
The Kosches too chose a lump sum plan but they poured $12,000 in all at once giving their daughter 300 units towards her college education.
“I wanted to lock in the one piece that seems to be the most variable in the equation,” Kosche said about the rising cost of tuition.
Families can use their accounts at nearly any public or private college in the country and some schools around the world. The value of the account is the same, whether a child attends a local community college or a private or out-of-state college.
Because GET is a state 529 plan, the money that families put into their accounts will grow tax-free and all withdrawals will be tax-free when used for tuition, room and board, books or other qualified higher education expenses.
If a child with a GET account doesn’t go to college or receives a scholarship, the owner of the account can transfer it to another family member or request a refund.
Anyone parents, grandparents, or friends can open a GET account. The only requirement is that either the student or account owner be a Washington resident at the time the account is opened.
“Each month my parents are also buying a unit for the girls,” McCullough said.
More than 70,000 children are already enrolled in the GET program, which last year was the fastest-growing prepaid tuition plan in the country based on new accounts and new assets. In addition, more than 8,100 students have used their accounts to attend colleges in 48 states and five foreign countries.
GET’s new enrollment year runs through March 31, 2008. To learn more about the GET program, go online at www.get.wa.gov or call 1-800-955-2318 (toll-free).