State senate set to debate Washington's GET tuition program
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SEATTLE (AP) - Until a month ago, lawmakers studying Washington's prepaid tuition program were focused on getting rid of a state policy that threated its solvency.
After the leadership of the state Senate appeared to be shifting away from the Democrats and toward a mostly Republican coalition led by Democrat Sen. Rodney Tom, they turned 180 degrees and started talking instead about closing the Guaranteed Education Tuition program, one of the few ways the Legislature helps middle class families send their kids to college.
Tom, who is chair of the legislative GET advisory committee, has been talking about closing the GET program for years. The former chair of the Senate Higher Education Committee, who has said he has his own kids' college money in the program, appears to be using some of his new leadership power to promote that idea to a bigger audience.
Tom told journalists gathered at The Associated Press Legislative Preview last week that it was time for the state to get out of the prepaid tuition business, and this week the advisory committee is expected to distribute its report calling for closing the GET program to all future participants.
When asked Wednesday how popular was the idea of closing the GET program while honoring the promises made to all current investors, Tom said, "Nobody in Olympia likes to shut down a program."
He is haunted, however, by a projected program deficit of about $631 million, which 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 their tuition.
"We just don't want to make that hole any bigger," he said.
Tom adds, however, that he has more than just a problem with the deficit. He also worries about the way the GET program controls the legislature's actions when it comes to college tuition.
"The GET is the 800-pound gorilla and the tail is wagging the dog," he said.
Also in the GET advisory committee report is a recommendation that the Legislature change its differential tuition plans to only allow colleges to charge more for tuition for certain programs as long as their higher tuition does not go above the University of Washington's highest rate, Tom said.
GET Director Betty Lochner said Wednesday nothing has changed concerning the solvency of the GET program. The state actuary has said repeatedly that the chance of the GET program running out of money and not being able to meet its obligations to future college students is about 1 percent.
Closing the program or stopping new participants from joining GET will cost the state an estimated $1.67 billion over 11 years after the program runs out of cash in 2025 because no new money would be coming in, Lochner explained. Keeping it open won't cost the state a penny.
"I know there are strong sentiments about long-term liability for the GET program," Lochner acknowledged, but she also worries about what the state will do for the middle class parents who benefit most from the GET program.
Parents and grandparents who use Washington's program to save for college are guaranteed that they will have that money to pay for college when their kids graduate from high school.
"The more expensive tuition gets, the more important this program is," she added. "That's the piece I wish they would talk about."
Sen. Andy Hill, R-Redmond, who chairs the powerful Senate Ways and Means committee, said he supports eliminating the GET program.
"It's a job that our government doesn't need to do," said Hill, noting that similar - though less generous - savings programs are widely available to consumers in the private sector.
Rep. Gary Alexander, R-Olympia, said he opposes the advisory committee's recommendation to eliminate the program.
He said that families relying on GET to save for college would be left with fewer options to do so in its absence.
"It would have to be through basic financial aid or the other traditional funding sources that have been there in the past," he said.
This year's price for one Guaranteed Education Tuition unit is $172, which translates into $17,200 for a year of tuition and state mandated fees at the University of Washington or Washington State University. That doesn't include room and board.
Two years ago, one tuition unit cost $117, which at $11,700 for 100 units would be slightly less than this year's tuition at UW and WSU.
Tuition has nearly doubled at the state's six, four-year colleges and universities over the past five years. While financial aid for students from lower income families has increased, most middle class students are depending on student loans to make up the difference.
Tom said it's unclear exactly who the GET program helps.
"The best way to help the middle class is to have a great system for everyone," he added. To him, that means making it possible for kids to get good paying technology and engineering jobs after earning degrees from Washington universities.
After the leadership of the state Senate appeared to be shifting away from the Democrats and toward a mostly Republican coalition led by Democrat Sen. Rodney Tom, they turned 180 degrees and started talking instead about closing the Guaranteed Education Tuition program, one of the few ways the Legislature helps middle class families send their kids to college.
Tom, who is chair of the legislative GET advisory committee, has been talking about closing the GET program for years. The former chair of the Senate Higher Education Committee, who has said he has his own kids' college money in the program, appears to be using some of his new leadership power to promote that idea to a bigger audience.
Tom told journalists gathered at The Associated Press Legislative Preview last week that it was time for the state to get out of the prepaid tuition business, and this week the advisory committee is expected to distribute its report calling for closing the GET program to all future participants.
When asked Wednesday how popular was the idea of closing the GET program while honoring the promises made to all current investors, Tom said, "Nobody in Olympia likes to shut down a program."
He is haunted, however, by a projected program deficit of about $631 million, which 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 their tuition.
"We just don't want to make that hole any bigger," he said.
Tom adds, however, that he has more than just a problem with the deficit. He also worries about the way the GET program controls the legislature's actions when it comes to college tuition.
"The GET is the 800-pound gorilla and the tail is wagging the dog," he said.
Also in the GET advisory committee report is a recommendation that the Legislature change its differential tuition plans to only allow colleges to charge more for tuition for certain programs as long as their higher tuition does not go above the University of Washington's highest rate, Tom said.
GET Director Betty Lochner said Wednesday nothing has changed concerning the solvency of the GET program. The state actuary has said repeatedly that the chance of the GET program running out of money and not being able to meet its obligations to future college students is about 1 percent.
Closing the program or stopping new participants from joining GET will cost the state an estimated $1.67 billion over 11 years after the program runs out of cash in 2025 because no new money would be coming in, Lochner explained. Keeping it open won't cost the state a penny.
"I know there are strong sentiments about long-term liability for the GET program," Lochner acknowledged, but she also worries about what the state will do for the middle class parents who benefit most from the GET program.
Parents and grandparents who use Washington's program to save for college are guaranteed that they will have that money to pay for college when their kids graduate from high school.
"The more expensive tuition gets, the more important this program is," she added. "That's the piece I wish they would talk about."
Sen. Andy Hill, R-Redmond, who chairs the powerful Senate Ways and Means committee, said he supports eliminating the GET program.
"It's a job that our government doesn't need to do," said Hill, noting that similar - though less generous - savings programs are widely available to consumers in the private sector.
Rep. Gary Alexander, R-Olympia, said he opposes the advisory committee's recommendation to eliminate the program.
He said that families relying on GET to save for college would be left with fewer options to do so in its absence.
"It would have to be through basic financial aid or the other traditional funding sources that have been there in the past," he said.
This year's price for one Guaranteed Education Tuition unit is $172, which translates into $17,200 for a year of tuition and state mandated fees at the University of Washington or Washington State University. That doesn't include room and board.
Two years ago, one tuition unit cost $117, which at $11,700 for 100 units would be slightly less than this year's tuition at UW and WSU.
Tuition has nearly doubled at the state's six, four-year colleges and universities over the past five years. While financial aid for students from lower income families has increased, most middle class students are depending on student loans to make up the difference.
Tom said it's unclear exactly who the GET program helps.
"The best way to help the middle class is to have a great system for everyone," he added. To him, that means making it possible for kids to get good paying technology and engineering jobs after earning degrees from Washington universities.
Ross Hunter! The children's Guaranteed Tuition Trust fund saved their jobs, the government workers need to return the funding!
The larger problem is the legislature ransacked GET for over $300 million to balance their budget. Â They have not returned the funds. Â This is the larger problem with GET all around the country, many state government raid the money to balance their budget then turn it into a ponsi scam. Â
The government labor unions must return the funds back into GET so it can secure proper investments to cover the cost of the students tuition. Â Example, the ferry system refinanced their debts and saved $60-$70 million per year, that money need to go to pay back the children's Guaranteed Education Tuition trust fund. Â Those debt refinancing saving is not the labor unions money or the ferry systems money it belongs to the tax payers. Â
(Source for GET raid 2010 Siene Die, Â Democrat Ross Hunter Budget Committee, Â $60 million to $70 million saving per year at ferry system for debt refinancing was Ferry System financing committee meeting, both were on TVW)
The real 800-pound gorilla is the state's lack of education funding!  The state legislature is responsible for creating this fiasco. Current massive tuition increases are the result of the reduction in the state's education subsidy. When the state legislature reduced their education support they also changed tuition laws to allow the schools to increase tuition to make up the difference. The GET program guarantees 100 units will pay for one year of education at UW or WWU. If the state enacts laws to allow larger tuition increases then the GET program must cover the price increase. The GET program was established at a time when tuition was legislatively governed with low annual increases. The GET program was easily manageable until the legislature enacted laws allowing the annual tuition to increase dramatically from 5% to 16%.
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This reminds me of when WA State Lotto was voted in. Twenty percent of the profits would be given to support basic education. Slowly but surely the legislature changed the definition of basic education and reduced state funding by 20% directing the monies elsewhere. Ever wonder why this generation has to pay for drivers ed or why PE, bands and orchestras have disappeared? If there is one group to blame for Getsâ problems lay it at the feet of the state legislature. Â
From the moment I heard about it sounded to much like Bernard Madoff but all the people of this state heard was we will give you tuition at todays prices down the road.  Just a tip the government can't give you anything unless you don't pay taxes someone has to pay for it.  The government will not save you money in the long run they will only cost you money.
This program has already failed. If you look at the current costs for a "unit" today they have been increased to pay for program liabilities and to keep the program solvent. In other words the state is asking you to pay for those who got in early and are scheduled to "get" something for nothing. The GET program is toxic. It also has been a way of allowing massive increased tuition costs. Instead of dealing with the rising costs if tuition (similar to health care), poloticians could point to the GET program as a way of circumventing the problem. The program was just another magic carpet to sweep the dirt under.
They never should have been involved in the tuition business to begin with. It's one of the primary reasons tuition has skyrocketed. Just like when government got heavily involved in paying for medical care. Costs skyrocketed and now they're making it worse with Obamacare. If they kept out of these things and let the market work, costs would be reasonable.
GET director Betty Lochner explains that closing the program will cost the state $1.67 billion but keeping it open won't cost a penny. That's because you're kicking the can down the road just like everything else politicians do. At some point, you're going to have to make up the difference between the money made on interest and the rise in tuition. It's just like Social Security.Â
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But c'mon folks, did anybody think that a state run program that involves money would really work?
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 @I Can't Believe This! My brother and myself use GET. It actually is an amazing program, that really has helped my family afford higher education.Â
 @BeHappy  @I Can't Believe This! Glad it helped you but it is going to hurt others.  It just not sound economics if this was a good idea the private schools would have been all over it.  But they know they can't take payment at today prices now for a service to be offered later at a higher price.  It would be like buying a house now that doesn't exist but in 10-18 years they would have to build and give you that house regardless of house prices have changed.
 @FlyingHeavies The restricted mandated increases create short falls that are covered by the tax payer. Private schools can't do that because they can't look to the tax payer to cover short falls.  Pointing out that the government is better at handling money is funny when our government is overspending a private business does that they go out of business.
 @APenny4MyThoughts  @BeHappy  @I Can't Believe This! I have to disagree.  When GET was established there were low annual tuition increases mandated by WA State law.  Private schools would never approve restrictions on their tuition increases! Â
I had no idea GET was a ponzi scheme. Why is it the government is able to pull these off but the average joe goes to jail?
So rich people who have the cash to bet tuition's will rise in the future (good bet) can send their kids to school someday at the old rate and the state makes up the difference from the the interest they receive from investment of the early cash, and the state doesn't get caught until 2025. Perfect, who really get screwed on this deal? Hint they live from paycheck to paycheck.
Make professors teach more classes per semester and eliminate some positions. Quit building a new building for every minor special interest group. Right there a lot of money can be saved.
 @Hagar That's too logical. Olympia cannot comprehend such methods of thinking.
Yes. Get out of subsidizing the tuition, and start looking at what is making tuition rise at a rate FAR FAR in excess of other measures of inflation.  You cannot possibly resolve the differential between the rise of tuition cost (8.5% nationally, but 16-21% in WA.  http://www.smartmoney.com/borrow/student-loans/5-states-where-college-tuition-is-soaring-1344892974773/), and the return on investment for anything with a sane risk profile. Even Bernie Madoff would shake his head at this one.
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As a parent who has quite a bit of GET credits I agree 100% with what you are saying. The reason we take part in the GET program is because tuition rates rise at a considerably higher percentage than any reasonable investment would. So if they want to terminate the GET program then that needs to rein in the out of control state tuition increases. Personally I would like to see caps on tuition rate increases to more than 5% annually and I would like to see higher entry requirements along with more stringent requirements for allowing post grade students to continue to pursue their advanced degrees. These adjustments would help keep the student body at a reasonable size and keep professional students from consuming resources that new students should be leveraging.