Yesterday (March 31, 2015), the Washington State Senate announced its proposed budget for the 2015-17 biennium and in its plan the Senate calls for reducing tuition at Washington’s institutions of higher education.
It is important that our customers know that we have been working closely with the State Actuary, legislators and their staff and our agency policy team for several months now to discuss the possibility of zero tuition growth or even the possibility of lower tuition as proposed by the Senate budget.
Our first and foremost priority is the best interests of our customers. We want to ensure that our customers maintain the current dollar value of their accounts and that they have the opportunity for their investment to continue to grow over time. With that said, we also need to ensure that any changes we make to the program are fiscally responsible and keep the funded status or solvency of the program strong and viable.
In the case of the proposed Senate budget, we are currently looking at what the impacts would be if we lowered our price and provided additional units to our customers based on a number of potential formulas.
Since legislation and the budgets are still undergoing discussions and negotiations at this point, it is really difficult to provide specifics. Our goal over the next several weeks is to work with the legislature, the GET Committee and the State Actuary to develop financially sound models to evaluate so that the best possible solution can be implemented in a timely manner once a budget proposal and tuition setting policy is agreed upon by our state leaders.
In both of the higher education budget scenarios that have been proposed, we realize our business model may need to be adjusted; however, our mission of making college more affordable and accessible for Washington families does not change and we are fully committed to that goal. As more information and details become available we will be sure to share them with you.
get529wa.wordpress.com 
I have a GET account set up for my daughter who just turned 16. We have a total of just over 300 units. When originally setting up the account, I assumed that she would be attending college here in state, probably at a public school. However, as she has gotten older, it has become increasingly evident that she would prefer to go to school out of state, probably at a smaller private school.
While the state legislature is set to lower tuition – which would effectively lower the GET payout value – I think it is safe to say that private colleges will not be following suit. Add to this the fact that GET does not allow rollovers, and we would seem to be in a no-win solution. While issuing more units to make for the loss in payout value might seem to be an equitable compromise solution – assuming enough units were really issued to make up for the loss – I can’t help but wonder if issuing additional units would really be consistent with the GET model, as it could conceivably act to further dilute the value of individual units.
If GET should find this to be the case, I have what I think is a fair compromise: allow account owners the opportunity to initiate a direct rollover of their assets to another custodian without incurring state and IRS fees and penalties. This would allow GET to protect the integrity of the 100 unit = 1 year tuition model and allow account owners like our family who are going to see their child or children attend school out of state protect the equity they have built up in their GET accounts over the years.
Thank you.
Steve Henderson
Bremerton, WA 98312
Hi Steve, thank you for your comment and for contacting us to discuss further. As we mentioned, we are making sure that your concerns are heard as we work through these discussions with legislators and our GET Committee. Stay tuned for updates.
Your news release stated in part “…impacts would be if we lowered our price and provided additional units to our customers based on a number of potential formulas…” can you give me an example of a potential impact with the current proposed budget? When I started purchasing units some years ago they were $76/unit, today that unit is $172. That is a 126% increase for ONE unit. At what price do parents decide that they can no longer afford to fund their child(ren’s) college fund?
Hi Teresa. As we address the possibility of tuition decreasing in our state, we are also discussing how we can ensure that current account owners would not lose any of the current dollar value in their accounts. Since the unit payout price is tied directly to tuition, that means the payout value per unit would adjust accordingly. Therefore, in order to ensure the value of our customers’ accounts would not be diluted, the idea is to add additional units to their accounts to offset any decreases in the unit payout value. We cannot discuss specific formulas at this point, as we must wait until final legislation is passed and we know the specific outcomes.
Hello GETadmin – I am probably the only one with this thought on this forum so please correct me if I’m wrong. Help me understand where the funds for “issuing additional units to participants’ accounts to ensure the value of customers’ accounts would not be diluted” will come from? In fact, does GET have the obligation to “ensure the value of our customers’ accounts is not diluted”? I believe it does not, it was never advertized as such nor was it promised. GET is an investment, and as with all investments, it is expected to fluctuate in value (ie, cost of WA state’s college tuition), and could potentially lose value as well. It is true that all of us parents who have purchased GET credits over the years have only seen the value of our credits go up (we are used to it going up), but that is a consequence of the underlying tuition rates going up. Now, if the tuition rates are expected to stay flat or come down, I think it is unfair for us as parents to cry foul and ask the state to make up for the lose value. In effect, such parents are asking that the state hike tuition rates even if it is not necessary! Such an ask is unfair. And for GET to give in to these demands and issue additional credits to ensure that the value of customers’ credits is not diluted is unfair as well. Where will funds for such an action come from? From future beneficiaries’ contributions (as evidenced in the ridiculous 182% increase in the cost of a GET credit over the past 10 years)? From parents who expect to join the GET program in the future? From higher taxes in another part of the economy? Giving in to these demands is bad fiscal policy.
We saved with WA GET, but are in an unfortunate situation that our kid chose to attend college out of state. So, while UW tuition stays flat in the last two years (the units worth also stay the same), the tuition for her for out-of-state college continues to rise. Now, if the UW tuition actually goes down, does that mean that her GET units worth will go down as well? That does not work out well for us. We can’t even take it out earlier (you can only use 125 units per year). So, we are kind of stuck here, and have to figure out how to cover the unexpected shortfall. May as well leave it in cash savings. Let this be a warning for those who consider to save through the WA GET in the future. This thing carries more risks than it sort of implies.
I guess we’re in the same boat as TE Hui and Steve Henderson……just beginning to be able to use our investment at a private college/out-of-state and wondering what that will look like if the units are de-valued. Looking forward to the solution. I will stay-tuned!
We have our eldest daughter maxed out (500 units) and were looking at maxing out the other this year. What I’m wondering is if you add units, then would accounts go beyond 500? Would we be able to transfer some units from one account to another? Will we understand how this all works before this year’s deadline in June?
Issuing additional units to offset a tuition decrease isn’t really a solution unless you also (1) increase the maximum number of units allowable beyond the current cap of 500, and (2) increase the number of units that can be withdrawn in any given year. Should we assume this is also being considered? It is — and has been for the last few years — difficult to claim that GET remains a viable college savings vehicle for anyone, whether in-state resident or not. The delta between the price and the value of GET units is likely irrecoverable, and the absence of a rollover feature essentially traps investors with a static or declining asset. The first (and ethical) thing GET should do is to stop selling new units. Then consider converting the entire plan to a 529 (if that is even possible) — but only after taking whatever steps are necessary to keep current investors whole at prevailing unit values, at least. Thank you.
Our student started college in Fall 2014, at a private out-of-state university that gave him a generous merit scholarship. We used 100 units of GET at the currently frozen $11,782 unit payout value. Each year, however, their tuition will go up; for Fall 2015 our annual share of the expense will increase by $1700. We were already caught in the UW tuition freeze that has held the per unit payout value at a stagnant point, as tuition & fees continue to rise at most colleges across the country. GET was presented as a way to invest for college education that could be used at any college with a financial aid program. If the unit payout rate remains frozen (or worse, declines) for another year, we will have the exact same 100 unit value of $117.82 per unit x 100 = $11,782 while we have an increase in cost for tuition & fees, and room & board for each year moving forward. That means that our investment has zero gains from this point forward. We would be better off having it in a savings account, or a series of CD’s with timeframes related to our student’s 5-year Engineering degree program. To freeze the value of those funds as we are in the first year of college expenditure, is unfair. If you drop the value of the units, but we can’t access next year’s units until the new rate is set, how is that realistic? Should we all rush in and request payout of the additional 25 units we haven’t used for the current school year, just to secure the current frozen unit value? We did not invest in the GET program to have the value frozen or to decline in value. When will you determine what will happen with a further freeze or decline in unit payout value? As it stands, frozen tuition means that we might as well have this money under our mattress for the rest of our student’s education .
I hear your concerns, but am at a loss as to why you would consider “flat” or “declining” tuition change year-over-year a bad thing. GET was never meant to keep pace with the most expensive or even average public university’s tuition “across the country”, it was always meant to keep pace with the most expensive public university in “WA state”. This means that 100 GET credits will equal 1 year at WA state’s most expensive public college – regardless of what that tuition rate is. While WA state’s public university tuition has a reasonable correlation to other public universities across the country, I think it is unreasonable to expect GET to increase the payout value even when WA state tuition remains flat (or declines) – that was never the intention nor was it promised. In fact, what really is unfair (to new entrants to the GET program and to those who intend to use their credits in the future) is for the GET program to issue additional credits to existing participants (as GETAdmin suggests in a response to another question above) whose children opt to attend an out-of-state university and want a higher payout. Mathematically (and financially), I don’t see how that is a sound solution. Issuing additional credits only amounts to taking from one base of participants (A-those who opt for in-state college now, or B-those who will use their credits in future years are their children come to college age) and giving to another base (those who opt for out-of-state college now). The value of 100 credits = 1 year at WA state tuition rates should be held regardless of whether tuition at WA state colleges goes up or down, that is the only fair option. The simple truth is that it is an investment, and may lose value, regardless of how bitter that sounds.
You do realize they are lowering tuition while creating/raising “fees”, which are not covered by GET, to make up the difference.
When they start the “FREE” tuition in this state and you lose ALL your money, your kids may still get to go to college – you will just have to pay the new “fees” too. Where do you think the “extra” money is coming from? Even though the state Constitution requires the state to fully fund basic education, they still do not. They never applied the LOTTO money either. Another taxpayer fraud program.
However, your kids may not even GET the chance to enroll in a state college. The state universities do not like to take indigenous students because the out of state / foreign students have to pay more cash.
Any remaining GET funds you have (if any) will not go very far in a college which will actually enroll your kids.
If you still think this is a good deal, I would really like to sell you a bridge.
Rob McKenna would not allow them to do this while he was in office because it violated the intent of what they sold to us. If this continues, I will empty my account and pay the taxes, at least before they change that part of the contract too.
If it looks like a skunk and smells like a skunk, it’s probably a skunk.
GET charges a huge sales premium (of sorts) when people buy the units, so unlike most at-risk investments the program starts out ahead and the customers start out way behind on each dollar invested. If you bought units last year you paid $172 for units that are worth $125. The premium includes a reserve that is meant to protect the program from downward movement in its investments value, which is not tied to the price of tuition. It also includes a fee that is meant to restore the value of the program from losses suffered in the great recession. GET invests the money somewhere (AAA bonds or whatever) for collections that are in excess of payouts for tuition. In today’s economy we should assume that GET has continued to gain value on its investments even though the tuition level has not risen and probably will not rise, or may fall. Meanwhile nobody is going to put any new money into the program and suffer an immediate $172 to $125 loss without any tuition increases on the horizon. I’m sure the program admins are computing new assumptions of how much money is accumulating in the program versus the price of tuition and trying to figure out what to do with it. It’s not clear whether the problem is (1) they need to restructure GET in order to attract new money to make up for a shortfall, or (2) the ongoing increases in the program’s investment value will cause an excess of funds versus tuition outlays and they don’t know what to do with the extra. After all, GET has no outlet for those funds other than to pay for its customers’ tuition. The state can’t spend it on roads. The fairest option, in my opinion, would be to “repay” past investors for the sales premiums that they paid, and eliminate or reduce the sales premiums on future units.
Upon further reading, the answer was (2). The program has too much money and they don’t know what to do with the excess. From elsewhere on the site: “The report indicated that the program is now 106% funded meaning it could cover all of its current and future obligations.”
My family and I have purchased lump sum units in the past, and now are in the middle of a multi-year custom monthly plan. The $172/unit plus interest fee units we have already purchased will now be devalued, and I am curious as to the method of curing for this investment loss. With the future additional units still left to purchase, will those under current custom monthly plans have the future per unit price reduced commensurate with the new budget plan?
Thank you.
Tuition reduction is really an unexpected event if it happens, and I am happy for students who will be benefited from it. I am grateful that GET is working with the State to explore reasonable solutions for those who may be adversely affected.
The state appears to be trying to lower tuition on higher education while raising fees (which GET does not cover) on that same education.
Really? Do they expect to GET away with this? I worked like a dog for years to purchase 1000 GET units for my 2 kids and I am very concerned this investment in their futures will soon be worthless. I sure would like to hear what Rob McKenna thinks about this. While WA Attorney General, he disallowed a whole slew of unfair proposed changes to keep this program equitable for the owners of these accounts, and keep the terms the same as when these accounts were originally sold.
If the idea is that current account owners would not lose any of the current dollar value in their accounts and in order to ensure the value of accounts would not be diluted, the idea is to add additional units to their accounts to offset any decreases in the unit payout value, what would you do in cases where someone has already contributed the maximum credits of 500. There cannot be more than 500 credits so this will lead to a direct dilution for people who pulled all stops to save for college by buying all available credits. Can you provide some insights into how those customers will be dealt with? Thanks
Hi Prashant. The discussions we are having include how to address this scenario for account holders who already have the maximum number of units. Possible options include increasing the maximum number of units or refunding the difference that is above the maximum. We will be sure to provide any updates on these discussions as soon as more information is available. We likely won’t have additional details until the end of the legislative session (including any additional special sessions), when the state budget is finalized.
Regarding the possibility mentioned above of refunding the “difference above the maximum,” surely you mean at prevailing unit values before any tuition cut? Also, please consider that any such refund from the GET plan (to the extent that there are gains) would almost certainly be a taxable event — essentially, reneging on the basic promise of this being a tax free college savings vehicle. GET, you have a big problem here, and we are all watching.
I agree with previous comments. I have purchased 500 units and am now living out of state. The payout value has not increased for 2 years and now it looks like the value could drop. I agree that we should be able to “roll over” our accounts into a different 529 program at the latest value of $117.00. I don’t see the program as viable following a 30% cut in tuition costs.
The possibility of a significant decrease in tuition was not obvious to us as a possibility of our investment for GET funds. We frankly missed this detail. In the examples the WA GET website provided when we considered purchasing GET units, the example shown on prior web graphs was a 7 to 8% annual increase in tuition, not a potential 25% cut or tuition freeze.
At this point, is there any compelling reason to buy more credits when the future value may actually be undercut? Does it even make any sense to keep contributing? My kids are not as close to college as the other folks who have posted, but I cannot yet figure a good reason to continue to contribute…
I hope GET continues to work closely with the legislature to find other ways of making tuition affordable to more folks without changing the underlying assumptions of this program….the program is a helpful one ….until underlying assumptions of tuition continuing to increase changes.
Sincerely,
David
Hi David. We appreciate your questions and concerns. Be assured that we continue to work with the legislature to ensure they are fully aware of the impacts that these potential changes in tuition policy. We will continue to advocate for the best interests of our customers, and will keep you updated as we get new details. As mentioned in an earlier comment, we will likely not have any new details until the session ends and a state budget is finalized.
My son is currently in college, though he chose to go out of state. I have counted on the funds in his GET account for paying his out of state tuition. I would be very upset if the amount that I had set aside and need to pay for his school tuition declined in value, as tuition will NOT be decreasing at the school he is attending. If I could roll this account into another states 529 plan I would do that ASAP. I bought 400 units way back in 1999. I do NOT want more units. I do want the current value of my account to stay where it is! If the legislature does decrease tuition, then the value of GET accounts should either not decrease, or we should be allowed to roll them over at the current rate into another states 529 plan.
Looking at Stewart’s (and other’s) comments, it seems like account holders can be roughly broken down into two classes: those who will be using their units for in-state public colleges and those who will be using them for schools out of state. Parents of children planning to attend school in state would seem to be minimally affected and, if additional units are actually distributed, could conceivably even come out ahead. However, those of us who will be sending kids out of state would be hit really hard.
I continue to believe that the most realistic (and ethical) solution would be to simply allow tax- and penalty-free rollovers to other 529 plans. Pretty much all other 529 plans that I have checked on allow this; GET seems to be in the minority in not allowing these rollovers. As I stated earlier, this would allow account owners to protect their gains without incurring potentially devastating losses in the form of IRS penalties and taxes as well as the various early withdrawal penalties that GET charges, and it would allow GET to maintain the integrity of its current model (although I can’t help but wonder if this model is really viable moving forward – it seems like the whole GET model is predicated on a continuous rise in tuition, and we now know that tuitions will not rise indefinitely).
Steve – How is allowing tax- and penalty-free rollovers to other 529 plans a fiscally responsible solution? By allowing that, we are only thinking of the set of parents who are (a) currently cashing out their credits, AND (b) sending their children to out-of-state schools. We are not thinking of how this would financially harm the overall program because the remaining customers have to bear the cost of this decision. When tuition rates go down, it is good overall for the GET program – because the cost of credits go down for those customers who are still purchasing the credits and for those who will become future customers. By allowing a subset of customers to cash out at an artificially higher rate (ie, at a rate higher than the cost of WA state public college tuition), we are asking the program to be unfair to everybody else. Makes sense? See comments by “Craig Meyers on April 25th at 9:20pm” below – his are the only ones that make sense in this thread. It is an investment we bought into, and GET has held its end of the bargain (100 credits = 1 year at UW), why blame them for out-of-state college tuition rising faster than UW’s tuition, and why bargain for something different?
Your argument seems to imply that by allowing tax- and penalty-free rollovers – something that is by and large an industry norm – some measure of financial instability would follow. However, by GET’s own metric, the number of account owners who should logically be seeking such rollovers – i.e. those in the subset you describe – would be quite small. At the same time, over that last two+ years, GET, by its own admission, has been able to build up its holdings substantially thanks both to strong growth in two of the three asset classes that it holds- equities and non-TIPS fixed income – as well as the highly-inflated price that it charges for new units. So, you’ll pardon me if I find the “fiscal responsibility” argument less than convincing.
With regards to your later arguments about “cashing out at an artificially higher price”, I must confess you’ve lost me. The price at which any rollover would be calculated would naturally be the payout price at the time in question. I’m not sure how this constitutes an artificially higher price. While GET is not a market investment vehicle in the true sense of the word, the payout price would be the closet thing you have to a true market price.
Lastly, I don’t ‘’blame’ GET for the disparity in pricing between say the UW and out of state institutions and I don’t have a problem per se with the 100 units = 1 year tuition model, although I do think that, as it is largely predicated on the idea of ever-increasing tuition, its days are limited. I am simply advocating for the allowance of tax- and (largely ) penalty-free rollovers, something that virtually every other 529 plans offers.
And while you seem very satisfied with the current GET model, if the last paragraph of the press release above is any indication, GET itself, to its credit, seems to recognize that this model is no longer viable. I guess we just have to wait and see exactly what the new model looks like.
Steve – You answered you own question. “By charging highly inflated prices on new units” — is the key here. By allowing tax- and penalty- free rollovers, the “cost” of such rollovers is borne by newer/recent members in the plan. The logic is simple – your solution implies a cost to the program – the question is who bears that cost: burdening recent members who purchased units at inflated costs is unfair, I’m not sure why nobody else on this thread sees this simple point.
Also, it does not matter whether the recipients of a free pass is small or large in number. (1) GET never said or guaranteed this free pass; and (2) a one-time free pass sets a precedent which isn’t healthy.
The only fair option is to keep the 100 credits = 1 year UW tuition equation according to the original agreement.
Am I a fan of GET? No, absolutely not. The folks who are managing the finances at GET are amateur evidently. Or else they would not have panicked as much as they did during the crash of 2009 and bumped up unit costs by over a 100%. Nor would they have ended up in a 106% “funded” position as they are now because of the highly inflated unit costs in the last 5 years, and are now patting themselves on their backs for being in an over-funded state. Such a see-saw is not good for anybody. Seems shortsighted in my opinion. Imagine if folks like this managed insurance companies!
I think it ‘s going to require more than simply allowing rollovers. Those of us who have done the right thing and invested a lot early in our child’s years (and recently) stand to lose a lot in our investment with the reset, and a rollover at current payout will also result in a loss (substantial in some cases).
My understanding is that, if GET were to allow these rollovers, it would simply be a case of filling out the appropriate paperwork to initiate the rollover as provided by the new custodian, the value of which would be the current payout value times the number of units held in the account. As this would amount to a rollover as opposed to a distribution, there would be no IRS fees and GET would also have to waive their various fees and penalties associated with early distribution. This would be analogous to rolling over an IRA from one custodian to another, which happens all the time. So, I’m not sure how, if done in this hypothetical manner, a rollover at current at current payout value would trigger a loss, since the payout value has not been cut yet.
I actually called Vanguard – which has a 529 plan through the state of Nevada – about this very thing. The rep that I spoke with was very surprised to find that GET does not allow these rollovers; I guess the industry norm is to allow them sans any fees by the retiring custodian (and, of course, IRS penalties).
If the cost of tuition is cut 25%, then those who bought units in the past 2 or 3 years are starting out with a 25% loss. Maybe that will be regained, but is it right the same amount of money buys 25% more units in July than it would in May? That is my point.
Well, yes, but the payout value has not been cut yet and indeed can’t be cut until sometime in mid-summer subsequent to their board meeting at which they decide new rates (you can look on their website to find the exact dates). So, if GET does the right thing and actually allows these, there is a window of opportunity to rollover at the current payout value without incurring any losses.
The only problem is the current payout value is $117.82. The price the last couple of years was (and is) $172. That’s a pretty steep loss.
Ah, yes, you’re right there. I hadn’t considered that. I bought all of my units in two lump sums a few years back, so am currently in the black, although the lack of gains the last couple of years have been disheartening to say the least.
We understood when we purchased them that our GET units would be pegged to in-state tuition. We knew all along that we were prepaying tuition at Washington state colleges (which could be used at other colleges too) but that GET never promised to meet those other college costs. We accepted the premium because our child was young when we bought them. GET was never a speculative investment as the stock-market based 529 plans are. It’s not a lottery! Regardless of whether tuition rises or falls next year, 100 units will still pay for 1 year at UW or WSU.
I appreciate GET for staying financially stable for so many years after prepaid plans in most other states have failed.
I applaud our legislature for working to making college more affordable to families in our state.
If your child’s out-of-state or private college costs outpace the UW that is not GET’s fault.
“…GET never promised to meet those other college costs.” I don’t see any comments saying that. Nobody expects GET to do that.
“…If your child’s out-of-state or private college costs outpace the UW that is not GET’s fault.” I don’t see anybody saying that either. No one is blaming GET.
“GET was never a speculative investment “. Isn’t that the problem? It is not supposed to be speculative! GET has the duty to communicate risk. I don’t remember that GET communicate legislative risk that state can lower tuition. Granted, lowering the tuition is generally a good thing (except for those who have to pay for it as tax payers), and it’s an unexpected event. So, nobody is mad at GET. But we also accept some conditions that other saving plans do not require, like you can only use 125 units, and you can’t take the rest out even if you know it’s going down.
“I applaud our legislature for working to making college more affordable to families in our state.” I agree, but I know of many who disagree with that. It’s easy to be generous with other people’s money. How to pay for it is the real question.
“I appreciate GET for staying financially stable for so many years after prepaid plans in most other states have failed.” It’s not difficult. In fact, in the extreme case, you know that the legislature can solve GET’s solvency problem by waiving tuition, then all units can go to $0. Then GET won’t have any problem in paying back the units… Wouldn’t that be something? Is it really impossible if that happens? After this, who knows.
Your comments seem very biased and defensive. Look, I am sure GET is working with the State to find reasonable solutions. Let’s leave it at that.
I think many of us will agree with Craig on many of his points. I am pleased to see the legislature lowering tuition. Investment in our young people is needed nationwide. However, many of us bought into GET because we knew we could use the credits outside of State of Washington public colleges. Although we have been sheltered from stock market risks, we paid a premium to have this shelter, e.g. the current buy-in price is $172 per credit and the payout is $117.82. I was not expecting a potential loss in value and I doubt anyone else was either. I just checked, treasury rates from when I was purchasing and see that I would have been (assuming a 25% loss in value) better off buying treasuries when I funded my son’s GET account. Note that treasuries are also backed by the full faith and credit of a government (no different than GET).
No one is expecting GET to pay out like the lottery as Craig implies. We just thought we were buying something secure and if we are not re compensated for any reduction in tuition value, then are money was poorly spent as treasuries would have been a better investment and also provided the same (if not better) guarantee.
I guess in the end, I think it is great that GET is looking at protecting its customers. The advertisement then and now implies that the premium being paid for credits would provide value. I also think it is essential for GET to protect its customers, for the sake of its survival. I already look at the 46% premium that today’s customers are asked to pay and I wonder if I would have bought my credits at today’s rates. If they are unable to protect their customers in the event that tuition drops, I just don’t see why anyone would ever buy GET again.
I can’t believe GET is trying to promote so hard that it is still a great investment @172 a unit with so much uncertainty around this program. Like someone suggested above, I think they should stop selling additional units at this point until more clarity brought to GET program to avoid future lawsuits.
Do you not understand how things work? If you are a resident of Washington State, your child is on the bottom of the enrollment lists. Full paying foreign / out of state students are selected first. If you are a resident, you will find a private or out of state college may very well be YOUR child’s only option.
How do these GET changes sound now?
This is a link to the language and status of the bill. http://apps.leg.wa.gov/billinfo/summary.aspx?bill=5954&year=2015 It appears to me that there is explicit language saying that the program must make changes as necessary to keep the payout value the same. This is “ok” news to those of us who planned ahead and a relief if we are sending our kids to out of state colleges. Its hardly a windfall though. If you bought your units recently you are screwed. The payout hasn’t gone up in years and the initial premiums were steep in a lot of cases. This action to reduce tuition is not like an actual market. There is no actual crash. GET customers shouldn’t lose payout value because of a vote in the legislature that shifts costs. The fair risk to GET customers all along has been the risk that tuition wouldn’t rise (like last 3 years) and also that any increases wouldn’t cover the premium (very hefty at the moment).
Of course GET is trying to sell more units at the $172 rate; they need this money to pay out to the Washington State College Bound scholarship offered to anyone who qualifies (financially) and signs up in the 7th grade. GET has been the cash cow for College Bound which began payout in 2013. Not such good news for those of us who invested in GET. Thanks, Thomas for the link. I’ll check it out.
Hi Terrie. GET is a self-sustaining program that does not rely on state appropriations for operation. Accordingly, the state cannot access any GET funds for operating any other programs or agencies. This is protected by state law (see RCW 28B.95.060, Section 4: http://apps.leg.wa.gov/rcw/default.aspx?cite=28B.95.060 ). All GET funds can only be used to pay out GET account owners and to cover the administrative costs to run the GET Program. College Bound is a separate program that is funded by state appropriations. We hope this clears up any confusion for you.
At a Washington Student Achievement Council session last fall they talked about College Bound and how GET helped in the funding. I will check this out because I didn’t mean to speak out of turn if that is not the case. However, during the session I questioned the speaker and was told straight up that much of the funding for CB was through GET. Thanks for your reply.
Hi Terrie. We apologize for any confusion that you may have experienced. Hopefully the following information clears up your concerns. In 2007, when the College Bound Scholarship program started, the legislature made a one-time investment in GET of $7.4 million. They made this investment just as any other GET customer would, to ensure that their College Bound appropriation would keep pace with growing tuition costs. Accordingly, when they withdrew their funds (units) to pay out students in 2012, they did so just as any other GET customer would. Their account growth and withdrawals were tied directly to their investment, and were not funded by other GET participants. RCW 28B.118.010 (section 10) and 28B.118.040 (sections 6 & 7) explain College Bound’s authority to participate in GET (http://apps.leg.wa.gov/rcw/default.aspx?cite=28B.118&full=true). If you would like to learn more about the College Bound Scholarship, please visit: http://www.wsac.wa.gov/college-bound.
To those who unwisely disagree that GET has an obligation to “ensure the value of our customers’ accounts is not diluted”, or state “it was never advertized [sic] as such should read the first paragraph at GET’s site about “How Get Works”.
“The GET Program is Washington’s 529 prepaid college tuition plan that helps families with young children save for FUTURE HIGHER EDUCATION EXPENSES. The State of Washington guarantees that the value of your account will keep pace with the cost of college tuition, NO MATTER HOW MUCH IT INCREASES IN THE FUTURE (EVEN IF IT DOUBLES OR TRIPLES). The earlier you start saving, the greater the opportunity for increased value of your GET account.”
Really?
is that how GET is going to work for me? I have a 3 year old and a 5 year old. My wife and I have purchased 1,000 total GET units at a cost of $147,392 (lump sum and monthly). We are far from wealthy. We have sacrificed In many other areas to fund our children’s college education. We saw how the purchase price of a unit was quickly rising and invested in the program under the premise that “the earlier you start saving, the greater the opportunity for increased value of your GET account.” We figured that even though we averaged $147 per unit we were in good shape since we had 13 years and 15 years, respectively, to make up for the high purchase price. Looks as if we might have made a very poor financial decision while trying to do right by our children.
Please don’t tell me that “GET is an investment, and as with all investments, it is expected to fluctuate in value.” Not sure where it is stated in the GET website that the value of your GET account might go down. If it is in there, please let me know where. No, there are no guarantees of substantial gains but when you illustrate “Annual Tuition Increases Over Time” and state that “resident undergraduate tuition and fees … have increased an average of 8.6% annually over the past decade”, you are basically advertising that the reason to purchase GET units is because WA state tuitions are expected to rise and it is a wise investment to purchase units early.
Add me to the list of folks who can’t believe GET is still charging $172 per unit when there is so much uncertainty.
Rob,
Thanks for sharing your thoughts and concerns. If the legislature chooses to lower tuition, it would be a first time event in our state’s history which is why we do not have any scenarios in our marketing literature and website that show that as a possibility. Looking back over the past 33 years, tuition in our state has increased on average 7.6% per year. The charts shown on our website are factual representations of what tuition has done in our state in the past. Like other investment options, we are not able to predict what will happen in the future, we can only show what’s taken place up to this point in time. It is great that you recognize your children have a ways to go until they will need to use their GET units for college and that there is still plenty of time for your accounts to achieve their intended results.
As we have indicated in our responses above, we are working diligently to develop plans in response to continued zero tuition growth of even reduced tuition. In both of these scenarios we are considering options to lower our purchase price and provide additional units to our customers based on a number of potential formulas. Since legislation and the budgets are still undergoing discussions and negotiations at this point, it is really difficult to provide specifics; however, as soon as the current special session ends you can be sure that we will begin moving forward with a plan that we will share with all of our customers. In the meantime, we thank you for your patience and understanding and for choosing to save with GET.
While it is encouraging that GET officials are working “to develop plans in response to continued zero tuition growth or even reduced tuition,” it is important to recognize that those same officials have a conflict of interest that will influence any final outcome. Will GET, for example, propose to state lawmakers that GET allow for rollovers at the current unit value? Or to provide full refunds to those who are actually underwater on their investments? Probably not, as those two fair and equitable resolutions would result in large outflows from the program, essentially terminating its usefulness and efficacy — as well as the GET jobs associated with it. Which is to say, while GET officials may presently be advocating on our behalf — which I do appreciate — this advocacy is not likely to go so far as to threaten their employment. Even if that’s the cleanest and fairest way to go.
As an aside, I remain dumbstruck that GET continues, with all the uncertainty, to aggressively push the sale of new units. It seems a staggering ethical breach. How does the tagline go? ‘Helping parents save for their childrens’ education with a nationwide source of colleges?’ That is now patently misleading, at the very, very best. At worst, it is something else altogether.
Michael,
We appreciate you sharing your thoughts and concerns with us. While our blog is a way of sharing information, thoughts and ideas with our customers, I think it is important to note that we genuinely care about our customers and work hard every single day to provide a high quality product with excellent service. Most of our GET team members are also account owners with kids and grandkids of their own who have college dreams. Our team makes decisions with integrity, compassion and well-formulated information. As we have indicated in other responses, GET is a long-term savings program designed for families with young children. This is evident in all of our marketing materials, where we are transparent with information and details about the program both in our printed and online materials. Just like all investment tools, there are periods of dramatic increases and phases low to zero growth. The goal of GET is to insure your children’s college savings are not outpaced by tuition inflation over the long-haul. Moving forward we will continue to do our best in providing our customers with the resources and tools to make the best decisions for their families.
Hello everyone, I’m one of the suckers who spent $17,200 to buy 100 units at $172 a piece in June 2013, two months after my first child was born. Guess how much my 100 units are worth today? $11,782, exactly the same as it was two years ago. I bet those of you who think it’s a good idea to reduce the state college tuition rate are not in my boat. GET is a good program for people who got in early and enjoyed at least a few years of fantastic growth, not for suckers like me who caught the train too late (and who are in effect subsidizing the people who are using the units right now).
Anyway, enough ranting. I have looked into how much it would cost me if I were to do an early cancellation and request a refund. The answer is not much in terms of fees and penalties, since a lot of them are charged as a percentage of earnings and in my case it’s a big fat $0. The biggest loss is actually the difference between the payout value ($11,782) and the unit price I paid for them ($17,000). I sent an email to the GET people asking if I could claim that as a capital loss on my tax return, but they just told me to consult a tax accountant. Unfortunately I don’t work with one. Has anyone looked into this and know whether I could claim this as a capital loss?
Losing more than $5000 in two years is a difficult pill to swallow, but at the same time the opportunity cost of locking up the money is also significant, especially considering the uncertainty around the GET program and the fact that there are still 16 more years before my eldest kid goes to college. Any advice here?
FWIW, at least I wised up in 2014 and started contributing to UESP instead. Otherwise my loss would be even greater……
Thomas,
We understand your concerns and appreciate you sharing them with us. You are correct that there has been zero tuition growth over the past three years. The decision to hold tuition flat, was one made by the legislature after four years (2008-2012) of double digit tuition growth in which Washington’s college students saw annual increases somewhere between 13 to 19%. The legislature saw that these increases were not sustainable for students and provided additional funding to our state’s higher education institutions in order to provide some financial reprieve to current students and their families.
Because tuition goes through periods of dramatic increases and phases zero growth, we are very clear in our materials that this is a long-term savings program designed for families with young children like yourself. The goal of GET is to insure your children’s college savings are not outpaced by tuition inflation. Since your children have 16 years until they will need to use these funds for college there is still plenty of time for your account to grow and achieve its intended results. If you look at our latest annual report you will see that tuition in the state of Washington has increased on average 7.6% per year over the last 33 years. During that period of time tuition experienced annual growth somewhere between 0 and 22.7%.
In regards to our pricing, we are very clear in our materials and on our website that the purchase price is always higher than the payout value and that it will take several years for a customer to begin seeing a positive gain on their account. If you have concerns about the tuition-setting policies that govern higher education funding in our state, we would recommend you contact your elected representatives in the legislature to share your thoughts and ideas with them.
It’s sadly evident from this forum that many parents who contributed to the GET program in the past 5 years feel have made a mistake. This is especially true for those whose children need to go out of state for college as WA colleges increase accepting more profitable non-WA residents.
GET participants thought they did the right thing by following the advice of the plan. The marketing materials never addressed a reduction in tuition. There is at least one local law firm reviewing historical promotional materials for unfair and deceptive practices related to GET. I agree with others who have recommended that GET cease accepting new participants until they have a plan to generate value from the program.
The numbers tell a disappointing story. An investment in the Dow Jones 5 years ago for college would be worth 80% more today. An “investment” in GET is worth 14% less during the same time frame, according to representatives of the program. This has been a deceptive program that has made financial gains while participants have lost value in their investment. I wish there were better outcomes for those who enrolled. For the rest of us, we can warn other parents to invest in more stable 529 programs until GET figures a way out of its hole…or there is judicial remedy.
“The marketing materials never addressed a reduction in tuition. There is at least one local law firm reviewing historical promotional materials for unfair and deceptive practices related to GET”
——————————————————————
One question I wonder—did GET actuaries, mathematicians, admins, proponents, lawyers, and marketing staff actually consider or imagine a decrease in tuition as a possibility–or was this just inconceivable to them at the time in the past given the history of state tuition increases? Are there in fact past GET financial models or quantitative analyses prior to this year considering this possibility, its effects, and what would have to be done in such circumstances and are these available for public review? If not, it would seem hard for any families to have been adequately informed or disclosed of such risk, especially if the plan administrators themselves could not or did not imagine a tuition decrease as a possibility.
With respect to past promotional and enrollment materials, one would have to think that a GET lawyer would have wanted to insert at least one clause to state that tuition could actually decrease, if they had considered that as a possibility. Maybe this was just off of everyone’s radar? If not, and if in fact GET had considered this possibility–one has to then alternately ask/wonder–why was there not overt disclosure of a potential tuition decrease in their prior promotional materials (and are they indeed disclosing this possibility in current materials)? Did we all just miss the fine print–or where was it?
Until the Legislature sorts this out (and hopefully decides to stay out of considering tuition *decreases* forever), I would imagine that few would knowingly put in hard-earned money into GET with a potential tuition drop forthcoming. The only folks investing in GET now are those that perhaps may not be paying attention to the current news and/or have automatic deposits occurring.
Hi David,
Thanks for your question. The state, through the GET Committee, is responsible for pricing GET units and under RCW 28B.95.025 is statutorily required to take into account “past and projected patterns of tuition increases, program liability, past and projected investment returns, and the need for a prudent stabilization reserve.” GET units are sold taking all of these things into account. Tuition decreases were not considered in the price setting of units nor were they contemplated in statute. Since the GET Committee was not statutorily directed to take into consideration the possibility of tuition decreases, they were not contemplated as part of the price setting formula in the past. A decrease in tuition would be a historic event.
Dear Get529Plan –
Thank you for the courtesy of your prompt and detailed reply explaining what was statutorily required of the state through the GET Committee, and why tuition decreases apparently were not contemplated nor considered–namely, it apparently wasn’t thought of by the past Legislatures and therefore was not technically required.
If I understood what you wrote, it seems to suggest that no one at GET (not even the actuaries, mathematicians or the lawyers, who typically think of everything), imagined the possibility of a tuition decrease, and if someone in fact did, that they didn’t or couldn’t speak up, because they weren’t required to do so by law. Is this correct?
In this regard, has the Legislature actually passed an updated statute to include the potential for a tuition *decrease* and also formally required the state, through the GET Committee to consider this possibility and impact on the program? If not, will the GET Committee (using the same logic/explanation as to why tuition decreases were not previously considered), still *not* consider the impact of a tuition decrease without an updated statutory requirement to do so?
With all due respect—this just all seems a bit befuddling to me. What am I misunderstanding?
David,
In all the research we’ve done, we have found no information that shows any tuition decreases in the history of the state’s higher education institutions. Based on this history and accounting for inflation there has been no reason to assume a decrease in tuition. Now that this option is being discussed, the GET Committee is in the process of researching how to respond to and prepare for a possible situation of lowered tuition. Moving forward, it is up to the legislature to decide what is included in statute and what is not. We understand and appreciate your concerns and we are taking your input to heart.
I too am one who started buying units at $172 about 3 years ago. My investment is going nowhere, and I can only hope things might go better as my child still has 14 years before college. I am seriously considering not putting any more of my hard earned money into this program. I would like to know if what I have invested so far can still sit in the account (not refunded), and just hope that it will at least break even when the time comes. Also I don’t think I should be penalized for leaving the customized monthly payment plan I set up.
Beginning to think I would have been better off just stashing away the money!
Hi Tania,
Thanks for sharing your thoughts and concerns. It is great that you recognize your children have a ways to go until they will need to use their GET units for college and that there is still plenty of time for your accounts to achieve their intended results. If you look at our latest annual report you will see that tuition in the state of Washington has increased on average 7.6% per year over the last 33 years. During that period of time tuition experienced annual growth somewhere between 0 and 22.7%. Because tuition goes through periods of dramatic increases and phases zero growth, we are very clear in our materials that this is a long-term savings program designed for families with young children like yourself. The goal of GET is to insure your children’s college savings are not outpaced by tuition inflation.
As we have indicated in our responses above, we are working diligently to develop plans in response to continued zero tuition growth of even reduced tuition. In both of these scenarios we are considering options to lower our purchase price and provide additional units to our customers based on a number of potential formulas. Since legislation and the budgets are still undergoing discussions and negotiations at this point, it is really difficult to provide specifics; however, as soon as the current special session ends you can be sure that we will begin moving forward with a plan that we will share with all of our customers. In the meantime, we thank you for your patience and understanding and for choosing to save with GET.
I’m in the same boat. Mostly I’m just wondering what my options are at this point. My son was born in 2014 and I thought I was getting him off to a good start by picking up 200 units. My parents and grandparents even pitched in! I’m trying to figure out if would be better to just request a refund (No gains, no tax penalties, right?) and put everything in a stock market 529 (5% per year isn’t so bad). What losses would there be? Both bills I see going through the legislature either reduce tuition by 25% as early as 2 years from now and as late as 6 years from now. If I wait and see what they do, will my refund be even lower in July? In 2017? If I wait and assume GET finds a way to suitably compensate parents who have paid in this past year or two, should I add to my account now in order to continue growing my asset over the remaining 17 years? Should I wait till this is settled in 2019 when all the tuition cuts kick in and improve the price? It’s painful to try and make this decision when there is no new information and a 30 June deadline looming for lump sums.
I hate how closely this mirrors the economic situation – Boomers & some Gen Xers went to college, got jobs, bought a house, bought into the stock market and, invested in the GET program, put their kids through school, and were successful. They tell their kids to do the same thing. Stock market crash. Housing Market Crash. Job Supply Dries Up. Now the GET Crash… wee!
Wow. After reading this news article: http://www.seattletimes.com/seattle-news/education/gop-proposal-to-slash-college-tuition-puts-house-senate-at-odds/ I think I have my answer. Even if I keep the faith and stick with the GET program, by tying the tuition cost to the average household income virtually guarantees that the GET investment earns no more than 2.6% per year (average since 1989). Plus, it’ll fluctuate just as much as the stock market. Boosting minimum wage isn’t going to help much either (Maybe it’ll force tuition rates higher?). Even the stock market with its highs and lows is boasting 5% or better.
Hi Lisa C,
We understand your concerns. We are working with the state Treasurer, Actuary, and state legislators to develop plans with regards to what changes must be made to the program to protect our account holders, for each of the possible proposed budget scenarios. As soon as a state budget is decided upon, we will have more information. However you decide to save in the end, we applaud your early efforts to prepare for future costs of higher education.
I very much support increasing the affordability of Washington state universities for our residents. As it relates to GET, the concept of a large scale tuition cut though was never even considered in the design of the GET program, nor was an extended period of basically flat tuition. But in a flat tuition environment I received what I paid for, which is certainty of cost on tuition for my three children. So it may be a poorly performing investment, but I will have received what I paid for and that was my choice.
In a significant rate cut, the design will require a significant re-thinking as you have noted. I’m pretty sure my factual circumstances are not unique based on others I know who participate in GET. For each of my children I have the 500 unit maximum fully paid for many years ago. All are a few years away from college. My comments:
1. I don’t think I want more units.
2. If you give me more units, you have to remove the 125 unit per year usage limitation.
3. Even if you remove the 125 unit limitation, I assume you can only broaden out the permitted uses as far as the qualified educational expenses definition for US tax purposes. But you should permit utilizing that definition to its fullest extent. Room, board and other expenses are significant costs which should also be permitted as a way to use units.
4. You will likely create an incentive for people to go to private schools, or perhaps more accurately you may have removed an incentive for them to stay with state schools.
5. You should put real thought into maximizing the intra-family transfers exemption possibilities. Among those possibilities are removing the maximum number of units limitation if it is a result of a qualified transfer, removing the limitation on number of units used per year and maximizing the scope of permitted uses. At least among families with more than one child, there is a reasonable possibility of one child going to a state school and being simply unable to use the maximum number of units if there is a tuition cut. But another child in the same family going to a private school could utilize a significant portion of the balance since most private schools would cost two or three hundred units at current costs.
I appreciate your focus on this issue and hope that the legislature thoughtfully addresses this issue. The GET program and the legislature for many years pushed GET as a great alternative for families. We will see if they protect that alternative in this debate.
Also, it seems foolish and irresponsible for GET to still be selling units. If you were a company issuing stock, you would not do so or you would do so only with a significant explanation of the risks. I see no explanation of the risks in obvious places like the FAQs.
One point to consider. In a flat tuition environment, I don’t believe you get what you paid for. The cost per unit is quite a bit higher than the current pay out per unit. You would be better off burying your money in a whole in the ground.
Hi J,
Thanks for your comment. We would like to let you know that we take these types of suggestions from account holders to heart. Your suggestions will be shared with those planning for the future of the program. Also, just to clear up one point, room and board are currently considered a qualified expense, and can be covered by GET units.
the Room and Board argument is a bit disingenuous. for the past three years “Room and Board” has gone up, while “Tuition” has been flat. That way the GET payout does not have to increase, even though the cost of college certainly does. I think the observation speaks for itself, no need to try to defend it.
Looks like it’s going to happen. 5% cut next year, and another 10% the year after. Looking forward to see how the program is modified so it makes sense to invest in it the next couple years…
Hi Peter. Here is a link to a detailed response that outlines everything we know so far: http://www.get.wa.gov/sites/default/files/documents/GET-response-lower-tuition-6-30-15.pdf
Are GET administrators exploring the idea of refunding a percentage of contributions, due to the reduction of tuition, at all?
Thanks for your question. We encourage you to refer to our post below for a link to a document that provides information on all of the details that we know so far, and next steps.
So the legislature and GET’s solution to the tuition cut is to freeze the payout value for the next two years. No “stock split” as suggested earlier by GET; no action to permit qualified rollovers at the current full payout value. This is so incredibly cynical. Sure, just freeze our investment for another two years — it will be five altogether by then — and perhaps several more after that, until, at some point, tuition rises back to its current level, if it even does in a time frame that will be meaningful for us. Will it be five years? Ten? I have stated this before: whatever else GET leaders might have done to advance our interests — and I want to believe they tried — they would never pursue a rollover option with the legislature, because the money would leave and GET jobs would be lost. No doubt, a tuition cut at state universities is a public good. Just as turning our investment in GET units into a wasting asset is a public harm. Just as having continued to sell new units over the last six months is public disgrace.
It’s even less fair than you think. Reducing tuition does not reduce the cost to run the universities. The gap will be covered by WA taxpayers somehow, i.e. you. The legislature intends to use more of your taxes to fund/subsidize the universities, thus reducing the value of your investment with your own money.
If as if your college savings were in a 529 plan and you owned Coca-Cola stock, and Coke decided to give your dividends to Pepsi. Of course if this were a 529 you would sell your Coke stock immediately upon learning this and put it into something else, but the GET program forbids you from pulling your money out at its current value (i.e. without large penalties and fees). The most responsible thing for GET to do is let the current share owners roll their money at current value into a 529, or accept the new terms of whatever restructured program that they propose in order to “re-win” our investment.
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?
New and additional fees which are not covered by GET will be added.
You GET to pay twice!
What is to say that the Legislature in the future, such as 2 years from now won’t simply do the same thing—freeze payout value, yet again? Or, worse, also cut tuition further? I think it is reasonable to say that this GET program has simply not turned out to be what I believe many hardworking families worked to save for. I believe that none signed up for GET with any disclosure by the state that tuition could in fact be cut. The past advertising never raised this risk, and I believe that we consumers have been misled. Indeed, the admins themselves concede that they themselves never imagined it to be possible, and did not plan for such a scenario.
Hi Michael. We appreciate your concerns. See our post below for a link to a document that provides information on all of the details that we know so far, and next steps.
Thank you, GETAdmin. I appreciate your concerns, too. Or at least I well understand them. It is telling that among the four options GET will study at the behest of the legislature, none include the possibility of qualified rollovers out of the program. It is easy to see why: nearly everyone would, quite reasonably, abandon GET and take their college savings elsewhere. After 3 years of flat unit values, and at least two more to come, GET investors are essentially funding a jobs program for a state-controlled bank that is paying negative interest. As I said, I understand your concerns.
Hi Michael,
Your input in this process is vital and appreciated. To clarify, the fourth option to be reviewed, “the current state penalty for nonqualified withdrawals,” is meant to address that possibility. Rollovers are continuing to be discussed and will be agenda items for GET Committee meetings over the summer.
Please consider that we have over 130,000 active accounts whose interests we need to protect. Because these decisions impact such a great number of people with a countless number of individual circumstances, this comprehensive process is necessary to ensure our response carefully and thoughtfully addresses a wide array of concerns.
Please be assured that your concerns will continue to be shared and that these are high-priority considerations for the Committee.
There’s no doubt that reducing tuition is positive. What I don’t understand is why GET customers should be penalized in the process, i.e. savers, who went into this deemed credible program (by their backing from Washington state as a guarantee), believing they were doing a responsible thing.
If the payout is lower or stays flat for the next few years, isn’t the payout amount essentially being funded by contributions of older and more recent customers, with a greater reliance on more recent customers (since the premium to purchase units, based on more recent past, higher tuition increases, is so high)? How is this ideologically different than a Ponzi scheme? How is it that the worst case scenario as envisioned by GET administrators when this program was designed – tuition increases higher than funds available which would result in the state having to guarantee the shortfall – how is it that this scenario would have worked out better for GET customers, rather than responsible behavior?
Thank you all for your questions and comments. We would like to direct you to GET’s response to this legislation that was just updated and posted to our website this morning: http://www.get.wa.gov/sites/default/files/documents/GET-response-lower-tuition-6-30-15.pdf. This document provides everything that we know so far on this topic. It’s also important to know that the GET Committee will be meeting on July 13th to discuss the details of the next steps for the program. We will keep you all updated and post new information as it becomes available.
Hi GETAdmin. Thank you for directing everyone to your recent response to the legislation at http://www.get.wa.gov/sites/default/files/documents/GET-response-lower-tuition-6-30-15.pdf. Your response has convinced me to finally pull the trigger and request a refund. Doing so means that I’ll have lost 30% of my GET investment over the last two years, but I won’t have to deal with all the prolonged uncertainty surrounding this program and two more years of ZERO growth anymore.
Thank you again for making the decision easy for me.
Is the upcoming GET meeting open to the public? Will we, as members, be able to provide any input to the options to be considered or proposed and selected by the committee?
Hi David. Yes the meeting is open to the public. It will be held on Monday, July 13 from 2 to 4 p.m. at Senate Hearing Room 3 on the Capitol Campus in Olympia. We encourage you to attend and share your concerns.
Super–this is great to know—that said—I’m not sure I am able to attend in person due to my job responsibilities and difficulty in traveling to Olympia. Are there alternate ways that I might be able to submit a written statement for consideration and reading, to include in the record?
Hi David, you are absolutely welcome to submit your comments to the GET Committee. They can be sent to GETinfo@wsac.wa.gov, where they will be forwarded on appropriately.
Sorry – another question here—does anyone have a link where one can find the, “state’s average annual growth rate in median hourly wage” over the past years as determined by the Federal Bureau of Labor Statistics? Seattle Times listed in their article today (7/1) by report Katherine Long that the average change is only 2.1% a year. This rate would seemingly be what limits our future investment growth over time.
If state tuition increases can at most be 2.1% a year, this is quite low and makes the GET product a very different investment tool for families than was originally billed when WA tuition rate growth (according to get529plan), “…increased on average 7.6% per year over the last 33 years. During that period of time tuition experienced annual growth somewhere between 0 and 22.7%”
Is it unreasonable to conclude that a product capped at 2.1% is quite different than what was sold or advertised at 7.6%? There are certainly other financial products that return yields in the 2% range but without the uncertainty of legislature intervention.
For families whose children may end up attending out-of-state colleges/university (which includes everyone), this 2.1% cap is more significant, as it seemingly does little to counteract the tuition increases at other schools. As the ** portability ** to use GET funds at schools outside of WA was advertised as a key feature of this program, it also seems quite unfair that GET participants cannot consider the option to withdraw from the program without penalty, as we all bought a product ** without ** a cap in growth–not one that is limited to ~ 2%.
I hope that the folks at the upcoming GET meeting plan to address the unfairness of the changing nature of the GET product —which is now very different than what was originally sold and advertised. Even if there were a current year 30% penalty on the balance, a limited growth rate compounded over 15 to 20 years could readily cause many participants to lose out. For example, consider $100 today. If a participant today withdrew their funds, took the 30% hit, but could get at least 4% growth elsewhere, this would be a better option than staying in GET and being limited to 2% growth ** and ** the potential of future legislature-deemed tuition-payout cuts or freeze. What’s to say that Legislators won’t intervene and wish to re-cut tuition in Year 18 to again limit payout?
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$100, 2% growth $70, 4% growth
year
1 $102.00 $72.80
2 $104.04 $75.71
3 $106.12 $78.74
4 $108.24 $81.89
5 $110.41 $85.17
6 $112.62 $88.57
7 $114.87 $92.12
8 $117.17 $95.80
9 $119.51 $99.63
10 $121.90 $103.62
11 $124.34 $107.76
12 $126.82 $112.07
13 $129.36 $116.56
14 $131.95 $121.22
15 $134.59 $126.07
16 $137.28 $131.11
17 $140.02 $136.35
18 $142.82 $141.81
19 $145.68 $147.48
20 $148.59 $153.38
Hi David,
your concerns about tuition increase being tied to the state’s average annual growth rate in median hourly wage are on our radar. The GET Committee will be discussing 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.
Below is a response from Martin James in regard to an email I sent to my Legislator (Senator Linda Evans-Parlette). This email was sent to me on May 28, 2015 after I wrote asking for information on what Bill ESSB 5954 would do to the GET program and the value of our units. Here is his response:
“The constituent would actually see a boon to the value of their GET purchase with the passage of ESSB 5954. The operative language from the bill is below. In short, the constituent fears that his 100 credits today which is valued at $11,700 will be worth 25% less if the bill was to pass. That is factually untrue.
The bill requires a “stock split” for those people who own GET credits currently. In other words, instead of having 100 credits the constituent would have 133 credits under the bill. (This translates to the same $11,700 dollar amount, but it now buys more tuition & room and board than before because tuition is 25% cheaper under ESSB 5954.)
Far from opposing the bill out of fear that it will hurt his GET purchase, the constituent should be pushing for passage of the bill because the number of credits he will have – and the ability to cover things beyond simply tuition – will be higher with passage of ESSB 5954.
(7) For the 2015-16 and 2016-17 academic years, the committee and the governing body shall make such one-time adjustments to all unredeemed tuition units purchased before the effective date of this section as may be necessary to ensure that the total payout value of each account at the effective date of this section is not decreased or diluted as a result of the initial application of any changes in tuition under section 3, chapter …, Laws of 2015 (section 3 of this act). The first notification to holders of tuition units after the adjustment in this subsection is made must include a statement concerning the adjustment. For accounts that are opened prior to the effective date of this section, the committee and the governing body shall make such adjustments to the number of tuition units that may be redeemed in one year as may be necessary to ensure that any change in tuition policy under section 3 of this act does not result in the decrease of the dollar value of the maximum tuition units that may be used in any one year.”
In other words…..ONLY if your child is attending in-state schools, which both of mine are not. Dupped again!
It is important to understand the implications of GET freezing the payout value, rather than proceeding with a “stock split” as GET and the legislature had earlier proposed. While the stock split would not have addressed the issue of stagnating unit values (no increase for at least 5 years), it would have had the somewhat consoling effect of making permanent our compensation for the decrease in tuition. We would have had more units. They couldn’t have taken them away. By only locking in the payout value, GET can simply trap us indefinitely in a non-earning asset until, at some point, over many years, tuition rises back to the current level — thereby clawing back any fair consideration we may have derived from having the payout value frozen in the first place. To call this “incredibly cynical” (as I did in an earlier post) doesn’t really do it justice.
Perhaps the best way to think of GET units now would be this: it is, for all practical matters, a foreign currency that devalues every day of its own accord, and especially every time an out-of-state college raises tuition or fees. In fact, this will be true even for in-state schools once the WA tuition cut is fully in effect.
Certainly GET and the lawmakers in Olympia understand all this. It’s hard not to admire their audacity. Well played.
Hello, posters: I do not control GET or tuition costs, but teach at a public university, and greatly appreciate reading the points you are making. I hope you will be able to influence policy going forward with your excellent analysis of the impact of state tuition policy on the GET program. There is a lot to learn from your experience with purchasing GET units.
The GET Program has turned out to be an unfortunate investment for recent participants. The fact the managers of the program won’t provide an answer for 18 months while value stagnates convinces me they seek to defend the program rather than address serious concerns of the participants who are losing value. Like many of the comments above, I, too feel the program was misrepresented..
As noted above, you can send concerns to the administrators of this program at GETinfo@wsac.wa.gov. In addition, there are channels at the federal level that can help out. One of them is the Consumer Financial Protection Bureau, which you can visit at http://www.consumerfinance.gov/complaint/
We understand your frustrations with the timeline of events. Throughout the 18 month process information will be provided as it becomes available. Account value is a high priority issue and will be addressed by the GET Committee. We understand that 18 months seems like a long time, however it is important that the necessary amount of time be taken to gather information, study what the effects of any proposed changes might be, and discern how to ensure that our account holders are protected in the long term.
Has anyone figured out how to pull out of this program? Is there a specific window or can we cut the cord at any time? I realize there are penalities. Due to the fact I have one son in college and another scheduled to enter in 2016, I will probably keep 100 units in each of their accounts because at least I know the value for the next two years….after that, not so much. My decision is based on the fact that I do not want to stress about this anymore. So done.
Hi Terrie,
You are able to withdraw your savings at any time, however you may wish to consult a financial advisor before doing so, considering the penalties for withdrawal and the fact that your children are in, and on the verge of college. We also want to reiterate that refund options available to account holders will be a high priority discussion point for the GET Committee when they meet next Monday, July 13. We will be sure to share details as soon as they are available.
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As I understand it, the latest proposals from the GET committee (as of August 2015) would mean that we get the cash back that we put into the GET program and will have the opportunity to roll it tax free into another 529 plan. This strikes me as not a good result for those of us who started putting money into GET accounts in 2010 and later. The WA GET program took our money, which we could have invested in the stock market through another type of 529 plan. That money, if fully invested in the stock market, would have more than doubled in value since 2010. And they’re telling us we get back just what we put into the program (more or less)? Shouldn’t we participate in at least some of that growth in principal?
I recognize a few of the counterarguments:
1) Had the market tanked during that period, we wouldn’t have had any downside risk (short of a Washington state government bankruptcy),
2) The GET units we bought in 2010/2011 at a cheaper price “appreciated” in value.
3) The GET investment managers may have allocated some of the funds to other asset classes (bonds or hard assets).
But still, it seems to me that there’s something fishy here, as though the state got to play with our money for a few years, did well, and now they want to walk off with the winnings, leaving us holding just the original stake (and maybe a bit more as a sweetener to get us to shut up).
What am I missing?
I haven’t seen the report but this does seem insufficient. I understand from other comments on this thread that the GET program added a surcharge to participants for below market investment returns after 2008. Plus, the program was priced at a premium above fair value during the purchase period. So the state has made quite a return on participant investments. This is one for the lawyers to respond to.
Thank you for your input. Your comment has been forwarded to the GET Committee.
For those of us (15,280 new accounts) who purchased GET shares in 2010/2011 when the purchase prices was $117/share, it seems that if we are allowed to drop out now at the current payout-price of $117.82, even without the 10% penalty, the state will have essentially gotten a 4 to 5 year interest-free loan from us, once inflation is factored in. This equates to $315.9 million dollars (based on 2.7 million units x $117/share)—figures taken from Katherine Long’s Seattle Times article, dated August 16, 2015. (See also http://www.get.wa.gov/sites/default/files/documents/GETUnitPrice_chart.pdf). By contrast, the stock market has had 8 to 9% annualized growth since that time, even including cost of inflation (http://dqydj.net/sp-500-return-calculator/). In short, our returns in the last years helped pull GET out of its hole….and as Michael Kleiner writes, we stand to not benefit at all….
So, even if GET allows us a full refund at the current payout of $117/share, folks like myself who bought in 2010-2011 will stand to lose the most. Those who purchased beforehand (such as before 2009/2010 at $101/share or less) will at least make some money as a return. Those who bought more recently (2013-2015) will definitely get their investment back in full (as the state won’t allow them to be egregiously hurt)—but these folks will not have lost as much time and earning potential as those of us who bought in 2010/2011. We missed out on the opportunity to earn money elsewhere, such as in a different 529 fund/stock market for college tuition. We’ve had funds tied up for the last 4 to 5 years with now essentially nothing to show and two more years of no-growth coming.
What is so frustrating now is to read and learn of all of the potential changes to come… In short, it seems GET may try to alter the rules of our contractual agreement, which seems unfair. For those who bought it 2010/2011—it may be better to not blindly accept a full refund now (if so allowed), so as to maintain one’s legal options. Current payout at only $117.82 should NOT be considered acceptable, given they were essentially leading folks to believe in 7 to 8% annualized tuition growth in all of their advertisements in 2010-2011, without any warning/caution about the potential for tuition decreases.
Hi David. Thank you for expressing your concerns. We will be sure to share your thoughts to the GET Committee.
Thank you for your reply. I truly hope that GET folks are doing their best to figure out the best course of action.
By sharing these comments with the Committee, hopefully, they will understand our collective perspectives as those of us who purchased at the $117/price point in 2010-2011 (all 15,280 of us). We each had only hoped to do well for our kids’ tuition funds by buying GET (as advertised), and as time ticks away, it is unnerving to not see any significant growth or progress with our funds for the past 4 and next 2 years to come.
David–Your point is well-researched and well-articulated. Offering to return invested capital is the kind of concession one would expect if GET was insolvent, such as the case with Bernie Madoff’s investment scam. While some comments on this site have argued that GET was a Ponzi scheme, in contrast to Madoff’s case there are funds available to compensate those who are facing serious financial setbacks like you describe.
Returning invested capital only is not a serious offer from GET. It is the kind of proposal one would expect if GET were facing class-action litigation and sought to low ball as a negotiation strategy. Perhaps the GET managers anticipate a class-action suit, as suggested by the Attorney General’s office in this article by the Seattle Times: http://www.seattletimes.com/seattle-news/education/tuition-cuts-may-trigger-refunds-for-those-who-invested-in-get/
You are correct that buyers in 2010-11 should keep their legal options open. They should not accept an inequitable proposition of merely returning capital.
The law of unintended consequence… Here is a perfect example of how Gov’t can change the rules midstream and create havoc on a program it promised would benefit everyone who “invested”.
To have a cap or freeze placed on the tuition market (unprecedented in WA history) by our Reps is akin to the stock market being frozen from market forces which dictate a fair market value, and not allow the investor to take their money to another market.
I for one made a decision to make a long term commitment to the GET Plan in order to secure an option of using the credits for any US college of my family’s choosing. To eliminate the potential growth of my children’s shares versus other states schools by freezing and capping the value of my account, while other states are not imposing tuition freezes, devalues my dollars in terms of purchasing tuition to those out of state schools.
If I were to have the slightest idea that this state would essentially cap the value of the money I put into this program back when I bought in, I would have never signed up for GET. I would have opted for a 529 plan instead.
Regardless of when any participant purchased the GET shares, I propose that the shares be pegged to a percentage of growth that reflects increases from other out of state schools while our system is frozen. Offer a penalty-free buyout at a fair market value of the tuition increases reflected in the schools outside the state, allow for a direct rollover to 529 plan, and I will take my money and invest it in a free market.
And if our UW and WSU chooses to increase fees in order to find a loophole to cover increasing costs that are not allowed to be covered by GET credits, I will gladly join any class action suit that would sue for the circumstances and damages created by our legislature.
I did not buy into this program to have my children’s choices limited or to have their college fund hog-tied by a freeze imposed by the state government.
Well said, Greg.
Nailed it. This is what you get when you trust the government.
Hi Greg. Thank you for sharing your thoughts. Your comments will be shared with the GET Committee.