Changes To GET Program

Do you have money invested in a Washington state GET account for college tuition?  There are big changes coming soon!

Here’s an article from the Seattle Times about the changes.

Basically it works like this.  If you have money in a GET account, it’s like an insurance plan.  It is guaranteed to pay out based on tuition at the most expensive state university.  So if you own 100 GET units, you can exchange them for one full year tuition at the University of Washington.  Western Washington University tuition is lower, so 100 units will actually go farther there.

The state is now going to open a 529 plan.  This is an investment account.  You can invest the money in stocks, or a money market account, or any other option they offer.  What you take out will no longer be tied to tuition, it will just be whatever the investment money has grown to.  The state wants to encourage people who have invested in GET to move over to the new 529 plan, and they’re going to give you a 38% bonus to do it.

If you choose to stay in the GET, there MAY be up to a 15% bonus, depending how much money the state pays out to people who switch to a 529.  Right now there is more money than needed in the GET program, which is where the bonus money will come from.

Here are my thoughts on what to do.  My last child is in college now, so this is a short-term investment picture for us.  To me, it makes sense to take the 38% bonus and roll into the 529 plan, since we’ll be spending the last of it in the near term anyway.  My niece is in sixth grade, and her father is thinking he doesn’t want to risk the stock market.  For them, it may make more sense to keep the money in the GET plan and take advantage of the guaranteed tuition, regardless of what happens in the stock market between now and when she starts college.

It’s impossible to know what tuition at Washington state universities will do in the future, but it hasn’t increased since 2012/2013.  Both UW and WSU tuition have actually decreased by over 10% over the last few years. 

It’s also impossible to know what the stock market will do.  The current government debt load combined with the large new tax breaks are likely to depress the stock market in the medium term unless significant changes are made.  Most experts expect lower-than-average return from the stock market over the next 5 years or so. 

If you have several years before the GET will be used and you think tuition will go up faster than the market, or you think the stock market won’t be a good investment, then staying in GET will provide tuition insurance and possibly an up to 15% bonus.  If you’re going to use the money sooner and/or think the stock market is where you want your money to be, then taking the bonus and moving to the 529 plan may be best for you. 

Everyone has their own schedule, circumstances, expectations, and risk tolerance.  Hopefully this will give you some things to think about as you make your decision.  And whatever you decide, good for you for saving for college!