THE state’s Guaranteed Education Tuition program is a special deal for people with the foresight and money to plan for college.
Hear that? GET is "a special deal" for elitists like me who had the "foresight and money" to save for our children's education. We're everything that's wrong with America. If only the impoverished masses would finally rise up against their slightly-better-off oppressors in the lower middle-class, college tuition would become affordable once again!
Given wildly escalating tuition in recent years, those credits are like gold.
Nail me to a cross of gold (credits).
First, here is how GET works: Parents saving for college can buy tuition units (100 units cover a year’s tuition) and then redeem them at one of Washington’s public higher-education institutions in the future — without having to pay more because of tuition increases. A tuition unit could be purchased in 1998 for $35 and today for $172. The investment yields a handsome return, especially because tuition has soared — more than double in the past five years — as state universities have struggled to make up for deep state cuts.
If you're going to start off a paragraph with the words "here is how GET works," you might want to make a genuine effort to explain, you know, exactly how GET works. For while it is true that "a tuition unit could be purchased in 1998 for $35 and today for $172," those figures intentionally misrepresent the so-called "handsome return" on investment. The actual return on investment is the GET payout value—currently $117.82—the amount one would receive if a GET unit were redeemed today.
That's still a pretty good return, but about a third less than what the editorial implies. And at an annualized return of 8.4 percent over the 15-year life of program, it's still considerably less than historical stock market returns. Indeed, over its first decade, GET barely returned more than 6 percent a year—it's only the recent out-of-control tuition hikes that have dramatically pumped up its payout value. So this "deal" only became "special" when lawmakers like Rodney Tom decided to fuck the current generation of college students by denying them access to the same affordable college education that they enjoyed.
State lawmakers should be seriously concerned about a projected $631 million future shortfall in GET. The program’s $2.1 billion fund was set up to be self-supporting, as long as new investors continue to enroll. But as the price of new GET units has risen, new investors are buying fewer of them.
So... then... um... why the hell would we want to close GET off to new investors?
The challenge becomes more severe if the Legislature continues to underfund higher education, forcing a continuation of double-digit tuition increases.
Oh. I get it. The editors view GET as an obstacle to "a continuation of double-digit tuition increases." Which it is. So the obvious solution would be to eliminate GET, so that the state can underfund higher education to its heart's content without adding onto the GET shortfall it is obligated to cover. I mean, what other reason could there be for removing an obstacle to double-digit tuition increases than to facilitate increasing tuition by double digits? Right?
To best help students and their families, lawmakers must slow down tuition growth and return state support to the days when half of the funding for in-state undergraduate tuition came from the state and half from students. Currently, tuition accounts for two-thirds of the cost with the state picking up the remainder.
You pretty much just contradicted your prior argument for eliminating GET, for if we slow down tuition growth to market rates, GET's financial health will gradually recover. As it stands the program is already about 90 percent funded; as long as it remains open to new investors and its investments outpace tuition increases, that gap will shrink.
GET’s problems also negatively affect flexibility in tuition policy. Lawmakers gave Washington’s four-year universities authority to set different tuition rates for different majors as a way of paying for more slots in high-demand fields of study, such as engineering. But lawmakers rescinded the authority over concerns about its effect on the college-savings program.
They don't spend much time on it, but that is what this campaign to eliminate GET is really about: Differential tuition. Tom and his surrogates on the Seattle Times editorial board want to free universities to charge thousands more for STEM degrees. And GET, with it's payout tied to the "actual resident, undergraduate tuition and state-mandated fees at Washington's most expensive public university," throws a monkey wrench in those plans. Charge $5,000 a year extra for an engineering degree and the payout on 100 GET units suddenly increases by another $5,000. Ouch.
Personally, I don't see the social value in differential tuition pricing. I mean, the state could always pay for more slots in "high-demand fields of study, such as engineering," by, I dunno... paying for it? But that might require higher taxes. (As if tuition isn't essentially a tax on students. But that's a subject for another post.)
Almost every state offers some kind of a college-savings or prepaid tuition plan. But Washington’s GET plan is too generous. Now Washington is one of just four states that backs the plans with the full faith and credit of the state. Some states have shut down their prepaid tuition plans.
Because the very definition of "too generous" is providing middle-class families a financial instrument that actually allows them to plan for their children's education.
Closing GET to new enrollees would cause a $1.7 billion hit to the state treasury over an 11-year period. That’s because without new investors GET’s current fund balance is expected to be depleted by 2025. The state would then have to step in financially.
Then why the fuck would we want to lock in a $1.7 billion loss that we'd never have to pay if we'd just fund higher education at the level we all say we want to fund it? I mean, that's just crazy. Inflation has averaged between 2 and 3 percent over the past few decades. Limit tuition increases to 7.5 percent a year and the GET program easily outgrows its shortfall.
And to be absolutely clear, none of GET's current shortfall is due to financial mismanagement. It is all due to an unprecedented four straight years of double-digit tuition increases, a consequence lawmakers were well aware of when they decided to slash higher education funding.
The state has a contractual obligation to the holders of the 120,000 GET accounts. Any changes, including closing the program, should not affect those families. Those promises must be kept.
"Should not" affect those families? The correct phrasing is "could not." The editors are not being magnanimous here. The state is contractually obligated to pay off current account holders like me, fabulously wealthy that I am on my below median wage salary. (Although if the state could default on their obligations, no doubt the editors would advocate that it should, if only in the interest of protecting the poors and the job creators from gold-plated GET investors like me and our budget-busting "special deals.")
Middle-class families have other marketplace options to save for college. The state’s priorities should be to stop the bleeding in higher-education funding and protect low-income college students. Currently, the Legislature has accomplished this by pairing tuition hikes with commensurate increases in the State Need Grant and other state support. That’s the right priority.
As I've written before, GET is not an investment program. It's an insurance program. No other college savings option allows middle-class families to securely plan for their children's college education. Under other "marketplace options," all the foresight and responsible thriftiness in the world goes for naught if your child has the poor moral judgment to come of college age during an economic crisis marked by plunging markets and skyrocketing tuition. But I guess these middle-class kids don't deserve an affordable college education. Their parents should just sell their homes and thank God that they are Americans.
As for the Legislature "pairing tuition hikes with commensurate increases in the State Need Grant," that is total bullshit.. The State Need Grant remains substantially underfunded, with about 22,000 eligible students not receiving grant funded. But no doubt the editors would have you believe that we greedy GET investors are responsible for this too.
Lawmakers ought to look to Senate Majority Leader Rodney Tom, D-Medina, who chaired the GET legislative committee and calls for a long-term phaseout that protects current enrollees. He plans to introduce legislation to phase out GET.
More meat needs to be added to the bones of Tom’s plan but it leads the state in the right direction.
Yeah, if by "right direction" you mean removing obstacles to perpetual double-digit tuition increases by eliminating the one college savings program that allows middle-class Washington families to securely plan for their children's college education.
If that's what you consider progress, then I guess that makes Rodney Tom a progressive. But you know what it doesn't make Tom? A Democrat! So the editors should drop the "D" following his name before some real Dems sue the paper for defaming the Democratic Party by implying an association that no longer exists.