If you are planning to enroll in Washington's Guaranteed Education Tuition (GET) program to save for your child's future college expenses, you have until May 31, 2014 to sign up at this year's price of $172 a unit. The price may go up for the next enrollment period, beginning Nov. 1, 2014.
The cost per unit is pegged to the tuition rate at the state's most expensive colleges – the University of Washington and Washington State University. After years of drastic increases, tuition costs and GET unit costs stayed the same between 2012-2013 and 2013-2014.
The GET committee will meet in September to decide the 2014-2015 unit price. "At this point, we don't have any information related to future pricing," says Ryan Betz, GET associate director of marketing and communication. "We encourage families to start now and lock in today's price, as it is subject to change each year. The sooner families begin saving for college, no matter how much they put away, the better off they will be in the long run."
Here's how it works: A parent, grandparent, relative or friend makes contributions to a child's GET account, either through a monthly custom payment plan or through flexible lump sum payments. You can buy full or partial units, up to 500 units per child. You can begin using the units to pay for college tuitions and other expenses after the account has been open for two years.
It's best to start saving in GET early, not only to build up more time to save, but because the present payout value is $117.82 – lower than the cost per unit. Today's high unit price is based on current and projected tuition, operating expenses, an amount to build program reserves and an additional amount to amortize losses from recent unexpected tuition increases. This means that if you start saving when your child is in high school, you will lose money.
However, if you start when a child is born, or up to his 13th or 14th birthday, your payout value will be greater than your unit costs. This is because college tuition is rising faster than the cost of GET – an average of 10 percent a year in the past 10 years. Plus, you won't have to come up with all of the cost of college when your child graduates from high school.
The biggest advantage of GET or other 529 college savings plans (authorized by Section 529 of the Internal Revenue Code) is that the funds grow tax-free over the years, and you pay no tax if you use the money for qualified education expenses. Many of these plans are tied to the stock market, whereas the GET is guaranteed by the state of Washington to keep pace with resident undergraduate tuition. (Compare options at www.collegesavings.org.)
"Flexible plans and payment options make it easy to get started, even if you have a small budget," Betz notes. "The average American family spends $200 a month eating out. Cut that in half, and have another $1,200 a year to add to your college savings. Or when you get a raise, put the difference into your college savings. With student loan debt reaching more than $1 trillion dollars in our nation, the average college graduate is finishing school with more than $30,000 in student loans. Setting aside funds now ensures less debt in the future."
Betz also points to a 2011 study by Washington University in St. Louis which found that children with a dedicated college savings accounts in their names are seven times more likely to finish high school and move on to some form of post-secondary education. "Beyond the financial rewards of saving, a dedicated college savings account sends a powerful message to your children that you value their education and that it is a critical part of their future," he says.
