WA State Legislature Reconsiders Cap on Tuition – Impacts on the GET Plan

WA GET Plan (529) by on January 13, 2010 at 9:52 pm

Despite passing legislation in 2007 that limited the growth of in-state tuition, the WA legislature is considering removing this cap. From the Seattle Times article:

Gov. Chris Gregoire urged lawmakers to grant universities “tuition flexibility.” And a UW-backed measure that would give universities tuition-setting authority, within limits, is gaining the support of some key lawmakers. Sen. Derek Kilmer, D-Gig Harbor, who chairs the Higher Education & Workforce Development Committee, said he expects to file a bill this week that would give the state’s six universities the ability to set resident undergraduate tuition rates.

The bill currently being considered limits tuition growth to 14% in any one year and requires that the universities limit their growth to 10% a year.

Obviously this has an impact on the WA Get Program. The 529 plan currently targets investment returns of 7% a year, which corresponds to the prior cap on tuition growth. Since the out-of-state tuition reimbursement is indexed to the growth of in-state tuition, the higher tuition growth rate should translate to higher returns for this guaranteed investment vehicle.

Finaid.org highlights how reduced tuition support by state legislatures is quite common during financial downturns:

During recessions and for a year or two afterward, state governments tend to reduce support for higher education. This translates directly into increases in public college tuition rates. So when other investments are dropping due to a declining stock market, prepaid tuition plans will tend to increase.

The Washington Legislature may be doing just that as they try to close a $2.6B budget shortfall.

Overall, my opinion is that moves like this make the WA GET 529 Plan more attractive, particularly as a component of a diversified college savings strategy.


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