Uncertainty about the future price of tuition impacts Washington’s prepaid college tuition program

Stephanie Iris Schendel

Cost of tuition at Washington’s public universities and colleges will continue to rise and due to the unpredictability of these increases, legislators are proposing changes to the future pay-out method of the state’s prepaid college-savings program.

The Guaranteed Education Tuition (GET) Program was created to make saving for college more affordable and accessible to Washington’s families, said Betty Lochner, the director of the GET Program. The sustainability of program however depends on predictable increases of tuition prices.

“The concern about GET is really a reflection of what is going to happen to tuition predictability over the long-term,” Don Bennett, the executive director of the Higher Education Coordinating Board said.

Because the price of tuition remains unpredictable, there is legislative concern of creating a liability for future purchasers, Bennett said.

When a person buys a year of tuition with the current GET Program, they are guaranteed to receive a future pay-out that covers tuition and mandatory student fees at whichever Washington’s most-expensive public university will be at that time.

“In the way the state is moving currently they want to have much higher tuition for University of Washington (UW) and Washington State University (WSU) than the other schools,” Lochner said. “They want to de-link that (price) from the GET Program so it is not paying out at the highest tuition.”

Chio Flores, the director of financial aid and scholarships at WSU said she can understand why the state of Washington is taking the precautionary method of trying to change the pay-out of the program.

“The reality is that tuition always increases and it has always increased,” Flores said. “The types of increases that we have been seeing in the past ten years however, have been much more significant and remarkable (than before).”

The recent financial crisis caused even higher spikes in tuition than usual, she said, including the 14 percent rise to WSU’s tuition two years ago.

Another significant increase in WSU’s tuition is likely to happen again, she said.
“The amount in the past has been dictated by the state,” Flores said. “It has been capped at no more than a 7 percent increase and it takes legislative action to remove that cap.”

Currently, there is proposed legislation to remove that cap for the next two years, which would allow up to an additional 11 percent hike to tuition, she said.

Increase in the cost of higher education is not unique to Washington, Lochner said. Prepaid college programs similar to Washington’s GET Program in other states have faced the same problem.

“Texas probably is the most recent one that has restructured their program to a different pay-out,” Lochner said. “They are getting about 25 percent of the new enrollment than they got from the old program. For example, we get about 10,000 new enrollments a year that would take it down to 2,500.”

If legislation regarding the GET Program passes, it would change the pay-out method to be a “weighted average” of tuition growth of all public institutions of higher education, including community colleges, Lochner said.

“Because the community college system has so many students, about 125,000, it would weigh that top (tuition increase) way down,” she said.

The changes to the program will make it more difficult and complicated for families to plan for college, she said, especially for more expensive universities like WSU and UW.

“Our job is to run the program the best way we can and implement any changes,” Lochner said. “We don’t necessarily agree with those changes.”

She also said people who are already in the program and enrolled through March 31 of this year will not be affected by the change.


Sources
Don Bennett
360.753.7831
donb@hecb.wa.gov

Chio Flores
509.335.9720
cflores@wsu.edu

Betty Everitt Lochner
BettyL@HECB.WA.GOV
360-753-7871 (office)

Outline
Lede: Uncertainty about the future price of tuition impacts Washington’s prepaid college tuition program
First Section:
Why Washington needs to change the pay-out method
Introduce all three sources
Second section:
History and future of rising tuition prices
Third section:
How rising tuition makes it nearly-impossible for a tuition based program to exist
What that means for families planning for college
How the program would be specifically change
Other state-based university saving programs