Seattle — As Washington’s prepaid tuition program opens to new participants Tuesday, the plan may not seem like much of a bargain to people who bought in years ago at the equivalent of $7,000 or $8,000 for a year of college.
But it’s the inevitable result of keeping up with the state’s skyrocketing tuition.
This year’s price for one Guaranteed Education Tuition unit is $163, which translates into $16,300 for a year of tuition and state-mandated fees at the University of Washington or Washington State University. That doesn’t include room and board.
One tuition unit cost $117 before a September increase.
The program allows parents to prepay tuition for their kids, at a rate above current costs but below what they would expect when their kids are in college. They’re guaranteed that 100 units will pay for a year of Washington’s most expensive tuition and the units can be turned into cash for out-of-state and private colleges.
For parents buying tuition units for current middle-school students or younger, it’s still a bargain, said program director Betty Lochner.
“When you look at it over the long term, it’s still a good deal,” Lochner said.
Program officials estimate that a child born today will pay more than $150,000 for four years of tuition in 2029.
Washington is one of 13 states with current prepaid tuition programs. Nine other plans have been suspended or closed, mostly because of financial instability. Only five, including Washington, are guaranteed by the state, which means the government would have to bail the program out if it couldn’t meet its obligations.
That guarantee scares lawmakers, who during the 2011 Legislature debated freezing the current Guaranteed Education Tuition program and starting a new, less generous plan.
But a state actuary report released in March said there is a less than 1 percent chance Washington’s prepaid tuition program would not be able to meet its financial obligations over the next 50 years.
If everyone in the plan cashed in their units this year, the plan wouldn’t have enough cash to cover them, but that’s how the program works; future college students pay the cost of current tuition.
Supporters of Washington’s prepaid tuition program argued that freezing the current plan would not solve its financial challenges because that idea would cut the program off from future contributions.
Last year, families opened 15,280 new Guaranteed Education Tuition accounts as they watched college tuition going up.
A study ordered by the Legislature and approved by lawmakers and staff came to the same conclusion that the program would remain most solvent as is.
It also found that the current tuition program is sustainable with a low risk that the state will need to bail it out as long as units are correctly priced.
Lochner expressed confidence that would continue as long as Washington’s universities don’t start raising tuition more than once a year. Checks with the University of Washington and Western Washington University found that tuition has never increased more often than yearly.
The study found that the custom monthly plan — for which a parent signs up to pay the same amount each month to build a college fund for their child — provides a steady flow of predictable income to the program.
According to the recent report, the guaranteed tuition program has the second-highest amount of assets and number of accounts opened, and is the fastest-growing prepaid plan in the nation.
“(It) is viewed by other states as a leader in efficiency, program management, and increased participation,” the report said.