GET’ing the Most out of Your College Savings – WA GET Program Update
The Washington Guaranteed Education Tuition (GET) program has “rebased” units held in its popular college savings plan. The GET Program enables families to pre-pay college tuition costs by purchasing tuition units now to avoid paying higher tuition costs in the future. By rebasing, the program was able to bring the numbers back into alignment with the formal terms of the plan. Under the terms of GET, 100 units should equal one year of tuition at the most expensive public Washington university. Prior to this summer’s rebasing, 100 units were worth 13% more than one year of tuition.
In 2015, the state’s College Affordability Program went into effect, which lowered tuition for two consecutive years and limited future tuition growth for Washington State’s public colleges. As a result, the value of each GET unit was frozen at $117.82 for two years and the program was closed to new investors. The rebasing on August 1, 2017, adjusted the payout value of each GET unit to $103.86, while proportionally increasing the number of units each participant held.
Rebasing is a lot like a stock split. When Widget Inc. decides to issue more shares through a stock split, the value of shareholders’ investments does not shrink. The number of shares and the price of the shares simply change. For example, if a person owned 100 shares of Widget Inc. at $100/share before a 2-for-1 split, she would own 200 shares of Widget Inc. at $50/share after the split. The total value of her position in Widget Inc. would be remain $10,000.
Rebasing is a lot like a stock split. When Widget Inc. decides to issue more shares through a stock split, the value of shareholders’ investments does not shrink. The number of shares and the price of the shares simply change.
Below is an example that illustrates the effects of rebasing on a GET account (assuming this year’s highest tuition were $10,400*):
Previously, the maximum number of GET units per each student was 500 and the number of units that could be used in one year was 125. GET has now raised the maximum number of units per student to 600, and has also increased the number of units that can be used in one year to 150. GET will be reopening for new enrollment and unit purchases by November 1, 2017.
Planning and saving for college can be extremely challenging under normal circumstances. Adding the complexity of changing program terms can make it downright bewildering. Our team is well-versed on all manner of college savings vehicles, from tax-efficient plans like Washington’s GET Program and 529 College Savings Plans, to accounts created under the Washington Uniform Transfer to Minors Act. Please contact us if you would like help taking the mystery out of saving for college.