Washington GET 529 Reopened: Good deal?

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finance_learner
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Washington GET 529 Reopened: Good deal?

Post by finance_learner » Fri Oct 06, 2017 12:55 am

All,

The Washington GET 529 (details below for those who do not know what that is) reopened. The GET Committee voted to set the 2017-18 unit purchase price at $113 == $11,300 and the current tuition is $10,753. This means you only lose $600 out to start with and for the last 20 years UW tuition has been increasing by ~6%/year (http://opb.washington.edu/sites/default ... istory.pdf). This seems like a good deal for those with young children? And a good balance to stock/mutual fund based 529 holdings?


The GET program is Washington's 529 prepaid college tuition plan that helps families with young children save for future higher education expenses. The State of Washington guarantees that the value of your account will keep pace with the cost of college tuition, no matter how much it changes in the future. The earlier you start, the more time you have to save and the greater the opportunity for increased value of your GET account. GET account values are measured in "units," where 100 units equals the cost of one year of resident, undergraduate tuition and state-mandated fees at Washington’s highest priced public university. Individual units are valued at 1/100th of that cost. You can buy units in whole or partial amounts, from one to 600 units per student.

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Fri Oct 06, 2017 1:23 am

That's very interesting. That's a much lower premium than existed before the GET closed a couple of years ago.

In general UW tuition increases have moved inversely to the stock market. Thus if you think the stock market will continue to have robust gains, you would expect tuition to increase slowly and your returns to be muted. On the other hand if you think the stock market will crater, you'd expect tuition to skyrocket, making for a better investment.

It is a bit unclear if those who have previously bought the maximum number of units, but then transferred those units to other plans, would be eligible to buy more. If so I'd be tempted.

finance_learner
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Re: Washington GET 529 Reopened: Good deal?

Post by finance_learner » Fri Oct 06, 2017 1:35 pm

Agreed. The only concern I have is that it seems like WA state tax revenue is likely to be high for the long term due to the sharp increases in home prices (and increases in number of homes for that matter). Therefore we may not see the historical increases in WA state tuition in the future. Was there ever a justification as to why tuition at UW decreased a few years ago?

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Fri Oct 06, 2017 1:47 pm

finance_learner wrote:
Fri Oct 06, 2017 1:35 pm
Agreed. The only concern I have is that it seems like WA state tax revenue is likely to be high for the long term due to the sharp increases in home prices (and increases in number of homes for that matter). Therefore we may not see the historical increases in WA state tuition in the future. Was there ever a justification as to why tuition at UW decreased a few years ago?
Easy, the legislature passed a law requiring it. They funded state universities with more dollars and in exchange the universities agreed to lower tuition after the huge run up. I recall the agreement was -15% for 2 years then no change for 2 years and now I think we're at the end of that. What happens beginning in the fall of 2018 is anyone's guess.

I'm tempted to send them a check and see what happens. Ask for forgiveness rather than permission if they find out later I'm somehow not eligible. It's almost like a brand new program, and their FAQ does not address whether the old limits still apply.

Teyespider
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Re: Washington GET 529 Reopened: Good deal?

Post by Teyespider » Fri Oct 06, 2017 2:05 pm

I live in WA and my oldest just started college this year.

We didn't do GET. I wanted to have money in the end not college payment credits. I ended up using another state's 529 program allowing contribution to index funds.

You never know what will happen with college costs. What if they get subsidized in the future or get really cheap with online classes.

It turned out the early GET adopters did very well. Then they realized WA would have trouble paying for all the credits so they shifted the values so they benefited WA state.

I haven't looked at it close enough to see if there are any penalties to taking your money out if the kids don't go to college or if you don't need it all. You are already taking a 6% hit starting off. I wouldn't want to get hit again beyond typical 529s on the way out.

finance_learner
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Re: Washington GET 529 Reopened: Good deal?

Post by finance_learner » Fri Oct 06, 2017 4:34 pm

Teyespider wrote:
Fri Oct 06, 2017 2:05 pm
I live in WA and my oldest just started college this year.

We didn't do GET. I wanted to have money in the end not college payment credits. I ended up using another state's 529 program allowing contribution to index funds.

You never know what will happen with college costs. What if they get subsidized in the future or get really cheap with online classes.

It turned out the early GET adopters did very well. Then they realized WA would have trouble paying for all the credits so they shifted the values so they benefited WA state.

I haven't looked at it close enough to see if there are any penalties to taking your money out if the kids don't go to college or if you don't need it all. You are already taking a 6% hit starting off. I wouldn't want to get hit again beyond typical 529s on the way out.
It seems like I must be misinterpreting something: the GET premium was up to 60% in the past, now it's only 6%. Seems extremely cheap, no?

http://www.get.wa.gov/sites/default/fil ... .13.17.pdf
http://www.merriman.com/family-talk/the ... -get-plan/

limeyx
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Re: Washington GET 529 Reopened: Good deal?

Post by limeyx » Fri Oct 06, 2017 5:21 pm

We dont so far plan to do it as I think there is a good chance our kids will go out of state (especially since i want them to go somewhere warmer so i can visit to escape winter)

The deal doesn't seem so good if your kid goes out of state

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Fri Oct 06, 2017 5:23 pm

limeyx wrote:
Fri Oct 06, 2017 5:21 pm
We dont so far plan to do it as I think there is a good chance our kids will go out of state (especially since i want them to go somewhere warmer so i can visit to escape winter)

The deal doesn't seem so good if your kid goes out of state
why does it matter where your kids go to school?

sandramjet
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Re: Washington GET 529 Reopened: Good deal?

Post by sandramjet » Fri Oct 06, 2017 5:29 pm

letsgobobby wrote:
Fri Oct 06, 2017 5:23 pm
limeyx wrote:
Fri Oct 06, 2017 5:21 pm
We dont so far plan to do it as I think there is a good chance our kids will go out of state (especially since i want them to go somewhere warmer so i can visit to escape winter)

The deal doesn't seem so good if your kid goes out of state
why does it matter where your kids go to school?
Agreed... you can use it's value at any school. At other schools, there is just no guarantee that will meet 100% of tuition and fees.

EddyB
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Re: Washington GET 529 Reopened: Good deal?

Post by EddyB » Fri Oct 06, 2017 7:54 pm

letsgobobby wrote:
Fri Oct 06, 2017 5:23 pm
limeyx wrote:
Fri Oct 06, 2017 5:21 pm
We dont so far plan to do it as I think there is a good chance our kids will go out of state (especially since i want them to go somewhere warmer so i can visit to escape winter)

The deal doesn't seem so good if your kid goes out of state
why does it matter where your kids go to school?
I would have said the deal doesn't seem as certain, not that it doesn't seem as good. If I understand, it's an investment indexed to the cost of UW tuition, which (it being government) could have no relationship to changes in the cost of tuition at other schools. The arbitrariness of it would trouble me. Maybe they'd bring up UW in-state tuition to be in-line with UVA in-state tuition (likely a huge ROI for GET participants who then applied that value elsewhere). Maybe they'll decide UW should bring its tuition down to U. Wyoming levels. Terrible ROI.

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Fri Oct 06, 2017 8:29 pm

EddyB wrote:
Fri Oct 06, 2017 7:54 pm
letsgobobby wrote:
Fri Oct 06, 2017 5:23 pm
limeyx wrote:
Fri Oct 06, 2017 5:21 pm
We dont so far plan to do it as I think there is a good chance our kids will go out of state (especially since i want them to go somewhere warmer so i can visit to escape winter)

The deal doesn't seem so good if your kid goes out of state
why does it matter where your kids go to school?
I would have said the deal doesn't seem as certain, not that it doesn't seem as good. If I understand, it's an investment indexed to the cost of UW tuition, which (it being government) could have no relationship to changes in the cost of tuition at other schools. The arbitrariness of it would trouble me. Maybe they'd bring up UW in-state tuition to be in-line with UVA in-state tuition (likely a huge ROI for GET participants who then applied that value elsewhere). Maybe they'll decide UW should bring its tuition down to U. Wyoming levels. Terrible ROI.
UW is a flagship state U and while not in the same tier as Michigan or Berkeley, it will never be made as 'cheap as' Wyoming. It also happens to be in the most boomingest city in the country. I don't see its price suddenly falling in real terms. It's a liability matching program, though, not intended to optimize gains.

finance_learner
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Re: Washington GET 529 Reopened: Good deal?

Post by finance_learner » Sat Oct 07, 2017 11:27 pm

EddyB wrote:
Fri Oct 06, 2017 7:54 pm
EddyB wrote: ↑Fri Oct 06, 2017 5:54 pm
letsgobobby wrote: ↑
I agree. Would think that the premium rates (i.e. purchase price) is based on sound acturarial models. The fact that the premiums are so low now suggests that UW tuition (which I guess is inversely correlated with tax revenue) is not going to increase much in the future. Given the tech immigration and what not.

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Sun Oct 08, 2017 12:31 am

finance_learner wrote:
Sat Oct 07, 2017 11:27 pm
EddyB wrote:
Fri Oct 06, 2017 7:54 pm
EddyB wrote: ↑Fri Oct 06, 2017 5:54 pm
letsgobobby wrote: ↑
I agree. Would think that the premium rates (i.e. purchase price) is based on sound acturarial models. The fact that the premiums are so low now suggests that UW tuition (which I guess is inversely correlated with tax revenue) is not going to increase much in the future. Given the tech immigration and what not.
Actuaries make mistakes. In 2009 the price of one unit was $76 and the premium around 15%. By 2012 the cost was over $160 and the premium around 35% (value $117). Oops.

I would interpret a premium of 6% not to mean the actuaries know something I don't, but that they are extremely optimistic. What is it Warren Buffett said about being fearful when others are greedy and greedy when others are fearful?

limeyx
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Re: Washington GET 529 Reopened: Good deal?

Post by limeyx » Sun Oct 08, 2017 2:50 am

letsgobobby wrote:
Fri Oct 06, 2017 5:23 pm
limeyx wrote:
Fri Oct 06, 2017 5:21 pm
We dont so far plan to do it as I think there is a good chance our kids will go out of state (especially since i want them to go somewhere warmer so i can visit to escape winter)

The deal doesn't seem so good if your kid goes out of state
why does it matter where your kids go to school?
There are many reasons to go to different places and who even says a 4 year college will even be a concept when my kids go to school ?

Yes I could get guaranteed rates if they go to a WA school but it's not super clear if this is a better deal for out of state than just doing a regular 529

Maybe no one knows for sure

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Fri Dec 01, 2017 8:20 am

i went ahead and opened accounts. funded one unit each just to get a foot in the door. have til mid June to buy at this price so plenty of time to think about it. i will either transfer assets from a traditional 529 or sell muni bonds to fund.

mh77
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Re: Washington GET 529 Reopened: Good deal?

Post by mh77 » Wed Dec 20, 2017 6:32 pm

finance_learner wrote:
Fri Oct 06, 2017 12:55 am
... and for the last 20 years UW tuition has been increasing by ~6%/year
While that is true, the tuition rate increase is now tied to rate increase of hourly wages (http://www.get.wa.gov/sites/default/fil ... -11-17.pdf). So don't expect that tuition rates at UW will increase at the same historic pace.

Also, in early 2018 a new WA 529 savings plan will be opened and participants in the current GET program have 60 days from after the 529 plans opens to roll over their funds to the 529 w/o penalties.

I think the best option for those who paid >$117 is to request a refund and reinvest at the new $113 rate and optionally augment GET with the 529.

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Wed Dec 20, 2017 7:20 pm

mh77 wrote:
Wed Dec 20, 2017 6:32 pm
finance_learner wrote:
Fri Oct 06, 2017 12:55 am
... and for the last 20 years UW tuition has been increasing by ~6%/year
While that is true, the tuition rate increase is now tied to rate increase of hourly wages (http://www.get.wa.gov/sites/default/fil ... -11-17.pdf). So don't expect that tuition rates at UW will increase at the same historic pace.

Also, in early 2018 a new WA 529 savings plan will be opened and participants in the current GET program have 60 days from after the 529 plans opens to roll over their funds to the 529 w/o penalties.

I think the best option for those who paid >$117 is to request a refund and reinvest at the new $113 rate and optionally augment GET with the 529.
GET is already reopened.

that law is good, so long as it is the law. let’s see what happens with the next recession.

finance_learner
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Re: Washington GET 529 Reopened: Good deal?

Post by finance_learner » Thu Dec 28, 2017 12:39 pm

mh77 wrote:
Wed Dec 20, 2017 6:32 pm
finance_learner wrote:
Fri Oct 06, 2017 12:55 am
... and for the last 20 years UW tuition has been increasing by ~6%/year
While that is true, the tuition rate increase is now tied to rate increase of hourly wages (http://www.get.wa.gov/sites/default/fil ... -11-17.pdf). So don't expect that tuition rates at UW will increase at the same historic pace.

Also, in early 2018 a new WA 529 savings plan will be opened and participants in the current GET program have 60 days from after the 529 plans opens to roll over their funds to the 529 w/o penalties.

I think the best option for those who paid >$117 is to request a refund and reinvest at the new $113 rate and optionally augment GET with the 529.

There it is. Thank you. Median wages in WA state have been rising ~3%/yr since 1990. That explains the cheapness of the premium.

Any thoughts on the DreamAhead (https://www.google.com/url?sa=t&rct=j&q ... UjFXb5EG2y)

Since there is no state tax, is it really a matter of comparing to other states' 529s and seeing what the vehicles are?

SunnySeattle
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Re: Washington GET 529 Reopened: Good deal?

Post by SunnySeattle » Mon Apr 02, 2018 10:48 am

My plan is to rollover my kids’ GET accounts to the new 529 in June, and open new GET accounts for them at the current price. Our plan is to use the max allowed $10k/yr of the 529 for their private middle and high school tuition, and use 529, ibonds, and GET for college in 6-9 years.

ronin
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Re: Washington GET 529 Reopened: Good deal?

Post by ronin » Mon Apr 23, 2018 9:27 pm

As a parent of two young (<4 yrs old) children I was excited to to hear about the GET program being revamped. When I was considering 529 plans a couple/few years ago I was intrigued with this plan but not with the premium at the time hence I ended up setting up accounts through Utah (now called my529).

Now I have relatives looking to make significant lump sum contributions to both kids' college funds and so I'm back to re-looking at the WA GET program but have some questions/thoughts for others to comment on.

While the premium is historically low, the theoretical tuition inflation may also be much lower than historical figures given a recent law ties tuition inflation to wage inflation. I'm thinking since wage inflation has been somewhere between 2-3% isn't that about as much as tuition will rise going forward unless the law is changed? If so, it seems like the ROI would therefore be lower making a traditional plan such as Utah's possibly more appealing. I was also surprised to see the GET literature show the actuarial data suggesting tuition hikes could range up to 6% give or take, but that would suggest wage inflation would have to match that which seems unlikely.

Overall, I really am interested in the concept of the guaranteed plan to not have to worry about market returns and investment performance however I also wonder if the state could fiddle with things to de-value this investment if need be in the future?

Perhaps I'll diversify and use the GET for some and the Utah plan for other portions of their savings plans.

I welcome any additional thoughts.

Thanks.

doneat53
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Re: Washington GET 529 Reopened: Good deal?

Post by doneat53 » Mon Apr 23, 2018 10:42 pm

We signed into the GET program just at the wrong time. Increases remained flat and then declined and we withdrew our money 5 years later for the same amount we put it... so basically gave WA state a free loan for 5 years. WA residents have the advantage of no state income tax so basically you can invest in any state's 529 program without worrying about whether you would save additional amounts with your local state tax deduction. I recommend going with a 529 program that has a good history, WA state has proven that they will manipulate the program to their benefit. You can't fault them but I'd rather it be left to market forces. I looked around and found the Vanguard 529 college savings plan (Nevada) and have been happy with it.

suemarkp
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Re: Washington GET 529 Reopened: Good deal?

Post by suemarkp » Mon Apr 23, 2018 11:56 pm

I did OK with GET -- wasn't an early adopter, but got in in 2005, well before tuition flat lined. My only complaint with GET is how they report the 1099Q. I'm the account owner and my kids are the beneficiaries. So the 1099Q has my name on it, and it isn't broken out by kid (kids/beneficiaries are not mentioned at all on the 1099Q). My kids are twins, so both incurred college costs at the same time and both get the 1098T forms. The IRS can't seem to figure it out and I've been audited twice (they see no 1098T for me). The first time, it got resolved. The second time is still in work, but it is the same problem as the first. The GET plan wants to know what the money is for when you take it out (tuition, room/board, books/other) and each kid has a separate account, but this seems to be kept internally and on some statements the IRS never sees.

I don't know if all 529's work like this, or if the GET plan is just a bit lacking on paperwork details.
Mark | Kent, WA

ronin
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Re: Washington GET 529 Reopened: Good deal?

Post by ronin » Wed Apr 25, 2018 11:11 pm

I'm really perplexed after learning that WA State's new law limits tuition and fee hikes at state universities to align with the average growth in median hourly income for the state over a 14 year period. All the data I can see suggests this would be 2-3% however the actuarial tables for the GET program suggests tuition could rise 5-6% per year over the next 10 years which seem out of synch with history.

So unless they change the law again, isn't this a bet on medium wage growth expectations for the state at this point? At 2-3% you can purchase a 10-year Treasury for that yield. I love the concept of eliminating market risk for a portion of my college savings efforts but how hard woud it be to meet or beat 2-3% over the 15 year window I have to work with?

Any additional thoughts would be welcome.

Thanks!

yogesh
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Re: Washington GET 529 Reopened: Good deal?

Post by yogesh » Wed Apr 25, 2018 11:52 pm

Folks who get into GET pay premium for assurance meeting future tuition (inflation) guaranteed. I don’t think people put their money to get market like returns. If you are willing to take market risk then any state 529 plan should do it. I don’t consider GET accounts part of my investment or net worth; it’s guaranteed bond that matures when my kid goes to college and pays tuition equivalent to states costliest public school like UW.
Emergency: FDIC | Taxable: VT | Retirement: TR2040

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Thu Apr 26, 2018 12:54 am

ronin wrote:
Wed Apr 25, 2018 11:11 pm
I'm really perplexed after learning that WA State's new law limits tuition and fee hikes at state universities to align with the average growth in median hourly income for the state over a 14 year period. All the data I can see suggests this would be 2-3% however the actuarial tables for the GET program suggests tuition could rise 5-6% per year over the next 10 years which seem out of synch with history.

So unless they change the law again, isn't this a bet on medium wage growth expectations for the state at this point? At 2-3% you can purchase a 10-year Treasury for that yield. I love the concept of eliminating market risk for a portion of my college savings efforts but how hard woud it be to meet or beat 2-3% over the 15 year window I have to work with?

Any additional thoughts would be welcome.

Thanks!
Your thinking is correct, if the law holds. As you point out, GET's own actuaries do not predict the law to hold.

doneat53
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Re: Washington GET 529 Reopened: Good deal?

Post by doneat53 » Thu Apr 26, 2018 8:32 pm

Again (see my earlier post above) why bother? WA state GET has no advantage over other 529 plans and you can invest in Vanguard funds with low ER in other states without financial consequence. This is a no-brainer until WA state makes their program competitive.

doneat53
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Re: Washington GET 529 Reopened: Good deal?

Post by doneat53 » Thu Apr 26, 2018 8:36 pm

Folks who get into GET pay premium for assurance meeting future tuition (inflation) guaranteed. I don’t think people put their money to get market like returns. If you are willing to take market risk then any state 529 plan should do it. I don’t consider GET accounts part of my investment or net worth; it’s guaranteed bond that matures when my kid goes to college and pays tuition equivalent to states costliest public school like UW.
So if you are in it short term then perhaps this is good logic but if it will be 17-18 years before your child enters college the stock market is a better bet IMHO.

You can purchase bonds in other states programs to limit risk. Having already tested the WA state program personally I would NOT put your money there!

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Thu Apr 26, 2018 10:44 pm

I'm sorry you had a bad experience with the GET but you aren't acknowledging its significant advantage over a traditional 529, namely its liability matching feature. Unlike a 529, GET guarantees you will have enough for tuition at a future date. A 529 comprising stocks and bonds cannot guarantee that. Yes, right now the GET seems to offer a low rate of expected future return - but so do stocks and bonds. And GET's actuaries do not expect the tuition restriction to last, as evidenced by their projection of future tuition increases in the 5-6% range (no one expects 5-6% wage inflation to occur any time soon).

That being said, it's no gimme at this point. I am debating whether to add additional funds before the June 26 deadline for this year's price, or whether to convert other 529 money back into GET... or neither.

doneat53
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Re: Washington GET 529 Reopened: Good deal?

Post by doneat53 » Thu Apr 26, 2018 11:15 pm

My point isn't that I had a bad experience, my point is that I broke even after 5 years because the legislature couldn't pay GET program participants the higher yields.

The warning to others considering GET is that WA state will guarantee that you don't get a 6-7% return because WA state can't afford to pay people a 6-7% return. Consequently they will reduce WA state college tuition increases (ie they will mandate) to something they can afford (closer to 0-2%). If your child plans to attend a public institution in WA state then you are fine I suppose (although I don't know any parent who both knows their child's potential and knows what college they will attend 10 years out...). If you think your child might consider out of state schools or private schools then the GET program is not a wise choice, do yourself a favor and put the money in a 10 year CD making gauranteed 3% (subtract your tax bracket) and you are likely to do better than WA state GET.

Frankly even if you think your child will attend a WA state public institution it is a bad investment.

If low risk is your most important feature of your college investment you can obtain the same level of low risk as WA GET program and tuition guarantee with better investment yield potential by using 529 plans in other states.

letsgobobby
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Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Thu Apr 26, 2018 11:23 pm

doneat53 wrote:
Thu Apr 26, 2018 11:15 pm
My point isn't that I had a bad experience, my point is that I broke even after 5 years because the legislature couldn't pay GET program participants the higher yields.

The warning to others considering GET is that WA state will guarantee that you don't get a 6-7% return because WA state can't afford to pay people a 6-7% return. Consequently they will reduce WA state college tuition increases (ie they will mandate) to something they can afford (closer to 0-2%). If your child plans to attend a public institution in WA state then you are fine I suppose (although I don't know any parent who both knows their child's potential and knows what college they will attend 10 years out...). If you think your child might consider out of state schools or private schools then the GET program is not a wise choice, do yourself a favor and put the money in a 10 year CD making gauranteed 3% (subtract your tax bracket) and you are likely to do better than WA state GET.

Frankly even if you think your child will attend a WA state public institution it is a bad investment.

If low risk is your most important feature of your college investment you can obtain the same level of low risk as WA GET program and tuition guarantee with better investment yield potential by using 529 plans in other states.
You are making unsubstantiated allegations based on your bad experience. We had the opposite experience and can say with certainty WA has paid returns greater than 2%. We purchased at $70 and $76 and exchanged into traditional 529s when the payout was $113 eight and six years later and thus were quite happy with the returns. GET paid those returns even when state finances were much shakier than they are now.

ronin
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Re: Washington GET 529 Reopened: Good deal?

Post by ronin » Fri Apr 27, 2018 10:07 pm

I too am guessing tuition being tied (per current law) to median growth in hourly wages won't be sustainable at some point. It would a shame to hold tuition growth back at the expense of devaluing the actual educational experience/quality. One would think we wouldn't let this happen to our universities.

I agree with letsgobobby that trying to compare the GET to a traditional 529 plan is a bit of apples and oranges. Speaking of them, what led you to pull funds out of GET to put into another 529 plan instead of leaving them in GET?

As I'm getting ready to invest for my two kids' college, I'm leaning towards putting about half in the GET and the other a traditional plan such as Utah's. This will provide a bit of diversification so to speak.

doneat53
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Re: Washington GET 529 Reopened: Good deal?

Post by doneat53 » Sat Apr 28, 2018 12:02 pm

I too am guessing tuition being tied (per current law) to median growth in hourly wages won't be sustainable at some point. It would a shame to hold tuition growth back at the expense of devaluing the actual educational experience/quality. One would think we wouldn't let this happen to our universities.

I agree with letsgobobby that trying to compare the GET to a traditional 529 plan is a bit of apples and oranges. Speaking of them, what led you to pull funds out of GET to put into another 529 plan instead of leaving them in GET?

As I'm getting ready to invest for my two kids' college, I'm leaning towards putting about half in the GET and the other a traditional plan such as Utah's. This will provide a bit of diversification so to speak.
About ~10 years ago the tuition increases were dramatic (10-15% per year) and unsustainable. The WA state legislature realized they were going to lose money on the GET program and first limited the increases and actually reduced tuition two years in a row. At that point they shut down the GET program to new entries and we realized moving forward the return would be worse than traditional 529 programs so we switched. I've been very happy with the Nevada plan (Vanguard). The WA GET has just restarted but there is absolutely no reason to expect the returns of 10 years ago now. Personally I think it will be hard to keep up with inflation within GET. Again, you may not care if your children end up going to a WA state school but even in that situation you have post graduate education to think about. Why limit your returns?

I think you have the right idea that you don't need to focus on one program and dividing between two might be a good strategy. Long term (and perhaps even intermediate term) bonds aren't a great strategy right now but you can weight your 529 to short term bonds and basically have a similar risk profile to GET. If even less risk is important you might as well put the funds into an interest paying money market. Of course a lot of these decisions depend on your tax bracket and how much you will save by having tax free accumulation (time frame). Best approach would be to spreadsheet it but estimating GET increases moving forward I would not use the values people were seeing pre-halt of the program.

doneat53
Posts: 70
Joined: Tue Jul 04, 2017 1:23 pm

Re: Washington GET 529 Reopened: Good deal?

Post by doneat53 » Sat Apr 28, 2018 12:24 pm

Here is a graph of the GET price changes over time.

Image

letsgobobby
Posts: 11697
Joined: Fri Sep 18, 2009 1:10 am

Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Sat Apr 28, 2018 1:27 pm

ronin wrote:
Fri Apr 27, 2018 10:07 pm
I too am guessing tuition being tied (per current law) to median growth in hourly wages won't be sustainable at some point. It would a shame to hold tuition growth back at the expense of devaluing the actual educational experience/quality. One would think we wouldn't let this happen to our universities.

I agree with letsgobobby that trying to compare the GET to a traditional 529 plan is a bit of apples and oranges. Speaking of them, what led you to pull funds out of GET to put into another 529 plan instead of leaving them in GET?

As I'm getting ready to invest for my two kids' college, I'm leaning towards putting about half in the GET and the other a traditional plan such as Utah's. This will provide a bit of diversification so to speak.
It helps to understand how state legislatures generally help support public institutions of higher learning. One of the major reasons public institution tuition has grown so much faster than inflation over the last half century, and especially the last twenty years, has been an overall reduction in the proportion of university financing which comes from the state general fund. Whereas once upon a time large flagship universities received 2/3 or more of their total funding from the general fund, in many cases it is now under 1/3. So not only has tuition increased of its own accord (technology, facilities, administrative layers, etc), but tuition must also now cover twice as much of the total cost as it used to.

Within this larger trend, UW tuition has gone up more when stock market performance has been poor, and less when stock market performance has been good. I speculate this is because overall state finances suffer more during recessions and thus the support provided by the state to universities decreases, and vice versa. As you can see in the data doneat53 has posted, GET prices jumped 40% in the three years following the tech market crash, and 100% in the three years following the Great Recession. Tuition followed the same patterns, of course:

http://opb.washington.edu/sites/default ... istory.pdf

In 2015 the legislature reduced the future price of tuition at UW/UW-Tacoma by 15% over two years, to be followed by two years of tuition increases of only 2%. This followed a decade and a half of breakneck tuition increases in which tuition more than tripled, from around $3500 per year to over $11,000 per year. State finances had improved substantially, boosted in part by Seattle’s phenomenal growth, and the public was demanding a remedy for those years of tuition spikes. Because the prospects of a tuition decrease had never been entertained by GET, there was no protocol for dealing with the unpleasant reality that current investors would see their investment drop by a guaranteed 15% (although ultimately the GET committee solved that problem by granting additional credits toward these injured investors, in 2015 it was not clear any such solution would be forthcoming). In response, GET modified their plan language to allow current participants a one-time only transfer to any other traditional 529 plan, without penalty. Recall that in the original GET language, participants were ‘locked in’ and unable to transfer to other 529 plans.

We originally purchased 1000 units (ten years tuition, five years per child - the maximum allowed) in 2007 and 2009 for a total investment of $73,000. In 2015 the payout value for those funds was at ~$115,000. Given the prospects of a guaranteed loss of nearly 20% in real terms over two years, we played our get of jail free card and transferred 100% of the assets out to a traditional 529 in March of 2016. Those funds were then invested 100% in stocks. The stock market has since had a great run and those funds are now worth $180,000.

When GET reopened (current price: $113) last year, they did not place any restrictions on returning investors. Thus even though we had previously purchased five years of credits per child, apparently we can now purchase the maximum again (now six years per child - so maximum investment for two children is 1200 x $113 = $135,600). Our debate is how much, if any, to place in the 529; and whether to contribute new money or whether to roll in some of the assets in the other 529 plan.

Whether this is a wise decision depends primarily on what one’s predictions are regarding future tuition increases; and to doneat’s point, whether one has confidence in the state to honor its commitments. Obviously, our experience has been quite positive, so we don’t doubt the state’s integrity as others might. If anything, GET went out of their way to protect current investors in 2016, and they didn’t have to do that.

Regarding tuition increases, Washington hoped its bold actions on tuition decreases would start a national revolution, and that other states would follow. That didn’t happen. So now they’re a bit of an outlier, and I don’t think that will or can continue for long. In real terms tuition is now less expensive today than it was in 2011. And my reading of tuition history suggests the next time we have a recession, tuition will bump up markedly - the wage growth tie-in will become history. As you and I both pointed out, GET’s own actuaries do not predict those low rates of tuition inflation to hold.

Keep in mind the value of GET is not in its high rate of return, but in its liability matching qualities. We hoped for a fair rate of return with our investment but weren’t planning for a killing. We liked its predictability and its security. Likewise, with the new GET, even if you are not attracted by the prospects of future tuition growth, you may value the knowledge that college is paid for. I think of GET as an inflation-linked bond. As with TIPS, return isn’t everything.

2pedals
Posts: 648
Joined: Wed Dec 31, 2014 12:31 pm

Re: Washington GET 529 Reopened: Good deal?

Post by 2pedals » Sat Apr 28, 2018 2:12 pm

Lower returns are possible with WA GET 529 program over the 529 investment plan such as the Vanguard NV plan.

1) GET 529 is linked to lower than normal college tuition growth in tuition rates.
(no more than the average annual growth in median hourly wages in Washington State)

2) Student may go to a college that is better and more expensive private or out of state college. Many colleges may have higher growth rates for tuition and expenses than the GET provides.

3) Stock market return may outperform annual growth of median hourly wages.

4) Washington State Laws and 529 plans are subject to change (limiting the effectiveness of the investment)

5) I view the 529 plan as tax advantaged space and I would rather invest this money in vehicles I understand.

ronin
Posts: 41
Joined: Wed Apr 22, 2009 9:17 pm

Re: Washington GET 529 Reopened: Good deal?

Post by ronin » Sun Apr 29, 2018 9:52 am

Thanks to everyone for all the thoughtful contributions on this thread!

yogesh
Posts: 102
Joined: Thu Oct 11, 2012 6:20 pm

Re: Washington GET 529 Reopened: Good deal?

Post by yogesh » Sun May 06, 2018 12:41 pm

And new 529 index based plan details are out for WA new DreamAhead 529 plan.
Advantages: Low cost index fund age based or static allocation funds
Disadvantages: Costs seems higher compared to Vanguard/Fidelity National 529 plans

Sample Plan:
https://www.dreamahead.wa.gov/sites/def ... folios.pdf
https://www.dreamahead.wa.gov/sites/def ... folios.pdf
WA DreamAhead 529 (Moderate - Enrollment Date 2036)
ER=0.284% (0.064 Fund fees + 0.12% Service Fee + 0.10% State Administrative Fees)
24%, Fidelity Total Market Index Fund Premium Class
23% Schwab Total Stock Market Index Fund
33%, Fidelity International Index Fund Premium Class
10%, Fidelity Emerging Markets Index Fund Premium Class

3%, Fidelity US Bond Index Fund Premium Class
2%, Vanguard Total Bond Market Index Fund
1%, Vanguard Long-Term Treasury Index Fund Admiral Shares
2%, Schwab Tresury Inflation Protected Securities Index Fund
1%, Vanguard Emerging Markets Government Bond Index Fund Admiral Shares

1%, JPMorgan US Government Money Market Fund Capital Class
Emergency: FDIC | Taxable: VT | Retirement: TR2040

letsgobobby
Posts: 11697
Joined: Fri Sep 18, 2009 1:10 am

Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Fri Jun 15, 2018 8:03 am

finance_learner wrote:
Fri Oct 06, 2017 12:55 am
All,

The Washington GET 529 (details below for those who do not know what that is) reopened. The GET Committee voted to set the 2017-18 unit purchase price at $113 == $11,300 and the current tuition is $10,753. This means you only lose $600 out to start with and for the last 20 years UW tuition has been increasing by ~6%/year (http://opb.washington.edu/sites/default ... istory.pdf). This seems like a good deal for those with young children? And a good balance to stock/mutual fund based 529 holdings?


The GET program is Washington's 529 prepaid college tuition plan that helps families with young children save for future higher education expenses. The State of Washington guarantees that the value of your account will keep pace with the cost of college tuition, no matter how much it changes in the future. The earlier you start, the more time you have to save and the greater the opportunity for increased value of your GET account. GET account values are measured in "units," where 100 units equals the cost of one year of resident, undergraduate tuition and state-mandated fees at Washington’s highest priced public university. Individual units are valued at 1/100th of that cost. You can buy units in whole or partial amounts, from one to 600 units per student.
Final days to decide for 2018. Have you decided whether to fund or not?

yuan66
Posts: 2
Joined: Fri Jun 15, 2018 6:41 pm

Re: Washington GET 529 Reopened: Good deal?

Post by yuan66 » Fri Jun 15, 2018 7:25 pm

http://www.dreamahead529.com/sb6087
Roll over GET to Dream Ahead for the special price of $143 per unit is open for 90 days starting today. I guess most existing GET account owners will take advantage of this. After the promotion is over, do you think GET account will be still sustainable?

yuan66
Posts: 2
Joined: Fri Jun 15, 2018 6:41 pm

Re: Washington GET 529 Reopened: Good deal?

Post by yuan66 » Fri Jun 15, 2018 7:53 pm

doneat53 wrote:
Mon Apr 23, 2018 10:42 pm
We signed into the GET program just at the wrong time. Increases remained flat and then declined and we withdrew our money 5 years later for the same amount we put it... so basically gave WA state a free loan for 5 years. WA residents have the advantage of no state income tax so basically you can invest in any state's 529 program without worrying about whether you would save additional amounts with your local state tax deduction. I recommend going with a 529 program that has a good history, WA state has proven that they will manipulate the program to their benefit. You can't fault them but I'd rather it be left to market forces. I looked around and found the Vanguard 529 college savings plan (Nevada) and have been happy with it.
We were in the same boat with you. We bought our units at $172 in 2013 and withdrew in October 2017 after they reopened the program and set new unit price at $113. Due to extreme disappointment, we decided to roll over to another 529 program, but they only allowed us to withdraw the money we put in and the rebased 67 units added to our account was not allowed to withdraw. Now with the new Senate bill 6087, these additional rebased units are honored and considered in the total units for roll over and calculation for adding more units. I am wondering if a class action can help us to get state to compensate our loss.

letsgobobby
Posts: 11697
Joined: Fri Sep 18, 2009 1:10 am

Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Fri Jun 15, 2018 8:28 pm

They extended current unit pricing through October 31.

User avatar
Chan_va
Posts: 773
Joined: Wed Dec 05, 2012 7:15 pm

Re: Washington GET 529 Reopened: Good deal?

Post by Chan_va » Sat Jun 16, 2018 3:56 am

We are currently WA state residents but unlikely to be so when it comes time to claim benefits. Thoughts on the role of the GET program in our case? I guess we are betting that the instate tuition in WA keeps up with the national average. How should I think about the mix between a traditional 529 and the GET program?

letsgobobby
Posts: 11697
Joined: Fri Sep 18, 2009 1:10 am

Re: Washington GET 529 Reopened: Good deal?

Post by letsgobobby » Sat Jun 16, 2018 9:58 am

Chan_va wrote:
Sat Jun 16, 2018 3:56 am
We are currently WA state residents but unlikely to be so when it comes time to claim benefits. Thoughts on the role of the GET program in our case? I guess we are betting that the instate tuition in WA keeps up with the national average. How should I think about the mix between a traditional 529 and the GET program?
Depends if the state can honor its commitment to keep tuition increases equal to wage inflation. They are already well below comparable institutions nationally. As long as Washington's economy thrives, I believe the state will step in with additional support for the University system. But we will see what happens with the next recession.

limeyx
Posts: 244
Joined: Wed Sep 07, 2016 5:34 pm

Re: Washington GET 529 Reopened: Good deal?

Post by limeyx » Sat Jun 16, 2018 8:20 pm

letsgobobby wrote:
Fri Jun 15, 2018 8:03 am
finance_learner wrote:
Fri Oct 06, 2017 12:55 am
All,

The Washington GET 529 (details below for those who do not know what that is) reopened. The GET Committee voted to set the 2017-18 unit purchase price at $113 == $11,300 and the current tuition is $10,753. This means you only lose $600 out to start with and for the last 20 years UW tuition has been increasing by ~6%/year (http://opb.washington.edu/sites/default ... istory.pdf). This seems like a good deal for those with young children? And a good balance to stock/mutual fund based 529 holdings?


The GET program is Washington's 529 prepaid college tuition plan that helps families with young children save for future higher education expenses. The State of Washington guarantees that the value of your account will keep pace with the cost of college tuition, no matter how much it changes in the future. The earlier you start, the more time you have to save and the greater the opportunity for increased value of your GET account. GET account values are measured in "units," where 100 units equals the cost of one year of resident, undergraduate tuition and state-mandated fees at Washington’s highest priced public university. Individual units are valued at 1/100th of that cost. You can buy units in whole or partial amounts, from one to 600 units per student.
Final days to decide for 2018. Have you decided whether to fund or not?
Not

finance_learner
Posts: 16
Joined: Mon Aug 14, 2017 12:44 am

Re: Washington GET 529 Reopened: Good deal?

Post by finance_learner » Wed Jun 20, 2018 6:57 pm

Sorry, I log in very infrequently. I did end up signing on.

As with every investment, there is alot of uncertainty with respect to opportunity costs and one has to make their own trade offs.

Despite the lower expected returns, I committed for the following reasons
1) diversification of my other sources of support for tuition which are primarily in stocks
2) peace of mind and ease of understanding of a guarantee tuition

Who knows, had I known that there was an extension, I might have changed my mind...
limeyx wrote:
Sat Jun 16, 2018 8:20 pm
letsgobobby wrote:
Fri Jun 15, 2018 8:03 am
finance_learner wrote:
Fri Oct 06, 2017 12:55 am
All,

The Washington GET 529 (details below for those who do not know what that is) reopened. The GET Committee voted to set the 2017-18 unit purchase price at $113 == $11,300 and the current tuition is $10,753. This means you only lose $600 out to start with and for the last 20 years UW tuition has been increasing by ~6%/year (http://opb.washington.edu/sites/default ... istory.pdf). This seems like a good deal for those with young children? And a good balance to stock/mutual fund based 529 holdings?


The GET program is Washington's 529 prepaid college tuition plan that helps families with young children save for future higher education expenses. The State of Washington guarantees that the value of your account will keep pace with the cost of college tuition, no matter how much it changes in the future. The earlier you start, the more time you have to save and the greater the opportunity for increased value of your GET account. GET account values are measured in "units," where 100 units equals the cost of one year of resident, undergraduate tuition and state-mandated fees at Washington’s highest priced public university. Individual units are valued at 1/100th of that cost. You can buy units in whole or partial amounts, from one to 600 units per student.
Final days to decide for 2018. Have you decided whether to fund or not?
Not

limeyx
Posts: 244
Joined: Wed Sep 07, 2016 5:34 pm

Re: Washington GET 529 Reopened: Good deal?

Post by limeyx » Wed Jun 20, 2018 7:42 pm

finance_learner wrote:
Wed Jun 20, 2018 6:57 pm
Sorry, I log in very infrequently. I did end up signing on.

As with every investment, there is alot of uncertainty with respect to opportunity costs and one has to make their own trade offs.

Despite the lower expected returns, I committed for the following reasons
1) diversification of my other sources of support for tuition which are primarily in stocks
2) peace of mind and ease of understanding of a guarantee tuition

Who knows, had I known that there was an extension, I might have changed my mind...
limeyx wrote:
Sat Jun 16, 2018 8:20 pm
letsgobobby wrote:
Fri Jun 15, 2018 8:03 am
finance_learner wrote:
Fri Oct 06, 2017 12:55 am
All,

The Washington GET 529 (details below for those who do not know what that is) reopened. The GET Committee voted to set the 2017-18 unit purchase price at $113 == $11,300 and the current tuition is $10,753. This means you only lose $600 out to start with and for the last 20 years UW tuition has been increasing by ~6%/year (http://opb.washington.edu/sites/default ... istory.pdf). This seems like a good deal for those with young children? And a good balance to stock/mutual fund based 529 holdings?


The GET program is Washington's 529 prepaid college tuition plan that helps families with young children save for future higher education expenses. The State of Washington guarantees that the value of your account will keep pace with the cost of college tuition, no matter how much it changes in the future. The earlier you start, the more time you have to save and the greater the opportunity for increased value of your GET account. GET account values are measured in "units," where 100 units equals the cost of one year of resident, undergraduate tuition and state-mandated fees at Washington’s highest priced public university. Individual units are valued at 1/100th of that cost. You can buy units in whole or partial amounts, from one to 600 units per student.
Final days to decide for 2018. Have you decided whether to fund or not?
Not
Yeah for me its really hard to make a prediction here.
My perception is the value is probably good for WA schools and less for out of state (but who knows)
Hoping my kids go somewhere with better weather in winter !!! But knowing my luck it will be cold & expensive !

finance_learner
Posts: 16
Joined: Mon Aug 14, 2017 12:44 am

Re: Washington GET 529 Reopened: Good deal?

Post by finance_learner » Thu Jun 21, 2018 3:44 pm

Harvard is cold and expensive ;)
limeyx wrote:
Wed Jun 20, 2018 7:42 pm
finance_learner wrote:
Wed Jun 20, 2018 6:57 pm
Sorry, I log in very infrequently. I did end up signing on.

As with every investment, there is alot of uncertainty with respect to opportunity costs and one has to make their own trade offs.

Despite the lower expected returns, I committed for the following reasons
1) diversification of my other sources of support for tuition which are primarily in stocks
2) peace of mind and ease of understanding of a guarantee tuition

Who knows, had I known that there was an extension, I might have changed my mind...
limeyx wrote:
Sat Jun 16, 2018 8:20 pm
letsgobobby wrote:
Fri Jun 15, 2018 8:03 am
finance_learner wrote:
Fri Oct 06, 2017 12:55 am
All,

The Washington GET 529 (details below for those who do not know what that is) reopened. The GET Committee voted to set the 2017-18 unit purchase price at $113 == $11,300 and the current tuition is $10,753. This means you only lose $600 out to start with and for the last 20 years UW tuition has been increasing by ~6%/year (http://opb.washington.edu/sites/default ... istory.pdf). This seems like a good deal for those with young children? And a good balance to stock/mutual fund based 529 holdings?


The GET program is Washington's 529 prepaid college tuition plan that helps families with young children save for future higher education expenses. The State of Washington guarantees that the value of your account will keep pace with the cost of college tuition, no matter how much it changes in the future. The earlier you start, the more time you have to save and the greater the opportunity for increased value of your GET account. GET account values are measured in "units," where 100 units equals the cost of one year of resident, undergraduate tuition and state-mandated fees at Washington’s highest priced public university. Individual units are valued at 1/100th of that cost. You can buy units in whole or partial amounts, from one to 600 units per student.
Final days to decide for 2018. Have you decided whether to fund or not?
Not
Yeah for me its really hard to make a prediction here.
My perception is the value is probably good for WA schools and less for out of state (but who knows)
Hoping my kids go somewhere with better weather in winter !!! But knowing my luck it will be cold & expensive !

limeyx
Posts: 244
Joined: Wed Sep 07, 2016 5:34 pm

Re: Washington GET 529 Reopened: Good deal?

Post by limeyx » Thu Jun 21, 2018 4:50 pm

Noted!
finance_learner wrote:
Thu Jun 21, 2018 3:44 pm
Harvard is cold and expensive ;)
limeyx wrote:
Wed Jun 20, 2018 7:42 pm
finance_learner wrote:
Wed Jun 20, 2018 6:57 pm
Sorry, I log in very infrequently. I did end up signing on.

As with every investment, there is alot of uncertainty with respect to opportunity costs and one has to make their own trade offs.

Despite the lower expected returns, I committed for the following reasons
1) diversification of my other sources of support for tuition which are primarily in stocks
2) peace of mind and ease of understanding of a guarantee tuition

Who knows, had I known that there was an extension, I might have changed my mind...
limeyx wrote:
Sat Jun 16, 2018 8:20 pm
letsgobobby wrote:
Fri Jun 15, 2018 8:03 am

Final days to decide for 2018. Have you decided whether to fund or not?
Not
Yeah for me its really hard to make a prediction here.
My perception is the value is probably good for WA schools and less for out of state (but who knows)
Hoping my kids go somewhere with better weather in winter !!! But knowing my luck it will be cold & expensive !

sac41487
Posts: 1
Joined: Fri Jun 22, 2018 11:39 pm

Re: Washington GET 529 Reopened: Good deal?

Post by sac41487 » Fri Jun 22, 2018 11:55 pm

In the 2017 GET Actuarial Valuation report they explain why their tuition growth rate expectations are higher than if tuition is capped at the annual rate of state wage growth (from Senate Bill 5954 2015).

"Chapter 36, Laws of 2015, 3rd Special Legislative Session,
also established a policy to limit resident, undergraduate
tuition growth rates to no more than the annual growth
rate in the median state wage. If future Legislatures
continue this policy, we would expect future tuition
growth rates closer to 3-4 percent per year. However,
because the current Legislature cannot obligate a future
Legislature, the sustainability of the current higher
education budget is not certain, and because past history
consistently demonstrates that higher education tuition
policy changes remain for short-term periods only, we
have assumed tuition growth rates after the next two
years that we believe are more reflective of long-term
practices and consistent with our expectations for the
future."

https://www.get.wa.gov/sites/default/fi ... Report.pdf

gansvv
Posts: 1
Joined: Sat Jul 14, 2018 9:44 pm

Re: Washington GET 529 Reopened: Good deal?

Post by gansvv » Sat Jul 14, 2018 10:02 pm

How does WA DreamAhead 529 compare to other state and online 529 plans? Can someone comment on if they use any online 529 plans like ML or Fidelity?
I'm apprehensive because of the $35 annual fee and management expenses for DreamAhead vs $0 for GET and other online 529 plans.

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