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Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 12:55 am
by finance_learner
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.

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 1:23 am
by letsgobobby
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.

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 1:35 pm
by finance_learner
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?

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 1:47 pm
by letsgobobby
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.

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 2:05 pm
by Teyespider
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.

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 4:34 pm
by finance_learner
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/

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 5:21 pm
by limeyx
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

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 5:23 pm
by letsgobobby
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?

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 5:29 pm
by sandramjet
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.

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 7:54 pm
by EddyB
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.

Re: Washington GET 529 Reopened: Good deal?

Posted: Fri Oct 06, 2017 8:29 pm
by letsgobobby
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.

Re: Washington GET 529 Reopened: Good deal?

Posted: Sat Oct 07, 2017 11:27 pm
by finance_learner
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.

Re: Washington GET 529 Reopened: Good deal?

Posted: Sun Oct 08, 2017 12:31 am
by letsgobobby
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?

Re: Washington GET 529 Reopened: Good deal?

Posted: Sun Oct 08, 2017 2:50 am
by limeyx
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