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Stay in GET, or get out?

| September 06, 2015
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In Katherine Long's Seattle Times article published on September 5, 2015, our very own Chris Featherstone, CFP, ChFC provided some valuable insight on the important topic of what to do now that the State of Washington has authorized refunds from the GET prepaid tuition program.  This question has generated a lot of anxiety for many parents around the state, and we encourage you to contact us at any time to discuss your options.  Here are Chris' thoughts as published in the Seattle Times:

Featherstone advises account-holders with children who are within three years of enrolling in college, and little or no tolerance or risk, to stay in the GET program. Those who have a moderate or high level of risk should roll their money into another state’s 529 plan, “and accept some risk for the chance to make some money.”

If you’ll be using GET units four or more years from now, transfer to a 529 plan, Featherstone says. “If we take the legislature seriously and assume that they will fund higher education, the assumption we would make, would be lower increases (or no increases) in costs over the next 5 – 10 years. We would also have to make the assumption that if costs are rising in-state at a low rate, parents may be able to beat college in-state inflation by investing in a diversified portfolio of stocks and bonds (mutual funds).”

“That all being said, if there is any chance that a client’s children would be going out of state for college, that makes this discussion even more important,” Featherstone wrote. “Just because the State of Washington is keeping tuition costs down, doesn’t mean that other states are looking at their costs the same way. It could be that tuition in-state goes up by 1% or 2% over the next several years (we know for the next couple they won’t go up at all), but that out of state tuition could and very likely will go up by a much higher percentage than that, which makes it even more important to try and keep up with out of state tuition inflation.

“As we all know, where our children go to school is a function of many things, cost being only one of them. Geography, student experience, quality of education are other factors that may weigh heavier for many parents.

“As the parent of a child with both a GET account and 529 account, I got the best of both worlds for a period of time. After 2010 it became very expensive to get in the GET program when factoring in the premium one had to pay for credits. Our advice over the last few years has been, and remains, to put your money in a 529 plan where you can potentially keep up with tuition rates nationally. Since 2009, when I bought credits for my son, it has been a decent investment, but going forward (he’s 13) I will be rolling the GET account to his 529 account. If he stays in-state and his 529 account continues to do well, he will be able to make that money go further. If he chooses to go out of state then hopefully we will have kept up with that state’s increases.”

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