Because it's extra money in the state program that allows parents to save for college by prepaying their kids' tuition bills.
And now one lawmaker wants to distribute it.
If you have money in the program, known as the Guaranteed Education Tuition (GET) plan, you might want to pay close attention to a bill sponsored by that lawmaker.
SB 5923, sponsored by
Parents who have bought 400 units of GET — enough to cover the costs of four years of college at an in-state institution — would get an extra
Sounds great, right?
Of course, the bill has to pass first.
And there's a catch. As a prepaid-tuition plan, GET comes with a guarantee — no matter what the stock market does, 100 units of GET will always pay for one year of tuition and fees at
Not so for 529 savings plans — they are more like 401(k)s, at the mercy of the ups and downs of the stock market.
Who might make the switch?
Participants with children who want to go to out-of-state schools, for one, Mullet said.
And parents whose kids are going to college in the next two years might also want to forgo the tuition guarantee in exchange for the chance of a boost in the value of their accounts, Mullet said.
Here's a little history of GET's ups and downs:
Shortly after the recession, when the stock market fell and the price of tuition zoomed, GET was underfunded. Two years ago, the state cut tuition, playing havoc with the price of GET units and causing the state agency that administers GET to allow recent investors to pull money out without penalty, and closing it to new participants. (It's expected to reopen by July 1.)
Now, with tuition cuts and a strong stock market, the GET fund has a surplus — the overall value of the fund is
There are more than 100,000 active GET accounts. (Some students have more than one account.)
Because GET money is owned by its investors — the state acts in a fiduciary, not ownership, capacity, and the assets of the program are not considered state money — the surplus belongs to its investors.
Meanwhile, last year legislators approved the creation of a 529 college savings plan, which proponents say allows investors to take advantage of a strong stock market.
Every state but
Mullet says his bill will “kill two birds with one stone” — deal with the GET surplus and help the 529 savings plan get set up. A new request for proposals is out, and Mullet thinks the rollover deal might sweeten the pot because financial firms would see it as a way to get more investors into the savings plan.
His bill has bipartisan appeal — its co-sponsors include three other
Lawmakers can just leave the surplus be, but Mullet would rather not.
“If we're not going to share it with the GET holders,” Mullet said of the surplus, “who are we going to share it with?”
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