Saving for college? State’s newest option won’t be ready until next year

Students walks across Red Square at Western Washington University on Feb. 20, 2013.
Students walks across Red Square at Western Washington University on Feb. 20, 2013. The Bellingham Herald

A new, state-sponsored option for investing for college won’t be ready until next year, so those enrolled in Washington state’s current prepaid tuition plan have until at least Sept. 1 to pull their money out without penalty.

Some members of the committee that runs Washington’s Guaranteed Education Tuition plan had hoped to set up a second traditional 529 college savings plan by the end of this year.

Now, it’s more likely that the new plan will be in place by summer, The Seattle Times reported. That means the deadline to pull money out of the state’s current Guaranteed Education Tuition plan has been extended to either Sept. 1 or 60 days after the new 529 plan opens, whichever is later.

Washington is one of the few states in the country to offer a prepaid tuition plan.

The state’s prepaid college tuition plan, known as GET, is temporarily closed to new enrollments and tuition “unit” sales, but it still is scheduled to reopen to new investors by July 1. One hundred units are guaranteed to cover a year of tuition and fees at the state’s most expensive public school.

The Legislature decided earlier this year that the GET program should reopen and the state should start a more traditional 529 college savings plan alongside it.

The state has been looking for a company to manage the new 529 college savings plan. Proposals are due Nov. 30, and the state expects to pick a company in January, said Lucas Minor, a spokesman with the GET committee.

Washington runs one of the few college-savings programs in the country that allows parents to buy tuition units in advance.

Traditional 529 plans allow participants to invest in mutual funds or make other investments, much like a 401(k) plan, but without guarantees. Both allow people to save for college and not pay federal income taxes on their investment earnings.

Since 2015, the state has allowed people to pull money from the GET program. Between September 2015 and last month, the agency that oversees GET issued 19,000 refunds to customers totaling $361 million.

Minor said some GET customers have rolled their money into 529 plans offered by other states. But many have said they’re waiting to see what options the state will offer with the new plan before deciding what to do with their money.