SEATTLE — The state took another step toward starting a traditional 529 college savings plan on Thursday, as people continue to ask for refunds from the state’s prepaid tuition program, which will remain frozen for now.
The new plan would be run by the state, not an outside investment group.
The committee that runs Washington’s college savings program decided at a meeting in Olympia that it will ask the Legislature to allocate money to pay the start-up costs for the new savings plan.
They want to have the Washington State Investment Board handle the investment side and use existing software and processes to manage the program, which could be ready to open by 2017.
This kind of independently run 529 college savings plan would be similar to plans in six other states, according to GET program Director Betty Lochner.
It would offer another alternative to people who want to save for college and would be more attractive to parents with older children, she said, adding that the GET program was always aimed at families with babies and young children.
The goal would be to set up an investment program that gets good results for savers while offering low fees and Lochner expressed confidence that could happen.
“We don’t want to do this unless we can do this well,” Lochner said.
She emphasized that this would not be a replacement for the GET program and that the committee is consciously going down two paths right now: exploring this new approach and thinking about how it can reopen the GET program.
“That’s one of the pieces that’s confusing to customers,” Lochner said. “They are two separate issues.”
She said lawmakers and members of the public have told her that they want to see the GET program reopen, but the committee does not plan to discuss that until after the Legislature finishes its work next year.
State Treasurer Jim McIntire said development of the new program comes at a good time, because people are uncertain about the GET program.
“I think this will be a really positive move,” said McIntire, who sits on the GET planning committee. “I look forward to being able to help move this idea forward.”
Thursday’s actuarial report on the GET program shows it is financially strong, with about 140 percent of the assets it needs to meet its future tuition obligations.
About 8,669 people out of 130,000 savers have asked for their money back from the GET program since the committee offered refunds earlier this year.
The committee took that action because it recognized that the prepaid tuition program had lost some of its appeal and investment value since Washington tuition rates were cut by the Legislature. The program is designed around the idea that tuition always goes up.
More than $63 million in refunds have been processed so far and state officials say that number will continue to grow.
Only, 2,845 of the refund requests have been processed so far so the total dollar amount will continue to grow.
Lochner has said up to 16,000 refund requests are expected, but families with money in the GET program will have a year to decide. The program has a total of $27 billion invested at this time.
The calls from customers have slowed down, but the program staff believes they may pick up again next fall when the refund deadline nears and people hear what is going to happen with the GET program.
