Washington keeps moving toward new college savings plan
SEATTLE (AP) - While Washington's prepaid tuition program remains on hold, the state took small steps toward opening a second college savings plan this week.
The Senate Ways and Means Committee on Tuesday passed a bill that would establish a more traditional 529 savings plan.
When the committee that runs Washington's prepaid tuition program met on Thursday, members discussed more details about how that new program might be set up. But they took no action.
Betty Lochner, the director of the Guaranteed Education Tuition program, said officials would be able to take the next steps when the committee meets on April 20 because it would likely know by then if Senate Bill 6601, which would create the savings plan, passes.
Meanwhile, nearly $164 million in refunds have been processed for Washington's prepaid tuition program since the state agency told people in September they could ask for their money back. The program is frozen for up to two years until the committee that runs it can figure out the effect of two years of tuition cuts at state colleges and universities.
Lochner said nearly 8,000 refunds have been processed and another 4,000 are still waiting to be processed. She had previously estimated up to 16,000 refund requests can be expected, but families with money in the program have until Dec. 15.
The program had a total of $2.4 billion in cash and investments as of Sept. 30, according to the Washington State Investment Board.
Allyson Tucker, senior investment officer for the state investment board, said the assets have decreased since December mostly because of volatility in the stock and commodities markets and because of withdrawals from the program.
Tucker said that volatility is expected to continue, but the program is still well funded. The only new income coming into the program comes from market gains and people who signed up for an installment plan and are still sending money each month. The program is not taking lump-sum payments during the freeze.
If Washington creates a new 529 college savings plan it would not open it until January 2017 at the earliest, Lochner said. After a question from the public about the gap between when withdrawals from program are allowed and the estimated start date for the new program, she said that deadline could be extended by the committee.
Lochner and others stressed that it hasn't been decided whether to reopen the Guaranteed Education Tuition program alongside a new 529 savings plan, to start a new kind of prepaid plan or to just shift to the savings plan.
"A lot of what we're hearing from customers is that they like it the way it is," she said of the frozen Guaranteed Education Tuition program.
If the Legislature does not pass the proposal for starting the new program this year, Lochner said she was concerned about waiting until 2018 to take the next steps.