- Associated Press - Monday, March 7, 2016

SEATTLE (AP) - The Legislature is moving toward starting a traditional 529 college savings plan for Washington state, while reopening the old prepaid program that has been frozen since last year.

Both the House and Senate have approved a bill that would set up the new 529 plan. A concurrence committee is working out the differences between the two versions.

The main difference is the House’s insistence that the measure spell out that the Guaranteed Education Tuition program is not going away. It sets a July 2017 deadline for reopening the GET program.

The House also insisted that the new 529 savings plan charge a low service feel of below half a percent after a start-up period.

The sponsors of the bipartisan measure, Senate Bill 6601, do not expect any trouble getting the House version approved by the Senate.

“We’re very optimistic we’ll get this bill to the governor’s desk by the end of the week,” said Sen. Mark Mullet, D-Issaquah.

Sen. David Frockt, D-Seattle, said the House changes made the bill better.

The commission that runs the current GET program has been investigating the new program and requested the legislation to get state approval to start it.

Staff members were not concerned about the House changes to the bill and said they appreciated the vote of confidence in the GET program.

“From the beginning of this legislation, lawmakers expressed the importance of seeing this new savings option as a complement to GET. There was never a discussion of this being a replacement,” said Luke Minor, a spokesman for the Washington Student Achievement Council, which will run both programs if the bill gets final approval in the Senate and is signed by the governor.

Last year, the Legislature told the council to consider the future of the GET program while it explored starting a new 529 plan.

Washington runs one of the few college-savings programs in the country that allows parents to pay tuition in advance. Traditional 529 plans, in which participants make choices about their investments and get no guarantees, are open in 48 other states. Both allow people to save for college and not pay federal income taxes on their investment earnings.

Washington’s prepaid tuition program has been frozen since August and is not registering new accounts or accepting money into existing accounts except for those on a payment plan. The GET committee also has given people until Dec. 15 to decide whether to pull their money out of the program.

Nearly $164 million in refunds have been processed since September. That’s about two-thirds of the refunds requested.

The program had a total of $2.4 billion in cash and investments as of Sept. 30, according to the Washington State Investment Board. The staff said it was more than fully funded, despite the refunds.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide