GET, Other Prepaid-Tuition Plans Cost U.S. Treasury Big Bucks

Ann McClure's picture
Wednesday, December 19, 2012

Washington's prepaid college-tuition program has been such a bonanza for early buyers that someone who locked in five years' worth for $17,500 in 1998 can redeem the units today for $58,910.

The lucky parents who bought into the Guaranteed Education Tuition (GET) program have enjoyed even sweeter returns, courtesy of federal taxpayers. Thanks to the first of two George W. Bush-era tax cuts, gains in the value of GET and 529 college-savings accounts have been tax-free since 2002.

The favored treatment of 529 plans is part of the tax code, so it's not at risk in the negotiations over the mandatory spending cuts and automatic tax increases due to go into effect next month without congressional action.

But the savings plans are part of a slew of so-called tax expenditures that cost the U.S. Treasury hundreds of billions of dollars a year — and that both President Obama and House Speaker John Boehner have publicly vowed to curb.

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