Benefits of Saving for College Outweigh the Costs
I was grabbing coffee with one of my girlfriends last week getting the scoop on all things baby. I was shocked when the discussion of college savings was brought to the forefront. I hadn’t yet thought about saving for college, I was thinking about birth and nurseries, breastfeeding vs. bottles.
After all, my baby doesn’t even have a name yet let alone college aspirations. My friend, who is the mother of two, explained that if she could go back, she would have started saving for college when her children were infants. Now they are 3 and 5, and she recently opened a Pay-As-You-Go limited-benefits contract with the Michigan Education Trust (MET). She explained that had she started saving earlier, she could have gotten even further ahead of rising college tuition costs.
I had her send me the information so I could google it later on. I was surprised to learn that MET is pretty simple. It is the state’s 529 prepaid tuition plan that allows for the prepurchase of undergraduate tuition for any child residing in Michigan. The tuition is bought at today’s rates and then paid out at whatever the cost is when your kid is ready for college. With tuition costs continuing to rise, you can’t afford not to consider this 529 college savings plan (the “529” comes from the section of the federal Internal Revenue Code that allowed for MET and similar plans’ creation).
The best part is there are many payment options are available to parents and guardians, but the key benefit of Pay-As-You-Go is that it allows purchasers to buy MET contracts by credit hours rather than in semester increments. With so many new expenses being crunched into our budget while planning for this baby I didn’t think we could afford to start saving for college, but this makes it a great option for those who don’t have a big chunk of cash to apply toward a contract purchase. As the name implies, it allows you to “pay as you go” by making future contributions of as low as $25. One of the best aspects of this option, I learned, is that once a contract has been purchased, friends and family can also make contributions to the contract, meaning my parents or other family members or friends could help fund my child’s future education–a great way to prevent clutter come every holiday and birthday party!
MET does not restrict a student’s choice in school – he or she can direct tuition payments to any eligible university in the nation, including both private and public schools, good news since we don’t know what this little bundle will want for themselves 18 years for now.
And we benefit now as both the initial contract purchase and any additional contributions are tax deductible on purchasers’ Michigan income tax returns for the year the purchases were made.
There’s a great promotion going on right now too, the MET 529 Awareness Week Sweepstakes. The grand prize is $1,529 toward a new or existing Pay-As-You-Go limited-benefits MET contract. Those interested can enter the sweepstakes online at www.SETwithMET.com or by mail. Keep in mind that this sweepstake ends May 31, 2017, with the winner being drawn randomly on or about June 2. I have already entered, but even if I don’t win, I still plan to open my 529 savings plan with MET once my child is born.
For more information about MET plans, visit www.SETwithMET.com.
