After George Johnson III was born, his parents – George II and Maria – were certain of this much: Their son was going to college, the school of choice was Michigan State University, and they were going to pick up the tab.
What wasn’t immediately clear was how the West Bloomfield couple was going to fund George III’s higher education.
“We were committed to paying for his college education, but I didn’t know in 2000 what that looked like or how it would work,” George II said.
The answer came through basketball.
When George III was in elementary school, George II was having one of his regular chats with MSU basketball great Steve Smith, whom the elder Johnson had met while serving as a student manager for the MSU basketball team. Because of his position with the team, Johnson was chosen to host Smith during a campus recruiting visit, and they remained friends throughout the years.
“Our kids are about the same age, and we talk about life, and at that time we were talking about education,” George II said. “We’re both passionate about our kids and their future education.” In fact, Smith is such a believer in higher education that in 1997 he donated $2.5 million in honor of his mother toward construction of the Clara Bell Smith Student Athlete Academic Center at MSU.
Smith told Johnson he should look into Section 529 plans, tax-advantaged college-savings vehicles named after the portion of the federal Internal Revenue Code that allowed for their creation. Michigan’s plans are the Michigan Education Trust (MET) prepaid tuition plan, which allows purchasers to lock in future tuition costs at today’s rates, and the Michigan Education Savings Program, in which savings grow tax-free. Contributions to both are deductible on investors’ Michigan tax returns.
Based on Smith’s tip, Johnson talked with his financial adviser, learned more about MET, and came away impressed with the chance to protect against tuition price increases. “I was like ‘wow,’” he said.
Soon after, he had another discussion about the plan’s features, this time with MET Executive Director Robin Lott, and within a week after that, he and Maria decided MET was the college savings choice for them. They wound up buying four years’ worth of college tuition on their son’s behalf.
“I just wanted the security of knowing that if I got sick or something happened to both my wife and me that whoever raised our son wouldn’t have to worry about saving for his education,” said the elder Johnson, who serves as director of business programs at Spectrum Health’s Strive facility in Grand Rapids. “This has been a blessing to us. We never had to worry.”
MET provides three ways to purchase prepaid tuition: at least a semester’s worth in an up-front lump sum, monthly payment plans on a minimum of a semester, and a Pay-As-You-Go option that allows initial purchases of only one credit hour and additional payments of $25 or more at any time.
Armed with his MET contract, George III will head to MSU in fall 2018 to study marketing after graduating from Walled Lake Central High School.
Because both George II and Maria – who is sales director at the Mann+Hummel filtration operation in West Bloomfield Township – are Michigan State grads, there was little doubt their son would go there too. “He applied to only one university,” said the elder Johnson, holder of an MSU Alumni Association Distinguished Alumnus Award for creating a scholarship fund to buy books for student managers.
While MET will cover George III’s tuition and mandatory fees at MSU, the $100 per month that his parents have been setting aside since he was born – and which he will receive after high school graduation – will cover his books, laptop and living expenses.
“I didn’t want him to worry about work or paying for college,” George II said. “He can be a student and not have to worry about the financial challenges of getting a college education.”
More information about MET is available at SETwithMET.com or 800-MET-4-KID (800-638-4543).
