MICHIGAN’S 529 COLLEGE SAVINGS PROGRAMS
2008 ENROLLMENT
College Costs Today; What About Tomorrow?
$118,955$41,675$9,578$32,097Harvard University
$92,344$32,352$6,708$25,644Kalamazoo College
$47,345$16,587$7,374$9,213University of Michigan
$42,236$14,797$6,482 $6,159Northern Michigan University
Estimated SY 2023-2024*
Total in SY 2006-2007
Room and Board
Tuition and Fees
*Estimating an annual 6% inflation factor per year for 18 years. Source: National Center of Education Statistics, IPEDS College Opportunities On-Line, 2006-2007 school year.
College: The Wise Investment
$30,800 $37,600
$49,900
$59,500
$79,400
$95,700
High School Associate Bachelor's Master's Doctorate Professional
The lifetime gap in earning potential between a high school diploma and a BA exceeds $1,000,000.
Source: U.S. Census Bureau, 2004 as cited in The College Board, “Education Pays Update,” 2005. Assumes 35 years in work force.
Don’t Do It With Debt
Loans…Your Last Resort, because Loans account for 54% of all financial aid
according to the College Board Roughly 70% of the Class of 2000 took
out educational loans Source: New York Times, “College Loans Rise,” January 28, 2003
The average undergraduate debt is $18,900, up 66% from 1997 Source: Nellie Mae, “College on Credit,”
February 6, 2003`
Savings…Your First Choice
Get Started with MET & MESP Set Your Goal Now
What do you want to achieve? Learn how we can help you achieve it
Use Our Web-Based Resources IPEDS/COOL College Cost Data Base College Cost Calculator www.michigan.gov/mistudentaid
Start NOW – Don’t Delay Earning interest beats paying interest
Michigan 529 Internal Revenue Code Section 529
States can establish Qualified Tuition Programs (QTP) Two Kinds: Prepaid and Savings/Investment
Michigan has both! 1988 -- Michigan Education Trust (MET) – the nation’s
first guaranteed tuition program 2000 -- Michigan Education Savings Program (MESP) – a
top-rated savings/investment plan Why Use Michigan’s 529 plans
Provides state and federal income tax benefits Minimizes potential debt Provides peace of mind
SIMILARITIES
Both are Section 529 qualified tuition programs
State income tax deductions
Earnings are tax exempt for qualified withdrawals
Low Cost, No Commissions Transferable to immediate
family members Fund with after tax dollars Contribute with payroll
deduction, ACH or coupons Can be used separately or
together ($235,000 max.) Recognized as owner’s
asset for financial aid purposes
Rollovers accepted from other 529 programs
Michigan Education Trust and Michigan Education Savings Program
(MET) (MESP)Similarities and Differences
MET Prepay tuition with three
contract options Purchase credit hours, in
semester increments, at today's prices for future use
Best benefit at Michigan public institutions for tuition and mandatory fees
Refund amounts payable to in-state private or out-of-state institutions
Purchase for Michigan children newborn to 12th grade
15 years to use or refund Forget about tuition
increases, you are locked in
MESP Investment savings
account with seven investment options
Use at any "eligible educational institution"
Save for all qualified higher education expenses
Open an investment savings account with as little as $25
State matching grant available up to $200 for Michigan children newborn to 6 years
One change in investment strategy every twelve months
No age or time limit to use funds
MET & MESP Tax Benefits
State income tax deduction MET - Total Contract Price MESP - $5,000 (s) or $10,000 (joint)
Qualified withdrawals are state and federal income tax-exempt
Treated as completed gifts for federal estate and gift tax purposes
Financial Aid Issues Effective July 2006 Equal treatment of MET & MESP Generally considered asset of
account or contract owner Only 5.6% of value considered in
FAFSA calculation Contact high school counselor or
college financial aid office
Financial Overview as of August 31, 2007
MET Contracts Total 84,462 In Use 18,000 Paid in Full 29,000 Assets $997 M
Annual Audit Actuarial Review
MESP Accounts Total 185,073 Assets $1.76 B Match 29,033 Match Assets $5.7
M Annual Audit Treasury Review
Designed to allow parents, grandparents and others to prepay college tuition
Tomorrow’s education at today’s cost Purchase credit hours
Transfer of risk Funds pooled together for investment purposes
Guarantees in-state tuition and mandatory fees at any Michigan public college/university
Secured by the assets of the Trust
The Basics
Full Benefits - in-state rate Limited Benefits - 105% WAT
105% Weighted Average Tuition = $8,349 UM-AA (23 cr.) – MSU, FSU, MTU (28 cr.)*
Community College - in-district rate Contract constitutes a completed gift for
benefit of a minor - age 18/h.s. graduate
*As of Fall 2007
Contract Options
One beneficiary per contract Beneficiary must be Michigan
resident Newborn to 12th grade Low fee program – 30 basis points
Lump Sum Monthly Purchase - Use Payroll
Deduction, ACH, Coupons 1st monthly purchase due Feb. 25,
May 25, or Sept. 25 No obligation to continue monthly
purchases Early payoff discount
Payment Options
Prepay by Semesters (1/2 years) Maximum 8 Semesters (4 years) per
beneficiary See Price Charts on page 34 & 35 Flexibility
Multiple contracts per beneficiary Mix contract options Now or later
Flexible Purchase Options
Use Your MET Contract: At Out-of-State colleges and Michigan
Independent colleges With partial scholarships To transfer among colleges Towards a graduate degree (AP credits) Within 15 years
Portability
Refund Amounts for Fall 2007
Reason for not attending Mich. Public college:
Michigan private college Weighted Average Tuition - $7,951
Out-of-state institution or full scholarship Average Tuition - $7,742
Death, disability, not attending or military Lowest Tuition - $6,159
Lowest tuition refund can be used at any certificate or degree granting institution that offers financial aid to their students
Go to U.S. Dept. of Education Web site: www.ed.gov
Qualified Expenses*: tuition, fees, room, board, books, equipment required for enrollment
*Earnings are taxed & 10% fed. excise tax on the earnings apply if not used for qualified higher ed expenses at a qualified institution.
Qualified Institutions
2008 Contract Enrollment Period September 1, 2007 to August 31, 2008
Read the Contract, then Enroll at: Treasury Offices By Mail On line at www.SETwithMET.com
Help Line: 1-800-MET-4-KID or (517) 335-4767
How to Enroll
The Basics
Investment-based Total account balance can be used for
qualified higher education expenses Use at any eligible institution of higher
education in the US and abroad Managed by TIAA-CREF Tuition
Financing, Inc., a subsidiary of TIAA-CREF, administered by the Michigan Department of Treasury (pursuant to contract and PA 161 of 2000)
Benefits Low fee program (45 basis points p.a.) Minimum contribution $25 at any time
$15 through payroll deduction Use at qualified schools everywhere Account Owner Control Contribute by Check, ACH, Payroll
Deduction
Family-Friendly Multiple accounts allowed for
beneficiary Multiple contributors allowed for
beneficiary No age or time restrictions on use No residency requirements
Investment Options Moderate Age-Based Allocation Option
(Managed Allocation) Conservative Age-Based Allocation
Option Aggressive Age-Based Allocation Option 100% Fixed Income Option Balanced Option Principal Plus Interest Option (Guaranteed
Option) 100% Equity Option
Managing with MESP Set Your Goal Select option(s) based on Your Goal Read the Program Disclosure Booklet
before investing Rebalancing
Once per account per calendar year Upon change of beneficiary Does not create taxable event
Maximum investment $235,000 per beneficiary (includes cash value of any MET contracts)
Using What You Saved
Qualified Withdrawal Qualified Expense - Tuition, Room &
Board, Books, Mandatory Fees, Supplies, & Equipment
Qualified Institution of Higher Education - Accredited post-secondary institution eligible to provide federal financial aid
Use at qualified schools throughout the US and abroad
Withdrawals
Non-Qualified Withdrawals 10% federal excise tax on earnings
portion of distribution, state and federal income taxes, state recovery of applicable state income tax deduction
Special Cases: Scholarship, Disability, Death
State Matching Grant IF ELIGIBLE
The State will match $1 for every $3 contributed Maximum $200 per beneficiary State determines eligibility and owns State Match
Accounts REQUIRED -- when the MESP account is opened
Beneficiary must be 6 years old or younger Beneficiary must reside in Michigan Household income of the beneficiary’s custodial
parent(s) must be $80,000 (AGI) or less Available only the 1st year the beneficiary is enrolled
in the program Proceeds are invested in the TIAA-CREF Institutional
Bond Fund, used for tuition only
How to Enroll in MESP By Mail
Call for forms or download On-Line
Secure on-line enrollment Use Our On-Line Resources
College Cost Calculator
Other State 529 Programs Contributions to another State’s Section 529
program are Not entitled to the Michigan income tax deduction Not eligible for the State Matching Grant Do consider other plans if not Michigan resident
May incur expenses not found in Michigan programs such as Annual Fees Broker’s commissions (front-end or deferred) Underlying mutual fund charges Higher annual management costs
MESP Disclosures The State of Michigan, its agencies, TIAA-CREF Tuition Financing, Inc., Teachers Insurance
and Annuity Association of America and its affiliates do not insure any account or guarantee its principal or investment return, except for TIAA-CREF Life Insurance Company's guarantee to the MESP under the funding agreement for the Principal Plus Interest Option. Account value will fluctuate based upon a number of factors, including general market conditions. Contributions made to any of the three Managed Allocation options, or the100% Equity, Fixed Income, and Balanced Options do not guarantee principal or a minimum rate of return. Investment return might not exceed tuition inflation.
Non Michigan residents or individuals with taxable income in another state should evaluate benefits & tax treatments of other state 529 options prior to investing in MESP
Admission to any institution of higher education is not guaranteed by participation
Consider the investment objectives, risks, charges and expenses carefully before investing in MESP. Please visit www.misaves.com for a Disclosure Booklet containing this information. Read it carefully.
The tax information herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. It was written to support the promotion of the MESP. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.
TIAA-CREF Individual & Institutional Services, LLC, distributor, member NASD, SIPC.
For More Information www.SETwithMET.com 800-MET-4-KID (517) 335-4767
8 AM to 5 PM
www.misaves.com 877-861-MESP
8 AM to 10 PM
Be sure to read the MET Contract Enrollment Booklet and/or the MESP Program Disclosure Booklet before investing, which are available on-line or from the Programs at the numbers
listed above.
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