As college tuition continues to climb, Michigan families have an option to buy certainty. The Michigan Education Trust, the state’s prepaid 529 tuition program, allows purchasers to lock in future tuition at today’s rates - and open an account for as little as $25.
“Historically, tuition doubles every 10 to 15 years,” said Heather Barthelmes, marketing manager with the Michigan Education Trust (MET). “This is a great way to save some money.”
Unlike traditional investment-based college savings plans, MET sells future tuition credits at current prices. “You’re purchasing college credits today at today’s rates, and then that pays out at future tuition costs,” Barthelmes said during an appearance on Live in the D. “Think of it more like insurance. It gives you that peace of mind that you have that tuition taken care of no matter what happens in the future.”
Eligibility is broad, and participation is flexible. The beneficiary must be a Michigan resident, but the person who purchases the contract does not need to live in Michigan. “Anybody can open it - a parent, a grandparent, an aunt, even a really nice neighbor,” Barthelmes said. “If a parent opens it, anybody can contribute to it as well.”
MET has lowered the barrier to entry in recent years. “Right now, it only costs $25 minimum to open the account,” Barthelmes said. “In the past, you would have to commit to a really large payment plan or a large lump sum to start. But now you can start with that $25 and contribute any amount at any time.”
That flexibility can be especially helpful during tax season. “Any time is a great time to start,” Barthelmes said. “But this time of year is really great because we have a lot of people who are getting tax refunds. They can put that money toward something that’s going to last a lifetime like that college education.” Bonuses, gifts and small, recurring contributions can also move the balance forward. “Every little bit counts. It really does,” she said.
MET’s definition of “college” is broader than a four-year university. “In the MET world, college is anything post high school,” Barthelmes said. Beneficiaries can use MET funds at Michigan public colleges and universities, but they can also take the value out of state. “MET funds can also be used toward trade schools,” she said.
For families worried about changing plans, MET offers guardrails. “If you get a full scholarship or that child decides, ‘You know what? That future education is not for me,’ the money is transferable. It’s also refundable,” Barthelmes said. That can help parents encourage postsecondary education without locking a student into a single path. “It’s a good incentive to encourage them to do something after high school, but it can be used for whatever their future is,” she said.
Barthelmes’ advice for families who feel college saving is out of reach: start small and stay consistent. “Everybody’s got different budgets and different goals,” she said. “Start with the $25. If your circumstances change, maybe up that a little bit. If you can do a little bit every month, it’s going to be beneficial. You can combine that with scholarships and other forms of financial aid.”
To view the segment, click on the video above. For more information visit setwithmet.com.