GRAND RAPIDS, Mich. — As the cost of college continues to rise, saving for your child's post secondary education can feel daunting. But it doesn't have to be thanks to a pair of college savings plans offered here in Michigan.
A 529 plan helps families save for future education expenses. The two most common plans in Michigan are the MET and the MESP.
The MET, or Michigan Education Trust, is a prepaid tuition plan. You pay for college credits at today's rates and your child's future classes are covered.
The MESP, or Michigan Education Savings Plan, is an investment plan, similar to a 401k that you might have at work. How the stock market performs does play a role in how much you save. This money can cover tuition, books, room and board, and any qualified education expenses.
Here's how the two plans are similar: contributions to both of them provide state income tax deductions and the earnings in these plans grow tax free.
Here's more good news. These two plans can be used together.
"In a perfect world a student would have MET and MESP," explained Diane Brewer, Executive Director of MET and Program Manager of MESP. "Because with MET they are locking in the tuition value with those credit hours but they are having MESP for all of those other things that are part of the college experience."
And parents, you don't have to do this alone.
"A nice feature of both programs is the gifting option because you can accept grandparents, aunts and uncles, friends, anyone else, once you have the account set up others can go in and make happy birthday contributions or whatever holiday. So really just taking that first step getting started will go a long way."
Now you can't start a plan until your child has a social security number, which means you need to wait until after they're born.
Then Diane advises, start as soon as you can-with as little as $25.
If you'd like some advice on how to get started or how to divide up your contributions, the Michigan Department of Treasury hosts frequent webinars to help you. Representatives for both MET and MESP are on these calls to answer your questions.
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