The kids are heading back to school, and there's no better time to think about saving for their college education. Michigan is joining several other states to promote September as College Savings Month. The goal is to increase awareness of the importance of saving for college.
A college education can have a profound impact on a child's life. The median family income in 2009 for those with a bachelor's degree was $50,000 higher than for those without, according to College Board's 2010 "Trends in College Pricing" report. The Center for Social Develpment reports that children who have college savings are four times more likely to attend college than those who don't.
Michigan offer three 529 college savings plans: the Michigan Education Trust, the Michigan Education Savings Program, and the Michigan 529 Advisor program. The MET is a pre-paid college tuition plan, allowing you to pay for future college semesters at today's tuition prices. Historically, college tuition has increased at a rate of 7.3 percent annually; pre-paying college tuition can represent a significant savings by the time a child attends college.
The Michigan Education Savings Program is an account that allows investments to grow tax-free; earnings are not subject to federal or state taxes if they are used to pay for qualified higher education costs. Contributions to an MESP account are eligible for a deduction on the state tax return in the year they are made. The MI 529 Advisor plan is an advisor-sold MESP account, allowing financial advisors to work with clients in building a comprehensive financial, estate, and retirement plan.
It's never to early to start saving for your child's college education. A state-sponsored 529 plan offers tax savings along with tuition savings or investment income. For more information on the MET, MESP, or MI 529 Advisor plans, or on college savings and financial aid, visit the State of Michigan Student Financial Aid website.
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