Michigan’s 529 Michigan’s 529 Prepaid Tuition Prepaid Tuition

ProgramProgramPresented by the

~TIP LADYwallacej4@michigan.govTIPLady@live.com

Zinch.comFastweb.comCollegetoolkit.comScholarships.com

517-962-1568State of Michigan www.michigan.gov/studentaid

Additional costs may include registration fees, text book and supplies, mandatory fees, transportation, parking passes, athletic fees, recreational facilities pass, computer lab costs, legal services, health service fee, etc…

Reflects In-state Tuition Rates for Michigan Residents.

*Estimating an annual 6% inflation factor per year for 18 years. College costs were taken from college websites www.svsu.edu, www.umich.edu, www.alma.edu

Cost of College2012-2013

Tuition & Fees

2012-2013

Room & Board

2012-2013

Total Per Year

EstimatedCost for 4 years of

college in 2011-2012 without inflation

Saginaw Valley State University

$7,578 $8,220 $15,798 $63,192

University of Michigan

$12,994 $9,752 $22,746 $ 90,984

Alma College $30,700   $8,990 $39,690 $158,760

A Wise InvestmentA 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 DebtDon’t Do It With DebtLoans…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

• 2006-2007 college graduates had average debt of $22,700 Source: College Board

Savings…Your First Choice

529 Direct-sold College Savings Plan started in 2000Over $3.5 billion in assets and 204,613 accounts (Oct. 2013)Treasury Review & Annual Audit

First 529 Prepaid Tuition Plan implemented in 1988Over $1 billion in assets & 101,225 Contracts (Oct. 2013)Actuarial Review & Annual Audit

Michigan’s Section 529 Plans

529 Broker-sold College Savings Plan started in 2009$251 million in assets & 23,923 accounts (Oct. 2013)Treasury Review & Annual Audit

MET & MESP Tax MET & MESP Tax BenefitsBenefits

• State income tax deductiono MET - Total Contract Priceo 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 IssuesFinancial 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 college financial aid office

What is What is MET?MET?

• Michigan’s 529 Prepaid Tuition Plan• Designed to allow parents, grandparents

and others to prepay college tuition• Purchasing a contract for tomorrow’s

education at today’s costo Purchase credit hours

• Provides in-state tuition and mandatory fees at any Michigan public college/university

• Transfer of risk o Funds pooled together for investment purposes

• Secured by the assets of the Trust

The BasicsThe Basics• Designed to allow parents, grandparents

and others to prepay college tuition• Tomorrow’s education at today’s cost

o Purchase credit hours• Transfer of risk

o Funds pooled together for investment purposes

• Provides in-state tuition and mandatory fees at any Michigan public college/university

• Secured by the assets of the Trust

Purchasing a Purchasing a Contract Contract

• One Purchaser per contract• One Beneficiary per contract • Beneficiary must be Michigan resident• No age restrictions • Name a Contingent Contract Purchaser• Transferable to an immediate family

member (no residency requirement)• Low fee program – 40 basis points

• Full Benefits - in-state rate• Limited Benefits - 105% WAT

o 105% Weighted Average Tuition = $12,128o UM-AA (25 cr.), MTU (24 cr.), MSU (27 cr.)*

• Community College - in-district rate• Contract constitutes a completed gift for

benefit of a minor - age 18/h.s. graduate

*As of Fall 2013

Choice of Contract Choice of Contract OptionsOptions

Flexible Purchase Flexible Purchase OptionsOptions

• Prepay by Semesters (1/2 years)oMaximum 10 Semesters (5 years) per

beneficiary• See Price Chart on page 20• Flexibility

oMultiple contracts per beneficiaryoMix contract optionsoNow or later

Payment Payment OptionsOptions

• Lump Sum• Monthly Purchase - Use Payroll

Deduction, ACH, Couponso 1st monthly purchase due Feb. 25,

May 25, Sept. 25 or Oct. 25oNo obligation to continue monthly

purchaseso Early payoff discount

PortabilityPortability• Use Your MET Contract:

oAt Out-of-State colleges and Michigan Independent colleges

oWith partial scholarshipso To transfer among collegeso Towards a graduate degree (AP credits)oWithin 15 years

Refund Amounts for Refund Amounts for Fall 2013Fall 2013

Reason for not attending Mich. Public college:

(Refund amounts for Full Benefits Contracts)• Michigan private college

o Weighted Average Tuition - $11,551 • Out-of-state institution or full scholarship

o Average Tuition - $11,228• Death, disability, not attending or military

o Lowest Tuition - $8,728

Qualified Qualified InstitutionsInstitutions

• 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.fafsa.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.

Withdrawing FundsWithdrawing FundsWithdrawals for qualified expenses are exempt from federal and Michigan income taxes

Qualified Expenses

Submit Forms or Withdraw Online

• Notice to Use MET Educational Benefits (form 3181) – Attending Mich. Public College or University

• Notice to Terminate a MET Educational Benefits Contract (form 2773) – Attending Mich. Private, Out-of-State, Full Scholarship, Not Attending College, Death or Disability

•To withdraw online visit www.SETwithMET.com and log into Customer Web

How to How to EnrollEnroll

• 2014 Contract Enrollment Periodo December 10, 2013 to September 30, 2014

• Read the Contract, then Enroll:o On line at www.SETwithMET.com o By Mailo Treasury Offices

• Help Line: 1-800-MET-4-KID or (517) 335-4767

Charitable Tuition Charitable Tuition ProgramProgram

• Approximately 14,000 students in Michigan foster care system

• Growing number of youth reach adult age & have no resources to attend college when they age out of the system

• Currently nine Michigan public colleges have programs to assist foster care students

• Donations to the MET Charitable Tuition Program are eligible for state tax deduction & will go toward providing scholarships to foster care students

• Download contribution form at SETwithMET.com

For More InformationFor More Information

• www.SETwithMET.com• 800-MET-4-KID (638-

4543)• (517) 335-4767

o 8 AM to 5 PM

Be sure to read the MET Contract Enrollment Booklet before enrolling, which is available on-line or from the Program at the number listed above.