With college costs rising annually, there’s a way to lock in a tuition price at this year’s rate for a potential student still more than a decade from college.
With College Savings Month coming to a close at the end of September, it marks the end of this year’s open enrollment period for the Michigan Education Trust. Potential college students, or relatives, can lock in this year’s tuition price if they invest into the MET by Sept. 30, according to Diane Brewer, assistant to the director at Michigan Education Trust.
Michigan Education Trust also has the Michigan Education Savings Program, which is a savings account that allows parents and students to contribute funds at any point throughout the year and can be used on college costs, including tuition, room and board, books and laptops. The MESP has nine investment options and can be opened for as little as $25.
Both accounts are Section 529 qualified tuition programs, meaning there are tax advantages to both options, Brewer said.
“Saving for college doesn’t have to be all or nothing,” Brewer said. “The earlier you start, the more you have, but it’s never too late to save. Anything you put away is money that doesn’t have to be a loan down the road.”
Brewer suggested parents of young children start saving with little increments, even if they can’t afford more.
“Start somewhere, get into the routine of saving $25 a week or $25 a month,” she said. “As the children grow and the parents’ career grows and earning power grows, there’s a point where there will be more funds available, and if they’re already in the routine, it makes it easier.”
Michigan Education Trust has more than 100,000 contract holders, and the organization is making payments to more than 700 schools across the country, Brewer said. While the MET — which started in 1988 — is specific to Michigan public institution credit hour costs, Brewer said the costs can be transferred to out-of-state schools as well.
“Tuitions are generally higher, so you might not be fully covered, but it’s more than you had before,” she said.
If a child decides against college, the programs allow for money to make it back into the parents’ wallets. METs are refundable, and the MESP, if not used for college expenses, are federally taxed 10 percent on earnings and income tax.
METs are on a closed schedule, as the price per credit hour goes up if the public universities increase their prices. Once a price is locked in and paid, a contract holder no longer has to worry about the cost of those credit hours once the student is in college, Brewer said.
She said having a certain number of credit hours paid for helps students know they’ll be able to afford the next semester or work fewer part-time jobs to afford other expenses. Brewer also said using both programs together would be wise: MET to pay for credit hours and MESP for other education-related costs.
If a MET contract for a single year of tuition at Grand Valley State University was purchased in 1988 it would have cost $1,767, as opposed to last year’s cost for 31 credit hours of $11,387.
“Whether it’s 30 or 120 credit hours, they’ve paid the price for those,” she said. “Having those paid for creates a peace of mind for a student, parent or grandparent. It takes some worry out of it and helps the student focus on their studies.”