SET with MET
Another school year has come to an end. It seems like each year goes by faster and faster; before you know it your child is going to be graduating high school and heading off to college! Will you be ready?
As college tuition prices continue to climb it is important to make sure you and your child are prepared for these future expenses. Will you have enough money? Does your child understand how different majors and different schools may affect his or her tuition costs?
Here are some ideas of things you can do during the summer to help you prepare for the day your child goes off to college:
First, if you have not set-up a 529 plan do it. 529 plans are recognized as one of the best ways to save for college. Michigan has a couple of different plans to choose from. The Michigan Education Trust (MET) is Michigan’s 529 prepaid tuition program. You purchase credits at today’s rates to use for future tuition costs. The MET program can be used for tuition at in-state, out-of-state, public or private schools.
The Michigan Education Savings Program (MESP) is a 529 direct-sold investment savings account. It works a lot like a 401k. You put money into an account and choose from nine different investment options. When your child attends college the account balance can be used for tuition, room and board, books, etc.
Both programs offer a tax deduction on your State of Michigan tax return. And when you use the money for qualified education expenses, earnings are tax-exempt.
Now that you have your 529 plan set-up, you need to find ways to contribute to it. You always have the option of setting up automatic monthly payments in the account. You can also have friends and family make a contribution for events like birthdays and holidays. However, let’s think of some other ways you can grow your 529 plan.
Perhaps your child just finished a milestone year—did they graduate from preschool, kindergarten or junior high? These are all great reasons to put an extra payment into their 529 account. Perhaps they earned good grades. Maybe each “A” gets an additional $10 added to their account.
Also, think about all the money you spent on school lunches this year. You could take that $5/day and add that to your account. Over the twelve weeks of summer, it would add up to an additional $720 in college savings.
It may be only July, but it is never too early to think about the start of the new school year—maybe make a “back-to-school” contribution. That contribution will make more of an impact than another new shirt.
And don’t forget to get the kids involved. If you have older kids with summer jobs have them contribute some of those earnings into their college savings. Babysitting and lawn mowing money can add up fast!
It is never too early or too late to get your child thinking about college. For middle school age and older children have them do research on career fields that interest them. They should think about what kind of education is required for that field, what kind of salary they would earn, etc. Is there a particular school they are interested in attending? Does that school offer the degree they want? How much does that school cost? Is there another school that is just as good, but cheaper?
A good way to get younger kids involved is to visit different college campuses. You don’t have to do the official college tour—go to a sporting event, play or see a musical performance. Every school has some gem the locals like to go and see. Visit the book store, botanical gardens or campus library. You could even take a ride around campus on your bike and see the sights.
Early exposure to colleges can spark an interest in higher education.
Have a great summer!