College Savings Plans, Not Just for the Wealthy

Image of fingers dropping coins into a piggy bank.

One of the misconceptions about 529 college savings plans is it takes a lot of money to open an account. While data shows most families who save in 529 accounts tend to be wealthier there are still lots of middle class and lower income families using the plans.

Experts say, the minimum contribution to open an account is lower than what it used to be. Michigan’s prepaid 529 plan—Michigan Education Trust (MET) now allows purchasers to buy a credit, or fraction of a credit at a time. The new Pay-As-You-Go option allows parents, grandparents and others to start an account by purchasing one credit to begin with and then make contributions as low as $25

It is often recommended for purchasers to make recurring payments into the 529 account, but it is not required. Parents can use milestones as an opportunity to contribute—if you have a toddler who no longer needs diapers take a portion of that money and put it into college savings. Friends and relatives can also use holidays and birthdays as an opportunity to contribute.

Even saving a little for college is better than nothing. Every dollar saved is a dollar the student, or parent, isn’t going to have to borrow later. According to a Washington Post article, Americans now owe a record $1.3 trillion in student loans. “Some 50 million people in the U.S. hold a student loan, slightly more than the number of people on Medicare and almost as many as those receiving Social Security benefits.”

To find out more about MET visit www.SETwithMET.com.