Oakland Press: Begin to save wisely during College Savings Month

Sen. Mike Kowall

Sen. Mike Kowall

By Sen. Mike Kowall
15th Senate District

If you’re like most parents, you are at the same time a little sad yet also excited that school will be back in session in just a couple of weeks. Summertime is wonderful, but it’s good for children to get back into the schoolyear routine.

At this time of year many parents also begin to look down the road a ways, and they wonder where their young students will go to college — and how it will be paid for.

That’s a good thing, because even if your children are very young, it’s never too early to start thinking about saving for college.

Now is a great time to do so, because September has been designated College Savings Month.

There is good reason to start your educational savings earlier, rather than later. College is expensive, and the costs seem to constantly be rising. The longer you wait to save, the more difficult it becomes.

The average annual in-state college tuition in Michigan was $13,988 for the 2016-2017 academic year, placing Michigan as the 24th most expensive state for the cost of tuition.

That’s nearly $56,000 in tuition costs to earn a bachelor’s degree — assuming the student takes only four years to complete it.

Traditional student loans end up costing much more, of course, as high interest rates are tacked on to the cost of schooling.

Valuable savings tools to consider during College Savings Month are 529 plans. These plans help families set aside money now for college expenses in the future, like tuition, room and board, textbooks, and other fees or expenses.

Michigan offers two 529 plans: The Michigan Educational Savings Program and the Michigan Education Trust.

The MESP is a tax-advantaged 529 college savings plan that helps families and individuals plan for the cost of higher education. A 529 college savings plan helps you save more over time. Any earnings grow free from federal tax, and withdrawals are tax-free at both the federal and state level when used for qualified higher education expenses.

The MESP enables parents, grandparents, family, friends, students and even employers to help families prepare their children for college.

The MET is the state’s prepaid 529 plan, which enables you to buy college credit hours at current rates and avoid the inflated costs of future tuition. You can get your child started on an MET plan for as low as $14 a month.

For more information on the Michigan Educational Savings Program, visit www.misaves.com. The site includes a free college savings planning calculator at www.misaves.com/tools/calculator to help get you started.

For more information on the Michigan Education Trust, visit www.michigan.gov/setwithmet.

Take some time during College Savings Month to research these programs and find a plan that works for your family!

This column appeared in the Oakland Press. Senator Mike Kowall, R-White Lake, is the Michigan Senate majority floor leader. He serves the residents of the 15th Senate District, representing western Oakland County.