College Savings Plans 101

When is the best time to open an MESP college savings plan? The earlier, the better if you want to maximize your savings and completely – or mostly ­– cover your child’s college costs. But the truth is that it’s really never too late to start. Even contributing for a couple of years can help afford your child their educational dreams.

But before you start, you’re bound to have questions. Here we tackle some of the most common ones:

I’ve heard of 529 college savings plans. What is that? A 529 savings plan is a state-sponsored college savings plan, and “529” simply refers to the Internal Revenue Service code. 529 plans vary in how they may be used. You may have heard of the Michigan Education Trust, another Michigan-sponsored 529 plan, which works a bit differently than MESP.

What is the difference between MESP vs. MET? Both Michigan Education Trust, or MET, and MESP are state-sponsored college savings plans.

MESP is like a Roth IRA, in that you make after-tax contributions that are invested in mutual funds and other financial vehicles and earn interest over time. The investment growth is tax free as long as it’s spent on qualified higher education costs.

MET is a prepaid tuition plan that locks in tuition at Michigan colleges at today’s costs. This year, the average tuition hike at Michigan colleges was 2.78%.  Many years, it’s been even higher. When you factor those increases year after year, you can see the savings in locking in today’s tuition.

Is there a minimum or maximum contribution? “Your minimum contribution is $25 and you can contribute as often or as infrequently as you like,” says Jennifer Howey, senior marketing manager for MESP. “The commitment is whatever you can work into your budget.”

That could mean contributing once a year, once a week or only for holidays.

Or, if you set up payroll deductions, it’s a $15 minimum per pay period.

 How many investment options are there? Since MESP operates a lot like a Roth IRA, you get to choose how you want your money invested. MESP offers nine different investment options for families to choose from.

How do college savings plans compare to other savings options? See for yourself! Visit and use the interactive tool to see how an MESP account stacks up when compared to education savings bonds, custodial accounts and more.

Have more questions? Learn about how an MESP college savings account can work for your family at


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