The cost of higher education is only going up, but that shouldn’t get you down. Saving for college doesn’t need to be a burden. With the Michigan Education Savings Program (MESP), there’s no big upfront investment and getting started takes about as long as grabbing a cup of coffee.
1. Easy & convenient
With MESP you can easily open an account online in just 15 minutes. Account management is made simple with online access. By setting up recurring contributions from your bank account or by payroll direct deposit (if supported by your employer), making regular contributions is hassle free.
2. Savings grow more due to tax advantages
Your earnings, if any, are free from federal income tax when used for qualified expenses. In the meantime, your earnings are reinvested automatically so your account can grow more than a taxable account over the same period.
3. Use at schools anywhere
Funds can be used at any accredited university, college or vocational school nationwide — and many abroad. Basically any institution with a student aid program qualifies.
4. Use for more than just tuition
MESP can be used to pay for tuition, certain room and board costs, computers and related technology expenses as well as fees, books, supplies, and other equipment.
5. Lower impact on financial aid than other savings options
Many parents worry that a 529 Savings Account can adversely affect eligibility for financial aid. Assuming the parent is the account owner, funds are typically treated as belonging to the parent, not the child, minimizing the impact on financial aid.*
Open an account with as little as $25 per investment option, or $15 dollars per pay period using payroll direct deposit. Since there are no application, sales, or maintenance fees, saving for college is affordable even for those on a modest budget.
7. Everyone can help
You don’t have to do it all on your own! Grandparents as well as other family and friends can make gifts to your account for maximum growth potential.
8. Unused funds can be used for other eligible members of your family
If your loved one doesn’t need all the money or their education goals change, you can designate a new beneficiary penalty-free as long as they’re an eligible member of your family.
9. Investment flexibility
MESP provides a variety of professionally managed investment options to choose from including enrollment year options that automatically change as the beneficiary approaches college enrollment. Alternatively you can tailor your portfolio with multi-fund, single-fund and principal plus interest options to match your risk tolerance, timeline and investment preferences.
10. Estate tax planning benefits
When you or anyone else makes a contribution, it may qualify for an annual gift tax exclusion of $16,000 per year for single filers and $32,000 a year for couples. As a 529 Plan, MESP is the only investment that allows you to give up to 5 years’ worth of gifts at one time — for a maximum of $80,000 for a single filer and $160,000 for couples.
Open your account online today and your MESP account could be growing by bedtime.
*The treatment of investments in a 529 savings plan varies by school. Assets are typically treated as the account holder’s and not the student’s. (Student assets are generally assessed at 20% whereas parental assets are generally assessed at 5.6%.) Any investments, including those in 529 accounts, may affect the student’s eligibility to get financial aid based on need. You should check with the schools you are considering regarding this issue.