Put Your Tax Refund to Work with MET

Expecting a tax refund this year? Discover the benefits of the MET 529 prepaid tuition savings program for your child or grandchild.

It’s tax filing time once again, and here’s some good news: Early filers are seeing an average tax refund of $3,536, up 23% from the same time last year, according to IRS data. If you’re looking for a way to put your tax refund to work, consider the Michigan Education Trust (MET), a 529 prepaid tuition savings program.

“Tax time is when financial discussions tend to happen,” says Dave Malick, a Certified Public Accountant and metro Detroit area dad of three. He says people tend to do their financial planning — including making plans for college and retirement — around tax time, and he encourages parents and grandparents to take advantage of programs, including MET, to help save for future education costs.

Malick purchased three limited MET prepaid tuition savings programs for his children in 2003 expecting them to attend University of Michigan, which the older two did. His youngest child will attend an out-of-state university, and his MET funds will be directed toward that school. “We paid $19,000 in 2003 (for each MET), and my youngest child’s MET is paying out $48,000. That’s a great return, and it’s tax free.”

What is MET?

Parents and grandparents can’t always predict their child’s future, but for those who know college is on the horizon, MET offers a secure, flexible way to save for higher education. MET is an established 529 college savings program that lets parents, grandparents and family members pay today’s price for future higher education costs. Contributors can deduct the amount from their Michigan state taxes, making MET a smart financial choice.

“If we think about it from the point of view of a grandparent,” Malick says, if you turn your tax refund into a MET contribution, “you know even after you are gone, your grandchild can use that money for college and nothing else. That money will go for what you intended for your grandchild.”

While many grandparents provide cash gifts to their grandchildren for birthdays and holidays, when they make contributions directly to MET, it ensures their gift can be used only for higher education — and it’s safe from disputes that can happen as a result of divorce, Malick says.

“I do advise clients in their 60s to buy a MET contract for their grandkids. You get a tax deduction for the state and here’s the cool part: If you are the grandparent and you have given money to the parents and the parents get divorced, the MET is for the kids so it’s outside the divorce proceedings. That makes it more secure,” he says.

MET benefits can be used at public and private and out-of-state universities, colleges, community colleges and technical schools. Children have up to 15 years post-high school to use the MET funds for college, transfer benefits to a new Beneficiary or terminate the MET for a refund.

Three options

MET offers three benefit choices: full, limited and community college. Purchasers can buy as a lump sum; over four, seven, 10 or 15 years; or on a pay-as-you-go basis. And, for the first time since 2007, MET offers an age-based pricing discount. This means families will realize significant savings the earlier they begin saving with MET.

“You can bet college inflation will be higher than regular inflation,” Malick says. “College costs have done nothing but go up.”

As an example, the current yearly tuition cost for University of Michigan is $15,948. In 2040, when this year’s newborns plan to attend college, the annual cost may be more than $38,000 — or about $165,000 for four years — given a 5% annual increase. A MET full benefits lump sum cost for a newborn is $61,760.

MET offers parents and students peace of mind, knowing that funds for future education are there when they are ready to attend college. According to MET, more than 96% of high school graduates participating in MET have attended college or university or have received a refund of MET payments for a trade school or certificate program.

Convenience, too

Peace of mind is built into the whole process with MET. Malick says he never had to write checks to pay the bursar when his children went to college at University of Michigan.

“I didn’t have to do anything. I made one phone call when they started college and told them they had MET programs and it was automatically handled,” he says. “It was great. There was convenience and peace of mind. It was something I never had to think about.”

MET hosts webinars for families to learn more about features and benefits of the program, and there are one-on-one consultation sessions for families to ask questions. Learn more about MET at SETwithMET.com or call 800-MET-4-KID.

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