When your child makes their wish list for the holidays, chances are “money for college” won’t be a top contender. But experts say the holidays are a great time to contribute to your child’s college savings fund and even encourage family and friends to do the same.
In fact, many Michigan families make it a tradition to put money into their child’s Michigan Education Savings Program account around the holidays, says Jennifer Burke, senior marketing manager at TIAA-CREF Financial Services, which manages the MESP.
“People spend so much money on gifts because they want to make an impact. The real impact can be when they go to college and you’re responsible for giving them the tools and resources to be independent and successful in life,” Burke says. “There’s no better gift than that.”
What makes MESP meaningful
The MESP is a 529 savings plan. Since contributions are after-tax dollars, the savings grows tax-deferred. Earnings used for qualified higher education expenses are tax exempt. An account can be set up with as little as $25 and the funds can cover tuition, room and board and any additional qualified higher education costs.
Parents aren’t alone in saving for their child’s college education. It takes a village, after all, and one of the most common questions moms and dads hear around their kids’ birthdays and holidays is: “What do they want?”
With MESP’s E-Gifting Portal, it’s easy to send aunts, uncles, grandparents and friends a link where they can make a direct contribution to your child’s account. If you have the child’s six-digital code, it’s also a breeze to make a contribution online with the ugift529.com portal.
An impactful gift that’s easy to give
“At a time when you know friends and families are going to be spending money and buying gifts, what better time to have them contribute to something that will last a lifetime?” Burke says. “It’s a way to really contribute to a loved one’s future in a way the latest toy or a new sweater isn’t going to.”
Plus, most parents know all too well how quickly kids lose interest in their toys. While kids love ripping open a fun gift, the reality is the same toy will likely be overlooked a week later. Imagine, Burke suggests, knowing that your gift will make a real, long-term difference in the child’s life.
“If we think back to all the gifts that are given throughout the year that ultimately get given away or thrown away or put up on a shelf, they’re forgotten about,” she said. “When you give the gift of education, it’s something that’s going to last a lifetime.”
Striking a balance with those presents
Of course, no one’s suggesting skipping out on gifts altogether! After all, that’s part of the joy of the holidays — especially for kids. Instead, parents might consider setting aside part of their holiday gift budget for a college contribution.
The same goes for family and friends who ask about a gift. If an aunt usually spends $100 on your child, for example, they could easily buy a great toy for $20 and spend the difference as an MESP contribution.
“I understand that’s an awkward conversation to have,” Burke admits. “That being said, I think any aunt, uncle or grandparent would much rather contribute to a college fund than get the latest Legos.”
For more information on opening an MESP account, visit MIsaves.com.
This post is updated regularly.