Greatra Mayana

Career & Employment Opportunities

Michigan Education Trust (MET), Michigan’s 529 prepaid tuition plan


Hello today we’re going to discuss the
Michigan Education Trust that is the State of Michigan’s 529 prepaid tuition
program. Met is a tuition program that’s designed to allow parents, grandparents,
or really anyone to prepay college tuition. Essentially you’re going to
purchase college credit hours today based upon today’s prices and then that
will pay out at future tuition prices, you can purchase by the semester or the
credit hour. It’s designed for in-state tuition and mandatory fees at a Michigan
public university or college but there are ways to use this at a private or an
out-of-state school or even a trade school it just works a little bit
differently. You want to think of MET like insurance, MET you don’t have to
worry about what the price of college does or what the stock market does,
MET’s gonna worry about that. We pool everyone’s funds together and invest
that in order to be able to pay out at our future tuition obligations but you
don’t have to worry about the daily ups and downs of the stock market or the
doubling of the price of college, it is secured by the assets of the trust so
even though MET is a Michigan program the funds are not kept in a
general State of Michigan fund, the MET money can only be used for the MET
program. When you’re purchasing a contract you’re gonna have one purchaser,
that’s typically your parent or your a grandparent, you do not have to be a
relative to purchase a contract for a student, one beneficiary per contract
your beneficiary is your future student, there are no age restrictions on that,
your beneficiary can be a newborn, they can be a college student, it really does
not matter, the younger the student is when you purchase in that for them the
more you’re going to get out of that in terms of growth but you are not limited
to only buying when they’re a small child, the beneficiary does have to be a
Michigan resident at the time of purchase but really after that if they
move out of state that is fine we have plenty of people who are no longer
in Michigan who use MET for tuition. You are allowed to name a contingent
contract purchaser this person we call the appointee, the appointee is just a
third person on the contract who could get contract information if they were to
call, if you’re a grandparent it might be a good idea to put one of the parents
down is the appointee that way they can call and ask questions especially when
it comes time to using their MET, you don’t have to name an appointee, if you
do name an appointee you do have the option to elect it that the appointee
can take over the powers of the purchaser if something were to happen to
you as the purchaser so just an option for you. MET contracts are transferable
to a family member of the beneficiaries so if the original beneficiary does not
use their MET contract, does not attend college, or just has extra credits they
can transfer those credits to a relative of theirs which could include their own
children someday, niece, nephew, cousin, siblings, spouse, lots of options that
person does not have to be a Michigan resident so if your beneficiary moves
out of state when they get older and they have their own child and they want
to transfer some MET credits to their child, that child does not need to be a
Michigan resident in order for them to do that. You have three different
contract options to choose from full benefits, limited benefits, and community
college. Community college is the least expensive it’s going to design, it’s
designed to provide in-district tuition and mandatory fees at any Michigan
public Community College if you purchase this type of contract for the student
and the student decides to go straight to university that’s fine we can convert
your community college credits into a dollar amount and direct those dollars
to the university or the four-year school, it’s not going to cover as many
credits at that school as would have at the Community College but you can
definitely use it. Full benefits and limited benefits are both university
plans full benefits is like your top tier plan it’s gonna cover credit for
credit at any Michigan public university whether it’s the most expensive or the
least expensive it does not matter and we will pay
whatever those credits cost at that school, if you have a full benefits
contract and you attend an out-of-state school we’ll convert your credits to
dollars based upon the average of the Michigan public universities at that
time and pay the out-of-state school that way, it again may or may not cover
the full cost of the out-of-state school it would depend on what they’re charging
for tuition at that time. Limited benefits is also a university plan but
it’s less expensive for you to purchase than a full benefits contract because if
the student attends what we consider an above average cost Michigan public
university right now, those schools are University of Michigan Ann Arbor,
Michigan State, and Michigan Tech, if they attend one of those schools we may pro
rate the number of credits that we’re going to pay to the school for example
if you buy 30 credits which is a year of tuition and they attend the University
of Michigan Ann Arbor this year instead of us paying 30 credits to U of M we’re
going to pay 27 credits so it’s about a class a year that we’re not covering but
if you have a limited benefits and they attend Oakland or Grand Valley or
Central or any of those schools we’re gonna pay credit for credit, now, yes you
may not get as many credits out of it if they attend those more expensive schools
but they might have AP credits or dual enrollment credits or scholarships
something to kind of make up the difference. If they attend an
out-of-state school on a limited benefits contract we convert to dollars
based upon the lowest cost Michigan University at that time so less dollars
going out of state but you paid less for the contract a little hint for you, you
could always do two years of Community College plus two years of limited
benefits that could achieve a bachelor’s degree for the student it comes in at
half the cost of four years of full benefits you can mix and match these
options to fit your budget and your goals that’s just one option for you.
Once you decide which type of contract you’re going to choose, you can decide
which type of payment option you’re going to choose, lump-sum is where you’re
going to tell us how many semesters you want to buy we tell you how much that
costs you pay us that contract is then purchased, closed to future
contributions, when the child wants to use it they can notify us and then they
can use it. Pay-as-you-go is our most flexible option, this allows you to buy
one credit hour or more to start with but after that you can put in as little
as $25 each time you want to put money in and every time you put money in
you’re gonna be buying credits or fraction of credits based upon the
prices in effect at that time and you can just add up your little piggy bank
full of credits until you’ve either reached your goals or you’re ready to
use the credit at school pay-as-you-go you are subject to our annual price
changes so just keep that in mind when you’re making a purchase but prices
don’t change too much year-to-year. Monthly payment plans prior to 2016 when
pay-as-you-go came about was your only option if you didn’t have that large
lump sum, we still have this as an option but we are finding a lot of people who
previously chose monthly payments are going to the pay-as-you-go route just
because of the flexibility. Monthly payment you’re going to choose how many
semesters you ultimately want to purchase and then how long you want to
pay on that payment plan you can choose four, seven, ten, or fifteen years, your
only stipulation is that you do need to be done paying on that payment plan by
the time the child graduates high school so you can’t put a freshman in high
school on a ten year payment plan but your monthly payment will be locked in
for the duration of your payment plan it’s never going to change,
the downside the monthly payment is that you are going to have a 5.5 percent rate
of return built into your payments you want to kind of think of that like an
interest rate so over the course of your payment plan you are gonna pay more than
if you were to do it in a lump sum. Pay-as-you-go, you are subject to those
annual price changes but we would have to raise our prices more than 5.5
percent every year you’re on a payment plan to come out more expensive on the
pay-as-you-go than you would on the monthly payment plan, keep in mind on
pay-as-you-go you can set up monthly payments if you’d like to, it’s not
required, but obviously encouraged because it will help you consistently
save you can also have friends and family make contributions into that plan
as well. You can mix and match your contract
options so if you do like two years of Community College lump sum and then you
want to start a pay-as-you-go for a full benefits that’s fine you can do payroll
deductions, checking account contributions, automatic withdrawals from
your bank, you can kind of work whatever works best for you. MET is designed for
in-state tuition at a Michigan public college or university but as we
kind of spoke about you can use it at a private school or an out-of-state school
or trade school we just would convert it to dollars and pay that school that way,
you can transfer schools, you just need to let us know where you’re attending
and then we can notify the new school of your available benefits. You can use MET
alongside scholarships most common question is “what happens if my child
gets a full tuition scholarship?” Congratulations!
You can terminate the contract for a refund based upon that scholarship and
then a refund would be issued to whoever you listed on the contract as the refund
designee, they would be responsible for paying any kind of income taxes on the
earnings portion of that refund. You can also elect to transfer those credits to
a different relative of the beneficiary too. What’s more common though is instead
of a full ride scholarship they’re gonna get a partial scholarship, let’s say they
have a three thousand dollar academic scholarship that they got, most schools
are still gonna bill us for the full tuition and mandatory fees so when we
pay the school we’ll essentially have overpaid by that three thousand dollars
so then the MET can be put towards something else on the students account
like room and board or books or refunded to the student as an over-payment so even
though MET can only get a bill for tuition and mandatory fees once that MET
money gets to the school, we don’t really care how the school applies it. You can
use MET towards a grad degree if the student has extra credits we can pay
graduate school it’ll pay the upper level undergraduate
rate so not quite all of grad school but a good portion of it and you do have
fifteen years from your expected high school graduation date to do something
with your MET contract use it for school, terminate it for a
refund, or transfer it to another beneficiary, let’s say fourteen years
after you graduate high school you have a child of your own you have extra MET
credits you can transfer it to them and then they will have fifteen years from
their expected high school graduation date to do something with MET so it
really can keep going and going, MET has been around since 1988 and many of those
1988 contracts are still paying out or will be paying out for a really long
time because they keep getting transferred down. The notification
process is very easy once you decide you’re ready to use your MET you can
either notify us online or notify us via form depending on which school you’re
attending, would determine which form you would need to fill out but after that we
would tell the school that funds are available, school will send us a bill, we
send the school money, we tell them or we do this every semester until you either
run out of credits or you tell us to stop, it is very easy and hands-off once
you get going. If you only buy a year or two of MET you are not required to use
that freshman year of college, save it for junior or senior year, those
are your most expensive years of college, most schools charge more for
upperclassmen than they do underclassmen plus tuition increases each year so you
are not required to use MET in the very beginning. We don’t know you’re ready
until you tell us and that’s what this process does. If you are going to attend
an out-of-state or private school this is kind of how we calculate the refund
values, you get the best benefit if they attend a Michigan public school, next
highest benefit if they attend a michigan private school, next highest
benefit is out of state and then there’s still a benefit if they don’t attend
college, the most important thing on this slide is that little box on the left “the
total amount of the refund shall not be less than the prepaid tuition amount”, if
for some reason we do the calculation and what we pay out to the
school is less than what you paid us, we give you back the difference, if college
becomes cheaper in the future and we pay out less than
what you paid us we give you back the difference so that’s where MET really
is kind of like an insurance program and the fact that you don’t have to worry
about losing money on it you’re gonna get at least how much you put into it
plus you get a State of Michigan income tax deduction on your contributions. Enrolling is very easy so you can enroll right on our website our website is SETwithMET.com, you can enroll by mail, you can also drop a contract off at a
Treasury office, enrollment this year will run through September 30th,
historically, enrollment runs December through September of the next year so if
you missed an enrollment time it should be coming out pretty soon.
If you enroll online there is typically a $25.00 enrollment fee, but check our
website or our social media channels, many times we do have coupon code
waivers for you, if you enroll via mail it is a 60 dollar enrollment fee and
those coupon code waivers don’t apply if you have any questions don’t hesitate to
reach out to us, you can reach us at 1-800-metforkid we are here Monday
through Friday 8:00 to 5:00, we are happy to answer your what-if questions or your
specific scenario questions, that’s what we’re here for.
We understand that everybody’s situation is different and everyone’s goals are
different, so please contact us with anything. Thank you for listening and we
hope to hear from you soon.

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