Although an overwhelming majority of Michigan parents view a college education as an investment in their child’s future, only about half are currently saving for higher education expenses, a first-of-its-kind survey by the Michigan Education Trust (MET) found.
The study also discovered significant differences in savings rates and knowledge about college savings vehicles among the various regions of the state, with parents in Michigan’s southern half more likely to have a college savings plan than those in the northern portions.
MET – the 529 prepaid tuition plan managed by the Michigan Department of Treasury – undertook the survey to gain deeper understanding into Michigan families’ needs and possible roadblocks to saving for college.
The survey results were released today during a news conference at the state Capitol in Lansing. Also during the event, MET announced a partnership with the Michigan Association of State Universities, in which the association will help promote the importance of saving for college among the alumni of its members – Michigan’s 15 public universities.
The news conference – which also featured state Treasurer Nick Khouri and House Minority Leader Sam Singh, D-East Lansing – was staged in conjunction with 529 Day, observed annually on May 29 to raise awareness of 529 plans, tax-advantaged college savings vehicles named after the section of the Internal Revenue Code that allowed for their creation. Also, Gov. Rick Snyder issued a proclamation recognizing May 29 as Michigan’s 529 Day to encourage saving for college and show appreciation for MET’s 30th anniversary as a 529 prepaid tuition plan.
“There’s a lot of research on saving for college on a national level, but detailed information specific to Michigan families – the people we serve – isn’t readily available,” MET Executive Director Robin Lott said of the reasoning behind undertaking the polling. “While we had anecdotal and other evidence about residents’ saving habits, knowledge and concerns, we were surprised by some of the findings in our statistically valid sampling of Michigan parents.
“The results from this first-of-its-kind survey will help us determine how we can better meet Michigan families’ college savings needs.”
The online survey, based on 742 responses from Michigan residents age 18 or older who have children under 18 living at home, has a margin of error of 3.6 percent.
It aimed to gauge awareness of 529 college savings plans, such as MET and the Michigan Education Savings Program (MESP); perceptions related to saving for college; the value placed on saving for college; barriers parents face in accumulating college savings; and strategies parents use to reduce college costs.
The survey found that 91 percent of Michigan parents view college as an investment in their children’s future and that 77 percent are willing to stretch themselves financially to ensure they can attend college.
But it also discovered that only 54 percent of the state’s parents are saving for college, which is less than the 57 percent nationwide average as determined by Sallie Mae’s “How America Saves for College 2016” report.
The highest percentage of savers – 56 percent – is found in Southeast Michigan. Both South-central and West Michigan have college savings rates of 53 percent. The Saginaw Bay region and Northern Michigan – including the Upper Peninsula – have the lowest rates of college savings, each at 47 percent.
But even parents who are savers expect their savings to cover only 30 percent of their child’s total college education costs, the survey found. Other primary sources of paying for college expenses, in the order most cited, were scholarships, parent income at the time the child is enrolled in college, federal or state financial aid or grants, and children’s student loans.
Furthermore, awareness of 529 college savings plans such as MET also varies by region, with South-central and Southeast Michigan having greatest familiarity with them at around 50 percent, followed by the Saginaw Bay region at 41 percent, West Michigan at 36 percent and Northern Michigan at 25 percent.
Additional findings from the MET survey include:
Of those who are saving, half started when their oldest child was between 0 and 3 years old, and 8 in 10 had started saving by the time their oldest child was 10.
Also among savers, 55 percent are using a traditional bank savings account to accumulate college savings.
The leading reason for not saving for college is not having enough money, which was cited by 6 in 10 of nonsavers.
Among nonsavers, 57 percent say they feel “overwhelmed” about saving for college, compared with 37 percent of savers.
Relatively few parents believe they will not need college savings (5 percent) or that financial aid or scholarships will be enough to cover costs (11 percent).
“MET’s survey findings track those from a recent Michigan Association of State Universities poll showing Michigan parents place a high value on obtaining a college degree that can lead to a better-paying job and more rewarding career,” said Bob Murphy, director of university relations and policy for the Michigan Association of State Universities. “But the results also make clear that government, at both the federal and state levels, needs to encourage savings and assisting parents, grandparents, friends and businesses in helping students meet their higher education goals.”
Beyond teaming with the Michigan Association of State Universities, MET is staging several events throughout its 30th anniversary year to highlight the importance of saving for college. For example, its “How We MET” campaign features the stories of families whom MET over the years has helped achieve their college dreams. Also, MET this year will award a total of $30,000 worth of prepaid tuition to 10 Michigan families through its How We MET Sweepstakes drawings.
“Trying to set money aside for a student’s college fund is an important concern for every busy parent,” said Rep. Singh, who was joined during the news conference by his wife, Kerry Ebersole, and infant son, Remy, to promote the new MESP account they opened after his birth last year.
“One of the best aspects of Michigan’s 529 plans, aside from their affordability and tax advantages, is the fact that anyone can contribute money to them – including other family members and friends,” said Rep. Singh, who added the couple is now exploring the option of opening a MET account that combines the benefits of both programs.
MET, MESP and MI 529 Advisor Plan (MAP), Michigan’s three Section 529 college savings programs, offer Michigan taxpayers a state income tax deduction on contributions and potential tax-free growth on earnings if account proceeds are used to pay for qualified higher education expenses. More information about MET is available at SETwithMET.com or 800-MET-4-KID (800-638-4543).
Upper Peninsula parents are less likely than those in other regions of the state to have begun saving for their children’s college education, a first-of-its-kind survey by the Michigan Education Trust (MET) found.
The study by the state’s 529 prepaid tuition program discovered that 47 percent of U.P. families are saving for college, compared with 56 percent in Southeast Michigan and 53 percent in both South-central and West Michigan. The Saginaw Bay region, also at 47 percent, is the only part of the state with an average savings rate as low as the U.P.’s.
Furthermore, the state’s overall 54 percent college savings rate is less than the 57 percent nationwide average as determined by the Sallie Mae student loan company’s “How America Saves for College 2016” report.
MET’s U.P. survey results were released today in conjunction with a college savings informational session hosted by State Sen. Tom Casperson, R-Escanaba, State Rep. Sara Cambensy, D-Marquette, and MET Executive Director Robin Lott at the Peter White Public Library in Marquette.
MET – which is managed by the Michigan Department of Treasury – undertook the survey to gain deeper understanding into Michigan families’ needs and possible roadblocks to saving for college.
“There’s a lot of research on saving for college on a national level, but detailed information specific to Upper Peninsula and Michigan families – the people we serve – isn’t readily available,” Lott said. “The statistically valid survey results will help us determine how we can better meet Michigan families’ college savings needs and increase awareness that 529 college savings can be used for trade and technical schools.”
Cambensy noted that the survey also discovered that U.P. parents are less aware of Section 529 college savings plans such as MET compared with those in other regions of the state.
Section 529 plans, named after a section of the Internal Revenue Code, are tax-advantaged savings and investment vehicles designed to encourage saving for college.
“I would strongly urge Upper Peninsula families who are looking for safe and convenient ways to save for their children’s higher education to look into what MET and the Michigan Education Savings Program – or MESP – have to offer,” Cambensy said. “Both plans are consistently among the highest rated of their kind in national rankings.”
MET’s online survey, which drew 742 responses from Michigan residents age 18 or older who have children under 18 living at home, has a margin of error of 3.6 percent. It aimed to gauge awareness of 529 college savings plans, perceptions related to saving for college, the value placed on saving for college, and strategies parents use to reduce college costs.
“It’s clear that Upper Peninsula parents value a college education,” Casperson said. “Survey results show that 91 percent view college as an investment in their children’s future and that 77 percent are willing to stretch themselves financially to ensure they can attend college.”
In fact, 33 percent of U.P. parents would use a portion of their retirement savings for their child’s college costs, the second-highest rate in the state behind 39 percent in the South-central region, the survey found. Other primary sources of paying for college expenses, in the order most cited, were scholarships, parent income at the time the child is enrolled in college, federal or state financial aid, or grants and student loans.
Additional findings from the MET survey include:
Only 40 percent of U.P. parents are highly confident they will meet the costs of college education, by far the lowest level in the state. West Michigan, at 49 percent, was next lowest.
Among parents statewide, the leading reason for not saving for college is not having enough money, which was cited by six in 10 respondents. U.P. parents, however, were most likely to say they lack the money to save, with 79 percent giving that reason.
Of those who are saving, half started when their oldest child was between 0 and 3 years old, and eight in 10 had started saving by the time their oldest child was 10.
Also among savers, 55 percent are using a traditional bank savings account to accumulate college savings.
Among nonsavers, 57 percent say they feel “overwhelmed” about saving for college, compared with 37 percent of savers.
Relatively few parents believe they will not need college savings (5 percent) or that financial aid or scholarships will be enough to cover costs (11 percent).
MET, which allows for the purchase of future college tuition credits based on today’s rates, is celebrating its 30th anniversary as the nation’s first prepaid tuition program. MET, MESP and MI 529 Advisor Plan (MAP), Michigan’s three Section 529 college savings programs, offer Michigan taxpayers a state income tax deduction on contributions and potential tax-free growth on earnings if account proceeds are used to pay for qualified higher education expenses. More information about MET is available at SETwithMET.com or 800-MET-4-KID (800-638-4543).
The Michigan Education Trust (MET) announced today that it will reopen enrollment on Friday, Dec. 1, just in time for holiday gift buyers to buy or contribute toward a child’s 529 prepaid tuition contract.
“We like to say that, unlike the latest toy or gadget that children will quickly outgrow or lose interest in, the gift of a college education lasts a lifetime,” said Robin Lott, executive director of the 529 prepaid tuition program administered by the Michigan Department of Treasury.
Lott said that grandparents, other family members or friends can purchase a new MET prepaid tuition contract in a child’s name, or contribute money toward an existing contract.
She also noted that contract holders qualify for a tax deduction on their Michigan tax returns for purchases or contributions made by Dec. 31.
MET closes enrollment for a period each year in order to review pricing. During that time, it does not sell new contracts.
Also today, the 529 prepaid tuition program announced that its contract purchase prices will remain unchanged until April 30, 2018. Prices will increase 1 percent on May 1 and remain in effect through Sept. 30, 2018.
That means until April 30, for example, that purchasers of Pay-As-You-Go contracts will continue to pay $589 for a credit hour of tuition under a full-benefits contract, which guarantees full payment of tuition and mandatory fees at any Michigan public university; $474 per credit hour under a limited-benefits contract, which covers up to 105 percent of the weighted average tuition of Michigan’s public four-year universities; and $110 per credit hour for a community college contract.
MET also sells contracts through lump-sum and monthly purchase plans.
More information about MET is available at SETwithMET.com or 800-MET-4-KID.
About MET
Administered by the Michigan Department of Treasury, MET is Michigan’s Section 529 prepaid tuition program that locks future tuition at any of the state’s public universities and colleges at today’s rates. MET contracts are portable to out-of-state and Michigan private colleges and universities, may be transferred to other eligible family members and are refundable if the student does not attend college. More than 96 percent of high school graduates with MET contracts have attended a college or university.
