Michigan’s 529 Prepaid Tuition Program

1. Michigan’s 529 Prepaid Tuition Program Presented by the ~TIP LADY wallacej4@michigan.gov TIPLady@live.com Zinch.com Fastweb.com Collegetoolkit.com Scholarships.com 517-962-1568 State ofMichigan www.michigan.gov/studentaid

2. Cost of College Additional costs may include registration fees, text book and supplies, mandatory fees, transportation, parking passes, athletic fees, recreational facilities pass, computer lab costs, legal services, health service fee, etc… Reflects In-state Tuition Rates for Michigan Residents. *Estimating an annual 6% inflation factor per year for 18 years. College costs were taken from college websites www.svsu.edu, www.umich.edu, www.alma.edu

3. A Wise Investment The lifetime gap in earning potential between a high school diploma and a BA exceeds $1,000,000. Source: U.S. Census Bureau, 2004 as cited in The College Board, “Education Pays Update,” 2005. Assumes 35 years in work force.

4. Don’t Do It With Debt Loans…Your Last Resort, because • Loans account for 54% of all financial aid according to the College Board • Roughly 70% of the Class of 2000 took out educational loans Source: New York Times, “College Loans Rise,” January 28, 2003 • 2006-2007 college graduates had average debt of $22,700 Source: College Board Savings…Your First Choice

5. Michigan’s Section 529 Plans First 529 Prepaid Tuition Plan implemented in 1988 Over $1 billion in assets & 101,225 Contracts (Oct. 2013) Actuarial Review & Annual Audit 529 Direct-sold College Savings Plan started in 2000 Over $3.5 billion in assets and 204,613 accounts (Oct. 2013) Treasury Review & Annual Audit 529 Broker-sold College Savings Plan started in 2009 $251 million in assets & 23,923 accounts (Oct. 2013) Treasury Review & Annual Audit

6. MET & MESP Tax Benefits • State income tax deduction • MET - Total Contract Price • MESP - $5,000 (s) or $10,000 (joint) • Qualified withdrawals are state and federal income tax-exempt • Treated as completed gifts for federal estate and gift tax purposes

7. Financial Aid Issues • Effective July 2006 • Equal treatment of MET & MESP • Generally considered asset of account or contract owner • Only 5.6% of value considered in FAFSA calculation • Contact college financial aid office

8. What is MET? • Michigan’s 529 Prepaid Tuition Plan • Designed to allow parents, grandparents and others to prepay college tuition • Purchasing a contract for tomorrow’s education at today’s cost • Purchase credit hours • Provides in-state tuition and mandatory fees at any Michigan public college/university • Transfer of risk • Funds pooled together for investment purposes • Secured by the assets of the Trust

9. The Basics • Designed to allow parents, grandparents and others to prepay college tuition • Tomorrow’s education at today’s cost • Purchase credit hours • Transfer of risk • Funds pooled together for investment purposes • Provides in-state tuition and mandatory fees at any Michigan public college/university • Secured by the assets of the Trust

10. Purchasing a Contract • One Purchaser per contract • One Beneficiary per contract • Beneficiary must be Michigan resident • No age restrictions • Name a Contingent Contract Purchaser • Transferable to an immediate family member (no residency requirement) • Low fee program – 40 basis points

11. Choice of Contract Options • Full Benefits - in-state rate • Limited Benefits - 105% WAT • 105% Weighted Average Tuition = $12,128 • UM-AA (25 cr.), MTU (24 cr.), MSU (27 cr.)* • Community College - in-district rate • Contract constitutes a completed gift for benefit of a minor - age 18/h.s. graduate *As of Fall 2013

12. Flexible Purchase Options • Prepay by Semesters (1/2 years) • Maximum 10 Semesters (5 years) per beneficiary • See Price Chart on page 20 • Flexibility • Multiple contracts per beneficiary • Mix contract options • Now or later

13. Payment Options • Lump Sum • Monthly Purchase - Use Payroll Deduction, ACH, Coupons • 1st monthly purchase due Feb. 25, May 25, Sept. 25 or Oct. 25 • No obligation to continue monthly purchases • Early payoff discount

14. Portability • Use Your MET Contract: • At Out-of-State colleges and Michigan Independent colleges • With partial scholarships • To transfer among colleges • Towards a graduate degree (AP credits) • Within 15 years

15. Refund Amounts for Fall 2013 Reason for not attending Mich. Public college: (Refund amounts for Full Benefits Contracts) • Michigan private college • Weighted Average Tuition - $11,551 • Out-of-state institution or full scholarship • Average Tuition - $11,228 • Death, disability, not attending or military • Lowest Tuition - $8,728

16. Qualified Institutions • Lowest tuition refund can be used at any certificate or degree granting institution that offers financial aid to their students • Go to U.S. Dept. of Education Web site: www.fafsa.ed.gov • Qualified Expenses*: tuition, fees, room, board, books, equipment required for enrollment *Earnings are taxed & 10% fed. excise tax on the earnings apply if not used for qualified higher ed expenses at a qualified institution.

17. Withdrawing Funds Withdrawals for qualified expenses are exempt from federal and Michigan income taxes Submit Forms or Withdraw Online • Notice to Use MET Educational Benefits (form 3181) – Attending Mich. Public College or University • Notice to Terminate a MET Educational Benefits Contract (form 2773) – Attending Mich. Private, Out-of-State, Full Scholarship, Not Attending College, Death or Disability • To withdraw online visit www.SETwithMET.com and log into Customer Web Qualified Expenses

18. How to Enroll • 2014 Contract Enrollment Period • December 10, 2013 to September 30, 2014 • Read the Contract, then Enroll: • On line at www.SETwithMET.com • By Mail • Treasury Offices • Help Line: 1-800-MET-4-KID or (517) 335-4767

19. Charitable Tuition Program • Approximately 14,000 students in Michigan foster care system • Growing number of youth reach adult age & have no resources to attend college when they age out of the system • Currently nine Michigan public colleges have programs to assist foster care students • Donations to the MET Charitable Tuition Program are eligible for state tax deduction & will go toward providing scholarships to foster care students • Download contribution form at SETwithMET.com

20. For More Information • www.SETwithMET.com • 800-MET-4-KID (638-4543) • (517) 335-4767 • 8 AM to 5 PM Be sure to read the MET Contract Enrollment Booklet before enrolling, which is available on-line or from the Program at the number listed above.