Lansing, Michigan – November 17, 2105 – Rachael Hunter credits the Michigan Education Savings Program for helping her keep her vow that her daughter won’t face a mountain of student loan debt after she graduates from college.
“If there was one gift I wanted to give my child, it was no debts coming out of school,” said Hunter, an on-air personality for Detroit country radio station WYCD. “We’re so glad we had a plan and opened an MESP account when she was in the fifth grade.”
Thousands of other Michigan families who have saved for college through MESP since it began operating 15 years ago this month have similar stories to tell. Since its inception, MESP has paid out nearly $1.5 billion in higher-education expenses to more than 68,500 beneficiaries.
“It’s been gratifying to hear from parents throughout the years about how MESP has helped them reach their college savings goals,” said Robin Lott, MESP administrator for the Michigan Department of Treasury.
Hunter said she and her husband, Jay Dooley, used payroll deduction to build the MESP account they established for their daughter, Rachael Dooley, a Novi High School graduate who is studying developmental disabilities at Vanderbilt University in Nashville, Tenn.
Their MESP savings allowed them to afford out-of-state tuition that otherwise might have proved overwhelming, Hunter said. “Putting money away on a regular basis in MESP was one of the best things we’ve done in our lives,” she said.
The couple chose MESP to save for college because they liked its investment options, Hunter said. MESP, which is sold directly to families saving for college, offers nine professionally managed investment options designed to meet investors’ savings timeline and risk tolerance.
While Rachael Dooley is on track to graduate debt-free, not all college students from Michigan are so fortunate. Michigan college students left school with an average of $29,450 of debt in 2014, higher than the national average and up 57 percent from 2004, according to an October 2015 report from the Project on Student Debt.
“MESP’s 15th anniversary is an ideal time to remind families who have yet to begin saving for higher education how simple it is to open an account and that it comes with a host of features, including online enrollment, online account access, payroll deduction and e-gifting for contributions from grandparents and others,” Lott said.
The plan, which since its inception has been managed by TIAA-CREF Tuition Financing Inc., has grown steadily over the years. It topped $1 billion in assets in 2005 and hit the $2 billion mark in 2008. Today, MESP has more than 220,000 accounts with total assets exceeding $4 billion.
MESP is one of three Michigan Section 529 plans, named after the section of the Internal Revenue Code that allowed for their creation. The others are Michigan Education Trust (MET), a prepaid tuition plan that allows for the purchase of tuition based on today’s rates, and MI 529 Advisor (MAP), a savings plan offered through financial advisers that offers various investment options.
Each plan offers 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.
MESP can be used at any eligible college, university or trade school in the nation and some abroad for a variety of qualified higher education expenses, including tuition, fees, certain room and board costs, books, supplies and equipment required for enrollment.
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