Purchases of Michigan Education Trust (MET) contracts by families saving for a child's education have soared nearly 76 percent in 2016, with the bulk of the increase attributable to the popularity of the college savings plan's new Pay-As-You-Go option, MET officials say.
Through July 31, MET sold 1,451 prepaid tuition contracts for a total of nearly $30 million, compared with sales of 826 contracts worth $20.6 million in the same period of 2015. Of the contracts sold so far this year, 452 were of the Pay-As-You-Go variety.
"We're pleased that so many families have decided to make Pay-As-You-Go part of their college savings strategy, and we're even happier the upturn in MET contract sales puts more students on the path toward higher education," said Robin Lott, MET executive director.
"Studies have consistently shown a college education is one of the best investments available, based on the degree holder's future earnings potential," she added.
MET, the Section 529 prepaid tuition program administered by the Michigan Department of Treasury, locks future tuition at any of the state's public universities and colleges at today's rates.
Pay-As-You-Go, which MET introduced in December, allows purchasers to open contracts by purchasing a minimum of one credit hour rather than in semester increments. The option lowers the initial cost of establishing a MET contract, which might prove a hurdle for some families.
Another key feature of the option is that it leaves the contract open to future contributions of as little as $25, as opposed to a regular lump sum purchase that is closed and cannot be added to in the future. Also, once a Pay-As-You-Go contract is purchased, friends and family members can contribute to it.
To help further spur interest in college savings and in recognition of College Savings Month MET is waiving the normal $25 processing fee for buying a new contract for the entire month of September.
"We hope the suspension of the processing fee serves as incentive to get even more families thinking about saving for college," Lott said. "As tuition costs continue to rise, it's becoming even more beneficial for families to save as much as they can as soon as they can to help fund a future college education."
According to the College Board, the average published tuition and fee price of a full-time year at public four-year institutions nationwide was 40 percent higher, after adjusting for inflation, in 201516 than it was in 200506. At private nonprofit four-year institutions, the average published price was 29 percent higher than it was a decade ago.
More information about MET is available at www.SETwithMET.com or 800-MET-4-KID.
Published: Wed, Sep 07, 2016
