Residents in Michigan have two options in terms of college education savings, if desired to obtain tax benefits from state income tax.

• MESP: Michigan Education Savings Plan or Michigan state version of 529 college savings plan. It offers a list of investment mutual fund portfolio that the account owner can choose based on risk tolerance, child’s age, etc. MESP allows account owner to hire a financial advisor to manage the account and choose appropriate mutual fund portfolio for them.
• MET: A prepaid tuition plan that the credits purchased can be used for future higher education tuition, books, fees etc. if the child chose to attend a Michigan public college. The assumed tuition increase is about 6% a year.
• Questions frequently asked:
  • Tax benefit: maximum state tax free contribution of $10,000 per family per year. This is about $400 state tax savings if contributed the full amount
  • What if my kid doesn’t attend Michigan public college:
    • MET: redeem at average Michigan public college tuition cost of the school year.
    • MESP: The money in account can be used at any college, any state, undergraduate or graduate, public or private, in the US.
  • What if my kid doesn’t attend go to college:
    • MET: redeem at average Michigan public college tuition cost of the school year.
    • MESP:
      • Non-qualified withdraw: redeem cash can be used for anything with penalty (worst choice).
      • Transfer the beneficiary to another person of the family
      • Rollover to Roth IRA
      • Other options
  • Should I buy MET or MESP:
    • MET:
      • About 6% assumed return to defend college tuition increase
      • Best deal for the family if attend expensive public college in Michigan like UM-Ann Arbor or MSU
      • Not as good deal if kid attends cheap tuition public Michigan college
    • MESP:
      • Full amount in account can be used in any college
      • Much higher investment return if invested properly