Unlock College Savings: A Guide To 529 Plan Types & Michigan Options

Prof. Alberto Ryan 12 May 2025

Are you feeling overwhelmed by the ever-increasing costs of higher education? Securing your child's future through strategic college savings is more achievable than you think, and understanding the nuances of 529 plans is the first crucial step.

Saving for college is no longer a distant aspiration, but a vital financial goal on par with purchasing a home or planning for retirement. With tuition rates continuing to climb, families are seeking effective ways to alleviate the burden of student debt. 529 college savings plans have emerged as a popular and powerful tool for achieving this objective. These plans, named after Section 529 of the Internal Revenue Code, are administered by state agencies and organizations, offering a tax-advantaged way to save for future educational expenses. However, the landscape of 529 plans can be complex, with a variety of options and considerations to navigate.

Here is a brief overview of 529 plans, including types, key features, and state-specific nuances, particularly focusing on Michigan's offerings. It aims to provide a comprehensive guide for families and individuals seeking to maximize their college savings potential.

Plan Type	Description	Key Features	Michigan Specific Plans
Prepaid Tuition Plans	Allows you to purchase tuition credits at today's prices for future use at eligible institutions.	Locks in current tuition rates, protecting against future increases. Performance is often tied to tuition inflation.	Michigan Education Trust (MET)
Savings Plans	Investment accounts where contributions grow tax-deferred, and withdrawals are tax-free when used for qualified education expenses.	Offers a range of investment options, allowing you to tailor your strategy to your risk tolerance and time horizon.	Michigan Education Savings Program (MESP), MI 529 Advisor Plan (MAP)
Eligibility	Generally open to U.S. citizens and resident aliens with a valid Social Security Number or Taxpayer Identification Number, regardless of their state of residence.	Flexible contribution options, potential state tax deductions, and ability to change beneficiaries.	MESP: Accessible to a broad range of individuals. MET: Allows parents, grandparents, businesses, and others to pay for future education.
Contribution Limits & Tax Benefits	Vary by state and plan. There are no federal contribution limits, but contributions may be subject to gift tax rules.	Earnings grow tax-deferred, and withdrawals are tax-free when used for qualified education expenses. Some states offer tax deductions or credits for contributions.	Michigan: Contributions up to $5,000 per year by an individual, and up to $10,000 per year by a married couple filing jointly, are deductible in computing Michigan taxable income.
Minimum Enrollment Contribution (Michigan)	Starting in 2025, the Michigan Education Trust (MET) will have a new minimum enrollment contribution of $25, replacing the previous requirement to purchase at least one credit hour to start.	Accessibility	The Michigan Education Trust (MET)

Source: Michigan Department of Treasury