For Shelby Township family, MET meets all their tuition needs
Michelle and Patrick Simasko figured they were getting a sure thing when they invested in prepaid tuition contracts from the Michigan Education Trust (MET) for each of their three children.
But the Shelby Township couple never dreamed they were going to come out so far ahead.
“We knew tuition was going to go up – but how much, we had no idea,” Michelle Simasko said of their decision as new parents to make MET their primary college savings vehicle.
As it turned out, tuition increased at an even greater rate than they expected.
In 2002, when they bought a MET contract for their eldest daughter, Lauren, four years of tuition cost $17,000. The actual tuition payout by MET between 2012 and this spring, when Lauren will finish her double major in finance and personal finance at Central Michigan University, will exceed $44,000.
The Simaskos expect to realize similar savings on the MET contracts they bought for their middle child, Kelsey, a junior majoring in corporate event management at CMU, and their 12-year-old son, Brian.
“When we first started the process, I thought this was going to be too good to be true,” Michelle Simasko said. “It turned out to be even better than we thought it would.”
A perfect fit
Administered by the Michigan Department of Treasury, MET is Michigan’s Section 529 prepaid tuition program that allows families to lock in future tuition at any of the state’s public universities and colleges at today’s rates. MET contracts can be used at Michigan public, private and out-of-state colleges and universities.
After Lauren was born, the Simaskos sat down and tried to determine the best way to save for her higher education. They were generally aware of MET, and after checking into it more, they decided the program best fit their needs.
“We just knew we didn’t want to get socked with big tuition bills,” Michelle Simasko said.
On top of that, MET’s tuition guarantee aligned with the Simaskos’ conservative approach to investing. “We would rather invest safely and never lose a dime,” Michelle Simasko said.
Many of the Simaskos’ friends were new parents at the same time and were facing similar decisions – and some of them are now regretting not purchasing MET contracts, Michelle Simasko said.
“At the time I kept thinking, ‘Why aren’t you doing it the way we’re doing it?’” she said.
Many parents might be wondering the same thing about themselves, given the rate of college tuition increases. The College Board reports that after adjusting for inflation, the average published tuition and fee price of a full-time year at public four-year institutions nationwide was 40 percent higher in 2015-16 than it was in 2005-06. At private nonprofit four-year institutions, the average published price was 29 percent higher than it had been a decade earlier.
Ease of use
Even though the plan met their needs on paper, the Simaskos admit to still having a bit of doubt that MET would operate as promised when it came time to put it to use. Michelle Simasko said she was particularly concerned about paperwork requirements – worries that turned out to be unfounded.
Once Lauren enrolled at CMU, the Simaskos filled out a MET form, and the program has handled all tuition payments ever since.
“I never have to do anything,” Michelle Simasko said. “Everything is so easy. Every time I’ve called there they’ve answered my questions.”
MET covers only tuition and mandatory fees, meaning the Simaskos are responsible for other expenses associated with college, such as room and board. But they’ve managed those costs out of pocket, and they’re easier to control than tuition is, Michelle Simasko said.
Coincidentally, each time they were planning to purchase a MET contract, the Simaskos received an inheritance from a relative. That made it possible to buy the contracts in single lump sums. But even if it weren’t for the sudden windfalls, the Simaskos still would have bought MET contracts – just possibly through a payment plan instead, Michelle said.
MET’s tax benefits were more of a bonus and not an overriding consideration for the Simaskos. Michigan taxpayers are eligible for a state income-tax deduction on contributions made to a MET contract, and contract earnings are tax-exempt when benefits are used for qualified higher education expenses.
But another key feature – a refund of the contract if a child winds up receiving a scholarship that covers tuition costs – might come into play.
Brian is a naturally gifted student, his mother said, and the Simaskos are using the promise of the MET contract going directly into his pocket as incentive for him to maintain his academic achievements.
When informed of the offer, Brian had what his mother described as a typical seventh-grade boy’s response: “Man, that could buy a pretty sweet bass boat.”
More information about MET is available at www.SETwithMET.comor 800-MET-4-KID.
Members of the editorial and news staff of The Detroit News were not involved in the creation of this content.