Friday, May 1 is Decision Day for graduating high school students – the day they commit to universities and start crunching numbers for tuition, fees, room, and board.
College is one of the biggest investments a family can make, and experts say that over the long term, the cost of college has consistently risen faster than inflation.
See the full story in the video below
Christen Elliott is a senior at Cass Technical High School in Detroit, aiming for a four-year dance scholarship.
Ricky Robertson is a graduating senior from University Prep in Detroit, hoping to attend Grand Valley State in the fall.
Both of their moms responded to our WXYZ Facebook post asking for input on the cost of college and how to plan for it, and I sat down with each of them recently to hear their thoughts on the matter.
“Your son has applied for how many scholarships total?” I asked Danielle Johnson of Detroit.
“I can't even count, it's so many!” she replied.
She credits the Midnight Golf program for helping Ricky get prepared for college and guiding him through the scholarship application process.
LaToya Latham of Detroit had one rule of thumb for her daughter, Christen.
”No student loans, “ Latham explained.
Lathem is still paying off her student debt. Unfortunately, she had to drop out of college to care for her mother, who was diagnosed with a fatal illness.
Both Christen and Ricky are taking advantage of a variety of scholarships – including the Detroit Promise, which is a last-dollar scholarship that ensures all eligible Detroit residents have a tuition-free path to an associate degree, bachelor’s degree, or technical certificate if the college determines they have an eligible funding gap.
“I just tell him all the time, I'm like, you're going to need money outside of, like, me paying for you to go to school. You still have to eat. There's still going to be necessities that you have,” explained Danielle Johnson. “He's like, 'when I go to the school, I want to get a job,'" she added.
“Did you participate in any of the savings programs that are provided by the state?” I asked LaToya Latham.
“I did not for my daughter, because I found out a little later on, but I am for my son,” said Latham, referring to her 5th-grade son at home.
“What is the biggest mistake you see families make when it comes to saving for college?” I asked Derrick Glencer – a Certified Financial Planner Practitioner with Raymond James in Birmingham.
”Not starting early enough,” he said.
Glencer said in Michigan, we’re fortunate because we have three different savings plans available with tax benefits.
Types of Plans
- MESP (Direct): Flexible, low-cost (managed by TIAA). This covers all qualified expenses (room/board, books). Most popular for versatile planning.
- MET (Prepaid): Hedging tool. Locks in tuition/mandatory fees only at today’s rates. Refundable for out-of-state/private use (based on public average).
- MI 529 Advisor: Professional management via Nuveen/Financial Advisor. Good for those parents who are currently working with an advisor and want assistance and to integrate this into their current financial plan.
The Michigan Education Savings Program (MESP) is a flexible, low-cost 529 plan that covers all qualified educational expenses, including room, board, and books.
He said the Michigan Education Trust (MET) is Michigan’s prepaid tuition savings program – which allows you to lock in tuition and mandatory fees at today’s rates. It does not cover room and board.
The Michigan 529 Advisor Plan is good for people who already have an advisor and want to integrate college savings into their financial plans.
“The MESP is certainly the most popular, and I think that's probably the best for individuals that want to get on a savings program and don't know where to start. The MET is very expensive, but it does give you cost certainty,” he explained.
Glencer also wanted to underscore the contribution amounts and tax benefits of 529 plans.
- State Deduction: Up to $10,000 (Joint) or $5,000 (Single) annually.
- Tax Alpha: Emphasize that growth and qualified withdrawals are 100% tax-free at both State and Federal levels provided they are used for qualified higher educational expenses.
- Annual Gift Exclusion: $19,000 (Single) / $38,000 (Joint).
- Superfunding: $95,000 (Single) / $190,000 (Joint)—a "5-year pull-forward" strategy for high-net-worth estate planning.
- Lifetime Cap: Michigan stops accepting contributions once the total account balance reaches $500,000.
Remember, these 529 plans aren’t just for universities. Trade schools and vocational programs can qualify, too, giving families even more options. And grandparents and relatives can contribute.
When should families start saving?
"I’d say start now, because education costs move faster than inflation. I should also add, every state has different plans with unique benefits, and since these investments involve fees and expenses, there’s no guarantee of a profit. Make sure to read the issuer’s official statement carefully before you invest to find the right fit for your family,” Glencer stated.
What’s the best strategy for parents who feel like they’re behind in saving for college?
“Scholarship options,” Glencer replied. “Also, I would suggest considering looking at a community college for the first couple of years is also a good option.”
Community college is tuition-free in Michigan for eligible recent high school grads through the Community College Guarantee and tuition-free for adults 25 and older who don’t already have a college degree through the Michigan Reconnect program.
Parents should know that Qualified Higher Education Expenses (QHEE) for tax-advantaged plans like 529s include tuition, required fees, books, supplies, computer, internet, and room and board if the student is enrolled at least half-time.
Glencer pointed out that Non-Qualified Expenses include transportation costs (gas, airfare, and car maintenance), health insurance (unless it is a mandatory fee and paid directly to the university as a condition of enrollment), extracurriculars (sports fees, fraternity/sorority dues, and gym memberships), and standard tech (cell phone plans or electronics used primarily for entertainment).
Some advice from parents going through it right now?
“I know it's hard. It is hard. I am a single mom. And even in two-parent homes, it's still a lot, you know, financially [with] the economy, just all of that. But use your resources,” Danielle Johnson recommended.
“Put away what you're able to put away because every amount counts,” LaToya Latham said.
Bottom line, Glencer said start saving today if you have college-bound kids.
“Even in a bank account, if you haven't made a determination on what plan is right for you. And I would review all of the plans that are available to you, because each one is unique and has different types of benefits, costs, and expenses. And I'd review the official statements by each of the providers to ensure that you're getting the plan that is right for you because you can lose money in some of these investments,” Glencer explained.
