MICHIGAN’S 529 COLLEGE SAVINGS PROGRAMS

2008 ENROLLMENT

College Costs Today; What About Tomorrow?

$118,955$41,675$9,578$32,097Harvard University

$92,344$32,352$6,708$25,644Kalamazoo College

$47,345$16,587$7,374$9,213University of Michigan

$42,236$14,797$6,482 $6,159Northern Michigan University

Estimated SY 2023-2024*

Total in SY 2006-2007

Room and Board

Tuition and Fees

*Estimating an annual 6% inflation factor per year for 18 years. Source: National Center of Education Statistics, IPEDS College Opportunities On-Line, 2006-2007 school year.

College: The Wise Investment

$30,800 $37,600

$49,900

$59,500

$79,400

$95,700

High School Associate Bachelor's Master's Doctorate Professional

The lifetime gap in earning potential between a high school diploma and a BA exceeds $1,000,000.

Source: U.S. Census Bureau, 2004 as cited in The College Board, “Education Pays Update,” 2005. Assumes 35 years in work force.

Don’t Do It With Debt

Loans…Your Last Resort, because Loans account for 54% of all financial aid

according to the College Board Roughly 70% of the Class of 2000 took

out educational loans Source: New York Times, “College Loans Rise,” January 28, 2003

The average undergraduate debt is $18,900, up 66% from 1997 Source: Nellie Mae, “College on Credit,”

February 6, 2003`

Savings…Your First Choice

Get Started with MET & MESP Set Your Goal Now

What do you want to achieve? Learn how we can help you achieve it

Use Our Web-Based Resources IPEDS/COOL College Cost Data Base College Cost Calculator www.michigan.gov/mistudentaid

Start NOW – Don’t Delay Earning interest beats paying interest

Michigan 529 Internal Revenue Code Section 529

States can establish Qualified Tuition Programs (QTP) Two Kinds: Prepaid and Savings/Investment

Michigan has both! 1988 -- Michigan Education Trust (MET) – the nation’s

first guaranteed tuition program 2000 -- Michigan Education Savings Program (MESP) – a

top-rated savings/investment plan Why Use Michigan’s 529 plans

Provides state and federal income tax benefits Minimizes potential debt Provides peace of mind

SIMILARITIES

Both are Section 529 qualified tuition programs

State income tax deductions

Earnings are tax exempt for qualified withdrawals

Low Cost, No Commissions Transferable to immediate

family members Fund with after tax dollars Contribute with payroll

deduction, ACH or coupons Can be used separately or

together ($235,000 max.) Recognized as owner’s

asset for financial aid purposes

Rollovers accepted from other 529 programs

Michigan Education Trust and Michigan Education Savings Program

(MET) (MESP)Similarities and Differences

MET Prepay tuition with three

contract options Purchase credit hours, in

semester increments, at today's prices for future use

Best benefit at Michigan public institutions for tuition and mandatory fees

Refund amounts payable to in-state private or out-of-state institutions

Purchase for Michigan children newborn to 12th grade

15 years to use or refund Forget about tuition

increases, you are locked in

MESP Investment savings

account with seven investment options

Use at any "eligible educational institution"

Save for all qualified higher education expenses

Open an investment savings account with as little as $25

State matching grant available up to $200 for Michigan children newborn to 6 years

One change in investment strategy every twelve months

No age or time limit to use funds

MET & MESP Tax Benefits

State income tax deduction MET - Total Contract Price MESP - $5,000 (s) or $10,000 (joint)

Qualified withdrawals are state and federal income tax-exempt

Treated as completed gifts for federal estate and gift tax purposes

Financial Aid Issues Effective July 2006 Equal treatment of MET & MESP Generally considered asset of

account or contract owner Only 5.6% of value considered in

FAFSA calculation Contact high school counselor or

college financial aid office

Financial Overview as of August 31, 2007

MET Contracts Total 84,462 In Use 18,000 Paid in Full 29,000 Assets $997 M

Annual Audit Actuarial Review

MESP Accounts Total 185,073 Assets $1.76 B Match 29,033 Match Assets $5.7

M Annual Audit Treasury Review

Designed to allow parents, grandparents and others to prepay college tuition

Tomorrow’s education at today’s cost Purchase credit hours

Transfer of risk Funds pooled together for investment purposes

Guarantees in-state tuition and mandatory fees at any Michigan public college/university

Secured by the assets of the Trust

The Basics

Full Benefits - in-state rate Limited Benefits - 105% WAT

105% Weighted Average Tuition = $8,349 UM-AA (23 cr.) – MSU, FSU, MTU (28 cr.)*

Community College - in-district rate Contract constitutes a completed gift for

benefit of a minor - age 18/h.s. graduate

*As of Fall 2007

Contract Options

One beneficiary per contract Beneficiary must be Michigan

resident Newborn to 12th grade Low fee program – 30 basis points

Lump Sum Monthly Purchase - Use Payroll

Deduction, ACH, Coupons 1st monthly purchase due Feb. 25,

May 25, or Sept. 25 No obligation to continue monthly

purchases Early payoff discount

Payment Options

Prepay by Semesters (1/2 years) Maximum 8 Semesters (4 years) per

beneficiary See Price Charts on page 34 & 35 Flexibility

Multiple contracts per beneficiary Mix contract options Now or later

Flexible Purchase Options

Use Your MET Contract: At Out-of-State colleges and Michigan

Independent colleges With partial scholarships To transfer among colleges Towards a graduate degree (AP credits) Within 15 years

Portability

Refund Amounts for Fall 2007

Reason for not attending Mich. Public college:

Michigan private college Weighted Average Tuition - $7,951

Out-of-state institution or full scholarship Average Tuition - $7,742

Death, disability, not attending or military Lowest Tuition - $6,159

Lowest tuition refund can be used at any certificate or degree granting institution that offers financial aid to their students

Go to U.S. Dept. of Education Web site: www.ed.gov

Qualified Expenses*: tuition, fees, room, board, books, equipment required for enrollment

*Earnings are taxed & 10% fed. excise tax on the earnings apply if not used for qualified higher ed expenses at a qualified institution.

Qualified Institutions

2008 Contract Enrollment Period September 1, 2007 to August 31, 2008

Read the Contract, then Enroll at: Treasury Offices By Mail On line at www.SETwithMET.com

Help Line: 1-800-MET-4-KID or (517) 335-4767

How to Enroll

The Basics

Investment-based Total account balance can be used for

qualified higher education expenses Use at any eligible institution of higher

education in the US and abroad Managed by TIAA-CREF Tuition

Financing, Inc., a subsidiary of TIAA-CREF, administered by the Michigan Department of Treasury (pursuant to contract and PA 161 of 2000)

Benefits Low fee program (45 basis points p.a.) Minimum contribution $25 at any time

$15 through payroll deduction Use at qualified schools everywhere Account Owner Control Contribute by Check, ACH, Payroll

Deduction

Family-Friendly Multiple accounts allowed for

beneficiary Multiple contributors allowed for

beneficiary No age or time restrictions on use No residency requirements

Investment Options Moderate Age-Based Allocation Option

(Managed Allocation) Conservative Age-Based Allocation

Option Aggressive Age-Based Allocation Option 100% Fixed Income Option Balanced Option Principal Plus Interest Option (Guaranteed

Option) 100% Equity Option

Managing with MESP Set Your Goal Select option(s) based on Your Goal Read the Program Disclosure Booklet

before investing Rebalancing

Once per account per calendar year Upon change of beneficiary Does not create taxable event

Maximum investment $235,000 per beneficiary (includes cash value of any MET contracts)

Using What You Saved

Qualified Withdrawal Qualified Expense - Tuition, Room &

Board, Books, Mandatory Fees, Supplies, & Equipment

Qualified Institution of Higher Education - Accredited post-secondary institution eligible to provide federal financial aid

Use at qualified schools throughout the US and abroad

Withdrawals

Non-Qualified Withdrawals 10% federal excise tax on earnings

portion of distribution, state and federal income taxes, state recovery of applicable state income tax deduction

Special Cases: Scholarship, Disability, Death

State Matching Grant IF ELIGIBLE

The State will match $1 for every $3 contributed Maximum $200 per beneficiary State determines eligibility and owns State Match

Accounts REQUIRED -- when the MESP account is opened

Beneficiary must be 6 years old or younger Beneficiary must reside in Michigan Household income of the beneficiary’s custodial

parent(s) must be $80,000 (AGI) or less Available only the 1st year the beneficiary is enrolled

in the program Proceeds are invested in the TIAA-CREF Institutional

Bond Fund, used for tuition only

How to Enroll in MESP By Mail

Call for forms or download On-Line

Secure on-line enrollment Use Our On-Line Resources

College Cost Calculator

Other State 529 Programs Contributions to another State’s Section 529

program are Not entitled to the Michigan income tax deduction Not eligible for the State Matching Grant Do consider other plans if not Michigan resident

May incur expenses not found in Michigan programs such as Annual Fees Broker’s commissions (front-end or deferred) Underlying mutual fund charges Higher annual management costs

MESP Disclosures The State of Michigan, its agencies, TIAA-CREF Tuition Financing, Inc., Teachers Insurance

and Annuity Association of America and its affiliates do not insure any account or guarantee its principal or investment return, except for TIAA-CREF Life Insurance Company's guarantee to the MESP under the funding agreement for the Principal Plus Interest Option. Account value will fluctuate based upon a number of factors, including general market conditions. Contributions made to any of the three Managed Allocation options, or the100% Equity, Fixed Income, and Balanced Options do not guarantee principal or a minimum rate of return. Investment return might not exceed tuition inflation.

Non Michigan residents or individuals with taxable income in another state should evaluate benefits & tax treatments of other state 529 options prior to investing in MESP

Admission to any institution of higher education is not guaranteed by participation

Consider the investment objectives, risks, charges and expenses carefully before investing in MESP. Please visit www.misaves.com for a Disclosure Booklet containing this information. Read it carefully.

The tax information herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. It was written to support the promotion of the MESP. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.

TIAA-CREF Individual & Institutional Services, LLC, distributor, member NASD, SIPC.

For More Information www.SETwithMET.com 800-MET-4-KID (517) 335-4767

8 AM to 5 PM

www.misaves.com 877-861-MESP

8 AM to 10 PM

Be sure to read the MET Contract Enrollment Booklet and/or the MESP Program Disclosure Booklet before investing, which are available on-line or from the Programs at the numbers

listed above.