1 T H E E D U C A T E D W A Y T O S A V E F O R C O L L E G E Welcome to our Presentation on Michigan’s 529 College Savings Plans

Excerpted from to College Savings Based on average published tuition and fees for as reported by The College Board and assumed to increase 5% annually. This is a hypothetical example for illustrative purposes only. Projected 4-Year Tuition and Fees Private College Projected 4-Year Tuition and Fees Public College $300,000 $200,000 $100,000 $ $39,400 $400,000 The Cost of College $94,800 $134,000 $323,000

How are families paying for college?  Parent income & savings are the #1 source of college funding, surpassing scholarships & grants for the first time since 2010.* Source: How America Pays for College 2015 National Study by Sallie Mae & Ipsos (

Incoming Freshmen Fall * In-State Kalamazoo College Tuition: $42,510 Room & Board: $8,886 Total: $51,396 Source: Kalamazoo College Office of Admissions Michigan State University Tuition: $13,612 Room & Board: $9524 Total: $23,136 Source: MSU Office of Admissions University of Michigan Tuition: $13,856 Room & Board: $10,554 Total: $24,410 Source: University of Michigan Financial Aid Office Oakland University Tuition: $11,344 Room & Board: $9,250 Total: $20,594 Source: Oakland University Student Financial Services Central Michigan University Tuition: $11,850 Room & Board: $9,088 Total: $20,938 Source: Central Michigan University Scholarships and Financial Aid Michigan Technological University Tuition: $13,986 Room & Board: $9,857 Total: $23,843 Source: MTU Office of Admissions Oakland Community College Tuition: $4,620 Room & Board: $6,700 (unless living at home) Total: $11,320 Source:

529 Direct-sold College Savings Plan started in 2000 Over $4 billion in assets & 222,861 MESP accounts (Dec. 2015). Treasury Review & Annual Audit First 529 Prepaid Tuition Plan implemented in 1988 Over $1.02 billion in assets & 105,395 Contracts (Dec. 2015) Actuarial Review & Annual Audit Michigan’s Section 529 Plans 529 Advisor-sold College Savings Plan started in 2009 Over $388 million in assets and 34,838 accounts (Dec. 2015) Treasury Review & Annual Audit

MET: Total Contract Price MESP: $5,000 (single) or $10,000 (joint) Michigan taxpayers are eligible to receive a Michigan income tax deduction of up to $10,000 a year for married couples filing jointly and $5,000 a year for individuals filing single on contributions made to MESP, less any Qualified Withdrawals made during the same tax year. Amounts transferred from another 529 college savings plan are not eligible for the Michigan income tax deduction. Tax Deferred Earning potential Tax Free Withdrawals if used for qualified expenses Treated as completed gifts for federal estate and gift tax purposes. Consult your Tax Advisor Michigan income tax deduction (annual)

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“WHY SHOULD I CONSIDER THE MESP COLLEGE SAVINGS PROGRAM?

The MESP 529 college savings program offers an easy and tax-advantaged way to save for post-secondary education with features like:  Tax-deferred growth potential  Tax-free withdrawals for qualified expenses  Gift and estate tax benefits (consult your tax advisor) Qualified expenses include tuition, fees, certain room & board costs, supplies. Any earnings on nonqualified withdrawals are subject to federal income and state income tax and may be subject to a 10% federal penalty. State income tax deductions may also be forfeited on a non- qualified withdrawal.

Experienced 529 College Savings Plan Manager TIAA-CREF  Established in 1918 by Andrew Carnegie with a mandate to serve the investment management and retirement needs of higher education & non-profits.  Innovators in delivering personalized financial advice TIAA-CREF Tuition Financing, Inc. (TFI)  An affiliate of the TIAA-CREF group of companies.  529 college savings plan industry pioneer managing 529 college savings programs since  An industry leader managing 10 state programs with more than $20.9 billion in assets under management (as of 08/15/2015)

Low Cost Program  Annual asset-based management fee of just $ per $1,000 annually (low % fee)  Management fee is used to cover the cost of investment management and administration services  No other fees or charges will be applied to your account More of your investment can go toward education expenses, not account administration

Account Owner One account owner per account Valid Social Security Number U.S. address of record Contingent account owner No state residency required Full control Change beneficiaries

Beneficiary One beneficiary per account Need a valid Social Security Number to start No state residency required No age restrictions No time restrictions Beneficiary can be changed to another eligible family member of the original beneficiary. See the Disclosure Booklet for details.

Opening An Account Open an account with as little as $25 per investment option Contribute as little as $15 per investment option using payroll deduction Current cap on Contributions: $500,000

How can you make a contribution? Payroll deduction Bank account deduction (ACP) By check Gifts from family members and friends Opening An Account

Investment Options  Conservative Age-Based Allocation Option  Moderate Age-Based Allocation Option  Aggressive Age-Based Allocation Option  Balanced Option  100% Fixed-Income Option  U.S. Equity Index Option  Global Equity Index Option  International Equity Index Option  Principal Plus Interest Option Investment Options can vary in risk and objective. Please read the Disclosure Booklet prior to opening an account.

Choosing Your Investment Option o Choose a combination of options o Allocate new contributions to any option o Transfer between options once per calendar year for the same beneficiary or upon a change of beneficiary * Note: The investment approaches described are not recommendations and do not take into consideration personal goals or preferences. After evaluating all the information, the ultimate decision is up to the account owner.

MESP usage is not restricted for use in Michigan only.  Account assets can be used at any eligible educational institution that meets federal accreditation standards (i.e., can accept federal student aid).  Includes four-year colleges and universities, many two-year institutions, graduate schools, doctorate programs, vocational and technical schools, as well as many schools abroad.  Check the FAFSA website ( You Should Know:

MESP accounts can be funded by individuals of any income level and at any age. * Contributions to Coverdell Education Saving Accounts (ESAs) are subject to a maximum annual contribution limit of $2000 per designated beneficiary below the age of 18, and funds must be used by the age of 30 (unless the beneficiary has special needs.) Full contribution eligibility begins to phase out, eventually becoming eliminated, if the contributor has a Modified Adjusted Gross Income exceeding $95,000 as a single tax filer, or $190,00 as a married couple filing jointly in the tax year. ** Qualified expenses include tuition, fees, certain room & board costs, supplies. Any earnings on nonqualified withdrawals are subject to federal income and state income tax and may be subject to a 10% federal penalty. State income tax deductions may also be forfeited on a non-qualified withdrawal.  Unlike Coverdell Accounts*, MESP plans are not subject to income restrictions nor are they subject to phase-out at certain income levels.  MESP plans can be funded for beneficiaries of any age, and tax-free withdrawals for qualified expenses** can be made at any age.  Current cap on contributions: $500,000 You Should Know:

MESP accounts can be used toward all qualified higher education expenses*. You Should Know:  Tuition and fees  Certain Room and board expenses  Books, supplies and equipment required by a course or the university  For example: Computer equipment or software required by the university or course instructor Cost of rent off-campus as long as it is within the school’s stated “Cost of Attendance” limit * Refer to Qualified Higher Education Expenses found in IRS Publication 970 found at

MESP accounts have more flexibility than you think. You Should Know: :  Account owners can change the beneficiary, or transfer the assets to another eligible beneficiary.*  The assets can be returned to you as a non-qualified withdrawal.**  Assets in the account can grow in perpetuity; there are generally no time or age limitations. * New beneficiary must be an eligible member of the family of the beneficiary. See the Plan’s program description for more information. ** Qualified expenses include tuition, fees, certain room & board costs, supplies. Any earnings on nonqualified withdrawals are subject to federal income and state income tax and may be subject to a 10% federal penalty. State income tax deductions may also be forfeited on a non-qualified withdrawal.

If you need the money back, you can take it back. You Should Know:  The earnings portion, if any, of a non-qualified withdrawal is subject to federal & state income tax and a 10% federal penalty.  In the event a designated beneficiary receives a scholarship or will attend a military academy, plan assets can be returned (withdrawn) with any earnings subject to federal and state income tax only – the 10% federal penalty is waived.*  The earnings portion of a non-qualified withdrawal due to death or disability by the designated beneficiary is subject to federal and state income tax only – the 10% federal penalty is waived.* * Please consult a tax professional for more information. Please read the Plan’s program description for more information.

Similarities and Differences SIMILARITIES  Both are Section 529 qualified tuition programs  State income tax deductions or plan contributions  Any earnings are tax exempt for qualified withdrawals  Low Cost, No Commissions  Transferable to eligible family members  Fund with after tax dollars  Contribute with payroll deduction, ACH or coupons  Can be used separately or together ($500,000 max)  Recognized as owner’s asset for financial aid purposes. Consult your tax advisor.*  Rollovers accepted from other 529 programs, consult your tax advisor.  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 – no age limit  15 years to use or refund  Forget about tuition increases, you are locked in  Investment account with nine investment options  Use at any eligible educational institution  Use funds for qualified higher education expenses  Open an investment account with as little as $25  One change in investment strategy allowed every calendar year  No age or time limit to use funds The treatment of investments in a 529 savings plan varies by school. Assets are typically treated as the account owner's and not the student's. Any investments, including those in 529 accounts, may affect the student's eligibility to get financial aid based on need. You should check with the schools you are considering regarding this issue.

For More Information 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 MET-4-KID (517) AM to 5 PM MESP - 8 AM to 8 PM

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Important Disclosures The Michigan Education Trust (MET) is administered and managed by the Michigan Department of Treasury. The Michigan Education Savings Program (MESP) is administered by the Michigan Department of Treasury. TIAA-CREF Tuition Financing, Inc. is the Program Manager. Investments in the Plan are neither insured nor guaranteed and there is a risk of investment loss. Before investing in a 529 plan, consider whether the state where you or your Beneficiary resides has a 529 plan that offers favorable state tax benefits that are available if you invest in that state’s 529 plan. The tax information contained herein is not intended to be used, and cannot be used, by any taxpayer for the purpose of avoiding tax penalties. Taxpayers should seek advice, based on their own particular circumstances, from an independent tax advisor. Neither TIAA-CREF Tuition Financing, Inc, nor it’s affiliates, are responsible for the content found on external website links contained herein. Withdrawals that are not used for qualified higher education expenses may be subject to federal income tax and any applicable state income tax, as well as an additional 10% federal tax. TIAA-CREF Tuition Financing, Inc., Program Manager. The Michigan Education Savings Program Facebook page is managed by the Michigan Department of Treasury. Connect with us on C25369