College Savings Month holds no special meaning for Alicia and Barry Pearlman.
After all, for years the West Bloomfield parents have regularly set aside money for their three children’s higher education – no matter the economic conditions.
So while a national spotlight will focus on saving for higher education throughout September, which is College Savings Month, the Pearlmans instead will take comfort in knowing that’s what they’ve been doing all along.
“We’ve always tried to do as much as we could,” said Alicia Pearlman, noting that they used two Section 529 college savings plans administered by the Michigan Department of Treasury – Michigan Education Trust (MET) and Michigan Education Savings Program (MESP) – to invest in their children’s education.
In September, in recognition of College Savings Month, MET is offering a $100 match on the first 300 contracts purchased, as well as waiving the $25 processing fee. Purchasers should use the code BKTOSCHL20 during the online enrollment process to waive the fee and determine if they qualify for the match.
Riding out the ups and downs
With their eldest child, Ariella, freshly graduated from college, middle child Shayna halfway through Michigan State University and the youngest, Joshua, beginning his senior year of high school, the Pearlmans have already accumulated the bulk of the college savings they’ll need.
That means they don’t have to worry about trying to save during the uncertainties of the COVID-19 pandemic. However, they did face a similar challenge during the Great Recession of 2007-09. And through it all, they kept on setting money aside.
“We’d put money in one month but maybe not the next month, but we always tried to do as much as we could,” said Alicia, who trains low-income people on how to use computers to help them land jobs, and whose husband is chief financial officer for a cognitive rehabilitation center.
“To me, it was like if I put in just $25 a month, it was $25 more toward their tuition and to help grow that amount that’s going toward paying their credits.”
That $25 could represent an easily skipped expense such as lunch with a friend – and, as Alicia said, “In these times of COVID, you’re probably not going much of anywhere anyway.”
That’s the perfect mindset for building a savings account, said MET Deputy Director Diane Brewer.
“We always urge people to simply save whatever they can and to begin as soon as they can,” she said. “It sounds simple, but it’s true: Every dollar that goes into a college savings account is one that you or your child won’t have to borrow or pay out of pocket when the time comes.”
Securing a sure thing
MET is a Section 529 prepaid tuition program that allows families to purchase future college tuition at today’s prices, while MESP offers a menu of investment options in which account holders can grow their college savings.
Both plans also offer tax advantages. For example, money taken out of them to pay for qualified higher education expenses is not taxed, and contributions may be deductible on Michigan tax returns.
For their firstborn, Ariella, the Pearlmans were able to buy an entire eight semesters’ worth of MET prepaid tuition when she was just a few months old.
“My husband had read something about it, and we had the money at the time, and he said, ‘We’re going to pay for this because it’s a great deal for her,'” Alicia Pearlman recalled.
“We thought this was a great way to pay for college,” she said. “We would have her tuition paid for, at least, and wouldn’t have to worry about it.”
The decision also paid off financially. By locking in tuition costs years in advance, the Pearlmans figured they paid half as much as the going rate while Ariella was at MSU, from which she graduated in 2019 after studying experience architecture.
Investing in their children’s future
For Shayna and Joshua, the Pearlmans initially invested in MESP accounts before rolling them over into MET contracts.
They at first opted for MESP because, unlike with MET at the time, they could add money to the accounts on their own timetable.
“I really think monthly is t…