In an Era of College Cost Anxiety, Let’s Build on What Works

published May 21, 2026

When my first son was born, I knew I should start saving for college.

But alongside that instinct came a flood of uncertainty. I was a young Mom and wife, we were on a tight budget, and college felt far away…everything else didn’t. How could I afford to save? What if I locked money away and needed it sooner? I was adamant that my children would attend a higher education institution, but I did not think that I could afford to pay for it.

That tension is familiar to a lot of families. Saving for college sounds responsible in theory, but in practice it can feel overwhelming.

I spent the majority of my career helping build the very savings tools that made it possible for families like mine to successfully save for college. And over thirty-five years later, I believe those tools are more important than ever.

Michigan Led the Way

In 1996, Congress enacted Section 529 of the Internal Revenue Code (IRC) as part of the Small Business Job Protection Act, establishing the legal foundation for the college savings plans millions of American families rely on today. But the story actually begins a decade earlier, here in Michigan.

It was one year after my second child was born, in 1986, State Treasurer Bob Bowman, Governor Blanchard, and the Michigan Legislature created and implemented a concept that would become the nation's First Tuition Guarantee Program — what we now know as the Michigan Education Trust (MET). Michigan didn't just participate in the 529 movement. We started it. The legal and tax battles that Michigan fought and won in the courts ultimately gave states the leverage to educate Congress and push for a dedicated section of the tax code. Section 529 exists, in no small part, because Michigan refused to give up.

Today, over 530,000 Michigan residents have 529 prepaid and savings accounts. More than 243,000 Michigan children have used them to pursue postsecondary education. And more than $8.2 billion has been distributed to help cover tuition, fees, room and board, books, and other qualified expenses.¹

A Tool That Has Evolved With Families

Despite their track record, 529 plans have been gaining recognition and popularity, but are still widely misunderstood.

Many people think of them as rigid or limited to traditional four-year, in-state colleges. But in reality, they’ve evolved significantly. Today, funds can be used for a wide range of qualified expenses: tuition, fees, books, housing, apprenticeship programs, and even student loan repayment in some cases.

They’re also more flexible financially than many assume. Contributions grow tax-free, and withdrawals for qualified expenses are not taxed—an especially meaningful benefit for families trying to stretch every dollar.

In fact, just this month, Michigan families saw another example of how scale and smart public design can work in their favor. As participation in the Michigan Education Savings Program (MESP) grew and total assets crossed a major milestone, the Program’s management fee dropped again—automatically—solidifying its place as one of the lowest-cost 529 plans in the country.²

Perhaps most importantly, the system has adapted to address one of the biggest concerns families have: financial aid.

I regularly hear from parents who are worried that saving would hurt their child’s eligibility for need-based financial aid. However, under the federal financial aid formula, 529 savings count as a parental asset, which means only 5.64% of the account's value is factored into the Student Aid Index (SAI) calculation. Compare that to the 20% assessment rate applied to assets held directly in a student's name. Saving in a 529 is, by design, among the least penalizing ways a family can put money aside.

In other words, saving and receiving financial aid are not in conflict. A strong affordability system should—and can—support both.

Why Starting Small Matters

If 529 plans are effective, why don’t more families use them?

The answer isn’t just about income. It’s also about psychology - parents second guessing their decisions and their ability to save, the same way I did.

But there’s strong evidence that saving, even modestly, sends a strong signal to your child that can shift how they think about their own future. When children grow up knowing there’s something set aside for them, higher education starts to feel like a plan instead of a question mark. It reinforces the parent’s expectation and inspires a child to dream and achieve their dream.

Research from the Center for Social Development at Washington University in St. Louis shows that children who have a college savings account early in life tend to have better educational and developmental outcomes than those who do not. Studies find that even when balances are modest, having savings set aside for education is associated with greater optimism about the future, stronger academic confidence, and improved academic skills—suggesting that the presence of savings itself can positively influence expectations and behavior.³

Where 529s Fall Short

None of this means 529 plans can solve everything.

They work best for families who can afford to put something away, even a little. Not everyone can. And some students—especially those without stable family support—don’t have anyone saving on their behalf.

During my career, I helped to establish Michigan’s Fostering Futures Scholarship Trust Fund (FFS) initiative for that reason. Tax deductible donations provide students who have experienced foster care with a scholarship that can fill a gap in their financial aid package. Programs like FFS are a reminder that access doesn’t happen automatically. It has to be purposely built in.

If 529s are going to reach more families, that likely means doing more on the front end—matching contributions, making enrollment easier, and finding ways to reach people who might not otherwise opt in.

Protect What Works. Expand What Doesn't Reach Far Enough.

I’m proud and honored to have helped Michigan build one of the most durable middle-income affordability tools in American history. As we confront rising tuition, growing public anxiety about college costs and whether a college degree is worth it, AND widening inequities in who can access higher education, the answer is not to dismantle what works or to let fear paralyze families into inaction.

The path ahead is straightforward: protect need-based financial aid, make it easier for families to start saving early, and expand access to those who’ve been left out.

For all the uncertainty around college costs, one thing hasn’t changed: starting early—even in small ways—can change the trajectory for a child. Michigan helped build that pathway. We should make sure more families can use it.

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Footnotes

1. ¹Data as of 4/30/2026. ↩
2. ²ISS Marketing Intelligence 529 College Savings Fee Analysis Q1 2026. MESP’s average annual asset-based fees are 0.09% for all portfolios compared to 0.47% for all 529 plans. ↩
3. ³Source: Center for Social Development, 2022 ↩

To learn more about MET, its prepaid tuition options, portability and flexibility, visit: SETwithMET.com.

To learn more about FFS and support students who have experienced foster care, visit: FosteringFutures-mi.com.

The treatment of investments in a 529 savings plan varies by school. Assets are typically treated as the account holder’s and not the student’s. (Student assets are generally assessed at 20% whereas parental assets are generally assessed at 5.6%.) 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.

To learn more about Michigan Education Savings Program, its investment objectives, risks, charges and expenses see the Program Description at MIsaves.com before investing. Read it carefully. Prior to investing, check with your home state to learn if it offers tax or other benefits such as financial aid, scholarship funds or protection from creditors for investing in its own 529 plan. Investments in the Plan are neither insured nor guaranteed and there is the risk of investment loss. If the funds aren't used for qualified higher education expenses, a federal 10% penalty tax on earnings (as well as federal and state income taxes) may apply. Michigan taxpayers can reduce their state taxable income by up to $10,000 if married filing jointly ($5,000 filing single) from contributions made into a Michigan Education Savings Program account. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributor and underwriter for the Michigan Education Savings Program.

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