Follows a 25 percent drop in program management fees in October 2013
New York, November 24, 2014 — TIAA-CREF Tuition Financing, Inc. (TFI) announced it is lowering the Michigan Education Savings Program (MESP) state-sponsored 529 plan's program management fees for the second time in little more than a year.
With total assets under management now above $4 billion, MESP's program management fees have dropped nearly 17%. As a result, total annual asset-based fees, now range from 0.17 to 0.27 percent, depending on the investment options selected in individual MESP accounts. That translates to annual costs of between $1.70 and $2.70 for every $1,000 invested.
The current decrease follows a 25 percent drop in program management fees in October 2013, when MESP assets reached $3.5 billion. Both reductions were negotiated in the state of Michigan's contract with TIAA-CREF Tuition Financing, Inc., MESP's program manager since November 2000.
MESP's total annual asset-based management fees have regularly been recognized as among the lowest of all direct-sold 529 college savings programs in the country in rankings by such independent research firms as Morningstar and Savingforcollege.com.
"Each decline in fees allows more of investors' funds to go toward college savings goals and less toward management fees," Michigan State Treasurer Kevin Clinton said. "We're proud of the success and popularity of MESP, and we're happy to be able to pass these cost savings on to our account owners."
"A 529 College Savings Plan can be a powerful tool that can assist families and individuals saving for higher education expenses," said TFI President Michael Noone. "With investment option choices that span equities, fixed income, guaranteed, age and risk-based options and low costs, the Michigan Education Savings Plan is a very attractive 529 plan."
MESP is one of three Michigan Section 529 plans, all of which offer Michigan taxpayers a state income tax deduction on contributions and potential tax-free growth on any earnings, if account proceeds are used to pay for qualified expenses. MESP can be used at any eligible college, university or trade school in the nation and some abroad for a variety of qualified expenses, including tuition, fees, certain room and board costs, books, supplies and equipment required for enrollment. Limitations apply. See the MESP Disclosure Booklet for details.
TIAA-CREF (www.tiaa.org) is a national financial services organization with $840 billion in combined assets under management (as of 10.1.14) and is the leading provider of retirement services in the academic, research, medical and cultural fields.