Investing in Education

May 2015


Congratrick -2ulations to all of our high school graduates.  Graduating high school is a milestone that we should take pause and celebrate.  I say pause because my hope is that the great majority of high school graduates will continue to pursue their education.  Despite the challenges of continuing ones education, such as financing the cost of college, it is an investment that will pay off over time.  In addition, for those who do not continue to pursue their education, unfortunately, the great majority will be locked into low-paying jobs with very little opportunity.  I bring this up because what goes hand-in-hand with high school graduation is high school graduation gifts.


When I graduated high school, as it is today, cash is the number one gift.  After all, it’s an easy gift and let’s face facts — who couldn’t use cash?  However, we all know what happens to the cash you give.  It tends to evaporate and before you know it, it’s gone.  That is why for this high school graduation season I encourage you to do something different with your money.


As opposed to giving cash or a gift card or something of that nature, why not give something that will have a little more meaning.  My recommendation is that you use your gift to help the graduate with their future education.  I recognize that most of our high school graduation gifts are not going to pay for someone’s college or even a semester of tuition.  However, gifts add up and before you know it, if more and more people band together with regard to their gift, they can make a dent in the cost of a college education.


What I recommend is that the high school graduate’s family establish an education fund for their graduate and then encourage people to make a donation to the college fund as opposed to giving cash or gift cards.  The Michigan Education Savings Plan (MESP) ( is an excellent vehicle for this.  The MESP as a Section 529 Plan has certain tax benefits in that all the money contributed will grow tax free.  The money can also be withdrawn tax free as long as it’s used for a qualified education expense, which basically includes tuition, books and other required fees.  In fact, you can also use the MESP for room and board.  In addition, one of the beauties of the MESP is the fact that it basically can be used for any public or private institution in the country.  It’s not limited to Michigan schools.


For those of you who are making larger high school graduation gifts, you can open your own MESP Plan for the graduate or another 529 Plan such as through Vanguard or Fidelity.  However, for people who are not making large gifts it would make sense for them to contribute into an established MESP.


I recognize that most high school graduates would rather receive a gift card from Apple or Netflix; however, that should not be the criteria.  These high school graduates are entering into a very competitive and challenging world where education is not only needed but is also extremely expensive.  If in your high school graduation gift you can reduce the burden upon the graduate, you have done something good with your money.  It also sends a strong message to the high school graduate that you also value the importance of continuing education.


To all the high school graduates and their families, I congratulate you on a job well done.  However, I want to remind you that your educational journey is not over, it’s just starting.


Good luck in your future and remember, an investment in an education is the only investment I can think of that has no risk.


Good luck!