MET on Endangered ListBy Sam
Stark
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Gov. John Engler began his campaign this year to lower state spending by going after programs that offered assistance to Michigan's most needy &emdash; and politically weakest &emdash; citizens. But now it appears that the new governor may be preparing to eliminate a state program that provides significant benefits to the very constituency that helped elect Engler last November. Undergoing close scrutiny these days by the conservative Republican administration is the Michigan Education Trust (MET). MET was enthusiastically received by thousands of middle- and upper-middle-income parents of college-bound children when the program was presented by former Gov. James Blanchard three years ago. The overwhelming response of 82,459 applicants to the MET reflected the widespread fear of parents over their children's future in the face of soaring college tuition costs. The MET program allows prepayment of a child's tuition at a Michigan public university at a discounted price. The MET then pools these funds and invests them while promising to guarantee the child's tuition regardless of future costs of college enrollment. State Treasurer Doug Roberts explained to the Metro Times why the MET is currently getting a second look: "We are reviewing the two major assumptions about MET that were made by the Blanchard administration. One, that the annual earnings on trust investments will average 9.75 percent, and two, that college tuition costs will only rise 7.3 percent. We believe that the first figure is too high and that the second one is too low." The Engler administration's review of the MET, however, extends well beyond the scope of a simple investigation into its financial stability. What is being questioned, in fact, is the program's mission itself. "We are leaving all our options open, but, quite frankly, we are raising the question of whether the state should be in the business of guaranteeing college tuitions at all. If we decide to discontinue the MET, we will still honor all existing contracts," Roberts said, explaining why no dates for MET enrollment have been set for this year. Roberts also argues that MET represents a cost to the state due to the tax deduction allowed for individual investors. Ironically, MET has turned out to be one program that has been welcomed with open arms by the segment of Michigan voters who normally reject any expansion of government authority. That the state has a role to play in providing Michigan students a higher education is a notion that is, no doubt, a direct reaction to college costs far exceeding the rate of overall inflation for the last 10 years. From 1982-83 to 1988-89, college tuitions in Michigan rose 37.3 percent while the Consumer Price Index, the most reliable inflation indicator, rose by just 20.8 percent. Thus, by 1989-90, Michigan parents could expect to pay $4,275 a year to send a child to one of the state's 13 public universities. It was not surprising then, when a 1989 Michigan Department of the Treasury survey showed that families with household incomes of $60,000 and above were twice as likely than those below that figure to enroll their children in the MET. One early MET participant was Robert Frank, Bloomfield Hills resident and a physician. "We actually borrowed money to enroll our three daughters, then 14 and 12 years of age," Frank said. "Obviously, my wife and I make pretty good incomes, but we are notoriously poor savers. Plus, neither one of us wanted to spend the time exploring other investment options. MET guaranteed our kids' college and provided us an easy savings plan. The only criticism I'd make of MET is that it doesn't guarantee every deserving student a college education." Guaranteeing college for the Frank family's three daughters still meant an initial total lump-sum payment, at the time, of $24,000. For parents like Detroiter Maxine Moore, a single mother of five, the announcement of the MET program came across as a sure guarantee that college would not be in the cards for her children. "When the program was first announced," the part-time mortgage company employee recalled, "I read up on it and discussed it with friends. The more I thought about it the more I felt is was just a program for the rich, just another case of 'Them that's got is them that gets.' "It sounded to me like they were trying to tell us in the city here that you can forget about college for your kids because even people with money can't afford it," Moore said. Moore's dilemma is a painful reminder that MET was never intended to meet every child's needs. This was openly acknowledged in a 1988 question-and-answer sheet released by the Michigan Treasury Department: "While available to all, MET will provide particular benefits to middle-income families. ..." A safety net for the poor was supposed to be offered in the expectation that "middle-income families participating in the tuition guarantee program will free up additional dollars of financial aid." From the Lansing viewpoint, this provision was a guarantee to a happy ending for every deserving student, but from the vantage point of Moore's Linwood-Philadelphia neighborhood, it was a different story altogether. "Even after I decided that MET was just for the rich, I figured there would still be grants and loans and other financial aid for helping pay my kids' way to college," she said. 'I didn't feel really defeated until I realized this money was all drying up due to Reagan and his cuts in education." Rather than eliminate the MET, might Governor Engler consider revising it to expand its guarantees to children like Maxine Moore's? That was one question for which Roberts had no response.
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