SPRINGFIELD – Students will be allowed to use 529 college savings accounts for other education-related purposes without additional taxation under a new law sponsored by State Senator Laura Ellman (D-Naperville) that was signed into law Friday.
“This law reflects the realities of modern-day higher education by allowing college savings plans to be used in more flexible ways,” Ellman said. “Loans and job-training programs are essential to students’ education, and they need to be able to use their savings plans to pay for them.”
A qualified tuition plan, also known as a 529 plan, is a type of savings account used for spending related to a child’s education. Savings in 529 accounts can be withdrawn tax-free for certain educational expenses. The new law allows a person to use up to $10,000 from their 529 savings account for additional education-related purposes without being taxed, making Illinois law consistent with federal law.
These funds can now be used:
- To cover interest payments on the student’s qualified education loan, and
- To cover expenses for fees, textbooks, supplies and other materials needed to participate in certain vocational apprenticeship programs registered and certified with the secretary of labor.
“Every student in Illinois deserves a chance to succeed and decide their future,” Ellman said. “This law gives students more opportunities to achieve success in their education.”
House Bill 741 is effective immediately.
