The Indiana House of Representatives passed a bill sponsored by State Rep. Holli Sullivan (R-Evansville) that would prevent funds saved in a 529 education savings account from being considered as a determining factor when applying for public assistance programs or educational financial aid.
According to Sullivan, Indiana’s CollegeChoice 529 Direct Savings Plan was established in 1997 to help families save for post-secondary expenses. With flexible investment options and affordable minimum contributions, these plans strive to make it as easy as possible to start saving for higher education early. However, 529 savings can currently be considered an asset that can negatively impact an individual’s financial assistance eligibility.
“Thanks to Indiana’s CollegeChoice 529 Plans, more than $3.76 billion have been invested in over 321,000 accounts today,” said Sullivan. “We want to make these benefits more available to lower-income Hoosier families. By establishing that 529 savings cannot affect eligibility for financial aid or other state assistance programs, more people will be able to participate in the program if they desire.”
The bill is backed by the Indiana Education Savings Authority, which oversees the CollegeChoice 529 Plan program. Since November 2014, the IESA has seen 97,000 new accounts created and over $867 million in new assets saved.
“As the chair of the Indiana Education Savings Authority, I am thrilled to see Senate Bill 412 move one step closer to completion,” said State Treasurer Kelly Mitchell. “We should be encouraging and not deterring Hoosier families to save for college.”
Funds saved in a 529 education savings account can be used to cover the costs of qualified education expenses such as books, computers, tuition and room and board at any post-secondary educational institution that is able to receive federal financial aid nationwide. The beneficiary can make withdrawals from their account tax-free so long as the money is being used appropriately.
The bill passed through the House and the Senate and can now be signed into law by the governor. For more information, visit iga.in.gov.