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Using Your College Illinois! 529 Plan & Prepaid College Tuition Benefits
Using College Illinois! prepaid tuition is easy. When the account is available for use, College Illinois! will send the student a letter to confirm that we have the correct social security number and current home (permanent) address. The prepaid tuition account must be paid in full before any benefits may be used. This includes payment of all outstanding fees by the account owner. The student will need to notify the school’s billing office that he/she intends to use prepaid tuition benefits. Many schools require students to notify them online or to sign some type of authorization form. Please check with the school’s billing office or Web site for specific instructions on how to arrange payment from College Illinois!. The school will send a tuition bill to College Illinois! and the program will then send a payment directly to the school for the amount covered by the prepaid tuition contract.
College Illinois! works differently for students attending a private or out-of-state college or university than for students attending an Illinois public university or community college. Once the student knows which type of school he/she will attend, please be sure to read that section of the student Handbook and follow the instructions. These instructions will help you start the process to use prepaid tuition.
Learn more in our Handbook about using benefits
Attending a Private and/or Out-of-State School
College Illinois! does not cover the full tuition and fees at private colleges and at schools outside of Illinois. At these schools, the amount paid to the school will be based on the current “mean-weighted average tuition and mandatory fees at Illinois public institutions”. Each year the payout amount (the mean-weighted average) increases to keep pace with the tuition rates at the Illinois public universities and community colleges. The mean-weighted average is calculated each year prior to the start of the school year and is reported on a credit hour basis.
The amount paid to private and/or out-of-state schools also depends on whether the student’s plan covers university semesters or community college semesters. A different mean-weighted average amount is calculated for university level prepaid tuition benefits versus community college benefits. To determine the amount that College Illinois! will pay towards the tuition and fee charges at a private or out-of-state school, you can multiply the current mean-weighted average amount by the number of credit hours taken each term.
Payment amounts for the 2008-’09 school year are:
| Semester Institutions |
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| University prepaid tuition: |
$315.07 per credit hour |
| Community College prepaid tuition: |
$92.17 per credit hour |
| Quarter Institutions |
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| University prepaid tuition: |
$210.04 per credit hour |
| Community College prepaid tuition: |
$61.44 per credit hour |
Attending an Illinois Public University or Community College
If the student is going to a public university or community college in Illinois, College Illinois! will pay the undergraduate in-state or in-district tuition and mandatory fees for the number of credit hours covered by the prepaid tuition plan. Mandatory fees are those fees required as a condition of enrollment for all students. College Illinois! will cover tuition and mandatory fees but will not pay any other charges such as room and board, books, course-specific fees, lab fees or other expenses.
The student does not need to notify College Illinois! if he/she is attending an Illinois public university or community college. However, the student must notify the school’s billing office to instruct them to request payment from the program. College Illinois! provides a list of eligible students to each Illinois public university and community college so the school can verify the student’s eligibility and then bill the program for the tuition and fees.
Since each school requests payments differently, please check with the school’s billing office or Web site for specific details on how to arrange payment from the program. The following school Web sites have specific information on using College Illinois! prepaid tuition:
Illinois
State University
Northern
Illinois University
University
of Illinois – all campuses
Western
Illinois University
Financial Aid
College Illinois! prepaid tuition contracts must be reported on the Free Application for Federal Student Aid (FAFSA) if the contract is owned by the parent(s) whose assets are reported on the FAFSA. As an asset of the parent, College Illinois! has only minimal impact on financial aid. The FAFSA requires the “refund value” be used when reporting prepaid tuition plans. This is the amount that the account owner would receive if the account were closed and a refund were issued. Parents should report the refund value of all prepaid tuition plans they own for all dependent children. If someone other than the parent(s), such as a grandparent, aunt or uncle owns the College Illinois! contract, it does not need to be reported on the FAFSA.
The College Illinois! annual statement sent to account owners each year in January shows the amount that should be reported on the FAFSA. This information is also available to account owners on the “Benefits” page when the account is accessed online at collegeillinois.com.
Tax InformationAn IRS Form 1099-Q will be issued for each year there is a distribution from the prepaid tuition account. Current federal tax law allows all prepaid tuition benefits paid directly to public or private institutions nationwide to be exempt from federal income tax. If a payment was made directly to a school, the 1099-Q will be sent to the student. Since the tuition payment was made directly to a school on the student’s behalf, assuming no other withdrawals occurred, this information is not reported on the tax return. If a refund from the prepaid tuition account was issued, the 1099-Q will be sent to the account owner. The refund may or may not be considered state and federal taxable income, depending if the refund was used for qualified education expenses. If you are an Illinois taxpayer, all College Illinois! benefits are also exempt from Illinois income tax.
College Illinois! cannot provide legal or tax advice. Please see IRS Publication 970 “Tax Benefits for Education” for specific information. You can download this Publication from www.irs.gov or call the IRS toll-free at 1-800.829.3676.
More Information
Detailed information about eligible schools, scholarships and more is provided in the Handbook for using benefits.
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