LANSING, Mich.—Advanced tuition payment accounts and other college savings funds established for a child beneficiary will be protected from creditors under a bill signed into law on Wednesday, said Sen. Mike Green who sponsored the legislation.
“The ability of a child to afford college shouldn’t be punished because someone else’s financial situation changes,” said Green, R-Mayville. “This new law will protect college funds set aside for children from liens, court judgments and other court actions, to ensure that future generations are able to pursue their dreams through higher education.”
Senate Bill 895 shields trusts, funds, accounts and advanced tuition payment contracts established under the Michigan Education Trust Act, the Michigan Education Savings Program Act, or sections 529 and 530 of the Internal Revenue Code of 1986. Twenty-five other states currently provide college savings accounts with such protection from creditors.
Green said that shielding college savings plans in this way is a common sense policy and that the bill received unanimous support in both the Michigan Senate and House.
“Previously, if a college savings plan sponsor fell on hard times and had some bad debts, the funds they set up for a child years earlier were fair game for bill collectors. This will no longer be the case in Michigan.”
SB 895 was signed into law by Lt. Gov. Brian Calley in Lansing. It is now Public Act 553 of 2012.