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 Savings in 529 accounts can be withdrawn tax-free for certain educational expenses.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:

  1. To cover interest payments on the student’s qualified education loan, and
  2. 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.