An educational savings account at a bank or other financial institution is exempt. The educational savings account must be in an interest-bearing account. Any tuition account or college savings bonds purchased under the Tuition Account Program and College Savings Bonds Act are also exempt.
This account must be established only to pay for tuition, books, and any incidental expenses at an approved postsecondary or vocational school, community college, college, or university, must be in a separate account, and must be clearly identified as being restricted to payment to an eligible educational institution for postsecondary educational expenses. This allows for monitoring of deposits and withdrawals.
Any funds deposited in the account and any interest earned by the account are exempt for as long as the funds remain in the account.
Any amount, including interest, withdrawn from the account and used for educational expenses is also exempt from consideration.
The amount and dates of deposits and withdrawals must be verified through bank or financial institution statements and through documents from the educational institution to determine that the funds are being saved and spent on educational activities.
Any funds that are withdrawn and spent for things other than education are considered a resource in the months withdrawn and used.
Accounts may be established on behalf of persons eligible for TANF, but the requirement that the establishing individual be TANF-eligible would limit these accounts to accounts established by a TANF-eligible budget group member for children in the budget group. An account established by a non–budget group member would not be excluded. Contributions to the account by a non–budget group member must be considered as income in the month of receipt and a resource in subsequent months.
Overpayments, if they are determined to have occurred, should be submitted to OIG.
Reviewed December 11, 2017. Reissued September 20, 2012; replacing January 31, 2012.