College Illinois!® Impact on Financial Aid
In order to use College Illinois!® benefits, the prepaid tuition plan must have been in place for at least three years and the plan must be paid in full, including any outstanding fees.
It is the student's responsibility to notify the school's financial aid and billing office about the intention to use College Illinois! benefits. Some schools collect this information on their form for institutional aid.
College Illinois! contract distributions will be made directly to the institution on behalf of the student. An instruction packet will be sent to eligible students from College Illinois! when their benefits can be used.
Impact on the Free Application for Federal Student Aid (FAFSA) and need analysis calculation of expected family contribution (EFC):
- Ownership of the College Illinois! contract (a prepaid tuition plan) is reported as a parental asset on the FAFSA, with minimal impact on financial aid eligibility. The value to be reported is the "refund" value of the prepaid tuition plan. The refund value is the amount the owner would receive if the account were liquidated as of the date the asset is reported. College Illinois! provides this information through online account access at collegeillinois.org, or through customer service line at 877.877.3724.
- Prepaid tuition benefits are not to be included in financial aid income, according to the Department of Education.
Impact on the financial aid package:
- In determining a financial aid award package for the student, the distribution from the contract is not treated as estimated financial assistance, nor as an adjustment to the student's cost of attendance.
Implications of using College Illinois! distributions with the Monetary Award Program (MAP) grant:
- Since both the MAP grant and College Illinois! may only be used for tuition and fees, the contract holder has the following options:
- use the College Illinois! benefits at a later time;
- designate a different beneficiary for the contract (must be a member of the family as defined by the IRS);
- combine the MAP grant and College Illinois! benefits up to the total of tuition and fees; or
- request a refund for the value of benefits not needed as a result of the MAP grant.
Impact on the student’s federal tax return:
- Qualified distributions from College Illinois! are not taxable for the student or owner of the prepaid tuition account. While the student beneficiary will receive a Form 1099Q for the tax year indicating the income earned on his or her College Illinois! plan, no taxes will be owed on the earnings
Questions regarding how College Illinois! may affect a student’s financial aid package should be directed to a School Services Representative at ISAC's toll-free number 866.247.2172; or via e-mail at firstname.lastname@example.org.