Legislative Analysis
Phone: (517) 373-8080
MICHIGAN EDUCATION TRUST ACT AND MICHIGAN
http://www.house.mi.gov/hfa
EDUCATION SAVINGS PROGRAM ACT
Analysis available at
Senate Bills 1001 and 1002 as passed by the Senate http://www.legislature.mi.gov
Sponsor: Sen. Rosemary Bayer
Senate Committee: Appropriations
House Committee: Higher Education
Complete to 11-12-24
SUMMARY:
Senate Bill 1001 would amend the Michigan Education Trust Act to change when an advance
tuition payment contract may be authorized for termination and then refunded. These contracts
allow purchasers to secure, at a predetermined rate paid by the purchaser, a specified number
of college credits at a public college or university in Michigan for the qualified beneficiary.
The advance tuition payment contract may be terminated and refunded if one of the following
occurs:
• The qualified beneficiary dies.
• The qualified beneficiary is not admitted to a state institution of higher education after
making proper application.
• The qualified beneficiary certifies to the Michigan Education Trust (MET) that they
have been accepted to, and will attend, an independent, degree-granting institution of
postsecondary education, located in Michigan, that has been recognized by the
Michigan State Board of Education.
• For a qualified beneficiary who has graduated high school or reached the age of
majority and has decided not to attend a state institution of higher education, they may
request in writing that they want to terminate the contract. This request must be made
by July 15 in the year they wish to terminate the contract.
• Other circumstances occur, as determined by MET and set forth in the advance tuition
payment contract.
The bill would amend the third provision above to also allow a qualified beneficiary who has
decided to attend, and has been accepted into, an eligible educational institution, as defined in
section 529 of the Internal Revenue Code, to terminate the contract.
Section 529 of the Internal Revenue Code defines an eligible educational institution
as meaning generally any college, university, vocational school, or other postsecondary
educational institution eligible to participate in a student aid program administered by
the U.S. Department of Education.
The bill would define Internal Revenue Code as meaning the U.S. Internal Revenue
Code of 1986 that was in effect on January 1, 2024, or, at the option of the taxpayer, in
effect for the current year. (This would match the definition of the term used in the
Michigan Education Savings Program Act, which SB 1002 would amend.)
House Fiscal Agency Page 1 of 3
 Regarding refunds, the bill would allow MET to waive a contract provision denying refund for
contract termination if the qualified beneficiary has completed more than half of the required
credits for granting of a bachelor’s degree or allow such a provision to be amended by
agreement of MET and the purchaser if the contract was entered into on or after January 1,
1988. Presently, the act only allows a contract to provide that MET may deny refund payment
if more than half of the credit hours have been completed by the beneficiary.
Refunds would have to be issued in full by MET no later than August 15 of the year due, unless
the board determines that full refund payments would violate the act’s requirements regarding
actuarial soundness. In that instance, the MET would make refund payments in equal
installments over four years. Presently, MET is required to issue refunds in equal payments
over four years, not later than August 15 of each year.
Once terminated, an advance tuition payment contract refund can be directed to an independent
degree-granting college or university in Michigan or to a community or junior college in the
state. The bill would also allow a contract to authorize, or be amended to authorize, a refund
to be directed to any eligible educational institution in this state.
MCL 390.1424 and 390.1428
Senate Bill 1002 would amend the Michigan Education Savings Program Act. As used in the
act, the term qualified higher education expenses means qualified higher education expenses
as defined in section 529 of the Internal Revenue Code. The bill would further provide that
qualified higher education expenses includes both of the following:
• Expenses for fees, books, supplies, and equipment required for participation of a
designated beneficiary in an apprenticeship program registered with the United States
Secretary of Labor under the National Apprenticeship Act, 29 USC 50 to 50c, 1 as
provided in section 529(c)(8) of the Internal Revenue Code. 2
• Amounts paid as principal or interest on any qualified education loan as provided in
section 529(c)(9) of the Internal Revenue Code.
The bill would also amend the definition of Internal Revenue Code to mean the code in effect
on January 1, 2024, or at the option of the taxpayer, in effect for the current year. Presently,
the definition means the code in effect on January 1, 2002, or at the option of the taxpayer, in
effect for the current year .
MCL 390.1472 and 390.1486
Note: Senate Bills 1001 and 1002 are nearly identical to House Bills 5782 and 5783, with the
exception of differences in the definition of qualified higher education expenses between
Senate Bill 1002 as it passed the Senate and House Bill 5783 as introduced.
FISCAL IMPACT:
Senate Bill 1001 would have a minimal fiscal impact on state and local government. There
could be minimal expenses to update websites or public resources with the clarifications made
1
https://www.law.cornell.edu/uscode/text/29/chapter-4C
2
https://www.irs.gov/pub/irs-pdf/p5834.pdf
House Fiscal Agency SBs 1001 and 1002 as passed by the Senate Page 2 of 3
 on potential refunds given to advance tuition payment contract terminations. While the bill
does add a full repayment specification for terminated contracts eligible for a full repayment
option, the full payment could be converted into equal installments spread over four years if
the refund payments would have an actuarial soundness impact on the trust fund as determined
by the board, which would minimize the potential fiscal impact on the trust fund.
Senate Bill 1002 would have a minimal fiscal impact on state and local government. There
could be minimal expenses to update websites or public resources with the clarifications on
qualified higher education expenses.
Legislative Analyst: Josh Roesner
Fiscal Analyst: Perry Zielak
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency SBs 1001 and 1002 as passed by the Senate Page 3 of 3


Statutes affected:
Senate Introduced Bill: 390.1472, 390.1486
As Passed by the Senate: 390.1472, 390.1486