F-8200, Tuition Savings Programs (Qualified Tuition Programs)

Revision 13-3; Effective September 1, 2013

Tuition savings programs allow individuals to prepay or contribute to an account established for paying a designated beneficiary’s education expenses beyond high school. Prepaid tuition plans and higher education savings plans authorized under Chapter 54, Subchapter G, H, or I of the Texas Education Code will be collectively called tuition savings programs.
Tuition savings programs include:

  • Prepaid tuition plans such as the Texas Tuition Promise Fund or the Texas Tomorrow Fund II.
  • Higher education savings plans such as the Texas College Savings Plan.
  • 529 Plans or Qualified Tuition Plans authorized under Section 529 of the Internal Revenue Code.

Note: The Texas Guaranteed Tuition Plan (formerly the Texas Tomorrow Fund) is closed to new enrollment but contracts will continue to be honored by the state.

F-8210 Resource Treatment

Revision 13-3; Effective September 1, 2013

Whether the applicant/recipient is the account holder, contributor, or beneficiary, exclude any funds used to establish a tuition savings program from countable resources if the tuition savings program was established:

  1. before the beneficiary's 21st birthday; and
  2. by the beneficiary's parent, stepparent, spouse, grandparent, brother, sister, uncle, or aunt, whether related by whole blood, half blood, or adoption.

Note: The designated beneficiary can be changed to another member of the contributor’s family as long as the new beneficiary meets the above criteria at the time of the change.

Funds used to establish a tuition savings program are not considered a transfer of resources.

F-8220 Income Treatment

Revision 16-4; Effective December 1, 2016

Payments made from or interest earned on a tuition savings program are excluded from countable income. 

This exclusion does not apply to groups whose eligibility is determined using the Special Income Limit. The Special Income Limit groups are as follows:

  • institutional programs:
    • state group home (TA 12 ME);
    • state school (TP 10 ME);
    • non-state group home (TP 15 ME);
    • state supported living center (TA 16 ME); and
    • nursing facility (TP 17 ME);
  • waiver programs (TA 10 ME);
  • Community Attendant Services (CAS) (TP 14 ME); and
  • Program of All-Inclusive Care for the Elderly (PACE) (TA 10 ME).

This exclusion does not apply if a withdrawal from the tuition savings program is made for any purpose other than paying the qualified educational expenses of the beneficiary or if the tuition savings program is cancelled. Distributions from the account not used for the educational expenses of the beneficiary are considered income to the individual receiving the funds in the month received. If the individual is the account owner, distributions from the account to the beneficiary which are not used to pay educational expenses should be explored as a possible transfer of resources.

Note: A prepaid tuition contract terminates on the 10th anniversary of the date the beneficiary is projected to graduate from high school.