Bill
SB 1001
MET contracts can be refunded to any Michigan-eligible 529 institution and refunds must be paid in full by Aug 15, with optional four-year installments if actuarially needed.
Status and timeline
- Enacted as Public Act No. 171 of 2024 (approved by Governor Dec. 17, 2024).
- Introduced in the Senate Sept. 17, 2024; passed the Senate Oct. 23, 2024; passed the House Dec. 5, 2024. (Amends sections 4 and 8 of 1986 PA 316.)
Purpose
- Update and clarify the Michigan Education Trust (MET) advance tuition payment contract rules on when contracts may be terminated and how refunds are handled, and align the Act’s cross-reference to the federal Internal Revenue Code (IRC) with more recent federal definitions used elsewhere in Michigan law.
Key provisions and changes
- Updated definition of “Internal revenue code” (MCL 390.1424):
- Defines the term to mean the U.S. Internal Revenue Code of 1986 in effect on January 1, 2024, or, at the taxpayer’s option, the IRC in effect for the current year. This aligns MET language with companion changes in the Michigan Education Savings Program Act.
- Expanded contract termination reasons (MCL 390.1428):
- Adds an explicit termination/refund option when a qualified beneficiary “has decided to attend, and has been accepted by,” an eligible educational institution in Michigan as defined by IRC §529. (Previously the statute referenced attendance/acceptance only at Michigan independent degree‑granting institutions recognized by the State Board of Education.)
- Continues existing termination triggers (death, not admitted to a state institution after proper application, voluntary written request by beneficiary by July 15 in year of termination, and other MET-specified circumstances).
- Requires contracts entered on or after Jan. 1, 1988 to be amended as needed to comply with the new language.
- Refund direction and payment timing:
- Allows a refund (on termination) to be directed to any eligible educational institution in Michigan (as defined by IRC §529), not only to state institutions, community/junior colleges, or independent Michigan degree-granting schools.
- Clarifies MET’s ability to waive or, for contracts entered on or after Jan. 1, 1988, amend a contract provision that disallows refunds when a beneficiary has completed more than half the credits needed for a bachelor’s degree. Previously the act only permitted contracts to include a denial provision.
- Refunds must be paid in full no later than August 15 of the year due — unless the MET board determines full payment would threaten the fund’s actuarial soundness. In that case, payments may be made in equal installments over four years. (Under prior law MET was generally required to make refunds in equal annual installments over four years; this change restores a full-payment default subject to actuarial exception.)
Who is affected
- Purchasers and qualified beneficiaries under existing and future MET advance tuition payment contracts.
- The Michigan Education Trust and its board (administration, actuarial reviews, contract amendment processes).
- Michigan postsecondary institutions that qualify as “eligible educational institutions” under IRC §529 (this includes many private, vocational, and other institutions eligible for federal student aid).
- Potentially the MET advance tuition payment fund’s cash flow and actuarial status (board retains discretion to stagger payments to preserve actuarial soundness).
Fiscal impact
- Nonpartisan analyses (House Fiscal Agency and Senate fiscal staff) estimate a negligible or minimal fiscal impact on state and local governments. Administrative updates (websites/contracts) and potential timing effects on trust cash flows are the primary considerations; the board’s actuarial-soundness exception is intended to limit material fund stress.
Related bills
- SB 1000 and SB 1002 (companion package) update parallel IRC references and the Michigan Education Savings Program Act definitions to conform with federal changes.
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
