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Texas Senate Passes Education Savings Accounts in SB 3
Friday, March 31, 2017 7:00 AM

SB 3 by Senate Education Chairman Larry Taylor (R-Friendswood) was passed by the Senate on Thursday. The bill creates Education Savings Accounts (ESA) and a Tax Credit Scholarship. These programs are available to students who attend private schools and those students attending public school in need of financial assistance to pay for educational expenses.

Estimates are that between 30,000-70,000 students across Texas will set up an ESA. Only schools in the 17 largest counties with a population over 285,000 will be eligible. Voters in smaller counties may elect to be included. 

Financial institutions, including credit unions, would be authorized to establish ESAs for members. The Comptroller of Public Accounts would contract with one or more FIs that would be authorized to provide ESAs. The Senate's intent is for many FIs to provide ESAs rather than one or two "too big to fail banks" having exclusive authority to provide them.  

It is anticipated the state will deposit $6,000-$7,000 for each child with an ESA, per school year, in four separate deposits over the course of the year. The financial institution will be required to provide online access to the account and the ability to make electronic payments.

ESAs would provide funding for parents to personalize their student's education. An ESA is useable for tuition at private schools, curriculum, tutoring services, and a variety of other educational opportunities. Families will also be able to roll their ESA funds over from year to year.

The Tax Credit Scholarship program would pay for tuition costs of students who wish to attend private school and help cover the educational expenses of qualifying public school students. This is funded by insurance companies who can count contributions to approved scholarship organizations as credit against their insurance premium tax.

The bill passed the Senate by an 18/13 vote and now goes to the Texas House of Representatives for consideration.

For more information, please contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or jhuffman@txcua.coop.