The following words, terms, and phrases, when used in this
subchapter, shall have the following meanings:
(1) Accredited out-of-state institution of higher education--A
public or private institution of higher education that:
(A) is located outside this state; and
(B) is accredited by a recognized accrediting agency.
(2) Beneficiary--The person designated under a prepaid
tuition contract as the person entitled to apply one or more tuition
units purchased under the contract to the payment of the person's
undergraduate tuition and required fees at a general academic teaching
institution, two-year institution of higher education, private or
independent institution of higher education, medical and dental unit,
career school, or accredited out-of-state institution of higher education.
(3) Board--The Prepaid Higher Education Tuition Board.
(4) Career school--A career school or college as defined
by Education Code, §132.001 that offers a two-year associate
degree as approved by the Texas Higher Education Coordinating Board.
(5) Eligible educational institution--A general academic
teaching institution, two-year institution of higher education, private
or independent institution of higher education, medical and dental
unit, career school, or accredited out-of-state institution of higher
education, that qualify as eligible educational institutions under
Internal Revenue Code, §529.
(6) Enrollment period--The period established by the
board during which a purchaser may enter into a contract with the
board to purchase tuition units. The general enrollment period is
September 1 through the end of February. For beneficiaries who are
newborn infants under one year of age at the time of enrollment, the
enrollment period is extended to cover the period of September 1 through
July 31.
(7) First payment due date--The date the first payment
is due after enrolling in the program and establishing a new prepaid
tuition contract. The first payment due date will be specified in
the prepaid tuition contract. The first payment due date serves as
the anniversary date for establishing the three-year holding period.
The first payment due date may be changed subsequently by the board
for future enrollment periods.
(8) Fund--The Texas Tomorrow Fund II.
(9) General academic teaching institution--Has the
meaning assigned by Education Code, §61.003, except that the
term does not include a public state college.
(10) Matriculation--Enrollment as a member of the student
body at an eligible educational institution.
(11) Medical and dental unit, private or independent
institution of higher education, public junior college, public state
college, public technical institute, and recognized accrediting agency--Have
the meanings assigned by Education Code, §61.003.
(12) Paid in full--All the required payments for the
tuition units and any assessed fees under the prepaid tuition contract
have been received and credited to the account.
(13) Pay-As-You-Go--Purchasing tuition units at the
price in effect for that type of tuition unit on the day payment is
received for the tuition unit. Pay-As-You-Go includes paying for tuition
units with a lump sum payment or multiple lump sum payments, without
being obligated to pay for any additional tuition units.
(14) Plan manager--A professional investment manager
that is under contract with the board to serve as a plan administrator
and to invest the assets of the fund on behalf of the board.
(15) Prepaid tuition contract--A contract under which
a person purchases from the board on behalf of a beneficiary one or
more tuition units that the beneficiary is entitled to apply to the
payment of the beneficiary's undergraduate tuition and required fees
at a general academic teaching institution, two-year institution of
higher education, private or independent institution of higher education,
medical and dental unit, career school, or accredited out-of-state
institution of higher education.
(16) Prepayment--Payment of the balance due or a portion
of the balance due under a prepaid tuition contract, ahead of the
schedule provided in the contract.
(17) Program or Plan--The prepaid tuition unit undergraduate
education program. The board may select a different name for the program
or plan for marketing purposes.
(18) Purchaser--A person who enters into a prepaid
tuition contract with the board on behalf of a beneficiary for the
purchase of one or more tuition units.
(19) Redemption--The exchange of one or more tuition
units to pay costs of tuition and required fees at an eligible educational
institution.
(20) Reduced Refund Value--The lesser of:
(A) the amount paid by the purchaser or other contributor
to purchase any unused tuition units under the contract; or
(B) the amount paid by the Purchaser or other contributor
to purchase any unused tuition units to be refunded under the contract,
plus or minus the portion of the total net earnings or losses on assets
of the Plan attributable to that amount.
(21) Refund Value--An amount equal to the total purchase
price of the unused tuition units to be refunded from the account,
plus annual net earnings on the contributions made to the account
to purchase the tuition units that are being refunded (including any
negative returns), with the earnings rate to be set by the board at
a rate that is up to two percent less than the actual investment return
for the fund for each of the years the contract is in effect, provided
that in no event shall the annual net earnings on the contributions
ever exceed five percent annually, and provided further that for any
year in which the investment return does not support payment of any
earnings, the board may elect not to credit and pay any earnings on
the contributions, to preserve the actuarial soundness of the fund.
Refund Value shall not be less than Reduced Refund Value that would
have been paid if the Tuition Units had been held for less than three
years. Refund Value does not include any state provided or procured
matching contributions or any earnings on State provided or procured
matching contributions.
(22) Required fee--A fee, other than a laboratory fee
for a specific course, that is charged by a public or private institution
of higher education to all students at the institution who are not
exempt from the fee. For purposes of this subdivision, a fee is a
required fee only to the extent that the fee is considered a qualified
higher education expense under Internal Revenue Code, §529. Required
fees are generally those fees imposed on all students as a condition
of enrollment. Required fees do not include fees such as equipment
usage fees required for particular courses, charges for room and board,
book costs, or any optional fees.
(23) Sales period--The year long period from September
1 through August 31 during which a purchaser who has established a
prepaid tuition contract may make purchases under the contract at
the price(s) established under the contract, or at the price established
for tuition units applicable to the sales period if additional tuition
units are purchased during the sales period.
(24) Three-year holding period--The period of time
that must transpire before a beneficiary or purchaser may redeem a
tuition unit to pay for qualified higher education expenses, as provided
under §7.125(g) of this title (relating to Redemption of Tuition
Units).
(25) Transfer value--The value of the prepaid tuition
contract at the time of transfer, that is the lesser of:
(A) an amount equal to the cost, at the time of the
transfer, of the tuition and required fees that would be covered by
redemption of the number and type of tuition units to be transferred
from the account (but not including any units resulting from any State
provided or procured matching funds) if the beneficiary were redeeming
the units at a general academic teaching institution or two-year institution
of higher education as follows:
(i) for a Type I unit, at the general academic teaching
institution that had the highest tuition and required fee cost;
(ii) for a Type II unit, at a general academic teaching
institution that had tuition and required fee cost at the weighted
average; and
(iii) for a Type III unit, at a two-year institution
of higher education that had tuition and required fee cost at the
weighted average; or
(B) an amount equal to the current market value of
the unused tuition units to be transferred from the account, which
is an amount equal to the total purchase price of the unused tuition
units to be transferred from the account (but not including any state
provided or procured matching contributions), plus the portion of
the total net earnings on assets of the Fund attributable to that
amount (including any negative returns), but not including any earnings
on state provided or procured matching contributions, as determined
by the plan manager.
Cont'd... |
