| (a) Under the program, a purchaser may prepay the costs of all or a portion of a beneficiary's undergraduate tuition and required fees at an eligible educational institution by entering into a prepaid tuition contract with the board to purchase one or more tuition units of a type described by this section at the applicable price established by the board for that type of unit for the year in which the unit is purchased. (1) The portion of the beneficiary's undergraduate tuition and required fees for which a tuition unit may be redeemed is assigned to the tuition unit at the time of purchase. (2) Tuition unit(s) may be redeemed to pay that portion of the tuition and fees at the general academic teaching institution or two-year institution of higher education in any academic year in which the unit is redeemed in accordance with this subchapter. (3) The purchaser may purchase one type of unit or a combination of two or three types of units. (b) The assigned value of a tuition unit, purchased as provided by this section, when used to pay the cost of tuition and required fees, is equal to one percent of the amount necessary for the academic year in which the unit is redeemed to cover the applicable cost of undergraduate resident tuition and required fees for one academic year consisting of 30 semester credit hours as follows: (1) for a Type I tuition unit, the cost of undergraduate resident tuition and required fees charged by the general academic teaching institution with the highest such tuition and fee costs, determined as provided by subsection (d) of this section; (2) for a Type II tuition unit, the weighted average undergraduate resident tuition and required fees charged by general academic teaching institutions, determined as provided by subsection (e) of this section; and (3) for a Type III tuition unit, the weighted average undergraduate resident tuition and required fees of two-year institutions of higher education, determined as provided by subsection (f) of this section. (c) Each year, the board will establish the price at which each type of tuition unit may be purchased during the next sales period and the percentage of the total cost of undergraduate resident tuition and required fees for one academic year consisting of 30 semester credit hours for which each type of tuition unit may be redeemed at each general academic teaching institution and two-year institution. (1) The percentage will be based on the total cost of required tuition and fees at a particular general academic teaching institution or two-year institution of higher education in relation to the amount determined for the institution with the highest cost or weighted average cost, as applicable. (2) The purchase price established for each type of unit will be equal to the applicable cost of tuition and required fees as determined under this section for the most recent academic year that began before the beginning of the sales period. (3) The sales period to which those prices apply expires on the first anniversary of the date the units become available for purchase at the prices established for that year. (4) Revisions to the purchase price established for each type of unit will be published in the Texas Register and on the board's Internet web site and shall apply to prepaid tuition contracts entered into on or after the effective date for the new price set by the board. (d) The board shall base the purchase price of a Type I tuition unit on one percent of the cost of the undergraduate resident tuition and required fees for the applicable academic year at the general academic teaching institution with the highest such tuition and fee cost for that academic year. (e) The board shall base the purchase price of a Type II tuition unit on one percent of the cost of the Weighted Average tuition and required fees of general academic teaching institutions for the applicable academic year. That cost is determined by: (1) for each general academic teaching institution, multiplying the average amount of the institution's undergraduate resident tuition and required fees for an academic year consisting of 30 semester credit hours by the number of full-time equivalent undergraduate resident students at that institution; (2) adding together the products computed under paragraph (1) of this subsection, for each institution; and (3) dividing the sum determined under paragraph (2) of this subsection, by the total number of full-time equivalent undergraduate resident students at all general academic teaching institutions. (f) The board shall base the purchase price of a Type III tuition unit on one percent of the cost of the Weighted Average tuition and required fees of two-year institutions of higher education for the applicable academic year, disregarding any portion of the tuition charged by a public junior college to a resident of this state who does not reside within the taxing jurisdiction of the junior college. That cost is determined by: (1) for each two-year institution of higher education, multiplying the average amount of the institution's undergraduate resident tuition and required fees for an academic year consisting of 30 semester credit hours by the number of full-time equivalent undergraduate resident students at that institution; (2) adding together the products computed under paragraph (1) of this subsection, for each institution; and (3) dividing the sum determined under paragraph (2) of this subsection, by the total number of full-time equivalent undergraduate resident students at all two-year institutions of higher education. (g) For the purposes of determining the cost of tuition and required fees at an eligible educational institution, if the tuition and required fees vary at an institution by the particular college or program area at the institution or campus, the tuition and required fees for those programs will be considered separately in calculating the weighted average costs for Type II and III tuition units and the price for Type I tuition units. (h) The board will establish, in compliance with Internal Revenue Code, §529, the minimum amount that the purchaser is required to pay under the contract on behalf of a single beneficiary. The initial minimums set forth in this subsection may be periodically changed by the board as needed to maintain compliance with Internal Revenue Code, §529, or to maintain the actuarial soundness of the fund. (1) The minimum number of tuition units that must be purchased to establish a new prepaid tuition contract using a Pay-As-You-Go purchase is one. Additional tuition units or fractional units may be added to an existing prepaid tuition contract by periodic Pay-As-You-Go purchases of a minimum of $15 each. (2) The minimum number of tuition units that must be contracted for purchase to establish a new prepaid tuition contract using an installment plan is 25 Type I tuition units or 50 Type II or III tuition units. Additional tuition units or fractional units beyond the initial installment contract amount may be purchased by periodic Pay-As-You-Go purchases of a minimum of $15 each and credited to the same beneficiary in a new or amended contract under the existing enrollment. The purchaser does not have to wait until a new enrollment period to add tuition units through Pay-As-You-Go purchases. (3) The minimum for an Automated Clearing House (ACH) payment is $15. (i) The maximum number of tuition units that may be purchased and assigned to a single beneficiary is 600 Type I units or an approximate equivalent in Type II or III units. (j) At the time of the establishment of the account to which a purchaser's prepaid tuition contract money is assigned, the board may impose an administrative fee not to exceed $25. The administrative fee may be imposed only once for an account established for the same purchaser and beneficiary, regardless of the number of account upgrades, contracts, or payment plans later established by the purchaser for that same beneficiary. Money from that fee will be used directly in maintaining the actuarial soundness of the fund as required by Education Code, §54.770. |
