| (a) Payments under prepaid tuition contracts may be made in single or periodic Pay-As-You-Go payments, or under an installment plan, or both. The first payment due date for a newly enrolled purchaser is May 1, or as may be otherwise established by the board for subsequent enrollment periods. (b) For payments under a contract to be made in installments over a period longer than one year, those payments can be made in annual, or monthly installments, in accordance with any permitted installment plans established by the board. (1) Monthly installment plans shall include as a minimum: monthly installments to matriculation, a 10-year installment plan, and a 5-year installment plan. (2) Annual installment plans include annual installments to matriculation, a 5-year installment plan, or a 10-year installment plan. (3) Installment payments shall be due on the 1st of the month. (4) Installment payments shall include an implied interest component at a rate set by the board to ensure the actuarial soundness of the fund. (5) Installment plans must be paid in full prior to redemption of any units purchased by the installment plan. (6) Under an installment plan, the basic unit price will not change over the life of the installment agreement, unless the agreement is later amended. The tuition unit price for new installment plans to be entered into during later enrollment periods will be adjusted by the board to reflect the then effective base tuition unit price and an updated implied interest component at a rate applicable to the new installment plans. (7) A purchaser may initially establish both an installment plan contract and a Pay-As-You-Go contract when enrolling in the program, but the contract payments will be tracked separately. The purchaser will receive one combined account statement reflecting all payments under the different payment plans for the same purchaser and same beneficiary. (c) There shall be no prepayment penalty imposed if a purchaser pays off an installment plan ahead of the schedule outlined in the prepaid tuition contract. Prepayments may result in a credit toward any monies due to reflect that the prepaid tuition contract was paid off early. Prepayments may be applied to reduce the outstanding contract balance, reduce the amount or number of monthly payments, or to make monthly payments ahead of schedule, at the option of the purchaser. In the absence of direction from the purchaser, prepayments will be applied to reduce the outstanding contract balance. (d) The price for tuition units purchased using Pay-As-You-Go payments shall be the tuition unit price established by the board in accordance with §7.124 of this title (relating to Prepaid Tuition Units: Purchase; Assigned Value; Types; Price), for the sales period in which the tuition unit was purchased. If additional Pay-As-You-Go payments are made to purchase additional tuition units under a pre-existing prepaid tuition contract, the prepaid tuition contract shall be automatically amended to incorporate the additional tuition units purchased and the additional tuition units shall be credited to the existing account. (e) A purchaser may make payments under a prepaid tuition contract by check, money order, electronic funds transfer, or payroll deduction. A purchaser may change payment methods. Credit cards may not be used to purchase tuition units. (f) A purchaser may make payments under a prepaid tuition contract by payroll deduction, under procedures developed by the board and the comptroller to facilitate payments. (1) To facilitate the establishment of payroll deductions by public employees, the board may extend the enrollment period as necessary to accommodate the employee benefit open enrollment period of the state or a political subdivision of the state during which payroll deductions are normally established. (2) A purchaser electing to make payments under a prepaid tuition contract by payroll deduction shall specify whether the payments should be applied to pay for purchases under an installment plan or to make regular Pay-As-You-Go purchases. (3) The purchase price for tuition units to be purchased by payroll deduction shall be based on: (A) for payments under an installment plan, the price in effect for the sales period when the first tuition unit payment is or was received, regardless of the date the employee enrolls in payroll deduction; or (B) for Pay-As-You-Go purchases, the price in effect for the sales period when each payment is actually received. (g) Upgrades. Upgrades to an existing prepaid tuition unit account are allowed. An upgrade of an account is defined as adding additional tuition units to the account beyond the units specified in the original or existing prepaid tuition contract, by amending the contract or adding a new contract to the account. (1) Pay-As-You-Go purchases of additional tuition units can be added to an existing Pay-As-You-Go contract without amending the contract. A new three-year holding period for tuition unit redemptions begins for new Pay-As-You-Go purchases. (2) Pay-As-You-Go purchases of additional tuition units can be added to an existing enrollment that has a pre-existing installment plan contract, at any time during the sales period. However, Pay-As-You-Go purchases will be under a new contract and tracked separately from the installment plan purchases for implementation of the three-year holding period. The purchaser will receive a single account statement reflecting all payment plans under the account. (3) The payment timeframe of an existing installment plan contract may be extended by contract amendment so long as the amended contract calls for payment in full prior to redemption of any of the tuition units. Other upgrades to an existing installment plan will also be performed by contract amendment. (4) An installment plan contract may be added to an existing account that is set up as a Pay-As-You-Go plan contract, but only during an enrollment period. The new installment plan will be considered a separate contract from the Pay-As-You-Go contract. The installment plan for additional units will be priced at the tuition unit prices in effect on the date when the plan manager receives and accepts a signed new contract from the purchaser to acquire the additional tuition units. Both payment plans will be reflected on a single account statement for the purchaser. (5) A purchaser can have multiple payment plans in a single beneficiary account but the aggregate amount should not exceed the limit of 600 Type I tuition unit equivalents per beneficiary. (h) Downgrades. A prepaid tuition unit contract may be downgraded without terminating the contract. A downgrade of an account is defined as agreeing to purchase fewer tuition units than originally specified in the original contract. (i) The board may impose a fee for a late payment under a prepaid tuition contract. (j) The purchaser will also bear the cost if a purchaser's attempted payment is refused by a financial institution. |
