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IMPORTANT NOTICE: The Texas Tuition Promise Fund is established and maintained by the Texas Prepaid Higher Education Tuition Board. The Texas Sunset Advisory Commission performs periodic reviews of most state agencies. The Commission is currently reviewing the mission and performance of the Board. For information on how to provide comments or suggestions to Sunset staff on the Board’s mission, operations or services, please click here.


Saving for College in Texas


Texas law requires all Texas two- or four-year public colleges and universities to accept Texas Tuition Promise Fund® Tuition Units as payment for the applicable portion of tuition and required feesrequired fees
Required fees are only those that must be paid by all students as a condition of enrollment in the college or university. They do not include course-specific fees such as equipment usage or lab fees, or fees related to your major or year of study.
.

Your Beneficiary will be treated as a Texas resident for the portion of the tuition and required fees covered by the Plan even if he or she lives out-of-state at the time of enrollment. Any portion not paid for by the redemption of Tuition Units must be paid at the school’s then-current tuition rate based on the then-current residency status of the Beneficiary.

Assets in your account are not considered in determining eligibility for Texas state-funded financial aid.

Two Texas 529 Plans529 Plan
A 529 plan is an education savings plan operated by a state or an educational institution and designed to help families set aside funds for college. It is named after Section 529 of the internal revenue code, which authorized these types of tax-advantaged savings plans in 1996. Earnings on 529 plans are tax-free if used for qualified higher education expenses. (Unqualified withdrawals may be taxable as ordinary income and subject to a 10% federal tax penalty.) The Pension Protection Act of 2006 made the tax-free character of 529s a permanent part of federal law.

Texas offers two types of 529 Plans529 Plan
A 529 plan is an education savings plan operated by a state or an educational institution and designed to help families set aside funds for college. It is named after Section 529 of the internal revenue code, which authorized these types of tax-advantaged savings plans in 1996. Earnings on 529 plans are tax-free if used for qualified higher education expenses. (Unqualified withdrawals may be taxable as ordinary income and subject to a 10% federal tax penalty.) The Pension Protection Act of 2006 made the tax-free character of 529s a permanent part of federal law.
– prepaid and savings. The prepaid tuition plan covers only tuition and required fees. The savings plans can be used to pay qualified educational costs not covered by the prepaid plan such as books, lab fees, and room and board.

You have the flexibility to choose one type of plan or combine both plans into a program designed to work best for your future graduate.

Each plan offers several investment and payment options to fit your needs.

1. The Texas Tuition Promise Fund® is a Texas prepaid plan that allows Texans to lock in tomorrow’s Texas public tuition and required fees at today’s prices.

The Plan offers:

  • An opportunity to prepay all or part of tuition and required fees for a college education at most Texas two- or four-year Texas public colleges and universities (excluding medical and dental schools, health science centers and other health-related institutions) at today’s rates.
  • A chance to start saving for a college education from a child’s birth.
  • The flexibility to be used for private and out-of-state colleges and universities, career schools, medical and dental schools, health science centers or other health-related instutitions. If your child attends a school where tuition and fees are not locked in, you can apply the Transfer ValueTransfer Value
    Transfer value is limited to the lesser of: 1) the costs the unit would cover at a Texas public college; or, 2) the price paid for the unit, plus or minus the Plan’s net investment earnings or losses on that amount. Transfer value does not include any state-provided or procured matching contributions or earnings thereon.

    of your units toward the cost of tuition and required feesrequired fees
    Required fees are only those that must be paid by all students as a condition of enrollment in the college or university. They do not include course-specific fees such as equipment usage or lab fees, or fees related to your major or year of study.
    .
  • The flexibility to change the BeneficiaryBeneficiary
    The person designated by the Purchaser under a Prepaid Tuition Contract as the person for whom undergraduate tuition and required fees will be paid to an Eligible Educational Institution when authorized by the Purchaser.
    to another member of Beneficiary’s familymember of Beneficiary's family
    or request a refundrequest a refund
    For all units held at least three years (and for contracts cancelled due to the Beneficiary’s death, disability, receipt of scholarship or admission to a U.S. Military Academy), the Purchaser will receive the Refund Value, which is an amount equal to the price you paid for the unit plus or minus adjusted net investment earnings or losses on that amount, with the earnings rate set annually by the Board at a rate that is up to 2% less than the actual net earnings, is capped at 5%, and is net of any fees due and payable. The earnings portion of a Refund is also subject to federal income taxes plus a 10% federal tax as well as any state or local taxes that may apply. Earnings may only be paid on a refund subject to the actuarial soundness of the fund. Refund Value does not include any state-provided or procured matching contributions or earnings thereon.

    For units that do not meet the three-year holding period requirement, the Purchaser will receive the Reduced Refund Value. It will be limited to the lesser of (1) the price you paid for the unit, or (2) the price you paid for the unit, plus or minus net investment earnings or losses on that amount, and is net of any fees due and payable. This means the Reduced Refund Value will not include any positive net earnings, but can be less than the purchase price if there have been periods of negative returns in the market. Reduced Refund Value does not include any state-provided or procured matching contributions or earnings thereon.
    . The new Beneficiary must be a Texas resident or the child of a parent who is both the Purchaser and a Texas Resident.

2. The Texas College Savings Plan® is a 529 college savings plan administered by the state of Texas that offers a flexible and tax-advantaged way to save for a child’s college education, including tuition, fees, room and board, and textbooks. The Plan’s benefits include:

  • A choice of savings options, including 20 different investment portfolios;
  • Any earnings grow tax free; and
  • Withdrawals are tax-free as long as the withdrawal is used for Qualified Higher Education ExpensesQualified Higher Education Expenses
    Qualified Higher Education Expenses include tuition; fees; the cost of books, supplies and equipment required for the enrollment and attendance at an eligible educational institution; and certain room and board expenses. Qualified expenses also include certain additional enrollment and attendant costs for special needs beneficiaries.
    , including certain books, room and board (subject to limits), and other qualified expenses.

Finally, the LoneStar 529 Plan® is a college savings plan for those who want the advice of an investment professional. Please note that a purchase through an investment representative will incur additional fees.

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