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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.


FAQS



General

  1. When is the first payment due date?

    The first payment due date is May 1, 2020, for Contracts established during the Plan’s 2019-2020 Enrollment Period.Enrollment Period
    Each year the Board sets an annual open Enrollment Period that typically begins on Sept. 1 and ends on the last day of February of the following year. However, newborns may be enrolled through July 31 of each year.

  2. When is the sales period?

    “Sales period” means the year-long period from Sept. 1 through Aug. 31 during which a Purchaser who has established a Contract may make purchases under the Contract. The enrollment period for establishing new Contracts is Sept. 1 through Feb. 28 (Feb. 29 in a leap year).

  3. What is the three-year holding period?

    “Three-Year Holding Period” means the period of time that must transpire before a Beneficiary or Purchaser may redeem a Tuition Unit.

  4. What if my child goes to a private, out of state school, career school or Texas health science center or health-related institution?

    You can use the Tuition Units to help pay for tuition and required fees at all eligible Texas public schools, private or career colleges in Texas, eligible out-of-state institutions, medical and dental schools, health science centers and health-related institutions. If your child attends a private, out of state college or university, career school, medical or dental school, health science center, or health-related institution where tuition and required fees are not locked in, you can apply the Transfer Value of your units toward the cost of tuition and required fees. 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 the units being redeemed will be the lesser of: 1) the costs the Tuition UnitsTuition Units
    Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
    would pay at a public in-state college or university, or 2) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount.

  5. If I move out of the state of Texas, how can I use my plan?

    Account beneficiaries will still be eligible to use their Tuition Units if they or the Purchaser moves to a different state. Residency, for purposes of tuition and required fees paid by the Plan, is established at the time of purchase of Tuition Units and carries through to redemption, no matter where the Beneficiary or Purchaser resides at the time of redemption. Semester hours not covered by the Plan may be charged by the institution at the out-of-state resident rate and will be the responsibility of the Purchaser or Beneficiary.

  6. Can I make a payment online?

    No. You can either select payment by direct deposit, check, money order or payroll deduction. If you select an Installment PlanInstallment Plan
    This payment plan allows you to purchase a specific number of tuition units in monthly or annual installments at the price in effect, including the charge of an interest component, at the time the Purchaser enrolls in the installment plan. Installment plans are available for 5 or 10 years, or they may be calculated based on the number of years until the Beneficiary’s projected high school graduation date.
    to make payments by check, you will receive a coupon book, prior to the May 1 deadline, which contains payment slips to use each time you make a payment. If you select the Pay-As-You-Go PlanPay-As-You-Go Plan
    This payment plan allows you to purchase as many or as few tuition units as you like on a schedule that you choose. Note, tuition units purchased using the Pay-As-You-Go Plan can cost more in the future, because tuition unit prices are adjusted annually.
    option and opt to make payments by check, you will not receive a coupon book. Instead, you will receive a payment voucher prior to the first payment due date of May 1, and each time you make a payment, you will receive a new payment voucher with your payment confirmation.

  7. Is this plan associated with the original Texas Guaranteed Tuition Plan?

    No. The Texas Guaranteed Tuition Plan, also known as the Texas Tomorrow Fund, was offered as the original Texas prepaid plan opened in 1995. It closed to new enrollment in 2003.

  8. Is the Texas Tuition Promise Fund guaranteed by the state of Texas?

    While the Texas Tuition Promise Fund is not constitutionally guaranteed, Texas law requires all Texas two-year and four-year public colleges and universities to accept Texas Tuition Promise Fund Tuition Units as payment for the applicable portion of tuition and required fees. This law does not apply to private or out-of-state colleges or career schools, but 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 Tuition Units may be applied toward costs at those schools. See the Plan Description regarding use at private or out-of-state schools or career schools.

    The Contracts are not deposits or other obligations of any depository institution. Neither a Contract nor any return paid with a refund is insured or guaranteed by the FDIC, the state of Texas, the Texas Prepaid Higher Education Tuition Board, any other state or federal governmental agency or Northstar Financial Services Group, LLC or its affiliates. The Contracts have not been registered with the U.S. Securities and Exchange Commission or with any state.

    Purchasers should carefully consider the risks, administrative fees, service and other charges and expenses associated with the Contracts, including plan termination and decreased transfer or refund value.

  9. Can I use my plan at graduate school?

    No. Tuition Units may only be redeemed for undergraduate tuition and required fees. Please see Rollovers to Another 529 Plan for more information on how to roll over funds to a 529 college savings plan so that they may be used for graduate school.

  10. What can I do if there are Tuition Units left over?

    If you have accumulated more Tuition Units than you need to cover tuition and required fees, you can:

    • Change the Beneficiary of your contract to a member of Beneficiary’s family.member of Beneficiary's family
      See the Plan Description for details and consult your tax advisor to determine whether such a change creates a taxable gift or other adverse tax consequences for you or your Beneficiary.
    • Transfer 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 unused Tuition Units to a 529 college savings plan, such as the Texas College Savings Plan® so that the money can be used for graduate school tuition, fees, books or room and board. Transfer Value is limited to the lesser of a) the costs the Tuition Units would pay to a public in-state college or university, or b) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount.
    • 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.
      of unused Tuition Units. See Cancellations and Refunds for information on how refunds are calculated. Federal income taxes and an additional 10% federal tax on the earnings, as well as any state or local taxes, may apply.
  11. Are there any exceptions to the additional 10% federal tax required under Section 529?

    Yes, the following exceptions apply:

    • Withdrawals due to the Beneficiary’s death (if paid to the Beneficiary’s estate) or disability (as defined in Section 72(m)(7) of the Internal Revenue Code);
    • Withdrawals due to a scholarship received by the Beneficiary (to the extent the withdrawal does not exceed the amount of the scholarship);
    • Withdrawals made on account of the Beneficiary’s attendance at a U.S. Military Academy (up to the costs of advanced education as defined by applicable federal law); and
    • Withdrawals resulting from the use of Education Tax Credits by the Beneficiary.

    You should consult your tax advisor before making a nonqualified withdrawal.

  12. Will I receive an IRS Form 1099?

    For any tax year during which there was a distribution from your account, an IRS Form 1099Q will be issued.

    Distributions will be reported to the IRS as follows:

    Type of Distribution IRS Form 1099Q Taxable Party
    Payments to Colleges and Universities Beneficiary
    Scholarship Refund Purchaser
    Voluntary Cancellation Refund Purchaser
    Involuntary Cancellation Refund Purchaser
  13. Can I request a refund of only a portion of my Tuition Units?

    The number of voluntary refunds for a Purchaser is limited to two in a 12-month period and must be in increments of 25 Tuition Units or 100% of the Purchaser’s Tuition Units, whichever is less.

  14. Should I purchase units in accordance with a specific school?

    All Tuition Unit TypesTuition Units
    Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
    can be used at most four- or two-year public colleges and universities in Texas (excluding medical and dental schools, health science centers and other health-related institutions). While it is impossible to predict the exact number and type of units you will need for a particular school in the future, check out the pricing guide for the number of units currently required at Texas public schools. At the back of the pricing guide you will find information on the number of each type of Tuition UnitsTuition Units
    Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
    necessary to cover one academic year’s 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.
    at Texas public two-year and four-year colleges and universities if the units were redeemed in the current academic year. This is subject to change in the year that you actually redeem your Tuition Units. For example, a college whose costs are at the Weighted Average in the year Tuition Units are purchased might not be at the Weighted Averageweighted average cost
    "Weighted Average" is calculated according to a formula established by Texas law. The Plan will calculate two Weighted Averages: (1) A Weighted Average cost of undergraduate resident tuition and required fees for four-year public senior colleges or universities in Texas, and (2) a Weighted Average cost of undergraduate resident tuition and required fees at two-year public institutions of higher education in Texas (public junior colleges, public state colleges, and public technical institutes) paid by residents of the taxing jurisdiction of the two-year public institution. Weighted Averages are essentially the average cost of undergraduate resident tuition and required fees at these public colleges and universities in Texas (institutions) and are calculated by 1) 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 the institution; 2) adding together the products computed in 1) for each institution; and 3) dividing the sum determined in 2) by the total number of full-time equivalent undergraduate resident students at all institutions.
    in the year Tuition Units are redeemed.

  15. What is the difference between Type I and Type II units?

    If you choose Type I Tuition Units, 100 units can be redeemed to pay 30 semester hours (two 15-hour semesters) or one academic year of tuition at the most expensive Texas public college or university in the year of redemption. Fewer Type I units would be required for a lower priced four-year or two-year school.

    If you choose to purchase Type II Tuition Units, your 100 units will pay for 30 semester hours or approximately one academic year of tuition and required fees at a college with tuition and required fees equal to the Weighted Averageweighted average cost
    "Weighted Average" is calculated according to a formula established by Texas law. The Plan will calculate two Weighted Averages: (1) A Weighted Average cost of undergraduate resident tuition and required fees for four-year public senior colleges or universities in Texas, and (2) a Weighted Average cost of undergraduate resident tuition and required fees at two-year public institutions of higher education in Texas (public junior colleges, public state colleges, and public technical institutes) paid by residents of the taxing jurisdiction of the two-year public institution. Weighted Averages are essentially the average cost of undergraduate resident tuition and required fees at these public colleges and universities in Texas (institutions) and are calculated by 1) 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 the institution; 2) adding together the products computed in 1) for each institution; and 3) dividing the sum determined in 2) by the total number of full-time equivalent undergraduate resident students at all institutions.
    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.
    of most Texas four-year public colleges and universities (excluding medical and dental schools, health science centers and other health-related institutions). Therefore, if your Beneficiary attends a Texas public school that costs more than the weighted average cost, you will either need to use more units to cover the tuition and required fees or pay the difference out-of-pocket. If the school chosen costs less than the weighted average school, you will need to redeem fewer than 100 units for 30 semester hours. For more information, see the Tuition Unit Pricing Schedule and Unit Value Redemption Guide.

  16. Can I upgrade my installment plan?

    Yes, you may increase or decrease the number of Tuition Units that you want to purchase on an existing installment contract at any time during the Sales Period, with the following exception. If you want to add an installment plan to an existing contract that has no pre-existing installment plan, the new installment plan may only be added during an Enrollment Period.

  17. If I experience financial difficulties, what can I do with my installment plan?

    As noted above, you may decrease (downgrade) the number or type of Tuition Units that you want to purchase at any time. You can also cancel or terminate a contract at any time and for any reason and receive a refund. However, the value of your refund will depend on when and why you cancel the Contract. See Cancellations and Refunds for information on how refunds are calculated. Earnings on nonqualified withdrawals are subject to federal, state, and local income taxes and any applicable income tax penalties. Please refer to the Plan Description for more information.

  18. When will my bank account begin drafting?

    Automatic debits and payments are debited on the first business day of each month.

  19. Where do I find forms for the Plan?

    All forms are available here.

  20. Are there any special benefits to Texans who participate in the Plan?

    Yes. Texas law provides that assets in an account may not be considered in determining eligibility for Texas state-funded student financial aid. Also, assets in an account are exempt from attachment, execution, and seizure in Texas for the satisfaction of debts under Texas law. Please refer to the Plan Description for more information.

  21. Why are there so many tuition and required fee options for some of the Texas public schools based on year of enrollment?

    House Bill 29 passed in the 2013 Legislative Session required Texas four-year public colleges and universities to begin offering fixed rate tuition in Fall 2014. While some colleges and universities provided traditional pricing models that incorporated fixed rate tuition, others established a new tuition and fee structure with different fixed pricing for each of their individual colleges within the school (for instance, X University – School of Engineering, School of Business, School of Nursing, etc.) depending on when a student first enrolled. For example, a university listed below might have one fee structure for School of Engineering students who enrolled in the 2013-2014 academic year, another for School of Engineering students who enroll in the 2014-2015 academic year, etc.

  22. What are Texas Match the Promise FoundationSM scholarships?

    The Texas Match the Promise FoundationSM awards scholarships to fifth- through ninth-graders who are enrolled in the Texas Tuition Promise Fund. The foundation encourages families to save for college by supplementing their contributions to the plan. Eligible students can apply between Sept. 1 and Dec. 31. More information on the scholarships and eligibility requirements can be found at MatchThePromise.org.

Top

Redeeming My Units

  1. When are my Tuition Units available for redemption?

    In order to redeem Tuition Units,Tuition Units
    Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
    your account must have met the following requirements:

    • Tuition Units to be redeemed must be paid in full
    • Tuition Units must have met the three-year holding period
    • The account cannot have unpaid fees or charges
    • The account must have valid Social Security numbers on record for both the purchaser and beneficiary
    • The account cannot have reached the 10-year termination limit
  2. How will I know when I can use my Texas Tuition Promise Fund contract benefits to pay for my child’s college tuition costs?

    Each April, purchasers with beneficiaries who will reach their projected high school graduation dates in the following May or June will receive notice from the Plan advising that they can manage the use of their Tuition Units online at www.texastuitionpromisefund.com. The beneficiary’s account status will show how many units have been purchased overall, as well as how many units have satisfied the three-year holding period and are available to be redeemed.

  3. How do I establish an online account to manage my tuition benefits?

    If you have not already established an online account login, go to the Home Page at www.texastuitionpromisefund.com and at the top right corner, click on the “New? Register Now” link under the Account Owner Sign-In button.

    Follow the instructions:

    • Step 1. Enter your account number (if you have multiple contracts, you can use any of your account numbers to retrieve all of the contracts)
    • Step 2. Enter your Social Security number
    • Step 3. Click “Continue” and follow the instructions to establish your password

    Note: The account number can be found on the confirmation that you received when you established the account, on the annual statement, or by calling us at 1-800-445-4723, Option #5.

  4. How do I authorize a payment to my child’s school if they attend a Texas public college, university or community college?

    The account PurchaserPurchaser
    The person who establishes the Contract for a specified Beneficiary. There can only be one Purchaser for each Contract. The Purchaser is responsible for making payments in a timely manner and is the only person who may direct or receive refunds, or may direct rollovers, Contract changes, and changes in the designated Beneficiary except that the Contract may be cancelled or modified by the Plan. Friends and family who contribute to another person’s account are not the Purchaser and may not prevent, direct or receive refunds, and may not direct rollovers, contract changes, or changes in the designated Beneficiary.
    MUST authorize payment to an in-state Texas public college, university or community college by completing the Benefit Payment Authorization Form. This process must be completed each semester even if your child is enrolled in the same school. The Purchaser can authorize redemption of available Tuition Units by any of the following methods:

    • Complete the online form found in the Benefits Information section of your online account access, or
    • Print, complete and submit the Texas Tuition Promise Fund Benefits Payment Authorization form that can be found under the Forms & Materials section.
  5. How many Tuition Units will I need to redeem to pay my child’s tuition and required fees?

    The number of Tuition UnitsTuition Units
    Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
    you will need to pay your child’s 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.
    costs will depend on the cost of the particular school attended and the type of Tuition Units you have. For the 2017-2018 academic year, those costs and required fees, as well as the current redemption value for each type of tuition unit, under “Forms & Materials”, in the document titled Academic Year Tuition Unit Pricing Schedule and Value Redemption Guide. The Guide also includes a schedule showing the tuition and required fee costs of each Texas public school, and how many units of each type are required to cover the tuition and fees at that school for one academic year consisting of 30 semester credit hours. A sample of the information included in the schedule, based on 2017-2018 numbers, is shown here:

    4-Year or 2-Year University/College Tuition and Required Fees 2019-2020 Academic Year # of Units Required
    Type I Type II Type III
    University of Houston – Nursing $14,780.10 100.00 140.04 550.67
    University of Austin – Business Guaranteed $12,802.00 86.62 121.30 476.97
    Texas A&M College Station – Business Guaranteed $12,508.30 84.63 118.52 466.03
    Texas State University – Guaranteed $12,112.30 81.95 114.77 451.28
    Universty of Texas Arlington – Liberal Arts $12,020.00 81.33 113.89 4447.84
    Texas Tech – Fixed Tuition $11,949.00 80.85 113.22 445.19
    Lamar University – Guaranteed $11,067.00 74.88 104.86 412.33
    Tarleton State Main Campus – Business $10,282.60 69.57 97.43 383.11
    Blinn College – Brenham $3,810.00 25.78 36.10 141.95
    Trinity Valley Community College $2,640.00 17.86 25.01 98.36
    * Number of units required for 30 semester hour academic year
  6. What fees are considered “required fees?” Are they the same at all schools?

    Required fees are only those fees paid by all students at a college or university as a condition of enrollment, regardless of year, major, or course of study. Please note: depending on the school your child attends, you may be required to pay fees that are not school-wide required fees and are not covered by the Plan.

    Examples of fees that are not covered by Tuition Units include course-related fees, such as lab fees; fees related to your child’s major or year of study, such as freshman orientation or freshman advisor fees; optional fees; graduate fees; or deposits. Although your child’s school might use the label “required fee,” a fee must meet the Plan’s definition of required fees to be covered by the Plan. Tuition Units may not be used to pay for other college expenses, such as dormitory, living expenses or books.

  7. Do I need to tell my child’s Texas public college or university that I am using the Texas Tuition Promise Fund?

    You should notify your child’s college or university that you will use the Texas Tuition Promise Fund®. Also, once you have completed the Payment Authorization process, the college will receive an electronic notification that your beneficiary is using the Plan. Most Texas public colleges and universities will pre-credit your account for some portion of the tuition and required fees due if you are using the Texas Tuition Promise Fund. However, you should coordinate with the school to determine the amount of the pre-credit, if any, and you should pay any amounts that will not be pre-credited by the school prior to the payment deadline in order to avoid late fees or cancellation of classes. The school will bill the Plan after the add/drop period. The Plan will issue payment directly to the school. The Plan will pay the school within 30 days of receiving a billing from the school.

    There will be no adjustments to your Texas Tuition Promise Fund account for hours dropped after the Plan has paid the school. Any refund under those circumstances is between you and the school, and no Tuition Units will be restored to your account.

  8. What if the student received a matching scholarship or tuition grant from the Texas Match the Promise Foundation?

    If the Texas Match the Promise Foundation awarded the student a matching scholarship or tuition grant in grades five through nine, the owner of the Texas Tuition Promise Fund account linked to the award must submit an Approval Request to Use Scholarship Tuition Units to request approval to use those units. The Foundation will work with the Texas Tuition Promise Fund program to disburse Scholarship Tuition Units as needed, up to the maximum number available, directly to the school’s billing office upon request.

    Scholarship Tuition Units can be applied toward the cost of undergraduate tuition and school-wide required fees at certain Texas public colleges and universities ONLY. Scholarship Tuition Units cannot be used at career schools, private or out-of-state colleges and universities, medical and dental schools, health science centers or other health-related institutions.

    To the extent possible, available Tuition Units in the linked Texas Tuition Promise Fund account should be used before Scholarship Tuition Units.

    Please note that scholarship account information is not available online. The owner of the linked account can obtain scholarship account information by calling the Texas Tuition Promise Fund program at 800-445-4723, option 5. Be sure to mention that the Foundation awarded the student a matching scholarship or tuition grant.

    The owner of the linked account will also receive an annual statement for the student’s scholarship account from the Texas Tuition Promise Fund program.

  9. Can I use Tuition Units for online or correspondence courses, study abroad, or certificate courses/programs offered by Texas public colleges and universities?

    Many Texas public colleges and universities offer undergraduate courses to enrolled students through online or distance learning. In most cases, Tuition UnitsTuition Units
    Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
    can be redeemed to pay for these courses the same way Tuition Units are redeemed to pay for on-campus courses.

    Texas junior colleges offer a variety of certificate programs. Generally, Tuition Units can be redeemed to pay for undergraduate for-credit courses, including courses offered in certificate programs.

    Texas junior colleges offer certain continuing education courses that are not for-credit courses. Generally, Tuition Units cannot be redeemed to pay directly for these courses. The Purchaser can rollover 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 the Tuition Units to a 529 Savings Plan Account, such as the Texas Tuition Promise Fund Plan®. Then the Purchaser can authorize distributions from the 529 Savings Plan Account to pay for these types of junior college courses. Transfer Value (Transfer Outside of Plan) is limited to the lesser of (1) the costs the Tuition Unit would cover at a public in-state college or university or (2) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount.

  10. What if the student receives a scholarship?

    The Purchaser can:

    • Keep the unused Tuition UnitsTuition Units
      Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
      for later use.
    • 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.
      of the contract to a member of the current Beneficiary’s family who meets the residency requirement. See the Plan Description for details and consult your tax advisor to determine whether such a change creates a taxable gift or other adverse tax consequences for the Purchaser or Beneficiary.
    • Transfer 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 unused Tuition Units to a 529 college savings plan, such as the Texas College Savings Plan® so that the money can be used for fees that are not school-wide required fees, books, room and board, or graduate school. Transfer Value is limited to the lesser of a) the costs the Tuition Unit would pay to a public in-state college or university, or b) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount.
    • 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.
      of the “Refund Value.” Refunds made due to a documented scholarship receive the Refund Value, even if they do not meet the three-year holding requirement. Refunds made due to scholarships may still be subject to federal income tax, but are exempt from the 10% federal tax penalty.

    Refund Value means an amount equal to the total purchase price of unused Tuition Units to be refunded from the Contract, plus or minus adjusted annual net earnings or losses on contributions made to purchase the Tuition Units that are being refunded. Adjusted annual net earnings on contributions are computed at an earnings rate set by the Board that is up to 2% less than the actual investment return for the Plan 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 5% annually. Earnings may be paid with a refund only if the Board determines that such payment will not adversely affect the actuarial soundness of the Plan. Any outstanding fees imposed by the Plan would be subtracted from the total refunded amount. Refund Value does not include any state-provided or procured matching contributions or any earnings on state-provided or procured matching contributions.

  11. What if my child attends a Texas private college or university, out of state school, career school, Texas health science center or health-related institution?

    If your child attends an eligible career school, Texas private college or university, out-of-state college or university, medical or dental school, health science center or health related institution 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 Tuition UnitsTuition Units
    Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
    towards the cost of tuition and required fees.required 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.
    Transfer Value (Transfer Outside of Plan) is limited to the lesser of (1) the costs the Tuition Unit would cover at a public in-state college or university or (2) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount.

    Payment of Transfer Value must be made by the Plan directly to the eligible Texas private college or university, career school, out-of-state college or university, medical or dental school, health science center, or health related institution.

    To calculate the estimated current Transfer Value of your Tuition Units, you can follow these simple steps:

    • Sign into your account online;
    • Calculate an estimated current Transfer Value for a number of Tuition Units or dollar amount online;

    Please note: Net investment earnings or losses continue to accrue until the business day the plan manager processes your transfer request.

    When the Purchaser is ready to request payment of the Transfer Value to a Texas private college or university, career school, or out-of-state college or university, the Purchaser can do the following:

    • Print, complete and submit the Texas Tuition Promise Fund Transfer Value Payment Authorization Form found on our website under the “Forms & Materials” section.

    You can also contact customer service at 1-800-445-4723, Option #5, for information about the Transfer Value of your Tuition Units.

  12. Are Tuition Benefits available to pay for Dual Enrollment credits?

    Yes. Dual enrollment (dual credit) is the term used for college credit courses taken while attending high school. Your Tuition UnitsTuition Units
    Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure.
    can be used to pay undergraduate 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.
    for dual credit courses at Texas public two- and four-year colleges and universities.

    In order to redeem Tuition Units while your child is attending high school, your account must have met the following requirements:

    • Tuition Units to be redeemed must be paid in full
    • Tuition Units must have met the three-year holding periodthree-year holding period
    • The account cannot have unpaid fees or charges
    • The account must have valid Social Security numbers on record for both the purchaser and beneficiary
    • The account cannot have reached the 10-year termination limit

    If your beneficiary takes dual credit courses at a Texas public college or university, follow the steps in item #4 above to authorize redemption of Tuition Units. If your child takes dual credit courses at an eligible career school, Texas private college or university, or out-of-state college or university, follow the steps in item #10 above to apply the Transfer Value of your Tuition Units toward the cost of tuition and required fees. Transfer Value (Transfer Outside of Plan) is limited to the lesser of (1) the costs the Tuition Unit would cover at a public in-state college or university or (2) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount.

    Payment must be made by the Plan directly to your beneficiary’s school.

    You can access your account informtion, including the Transfer Value of your account, online by following the instructions in item #3, above or you can contact customer service at 1-800-445-4723, Option #5, for information about your account, including the Transfer Value.

  13. How does the “weighted average” value impact the purchasing power of Type II or Type III Tuition Units?

    Because the Weighted Averageweighted average cost
    "Weighted Average" is calculated according to a formula established by Texas law. The Plan will calculate two Weighted Averages: (1) A Weighted Average cost of undergraduate resident tuition and required fees for four-year public senior colleges or universities in Texas, and (2) a Weighted Average cost of undergraduate resident tuition and required fees at two-year public institutions of higher education in Texas (public junior colleges, public state colleges, and public technical institutes) paid by residents of the taxing jurisdiction of the two-year public institution. Weighted Averages are essentially the average cost of undergraduate resident tuition and required fees at these public colleges and universities in Texas (institutions) and are calculated by 1) 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 the institution; 2) adding together the products computed in 1) for each institution; and 3) dividing the sum determined in 2) by the total number of full-time equivalent undergraduate resident students at all institutions.
    falls somewhere in the middle, many Texas public colleges and universities will cost more than the weighted average, and many will cost less. If your child attends a Texas public four-year college that costs more than the weighted average, you will need more Type II Tuition Units than if your child attended a Texas public school at the weighted average cost. If your child attends a school that costs less than the weighted average, you will fewer less Type II Tuition Units.

    The number of Type II UnitsType II Units
    The assigned value of a Type II Tuition Unit is 1% of the Weighted Average cost of undergraduate resident tuition and required fees for the applicable academic year consisting of 30 semester credit hours with an assumed 15 hours per semester charged by General academic teaching institutions (four-year public colleges) in Texas. Type II Tuition Units cover the same four-year Texas public colleges as Type I Tuition Units, but only pay the Weighted Average Cost of undergraduate resident tuition and required fees at Texas public four-year colleges and universities. Any difference not covered by redemption of Tuition Units must be paid by the Beneficiary or the Purchaser either through the redemption of additional Tuition Units or through alternative funding methods. The percentage of tuition and required fees covered will vary depending on the college or university your Beneficiary attends and the extent to which its costs are above or below the Weighted Average cost at Texas public four-year colleges and universities.

    All types of Tuition Units can be used at any Texas public college or university or converted to the Transfer Value for use at Texas private colleges and universities or out-of-state colleges or universities or eligible career schools. Transfer Value (Transfer Outside of Plan) is limited to the lesser of (1) the costs the Tuition Unit would cover at a public in-state college or university or (2) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount. See the Tuition Unit Pricing Schedule and Unit Value Redemption Guide to determine the number of Tuition Units required for redemption at four-year and two-year Texas public colleges or universities in the current year.
    needed will vary depending on how much a school’s costs are higher or lower than the Weighted Average of all Texas public four year colleges and universities.

    For example, for the 2012-2013 school year, the University of Texas at Austin School of Nursing was about 50 percent higher than the weighted average, and the University of North Texas was about five percent higher than the weighted average. So, in 2012-2013, you would have needed 124.97 Type II Tuition Units to pay tuition and required fees for 30 hours at the University of Texas at Austin School of Nursing. In contrast, in 2012-2013, you would have needed only 105.13 Type II Tuition Units to pay tuition and required fees for 30 hours at the University of North Texas. Lamar University in Beaumont was about three percent less than the weighted average cost of all Texas public fout-year colleges and universities, so you would have needed 102.80 Type II Tuition Units for the 2012-2013 academic year.

    Similarly, the actual “purchasing power” of Type III UnitsType III Units
    he assigned value of a Type III Tuition Unit is 1% of the Weighted Average cost of undergraduate resident tuition and required fees for the applicable academic year consisting of 30 semester credit hours with an assumed 15 hours per semester charged by two-year institutions of higher education for residents of the taxing jurisdiction of the two-year college (two-year public junior college/public technical institute) in Texas, 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. The number of hours paid will vary depending on the college your Beneficiary attends and the extent to which its costs are above or below the Weighted Average cost at Texas public two-year colleges.

    All types of Tuition Units can be used at any Texas public college or university or converted to the Transfer Value for use at Texas private colleges and universities or out-of-state colleges or universities or eligible career schools. Transfer Value (Transfer Outside of Plan) is limited to the lesser of (1) the costs the Tuition Unit would cover at a public in-state college or university or (2) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount. See the Tuition Unit Pricing Schedule and Unit Value Redemption Guide to determine the number of Tuition Units required for redemption at four-year and two-year Texas public colleges or universities in the current year.
    will vary depending on how much a Texas public college’s costs are higher or lower than the Weighted Average of all Texas public junior and community colleges. If the cost at your child’s school is higher than the Weighted Average, if your child takes more than 30 semester hours, or if your child is not a resident of the school’s taxing jurisdiction, you will have to use more Type III Tuition Units or pay the difference. But if the cost at your child’s school is lower than the Weighted Average, you will need less Type III Tuition Units.

    Remember, you can use any type of Tuition Unit to pay tuition and required fees at any Texas public two- or four-year college or university. The number of Tuition Units that need to be redeemed will depend on 1) the type of Tuition Units, 2) the Texas public school attended, and 3) the number of semester credit hours being paid by the Plan. At Texas public junior and community colleges, it will also depend on in-district or out-of-district status. If you have fewer Tuition Units than needed to cover the tuition and required fees or if you prefer to redeem fewer units than are required, the Beneficiary is responsible for paying the difference due to the school by the deadline so that classes are not cancelled for non-payment.

    Check the Unit Value Redemption Guide to see where your child’s school falls on the Unit Value tables. You can find the guide at the back of the Academic Year Tuition Unit Pricing Schedule and Unit Value Redemption Guide.

  14. How does having a Texas Tuition Promise Fund account affect financial aid?

    Whether your account will affect your child’s eligibility for federal financial aid depends on who the Purchaser is and your child’s relation to the Purchaser. Also, laws related to federal student aid change frequently. You should check the latest information on the Department of Education’s website at www.fafsa.com, particularly the Federal Student Aid Handbook, to see how you should report your account on your child’s Free Application for Federal Student Aid (FAFSA). For Texas state-funded financial aid, Texas law provides that the value of your Tuition Units may not be considered assets, income, or resources in determining eligibility for Texas state-funded student financial aid.

    For school-based financial aid, the effect of being a Purchaser or Beneficiary of an Account varies from institution to institution.

  15. Are the distributions from my account taxable?

    Qualified withdrawals are not subject to federal income tax.

    If you withdraw more than your qualified higher education expenses for any tax year, or use a refund for anything other than qualified higher education expenses (a “nonqualified withdrawal”), a portion of the nonqualified withdrawal may be subject to federal and, if applicable, state income tax, and may be subject to an additional 10% federal tax. If a nonqualified withdrawal was distributed to your school for your benefit, you will be responsible for the tax. Otherwise, the account Purchaser will be responsible for the tax.

    Distributions will be reported to the IRS on Form 1099Q as follows:

    Type of Distribution IRS Form 1099Q Taxable Party
    Payments to Colleges and Universities Beneficiary
    Scholarship Refund Purchaser
    Voluntary Cancellation Refund Purchaser
    Involuntary Cancellation Refund Purchaser

    Generally, withdrawals due to the Beneficiary’s death, disability, receipt of a scholarship (to the extent the withdrawal does not exceed the scholarship amount), attendance at a U.S. Military Academy, or use of Education Tax Credits are not subject to the additional 10% tax. For more details, please see the Plan Description and Master Agreement.

    The Board will aggregate the earnings portion of all annual contract distributions having the same Purchaser and same Beneficiary into a single IRS Form 1099Q. In addition, if there are any other contracts with the same Purchaser and Beneficiary under the Texas Guaranteed Tuition Plan, also known as the Texas Tomorrow Fund (or any other prepaid tuition plan which may be established by the state of Texas), those contracts will also be aggregated with your Texas Tuition Promise Fund® account for these purposes.

  16. How long do I have to use my Tuition Units?

    You have up to 10 years after your child’s projected date of high school graduation to use all Tuition Units; otherwise the account will be canceled. Any years your child spends in active U.S. military service are added to the 10-year limit to extend the time period in which benefits can be used.

  17. Can Plan benefits be used toward the cost of graduate school courses?

    No. Your Texas Tuition Promise Fund cannot be used for graduate school. However, you can rollover the Transfer Value (Transfer Outside of Plan) to a 529 college savings plan, such as the Texas College Savings Plan, and the proceeds can be used to pay for expenses not covered by the Plan. These expenses include course-specific fees, books, room and board, or graduate school tuition. The Transfer Value (Transfer Outside of Plan) is limited to the lesser of (1) the costs the Tuition Unit would cover at a public in-state college or university or (2) the original purchase price of the Tuition Unit plus or minus the Plan’s net investment earnings or losses on that amount.

    You should contact customer service at 1-800-445-4723, Option #5, or access your account online for information about your account including the Transfer Value.

  18. I have additional questions. Where can I find answers?

    The Texas Tuition Promise Fund Student Handbook is available online and may provide answers to your questions or you can contact Customer Service at 1-800-445-4723, Option #5.

5661-NLD-09/12/2017

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