93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB4364

 

Introduced 02/03/04, by Naomi D. Jakobsson

 

SYNOPSIS AS INTRODUCED:
 
110 ILCS 979/5
110 ILCS 979/10
110 ILCS 979/15
110 ILCS 979/35
110 ILCS 979/45

    Amends the Illinois Prepaid Tuition Act. Provides that at the purchaser's option, the Illinois prepaid tuition program must cover an institution of higher education's room and board charges. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1     AN ACT concerning higher education.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Prepaid Tuition Act is amended by
5 changing Sections 5, 10, 15, 35, and 45 as follows:
 
6     (110 ILCS 979/5)
7     Sec. 5. Purpose. The General Assembly finds and declares
8 that the general welfare and security of the State are enhanced
9 by access to higher education for all residents of the State
10 who desire that education and who demonstrate the
11 qualifications necessary to pursue that education.
12 Furthermore, it is desirable that residents of the State who
13 seek to pursue higher education be able to choose attendance at
14 the higher education institution that offers programs and
15 services most suitable to their needs. Accordingly, endeavors
16 that serve the higher education needs of the people of the
17 State represent an essential function of State government.
18     During the past decade, students have been paying more and
19 borrowing more to finance the increasing cost of higher
20 education at Illinois colleges and universities as well as at
21 similar institutions nationwide. Federal and state
22 governments' capacity to fund college scholarships and grants
23 cannot fully meet the current and future demand for higher
24 education nor is it reasonable to expect that paying for
25 college is solely a governmental responsibility. It is -- and
26 has always been -- a shared responsibility among the student,
27 the family, State government, and the federal government.
28 Consequently, the intent of this Act is to both encourage and
29 better enable Illinois families to help themselves finance the
30 cost of higher education, specifically through a program that
31 provides Illinois families with a method of State tax-free and
32 federally tax-deferred savings for college tuition and room and

 

 

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1 board charges.
2 (Source: P.A. 90-546, eff. 12-1-97.)
 
3     (110 ILCS 979/10)
4     Sec. 10. Definitions. In this Act:
5     "Illinois public university" means the University of
6 Illinois, Illinois State University, Chicago State University,
7 Governors State University, Southern Illinois University,
8 Northern Illinois University, Eastern Illinois University,
9 Western Illinois University, or Northeastern Illinois
10 University.
11     "Illinois community college" means a public community
12 college as defined in Section 1-2 of the Public Community
13 College Act.
14     "MAP-eligible institution" means a public institution of
15 higher education or a nonpublic institution of higher education
16 whose students are eligible to receive need-based student
17 financial assistance through State Monetary Award Program
18 (MAP) grants administered by the Illinois Student Assistance
19 Commission under the Higher Education Student Assistance Act
20 and whose students also are eligible to receive benefits under
21 Section 529(a) of the Internal Revenue Code of 1986, as
22 specified by the federal Small Business Act of 1996 and
23 subsequent amendments to this federal law.
24     "Illinois prepaid tuition contract" or "contract" means a
25 contract entered into between the State and a Purchaser under
26 Section 45 to provide for the higher education of a qualified
27 beneficiary.
28     "Illinois prepaid tuition program" or "program" means the
29 program created in Section 15.
30     "Purchaser" means a person who makes or has contracted to
31 make payments under an Illinois prepaid tuition contract.
32     "Public institution of higher education" means an Illinois
33 public university or Illinois community college.
34     "Nonpublic institution of higher education" means any
35 MAP-eligible educational organization, other than a public

 

 

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1 institution of higher education, that provides a minimum of an
2 organized 2-year program at the postsecondary level and that
3 operates in conformity with standards substantially equivalent
4 to those of public institutions of higher education.
5     "Qualified beneficiary" means (i) anyone who has been a
6 resident of this State for at least 12 months prior to the date
7 of the contract, or (ii) a nonresident, so long as the
8 purchaser has been a resident of the State for at least 12
9 months prior to the date of the contract, or (iii) any person
10 less than one year of age whose parent or legal guardian has
11 been a resident of this State for at least 12 months prior to
12 the date of the contract.
13     "Tuition" means the quarter or semester charges imposed on
14 a qualified beneficiary to attend a MAP-eligible institution.
15     "Mandatory Fees" means those quarter or semester fees
16 imposed upon all students enrolled at a MAP-eligible
17 institution.
18     "Registration Fees" means the charges derived by combining
19 tuition and mandatory fees and, if applicable, an institution
20 of higher education's room and board charges.
21     "Contract Unit" means 15 credit hours of instruction at a
22 MAP-eligible institution.
23     "Panel" means the investment advisory panel created under
24 Section 20.
25     "Commission" means the Illinois Student Assistance
26 Commission.
27 (Source: P.A. 93-56, eff. 7-1-03.)
 
28     (110 ILCS 979/15)
29     Sec. 15. Creation of Illinois prepaid tuition program.
30 There is created the Illinois prepaid tuition program to be
31 administered by the Illinois Student Assistance Commission.
32 This program is to be administered so that the full cost of
33 tuition and mandatory fees and, at the purchaser's option, full
34 room and board charges at Illinois public universities and
35 Illinois community colleges may be paid in advance of

 

 

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1 enrollment through the prior purchase of an Illinois prepaid
2 tuition contract. The Commission may enter into contracts as
3 may be necessary to provide for administration of the program
4 and shall develop and implement rules and regulations necessary
5 for the efficient administration of the program.
6     All reasonable charges incidental to the administration of
7 the program by the Commission shall be paid in the initial
8 start-up period for the program's operation from the General
9 Revenue Fund, pursuant to appropriations made for that purpose
10 by the General Assembly. Those charges and expenses in
11 subsequent years shall be paid exclusively from the Illinois
12 Prepaid Tuition Trust Fund established by Section 35 of this
13 Act.
14 (Source: P.A. 90-546, eff. 12-1-97.)
 
15     (110 ILCS 979/35)
16     Sec. 35. Illinois Prepaid Tuition Trust Fund.
17     (a) The Illinois Prepaid Tuition Trust Fund is created as
18 the repository of all moneys received by the Commission in
19 conjunction with the Illinois prepaid tuition program. The
20 Illinois Prepaid Tuition Trust Fund also shall be the official
21 repository of all contributions, appropriations, interest and
22 dividend payments, gifts, or other financial assets received by
23 the Commission in connection with operation of the Illinois
24 prepaid tuition program. All such moneys shall be deposited in
25 the Illinois Prepaid Tuition Trust Fund and held by the State
26 Treasurer as ex-officio custodian thereof, outside of the State
27 Treasury, separate and apart from all public moneys or funds of
28 this State.
29     All interest or other earnings accruing or received on
30 amounts in the Illinois Prepaid Tuition Trust Fund shall be
31 credited to and retained by the Fund. Moneys, interest, or
32 other earnings paid into the Fund shall not be transferred or
33 allocated by the Commission, the State Treasurer, or the State
34 Comptroller to any other fund, nor shall the Governor authorize
35 any such transfer or allocation, while any contracts are

 

 

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1 outstanding. The State Comptroller shall not offset moneys paid
2 to institutions from the Illinois Prepaid Tuition Trust Fund
3 (unless the Trust Fund moneys are used for child support). In
4 addition, no moneys, interest, or other earnings paid into the
5 Fund shall be used, temporarily or otherwise, for interfund
6 borrowing or be otherwise used or appropriated except as
7 expressly authorized in this Act.
8     The Illinois Prepaid Tuition Trust Fund and each individual
9 participant account that may be created in that Fund in
10 conjunction with the Illinois prepaid tuition program shall be
11 subject to audit in the same manner as funds and accounts
12 belonging to the State of Illinois and shall be protected by
13 the official bond given by the State Treasurer.
14     (b) The Commission from time to time shall direct the State
15 Treasurer to invest moneys in the Illinois Prepaid Tuition
16 Trust Fund that are not needed for immediate disbursement, in
17 accordance with provisions of the investment plan approved by
18 the Commission.
19     (c) The Executive Director of the Commission shall, at such
20 times and in such amounts as shall be necessary, prepare and
21 send to the State Comptroller vouchers requesting payment from
22 the Illinois Prepaid Tuition Trust Fund for: (i) tuition, and
23 fee, and room and board payments to MAP-eligible institutions
24 on behalf of qualified beneficiaries of Illinois prepaid
25 tuition contracts, and (ii) payments associated with
26 administration of the Illinois prepaid tuition program.
27     (d) The Governor shall indicate in a separate document
28 submitted concurrent with each annual State budget the
29 estimated amount of moneys in the Illinois Prepaid Tuition
30 Trust Fund which shall be necessary and sufficient, during that
31 State fiscal year, to discharge all obligations anticipated
32 under Illinois prepaid tuition contracts. The Governor also
33 shall indicate in a separate document submitted concurrent with
34 each annual State budget the amount of moneys from the Illinois
35 Prepaid Tuition Trust Fund necessary to cover anticipated
36 expenses associated with administration of the program. The

 

 

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1 Commission shall obtain concurrence from a nationally
2 recognized actuary as to all amounts necessary for the program
3 to meet its obligations. These amounts shall be certified
4 annually to the Governor by the Commission no later than
5 January 30.
6     During the first 18 months of operation of the Illinois
7 prepaid tuition program, the Governor shall request an
8 appropriation to the Commission from general funds sufficient
9 to pay for start-up costs associated with establishment of the
10 program. This appropriation constitutes a loan that shall be
11 repaid to the General Revenue Fund within 5 years by the
12 Commission from prepaid tuition program contributions.
13 Subsequent program administrative costs shall be provided from
14 reasonable fees and charges equitably assessed to purchasers of
15 prepaid tuition contracts.
16     (e) If the Commission determines that there are
17 insufficient moneys in the Illinois Prepaid Tuition Trust Fund
18 to pay contractual obligations in the next succeeding fiscal
19 year, the Commission shall certify the amount necessary to meet
20 these obligations to the Board of Higher Education, the
21 Governor, the President of the Senate, and the Speaker of the
22 House of Representatives. The Governor shall submit the amount
23 so certified to the General Assembly as soon as practicable,
24 but no later than the end of the current State fiscal year.
25     (f) In the event the Commission, with the concurrence of
26 the Governor, determines the program to be financially
27 infeasible, the Commission may discontinue, prospectively, the
28 operation of the program. Any qualified beneficiary who has
29 been accepted by and is enrolled or will within 5 years enroll
30 at a MAP-eligible institution shall be entitled to exercise the
31 complete benefits specified in the Illinois prepaid tuition
32 contract. All other contract holders shall receive an
33 appropriate refund of all contributions and accrued interest up
34 to the time that the program is discontinued.
35 (Source: P.A. 93-56, eff. 7-1-03.)
 

 

 

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1     (110 ILCS 979/45)
2     Sec. 45. Illinois prepaid tuition contracts.
3     (a) The Commission may enter into an Illinois prepaid
4 tuition contract with a purchaser under which the Commission
5 contracts on behalf of the State to pay full tuition and
6 mandatory fees and, if the purchaser has opted, full room and
7 board charges at an Illinois public university or Illinois
8 community college for a qualified beneficiary to attend the
9 MAP-eligible institution to which the qualified beneficiary is
10 admitted. Each contract shall contain terms, conditions, and
11 provisions that the Commission determines to be necessary for
12 ensuring the educational objectives and sustainable financial
13 viability of the Illinois prepaid tuition program.
14     (b) Each contract shall have one designated purchaser and
15 one designated qualified beneficiary. Unless otherwise
16 specified in the contract, the purchaser owns the contract and
17 retains any tax liability for its assets only until the first
18 distribution of benefits. Once a partial benefit of the
19 contract has been disbursed, any tax liability attributable to
20 the contract and its assets becomes a tax liability of the
21 qualified beneficiary, unless otherwise specified in the
22 contract. Contracts shall be purchased in units of 15 credit
23 hours at any MAP-eligible institution.
24     (c) Without exception, benefits may be received by a
25 qualified beneficiary of an Illinois prepaid tuition contract
26 no earlier than 3 years from the date the contract is
27 purchased.
28     (d) A prepaid tuition contract shall contain, but is not
29 limited to, provisions for (i) refunds or withdrawals in
30 certain circumstances, with or without interest or penalties;
31 (ii) conversion of the contract at the time of distribution
32 from accrued prepayment value at one type of MAP-eligible
33 institution to the accrued prepayment value at a different type
34 of MAP-eligible institution; (iii) portability of the accrued
35 value of the prepayment value for use at an out-of-state higher
36 education institution; (iv) transferability of the contract

 

 

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1 benefits within the qualified beneficiary's immediate family;
2 and (v) a specified benefit period during which the contract
3 may be redeemed.
4     (e) Each Illinois prepaid tuition contract also shall
5 contain, at minimum, all of the following:
6         (1) The amount of payment or payments and the number of
7     payments required from a purchaser on behalf of a qualified
8     beneficiary.
9         (2) The terms and conditions under which purchasers
10     shall remit payments, including, but not limited to, the
11     date or dates upon which each payment shall be due.
12         (3) Provisions for late payment charges and for
13     default.
14         (4) Provisions for penalty fees payable incident to an
15     authorized withdrawal.
16         (5) The name, date of birth, and social security number
17     of the qualified beneficiary on whose behalf the contract
18     is drawn and the terms and conditions under which the
19     contract may be transferred to another qualified
20     beneficiary.
21         (6) The name and social security number of any person
22     who may terminate the contract, together with terms that
23     specify whether the contract may be terminated by the
24     purchaser, the qualified beneficiary, a specific
25     designated person, or any combination of these persons.
26         (7) The terms and conditions under which a contract may
27     be terminated, the name and social security number of the
28     person entitled to any refund due as a result of the
29     termination of the contract pursuant to those terms and
30     conditions, and the method for determining the amount of a
31     refund.
32         (8) The time limitations, if any, within which the
33     qualified beneficiary must claim his or her benefits
34     through the program.
35         (9) Other terms and conditions determined by the
36     Commission to be appropriate.

 

 

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1     (f) In addition to the contract provisions set forth in
2 subsection (e), each Illinois prepaid tuition contract shall
3 include:
4         (1) The number of credit hours contracted by the
5     purchaser.
6         (2) The type of MAP-eligible institution and the
7     prepaid tuition plan toward which the credit hours shall be
8     applied.
9         (3) The explicit contractual obligation of the
10     Commission to the qualified beneficiary to provide a
11     specific number of credit hours of undergraduate
12     instruction at a MAP-eligible institution, not to exceed
13     the maximum number of credit hours required for the
14     conference of a degree that corresponds to the plan
15     purchased on behalf of the qualified beneficiary.
16     (g) The Commission shall indicate by rule the conditions
17 under which refunds are payable to a contract purchaser.
18 Generally, no refund shall exceed the amount paid into the
19 Illinois Prepaid Tuition Trust Fund by the purchaser. In the
20 event that a contract is converted from a Public University
21 Plan described in subsection (j) of this Section to a Community
22 College Plan described in subsection (k) of this Section, the
23 refund amount shall be reduced by the amount transferred to the
24 Illinois community college on behalf of the qualified
25 beneficiary. Except where the Commission may otherwise rule,
26 refunds may exceed the amount paid into the Illinois Prepaid
27 Tuition Trust Fund only under the following circumstances:
28         (1) If the qualified beneficiary is awarded a grant or
29     scholarship at a public institution of higher education,
30     the terms of which duplicate the benefits included in the
31     Illinois prepaid tuition contract, then moneys paid for the
32     purchase of the contract shall be returned to the
33     purchaser, upon request, in semester installments that
34     coincide with the matriculation by the qualified
35     beneficiary, in an amount equal to the current cost of
36     tuition and mandatory fees and, if applicable, current room

 

 

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1     and board charges at the MAP-eligible institution where the
2     qualified beneficiary is enrolled.
3         (1.5) If the qualified beneficiary is awarded a grant
4     or scholarship while enrolled at either a MAP-eligible
5     nonpublic institution of higher education or an eligible
6     public or private out-of-state higher education
7     institution, the terms of which duplicate the benefits
8     included in the Illinois prepaid tuition contract, then
9     money paid for the purchase of the contract shall be
10     returned to the purchaser, upon request, in semester
11     installments that coincide with the matriculation by the
12     qualified beneficiary. The amount paid shall not exceed the
13     current average mean-weighted credit hour value of the
14     registration fees purchased under the contract.
15         (2) In the event of the death or total disability of
16     the qualified beneficiary, moneys paid for the purchase of
17     the Illinois prepaid tuition contract shall be returned to
18     the purchaser together with all accrued earnings.
19         (3) If an Illinois prepaid tuition contract is
20     converted from a Public University Plan to a Community
21     College Plan, then the amount refunded shall be the value
22     of the original Illinois prepaid tuition contract minus the
23     value of the contract after conversion.
24     No refund shall be authorized under an Illinois prepaid
25 tuition contract for any semester partially attended but not
26 completed.
27     The Commission, by rule, shall set forth specific
28 procedures for making contract payments in conjunction with
29 grants and scholarships awarded to contract beneficiaries.
30     Moneys paid into or out of the Illinois Prepaid Tuition
31 Trust Fund by or on behalf of the purchaser or the qualified
32 beneficiary of an Illinois prepaid tuition contract are exempt
33 from all claims of creditors of the purchaser or beneficiary,
34 so long as the contract has not been terminated.
35     The State or any State agency, county, municipality, or
36 other political subdivision, by contract or collective

 

 

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1 bargaining agreement, may agree with any employee to remit
2 payments toward the purchase of Illinois prepaid tuition
3 contracts through payroll deductions made by the appropriate
4 officer or officers of the entity making the payments. Such
5 payments shall be held and administered in accordance with this
6 Act.
7     (h) Nothing in this Act shall be construed as a promise or
8 guarantee that a qualified beneficiary will be admitted to a
9 MAP-eligible institution or to a particular MAP-eligible
10 institution, will be allowed to continue enrollment at a
11 MAP-eligible institution after admission, or will be graduated
12 from a MAP-eligible institution.
13     (i) The Commission shall develop and make prepaid tuition
14 contracts available under a minimum of at least 2 independent
15 plans to be known as the Public University Plan and the
16 Community College Plan.
17     Contracts shall be purchased in units of 15 credit hours at
18 either an Illinois public university or an Illinois community
19 college. The minimum purchase amount per qualified beneficiary
20 shall be one unit or 15 credit hours. The maximum purchase
21 amount shall be 9 units (or 135 credit hours) for the Public
22 University Plan and 4 units (or 60 credit hours) for the
23 Community College Plan.
24     (j) Public University Plan. Through the Public University
25 Plan, the Illinois prepaid tuition contract shall provide
26 prepaid registration fees, which include full tuition costs as
27 well as mandatory fees and, if applicable, full room and board
28 charges, for a specified number of undergraduate credit hours,
29 not to exceed the maximum number of credit hours required for
30 the conference of a baccalaureate degree. In determining the
31 cost of participation in the Public University Plan, the
32 Commission shall reference the combined mean-weighted current
33 registration fees from all Illinois public universities.
34     In the event that a qualified beneficiary for whatever
35 reason chooses to attend an Illinois community college, the
36 qualified beneficiary may convert the average number of credit

 

 

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1 hours required for the conference of an associate degree from
2 the Public University Plan to the Community College Plan and
3 may retain the remaining Public University Plan credit hours or
4 may request a refund for prepaid credit hours in excess of
5 those required for conference of an associate degree. In
6 determining the amount of any refund, the Commission also shall
7 recognize the current relative credit hour cost of the 2 plans
8 when making any conversion.
9     Qualified beneficiaries shall bear the cost of any
10 laboratory or other non-mandatory fees associated with
11 enrollment in specific courses. Qualified beneficiaries who
12 are not Illinois residents shall bear the difference in cost
13 between in-state registration fees guaranteed by the prepaid
14 tuition contract and tuition and other charges (including, if
15 applicable, room and board charges) assessed upon out-of-state
16 students by the MAP-eligible institution.
17     (k) Community College Plan. Through the Community College
18 Plan, the Illinois prepaid tuition contract shall provide
19 prepaid registration fees, which include full tuition costs as
20 well as mandatory fees and, if applicable, full room and board
21 charges, for a specified number of undergraduate credit hours,
22 not to exceed the maximum number of credit hours required for
23 the conference of an associate degree. In determining the cost
24 of participation in the Community College Plan, the Commission
25 shall reference the combined mean-weighted current
26 registration fees from all Illinois community colleges.
27     In the event that a qualified beneficiary for whatever
28 reason chooses to attend an Illinois public university, the
29 qualified beneficiary's prepaid tuition contract shall be
30 converted for use at that Illinois public university by
31 referencing the current average mean-weighted credit hour
32 value of registration fees at Illinois community colleges
33 relative to the corresponding value of registration fees at
34 Illinois public universities.
35     Qualified beneficiaries shall bear the cost of any
36 laboratory or other non-mandatory fees associated with

 

 

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1 enrollment in specific courses. Qualified beneficiaries who
2 are not Illinois residents shall bear the difference in cost
3 between in-state registration fees guaranteed by the prepaid
4 tuition contract and tuition and other charges (including, if
5 applicable, room and board charges) assessed upon out-of-state
6 students by the MAP-eligible institution.
7     (l) A qualified beneficiary may apply the benefits of any
8 Illinois prepaid tuition contract toward a nonpublic
9 institution of higher education. In the event that a qualified
10 beneficiary for whatever reason chooses to attend a nonpublic
11 institution of higher education, the qualified beneficiary's
12 prepaid tuition contract shall be converted for use at that
13 nonpublic institution of higher education by referencing the
14 current average mean-weighted credit hour value of
15 registration fees purchased under the contract. The Commission
16 shall transfer, or cause to have transferred, this amount, less
17 a transfer fee, to the nonpublic institution on behalf of the
18 beneficiary. In the event that the cost of registration
19 (including, if applicable, room and board charges) charged to
20 the beneficiary at the nonpublic institution of higher
21 education is less than the aggregate value of the Illinois
22 prepaid tuition contract, any remaining amount shall be
23 transferred in subsequent semesters until the transfer value is
24 fully depleted.
25     (m) A qualified beneficiary may apply the benefits of any
26 Illinois prepaid tuition contract toward an eligible
27 out-of-state college or university. Institutional eligibility
28 for out-of-state colleges and universities shall be determined
29 by the Commission, but in making those determinations the
30 Commission shall recognize that the benefits of an Illinois
31 prepaid tuition contract may not be used at any postsecondary
32 educational institution that is both operated for-profit and
33 located outside of Illinois. In the event that a qualified
34 beneficiary for whatever reason chooses to attend an eligible
35 out-of-state college or university, the qualified
36 beneficiary's prepaid tuition contract shall be converted for

 

 

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1 use at that college or university by referencing the current
2 average mean-weighted credit hour value of registration fees
3 purchased under the contract. The Commission shall transfer, or
4 cause to have transferred, this amount, less a transfer fee, to
5 the college or university on behalf of the beneficiary. In the
6 event that the cost of registration (including, if applicable,
7 room and board charges) charged to the beneficiary at the
8 eligible out-of-state college or university is less than the
9 aggregate value of the Illinois prepaid tuition contract, any
10 remaining amount shall be transferred in subsequent semesters
11 until the transfer value is fully depleted.
12     (n) Illinois prepaid tuition contracts may be purchased
13 either by lump sum or by installments. No penalty shall be
14 assessed for early payment of installment contracts.
15     (o) The Commission shall annually adjust the price of new
16 contracts, in accordance with the annual changes in
17 registration fees at Illinois public universities and
18 community colleges.
19 (Source: P.A. 92-165, eff. 7-26-01; 93-56, eff. 7-1-03.)
 
20     Section 99. Effective date. This Act takes effect upon
21 becoming law.