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92_HB0841eng HB0841 Engrossed LRB9202509NTsb 1 AN ACT in relation to 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 5 by changing Section 45 as follows: 6 (110 ILCS 979/45) 7 Sec. 45. Illinois prepaid tuition contracts. 8 (a) The Commission may enter into an Illinois prepaid 9 tuition contract with a purchaser under which the Commission 10 contracts on behalf of the State to pay full tuition and 11 mandatory fees at an Illinois public university or Illinois 12 community college for a qualified beneficiary to attend the 13 MAP-eligible institution to which the qualified beneficiary 14 is admitted. Each contract shall contain terms, conditions, 15 and provisions that the Commission determines to be necessary 16 for ensuring the educational objectives and sustainable 17 financial viability of the Illinois prepaid tuition program. 18 (b) Each contract shall have one designated purchaser 19 and one designated qualified beneficiary. Unless otherwise 20 specified in the contract, the purchaser owns the contract 21 and retains any tax liability for its assets only until the 22 first distribution of benefits. Once a partial benefit of the 23 contract has been disbursed, any tax liability attributable 24 to the contract and its assets becomes a tax liability of the 25 qualified beneficiary, unless otherwise specified in the 26 contract. Contracts shall be purchased in units of 15 credit 27 hours at any MAP-eligible institution. 28 (c) Without exception, benefits may be received by a 29 qualified beneficiary of an Illinois prepaid tuition contract 30 no earlier than 3 years from the date the contract is 31 purchased. HB0841 Engrossed -2- LRB9202509NTsb 1 (d) A prepaid tuition contract shall contain, but is not 2 limited to, provisions for (i) refunds or withdrawals in 3 certain circumstances, with or without interest or penalties; 4 (ii) conversion of the contract at the time of distribution 5 from accrued prepayment value at one type of MAP-eligible 6 institution to the accrued prepayment value at a different 7 type of MAP-eligible institution; (iii) portability of the 8 accrued value of the prepayment value for use at an 9 out-of-state higher education institution; (iv) 10 transferability of the contract benefits within the qualified 11 beneficiary's immediate family; and (v) a specified benefit 12 period during which the contract may be redeemed. 13 (e) Each Illinois prepaid tuition contract also shall 14 contain, at minimum, all of the following: 15 (1) The amount of payment or payments and the 16 number of payments required from a purchaser on behalf of 17 a qualified beneficiary. 18 (2) The terms and conditions under which purchasers 19 shall remit payments, including, but not limited to, the 20 date or dates upon which each payment shall be due. 21 (3) Provisions for late payment charges and for 22 default. 23 (4) Provisions for penalty fees payable incident to 24 an authorized withdrawal. 25 (5) The name, date of birth, and social security 26 number of the qualified beneficiary on whose behalf the 27 contract is drawn and the terms and conditions under 28 which the contract may be transferred to another 29 qualified beneficiary. 30 (6) The name and social security number of any 31 person who may terminate the contract, together with 32 terms that specify whether the contract may be terminated 33 by the purchaser, the qualified beneficiary, a specific 34 designated person, or any combination of these persons. HB0841 Engrossed -3- LRB9202509NTsb 1 (7) The terms and conditions under which a contract 2 may be terminated, the name and social security number of 3 the person entitled to any refund due as a result of the 4 termination of the contract pursuant to those terms and 5 conditions, and the method for determining the amount of 6 a refund. 7 (8) The time limitations, if any, within which the 8 qualified beneficiary must claim his or her benefits 9 through the program. 10 (9) Other terms and conditions determined by the 11 Commission to be appropriate. 12 (f) In addition to the contract provisions set forth in 13 subsection (e), each Illinois prepaid tuition contract shall 14 include: 15 (1) The number of credit hours contracted by the 16 purchaser. 17 (2) The type of MAP-eligible institution and the 18 prepaid tuition plan toward which the credit hours shall 19 be applied. 20 (3) The explicit contractual obligation of the 21 Commission to the qualified beneficiary to provide a 22 specific number of credit hours of undergraduate 23 instruction at a MAP-eligible institution, not to exceed 24 the median number of credit hours required for the 25 conference of a degree that corresponds to the plan 26 purchased on behalf of the qualified beneficiary. 27 (g) The Commission shall indicate by rule the conditions 28 under which refunds are payable to a contract purchaser. 29 Generally, no refund shall exceed the amount paid into the 30 Illinois Prepaid Tuition Trust Fund by the purchaser. In the 31 event that a contract is converted from a Public University 32 Plan described in subsection (j) of this Section to a 33 Community College Plan described in subsection (k) of this 34 Section, the refund amount shall be reduced by the amount HB0841 Engrossed -4- LRB9202509NTsb 1 transferred to the Illinois community college on behalf of 2 the qualified beneficiary. Except where the Commission may 3 otherwise rule, refunds may exceed the amount paid into the 4 Illinois Prepaid Tuition Trust Fund only under the following 5 circumstances: 6 (1) If the qualified beneficiary is awarded a grant 7 or scholarship at a public institution of higher 8 education, the terms of which duplicate the benefits 9 included in the Illinois prepaid tuition contract, then 10 moneys paid for the purchase of the contract shall be 11 returned to the purchaser, upon request, in semester 12 installments that coincide with the matriculation by the 13 qualified beneficiary, in an amount equal tothe lesser14of (i) the original purchase price plus 2% interest15compounded annually, or (ii)the current cost of tuition 16 and mandatory fees at the MAP-eligible institution where 17 the qualified beneficiary is enrolled. 18 (1.5) If the qualified beneficiary is awarded a 19 grant or scholarship while enrolled at either a 20 MAP-eligible nonpublic institution of higher education or 21 an eligible public or private out-of-state higher 22 education institution, the terms of which duplicate the 23 benefits included in the Illinois prepaid tuition 24 contract, then money paid for the purchase of the 25 contract shall be returned to the purchaser, upon 26 request, in semester installments that coincide with the 27 matriculation by the qualified beneficiary. The amount 28 paid shall not exceed the current average mean-weighted 29 credit hour value of the registration fees purchased 30 under the contract. 31 (2) In the event of the death or total disability 32 of the qualified beneficiary, moneys paid for the 33 purchase of the Illinois prepaid tuition contract shall 34 be returned to the purchaser together with all accrued HB0841 Engrossed -5- LRB9202509NTsb 1 earnings. 2 (3) If an Illinois prepaid tuition contract is 3 converted from a Public University Plan to a Community 4 College Plan, then the amount refunded shall be the value 5 of the original Illinois prepaid tuition contract minus 6 the value of the contract after conversion. 7 No refund shall be authorized under an Illinois prepaid 8 tuition contract for any semester partially attended but not 9 completed. 10 The Commission, by rule, shall set forth specific 11 procedures for making contract payments in conjunction with 12 grants and scholarships awarded to contract beneficiaries. 13 Moneys paid into or out of the Illinois Prepaid Tuition 14 Trust Fund by or on behalf of the purchaser or the qualified 15 beneficiary of an Illinois prepaid tuition contract are 16 exempt from all claims of creditors of the purchaser or 17 beneficiary, so long as the contract has not been terminated. 18 The State or any State agency, county, municipality, or 19 other political subdivision, by contract or collective 20 bargaining agreement, may agree with any employee to remit 21 payments toward the purchase of Illinois prepaid tuition 22 contracts through payroll deductions made by the appropriate 23 officer or officers of the entity making the payments. Such 24 payments shall be held and administered in accordance with 25 this Act. 26 (h) Nothing in this Act shall be construed as a promise 27 or guarantee that a qualified beneficiary will be admitted to 28 a MAP-eligible institution or to a particular MAP-eligible 29 institution, will be allowed to continue enrollment at a 30 MAP-eligible institution after admission, or will be 31 graduated from a MAP-eligible institution. 32 (i) The Commission shall develop and make prepaid 33 tuition contracts available under a minimum of at least 2 34 independent plans to be known as the Public University Plan HB0841 Engrossed -6- LRB9202509NTsb 1 and the Community College Plan. 2 Contracts shall be purchased in units of 15 credit hours 3 at either an Illinois public university or an Illinois 4 community college. The minimum purchase amount per qualified 5 beneficiary shall be one unit or 15 credit hours. The 6 maximum purchase amount shall be 9 units (or 135 credit 7 hours) for the Public University Plan and 4 units (or 60 8 credit hours) for the Community College Plan. 9 (j) Public University Plan. Through the Public 10 University Plan, the Illinois prepaid tuition contract shall 11 provide prepaid registration fees, which include full tuition 12 costs as well as mandatory fees, for a specified number of 13 undergraduate credit hours, not to exceed the maximum number 14 of credit hours required for the conference of a 15 baccalaureate degree. In determining the cost of 16 participation in the Public University Plan, the Commission 17 shall reference the combined mean-weighted current 18 registration fees from all Illinois public universities. 19 In the event that a qualified beneficiary for whatever 20 reason chooses to attend an Illinois community college, the 21 qualified beneficiary may convert the average number of 22 credit hours required for the conference of an associate 23 degree from the Public University Plan to the Community 24 College Plan and may retain the remaining Public University 25 Plan credit hours or may request a refund for prepaid credit 26 hours in excess of those required for conference of an 27 associate degree. In determining the amount of any refund, 28 the Commission also shall recognize the current relative 29 credit hour cost of the 2 plans when making any conversion. 30 Qualified beneficiaries shall bear the cost of any 31 laboratory or other non-mandatory fees associated with 32 enrollment in specific courses. Qualified beneficiaries who 33 are not Illinois residents shall bear the difference in cost 34 between in-state registration fees guaranteed by the prepaid HB0841 Engrossed -7- LRB9202509NTsb 1 tuition contract and tuition and other charges assessed upon 2 out-of-state students by the MAP-eligible institution. 3 (k) Community College Plan. Through the Community 4 College Plan, the Illinois prepaid tuition contract shall 5 provide prepaid registration fees, which include full tuition 6 costs as well as mandatory fees, for a specified number of 7 undergraduate credit hours, not to exceed the maximum number 8 of credit hours required for the conference of an associate 9 degree. In determining the cost of participation in the 10 Community College Plan, the Commission shall reference the 11 combined mean-weighted current registration fees from all 12 Illinois community colleges. 13 In the event that a qualified beneficiary for whatever 14 reason chooses to attend an Illinois public university, the 15 qualified beneficiary's prepaid tuition contract shall be 16 converted for use at that Illinois public university by 17 referencing the current average mean-weighted credit hour 18 value of registration fees at Illinois community colleges 19 relative to the corresponding value of registration fees at 20 Illinois public universities. 21 Qualified beneficiaries shall bear the cost of any 22 laboratory or other non-mandatory fees associated with 23 enrollment in specific courses. Qualified beneficiaries who 24 are not Illinois residents shall bear the difference in cost 25 between in-state registration fees guaranteed by the prepaid 26 tuition contract and tuition and other charges assessed upon 27 out-of-state students by the MAP-eligible institution. 28 (l) A qualified beneficiary may apply the benefits of 29 any Illinois prepaid tuition contract toward a nonpublic 30 institution of higher education. In the event that a 31 qualified beneficiary for whatever reason chooses to attend a 32 nonpublic institution of higher education, the qualified 33 beneficiary's prepaid tuition contract shall be converted for 34 use at that nonpublic institution of higher education by HB0841 Engrossed -8- LRB9202509NTsb 1 referencing the current average mean-weighted credit hour 2 value of registration fees purchased under the contract. The 3 Commission shall transfer, or cause to have transferred, this 4 amount, less a transfer fee, to the nonpublic institution on 5 behalf of the beneficiary. In the event that the cost of 6 registration charged to the beneficiary at the nonpublic 7 institution of higher education is less than the aggregate 8 value of the Illinois prepaid tuition contract, any remaining 9 amount shall be transferred in subsequent semesters until the 10 transfer value is fully depleted. 11 (m) A qualified beneficiary may apply the benefits of 12 any Illinois prepaid tuition contract toward an eligible 13 out-of-state college or university. Institutional eligibility 14 for out-of-state colleges and universities shall be 15 determined by the Commission, but in making those 16 determinations the Commission shall recognize that the 17 benefits of an Illinois prepaid tuition contract may not be 18 used at any postsecondary educational institution that is 19 both operated for-profit and located outside of Illinois. In 20 the event that a qualified beneficiary for whatever reason 21 chooses to attend an eligible out-of-state college or 22 university, the qualified beneficiary's prepaid tuition 23 contract shall be converted for use at that college or 24 university by referencing the current average mean-weighted 25 credit hour value of registration fees purchased under the 26 contract. The Commission shall transfer, or cause to have 27 transferred, this amount, less a transfer fee, to the college 28 or university on behalf of the beneficiary. In the event 29 that the cost of registration charged to the beneficiary at 30 the eligible out-of-state college or university is less than 31 the aggregate value of the Illinois prepaid tuition contract, 32 any remaining amount shall be transferred in subsequent 33 semesters until the transfer value is fully depleted. 34 (n) Illinois prepaid tuition contracts may be purchased HB0841 Engrossed -9- LRB9202509NTsb 1 either by lump sum or by installments. All installment 2 contracts shall be for 5 years, except that contracts that 3 purchase at least 120 credit hours may be payable, by 4 installments, over a 10-year period. No penalty shall be 5 assessed for early payment of installment contracts. 6 (o) The Commission shall annually adjust the price of 7 new contracts, in accordance with the annual changes in 8 registration fees at Illinois public universities and 9 community colleges. 10 (Source: P.A. 90-546, eff. 12-1-97.) 11 Section 99. Effective date. This Act takes effect upon 12 becoming law.