Public Act 095-0217
 
HB1656 Enrolled LRB095 09329 NHT 29523 b

    AN ACT concerning education.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Prepaid Tuition Act is amended by
changing Sections 5 and 45 as follows:
 
    (110 ILCS 979/5)
    Sec. 5. Purpose. The General Assembly finds and declares
that the general welfare and security of the State are enhanced
by access to higher education for all residents of the State
who desire that education and who demonstrate the
qualifications necessary to pursue that education.
Furthermore, it is desirable that residents of the State who
seek to pursue higher education be able to choose attendance at
the higher education institution that offers programs and
services most suitable to their needs. Accordingly, endeavors
that serve the higher education needs of the people of the
State represent an essential function of State government.
    During the past decade, students have been paying more and
borrowing more to finance the increasing cost of higher
education at Illinois colleges and universities as well as at
similar institutions nationwide. Federal and state
governments' capacity to fund college scholarships and grants
cannot fully meet the current and future demand for higher
education nor is it reasonable to expect that paying for
college is solely a governmental responsibility. It is -- and
has always been -- a shared responsibility among the student,
the family, State government, and the federal government.
Consequently, the intent of this Act is to both encourage and
better enable Illinois families to help themselves finance the
cost of higher education, specifically through a program that
provides Illinois families with a method of State tax-free and
federally tax-exempt tax-deferred savings for higher education
college tuition.
(Source: P.A. 90-546, eff. 12-1-97.)
 
    (110 ILCS 979/45)
    Sec. 45. Illinois prepaid tuition contracts.
    (a) The Commission may enter into an Illinois prepaid
tuition contract with a purchaser under which the Commission
contracts on behalf of the State to pay full tuition and
mandatory fees at an Illinois public university or Illinois
community college for a qualified beneficiary to attend the
MAP-eligible institution to which the qualified beneficiary is
admitted. Each contract shall contain terms, conditions, and
provisions that the Commission determines to be necessary for
ensuring the educational objectives and sustainable financial
viability of the Illinois prepaid tuition program.
    (b) Each contract shall have one designated purchaser and
one designated qualified beneficiary. Unless otherwise
specified in the contract, the purchaser owns the contract and
retains any tax liability for its assets only until the first
distribution of benefits. Once a partial benefit of the
contract has been disbursed, any tax liability attributable to
the contract and its assets becomes a tax liability of the
qualified beneficiary, unless otherwise specified in the
contract. Contracts shall be purchased in units of 15 credit
hours at any MAP-eligible institution.
    (c) Without exception, benefits may be received by a
qualified beneficiary of an Illinois prepaid tuition contract
no earlier than 3 years from the date the contract is
purchased.
    (d) A prepaid tuition contract shall contain, but is not
limited to, provisions for (i) refunds or withdrawals in
certain circumstances, with or without interest or penalties;
(ii) conversion of the contract at the time of distribution
from accrued prepayment value at one type of MAP-eligible
institution to the accrued prepayment value at a different type
of MAP-eligible institution; (iii) portability of the accrued
value of the prepayment value for use at an out-of-state higher
education institution; (iv) transferability of the contract
benefits within the qualified beneficiary's immediate family;
and (v) a specified benefit period during which the contract
may be redeemed.
    (e) Each Illinois prepaid tuition contract also shall
contain, at minimum, all of the following:
        (1) The amount of payment or payments and the number of
    payments required from a purchaser on behalf of a qualified
    beneficiary.
        (2) The terms and conditions under which purchasers
    shall remit payments, including, but not limited to, the
    date or dates upon which each payment shall be due.
        (3) Provisions for late payment charges and for
    default.
        (4) Provisions for penalty fees payable incident to an
    authorized withdrawal.
        (5) The name, date of birth, and social security number
    of the qualified beneficiary on whose behalf the contract
    is drawn and the terms and conditions under which the
    contract may be transferred to another qualified
    beneficiary.
        (6) The name and social security number of any person
    who may terminate the contract, together with terms that
    specify whether the contract may be terminated by the
    purchaser, the qualified beneficiary, a specific
    designated person, or any combination of these persons.
        (7) The terms and conditions under which a contract may
    be terminated, the name and social security number of the
    person entitled to any refund due as a result of the
    termination of the contract pursuant to those terms and
    conditions, and the method for determining the amount of a
    refund.
        (8) The time limitations, if any, within which the
    qualified beneficiary must claim his or her benefits
    through the program.
        (9) Other terms and conditions determined by the
    Commission to be appropriate.
    (f) In addition to the contract provisions set forth in
subsection (e), each Illinois prepaid tuition contract shall
include:
        (1) The number of credit hours contracted by the
    purchaser.
        (2) The type of MAP-eligible institution and the
    prepaid tuition plan toward which the credit hours shall be
    applied.
        (3) The explicit contractual obligation of the
    Commission to the qualified beneficiary to provide a
    specific number of credit hours of undergraduate
    instruction at a MAP-eligible institution, not to exceed
    the maximum number of credit hours required for the
    conference of a degree that corresponds to the plan
    purchased on behalf of the qualified beneficiary.
    (g) The Commission shall indicate by rule the conditions
under which refunds are payable to a contract purchaser.
Generally, no refund shall exceed the amount paid into the
Illinois Prepaid Tuition Trust Fund by the purchaser. In the
event that a contract is converted from a Public University
Plan described in subsection (j) of this Section to a Community
College Plan described in subsection (k) of this Section, the
refund amount shall be reduced by the amount transferred to the
Illinois community college on behalf of the qualified
beneficiary. Except where the Commission may otherwise rule,
refunds may exceed the amount paid into the Illinois Prepaid
Tuition Trust Fund only under the following circumstances:
        (1) If the qualified beneficiary is awarded a grant or
    scholarship at a public institution of higher education,
    the terms of which duplicate the benefits included in the
    Illinois prepaid tuition contract, then moneys paid for the
    purchase of the contract shall be returned to the
    purchaser, upon request, in semester installments that
    coincide with the matriculation by the qualified
    beneficiary, in an amount equal to the current cost of
    tuition and mandatory fees at the MAP-eligible institution
    where the qualified beneficiary is enrolled.
        (1.5) If the qualified beneficiary is awarded a grant
    or scholarship while enrolled at either a MAP-eligible
    nonpublic institution of higher education or an eligible
    public or private out-of-state higher education
    institution, the terms of which duplicate the benefits
    included in the Illinois prepaid tuition contract, then
    money paid for the purchase of the contract shall be
    returned to the purchaser, upon request, in semester
    installments that coincide with the matriculation by the
    qualified beneficiary. The amount paid shall not exceed the
    current average mean-weighted credit hour value of the
    registration fees purchased under the contract.
        (2) In the event of the death or total disability of
    the qualified beneficiary, moneys paid for the purchase of
    the Illinois prepaid tuition contract shall be returned to
    the purchaser together with all accrued earnings.
        (3) If an Illinois prepaid tuition contract is
    converted from a Public University Plan to a Community
    College Plan, then the amount refunded shall be the value
    of the original Illinois prepaid tuition contract minus the
    value of the contract after conversion.
    No refund shall be authorized under an Illinois prepaid
tuition contract for any semester partially attended but not
completed.
    The Commission, by rule, shall set forth specific
procedures for making contract payments in conjunction with
grants and scholarships awarded to contract beneficiaries.
    Moneys paid into or out of the Illinois Prepaid Tuition
Trust Fund by or on behalf of the purchaser or the qualified
beneficiary of an Illinois prepaid tuition contract are exempt
from all claims of creditors of the purchaser or beneficiary,
so long as the contract has not been terminated.
    The State or any State agency, county, municipality, or
other political subdivision, by contract or collective
bargaining agreement, may agree with any employee to remit
payments toward the purchase of Illinois prepaid tuition
contracts through payroll deductions made by the appropriate
officer or officers of the entity making the payments. Such
payments shall be held and administered in accordance with this
Act.
    (h) Nothing in this Act shall be construed as a promise or
guarantee that a qualified beneficiary will be admitted to a
MAP-eligible institution or to a particular MAP-eligible
institution, will be allowed to continue enrollment at a
MAP-eligible institution after admission, or will be graduated
from a MAP-eligible institution.
    (i) The Commission shall develop and make prepaid tuition
contracts available under a minimum of at least 2 independent
plans to be known as the Public University Plan and the
Community College Plan.
    Contracts shall be purchased in units of 15 credit hours at
either an Illinois public university or an Illinois community
college. The minimum purchase amount per qualified beneficiary
shall be one unit or 15 credit hours. The maximum purchase
amount shall be 9 units (or 135 credit hours) for the Public
University Plan and 4 units (or 60 credit hours) for the
Community College Plan.
    (j) Public University Plan. Through the Public University
Plan, the Illinois prepaid tuition contract shall provide
prepaid registration fees, which include full tuition costs as
well as mandatory fees, for a specified number of undergraduate
credit hours, not to exceed the maximum number of credit hours
required for the conference of a baccalaureate degree. In
determining the cost of participation in the Public University
Plan, the Commission shall reference the combined
mean-weighted current registration fees from all Illinois
public universities.
    In the event that a qualified beneficiary for whatever
reason chooses to attend an Illinois community college, the
qualified beneficiary may convert the average number of credit
hours required for the conference of an associate degree from
the Public University Plan to the Community College Plan and
may retain the remaining Public University Plan credit hours or
may request a refund for prepaid credit hours in excess of
those required for conference of an associate degree. In
determining the amount of any refund, the Commission also shall
recognize the current relative credit hour cost of the 2 plans
when making any conversion.
    Qualified beneficiaries shall bear the cost of any
laboratory or other non-mandatory fees associated with
enrollment in specific courses. Qualified beneficiaries who
are not Illinois residents shall bear the difference in cost
between in-state registration fees guaranteed by the prepaid
tuition contract and tuition and other charges assessed upon
out-of-state students by the MAP-eligible institution.
    (k) Community College Plan. Through the Community College
Plan, the Illinois prepaid tuition contract shall provide
prepaid registration fees, which include full tuition costs as
well as mandatory fees, for a specified number of undergraduate
credit hours, not to exceed the maximum number of credit hours
required for the conference of an associate degree. In
determining the cost of participation in the Community College
Plan, the Commission shall reference the combined
mean-weighted current registration fees from all Illinois
community colleges.
    In the event that a qualified beneficiary for whatever
reason chooses to attend an Illinois public university, the
qualified beneficiary's prepaid tuition contract shall be
converted for use at that Illinois public university by
referencing the current average mean-weighted credit hour
value of registration fees at Illinois community colleges
relative to the corresponding value of registration fees at
Illinois public universities.
    Qualified beneficiaries shall bear the cost of any
laboratory or other non-mandatory fees associated with
enrollment in specific courses. Qualified beneficiaries who
are not Illinois residents shall bear the difference in cost
between in-state registration fees guaranteed by the prepaid
tuition contract and tuition and other charges assessed upon
out-of-state students by the MAP-eligible institution.
    (l) A qualified beneficiary may apply the benefits of any
Illinois prepaid tuition contract toward a nonpublic
institution of higher education. In the event that a qualified
beneficiary for whatever reason chooses to attend a nonpublic
institution of higher education, the qualified beneficiary's
prepaid tuition contract shall be converted for use at that
nonpublic institution of higher education by referencing the
current average mean-weighted credit hour value of
registration fees purchased under the contract. The Commission
shall transfer, or cause to have transferred, this amount, less
a transfer fee, to the nonpublic institution on behalf of the
beneficiary. In the event that the cost of registration charged
to the beneficiary at the nonpublic institution of higher
education is less than the aggregate value of the Illinois
prepaid tuition contract, any remaining amount shall be
transferred in subsequent semesters until the transfer value is
fully depleted.
    (m) A qualified beneficiary may apply the benefits of any
Illinois prepaid tuition contract toward an eligible
out-of-state college or university. Institutional eligibility
for out-of-state colleges and universities shall be determined
by the Commission, but in making those determinations the
Commission shall recognize that the benefits of an Illinois
prepaid tuition contract may not be used at any postsecondary
educational institution that is both operated for-profit and
located outside of Illinois. In the event that a qualified
beneficiary for whatever reason chooses to attend an eligible
out-of-state college or university, the qualified
beneficiary's prepaid tuition contract shall be converted for
use at that college or university by referencing the current
average mean-weighted credit hour value of registration fees
purchased under the contract. The Commission shall transfer, or
cause to have transferred, this amount, less a transfer fee, to
the college or university on behalf of the beneficiary. In the
event that the cost of registration charged to the beneficiary
at the eligible out-of-state college or university is less than
the aggregate value of the Illinois prepaid tuition contract,
any remaining amount shall be transferred in subsequent
semesters until the transfer value is fully depleted.
    (n) Illinois prepaid tuition contracts may be purchased
either by lump sum or by installments. No penalty shall be
assessed for early payment of installment contracts.
    (o) The Commission shall annually adjust the price of new
contracts, in accordance with the annual changes in
registration fees at Illinois public universities and
community colleges.
(Source: P.A. 92-165, eff. 7-26-01; 93-56, eff. 7-1-03.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.