Section 7.122 - DefinitionsThe following words, terms, and phrases, when used in this subchapter, shall have the following meanings:
(1) Accredited out-of-state institution of higher education--A public or private institution of higher education that: (A) is located outside this state; and(B) is accredited by a recognized accrediting agency.(2) Beneficiary--The person designated under a prepaid tuition contract as the person entitled to apply one or more tuition units purchased under the contract to the payment of the person's undergraduate tuition and required fees at a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, medical and dental unit, career school, or accredited out-of-state institution of higher education.(3) Board--The Prepaid Higher Education Tuition Board.(4) Career school--A career school or college as defined by Education Code, § 132.001 that offers a two-year associate degree as approved by the Texas Higher Education Coordinating Board.(5) Eligible educational institution--A general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, medical and dental unit, career school, or accredited out-of-state institution of higher education, that qualify as eligible educational institutions under Internal Revenue Code, §529.(6) Enrollment period--The period established by the board during which a purchaser may enter into a contract with the board to purchase tuition units. The general enrollment period is September 1 through the end of February. For beneficiaries who are newborn infants under one year of age at the time of enrollment, the enrollment period is extended to cover the period of September 1 through July 31.(7) First payment due date--The date the first payment is due after enrolling in the program and establishing a new prepaid tuition contract. The first payment due date will be specified in the prepaid tuition contract. The first payment due date serves as the anniversary date for establishing the three-year holding period. The first payment due date may be changed subsequently by the board for future enrollment periods.(8) Fund--The Texas Tomorrow Fund II.(9) General academic teaching institution--Has the meaning assigned by Education Code, § 61.003, except that the term does not include a public state college.(10) Matriculation--Enrollment as a member of the student body at an eligible educational institution.(11) Medical and dental unit, private or independent institution of higher education, public junior college, public state college, public technical institute, and recognized accrediting agency--Have the meanings assigned by Education Code, § 61.003.(12) Paid in full--All the required payments for the tuition units and any assessed fees under the prepaid tuition contract have been received and credited to the account.(13) Pay-As-You-Go--Purchasing tuition units at the price in effect for that type of tuition unit on the day payment is received for the tuition unit. Pay-As-You-Go includes paying for tuition units with a lump sum payment or multiple lump sum payments, without being obligated to pay for any additional tuition units.(14) Plan manager--A professional investment manager that is under contract with the board to serve as a plan administrator and to invest the assets of the fund on behalf of the board.(15) Prepaid tuition contract--A contract under which a person purchases from the board on behalf of a beneficiary one or more tuition units that the beneficiary is entitled to apply to the payment of the beneficiary's undergraduate tuition and required fees at a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, medical and dental unit, career school, or accredited out-of-state institution of higher education.(16) Prepayment--Payment of the balance due or a portion of the balance due under a prepaid tuition contract, ahead of the schedule provided in the contract.(17) Program or Plan--The prepaid tuition unit undergraduate education program. The board may select a different name for the program or plan for marketing purposes.(18) Purchaser--A person who enters into a prepaid tuition contract with the board on behalf of a beneficiary for the purchase of one or more tuition units.(19) Redemption--The exchange of one or more tuition units to pay costs of tuition and required fees at an eligible educational institution.(20) Reduced Refund Value--The lesser of:(A) the amount paid by the purchaser or other contributor to purchase any unused tuition units under the contract ; or(B) the amount paid by the Purchaser or other contributor to purchase any unused tuition units to be refunded under the contract, plus or minus the portion of the total net earnings or losses on assets of the Plan attributable to that amount.(21) Refund Value--An amount equal to the total purchase price of the unused tuition units to be refunded from the account, plus annual net earnings on the contributions made to the account to purchase the tuition units that are being refunded (including any negative returns), with the earnings rate to be set by the board at a rate that is up to two percent less than the actual investment return for the fund 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 five percent annually, and provided further that for any year in which the investment return does not support payment of any earnings, the board may elect not to credit and pay any earnings on the contributions, to preserve the actuarial soundness of the fund. Refund Value shall not be less than Reduced Refund Value that would have been paid if the Tuition Units had been held for less than three years. Refund Value does not include any state provided or procured matching contributions or any earnings on State provided or procured matching contributions.(22) Required fee--A fee, other than a laboratory fee for a specific course, that is charged by a public or private institution of higher education to all students at the institution who are not exempt from the fee. For purposes of this subdivision, a fee is a required fee only to the extent that the fee is considered a qualified higher education expense under Internal Revenue Code, §529. Required fees are generally those fees imposed on all students as a condition of enrollment. Required fees do not include fees such as equipment usage fees required for particular courses, charges for room and board, book costs, or any optional fees.(23) Sales period--The year long period from September 1 through August 31 during which a purchaser who has established a prepaid tuition contract may make purchases under the contract at the price(s) established under the contract, or at the price established for tuition units applicable to the sales period if additional tuition units are purchased during the sales period.(24) Three-year holding period--The period of time that must transpire before a beneficiary or purchaser may redeem a tuition unit to pay for qualified higher education expenses, as provided under § 7.125(g) of this title (relating to Redemption of Tuition Units).(25) Transfer value--The value of the prepaid tuition contract at the time of transfer, that is the lesser of: (A) an amount equal to the cost, at the time of the transfer, of the tuition and required fees that would be covered by redemption of the number and type of tuition units to be transferred from the account (but not including any units resulting from any State provided or procured matching funds) if the beneficiary were redeeming the units at a general academic teaching institution or two-year institution of higher education as follows:(i) for a Type I unit, at the general academic teaching institution that had the highest tuition and required fee cost;(ii) for a Type II unit, at a general academic teaching institution that had tuition and required fee cost at the weighted average; and(iii) for a Type III unit, at a two-year institution of higher education that had tuition and required fee cost at the weighted average; or(B) an amount equal to the current market value of the unused tuition units to be transferred from the account, which is an amount equal to the total purchase price of the unused tuition units to be transferred from the account (but not including any state provided or procured matching contributions), plus the portion of the total net earnings on assets of the Fund attributable to that amount (including any negative returns), but not including any earnings on state provided or procured matching contributions, as determined by the plan manager.(26) Tuition--The charges imposed by a general academic teaching institution, two-year institution of higher education, private or independent institution of higher education, medical and dental unit, career school, or accredited out-of-state institution of higher education, on undergraduates as a condition of enrollment, which are identified by such institution as tuition.(27) Tuition unit--A portion of the cost of undergraduate resident tuition and required fees that may be prepaid, whose assigned value, when used to pay the cost of tuition and required fees at an eligible educational institution, is equal to: (A) for a Type I tuition unit, one percent of the cost of undergraduate resident tuition and required fees for one academic year consisting of 30 semester hours charged by the general academic teaching institution with the highest such tuition and fee costs for the academic year in which the unit is redeemed, determined as provided by Education Code, § 54.753(d);(B) for a Type II tuition unit, one percent of the weighted average cost of undergraduate resident tuition and required fees for one academic year consisting of 30 semester hours charged by general academic teaching institutions for the academic year in which the unit is redeemed, determined as provided by Education Code, § 54.753(e); or(C) for a Type III tuition unit, one percent of the weighted average cost of undergraduate resident tuition and required fees for one academic year consisting of 30 semester hours charged by two-year institutions of higher education for the academic year in which the unit is redeemed, determined as provided by Education Code, § 54.753(f).(28) Two-year institution of higher education--A public junior college, a public state college, and a public technical institute, as those terms are defined in Education Code, § 61.003.(29) Weighted average--Has the meaning: (A) for Type II tuition units, a weighted average cost for undergraduate resident tuition and required fees of general academic teaching institutions for the applicable academic year, computed by the method specified in Education Code, § 54.753(e); and(B) for Type III tuition units, a weighted average cost for undergraduate resident tuition and required fees of two-year institutions of higher education for the applicable academic year, computed by the method specified in Education Code, § 54.753(f).34 Tex. Admin. Code § 7.122
The provisions of this §7.122 adopted to be effective August 27, 2008, 33 TexReg 6957; amended to be effective September 21, 2010, 35 TexReg 8503; Amended by Texas Register, Volume 45, Number 14, April 3, 2020, TexReg 2317, eff. 4/5/2020