Section 6901.309 - Tuition Account Guaranteed Savings Program(a) General description.-- Each contribution made pursuant to a Tuition Account Guaranteed Savings Program Contract will be considered the equivalent of a purchase of tuition credits at the tuition level designated by the account owner in the Tuition Account Guaranteed Savings Program Contract. All contributions will be held in a beneficiary's account and will be converted to the tuition level of the institution to be attended by the beneficiary. At the time of redemption, the tuition to be paid will be calculated based on the tuition level designated and the institution being attended as described in this section. A public institution attended by a beneficiary shall accept that beneficiary's tuition credits when presented. Payments on account of tuition shortfalls shall be made as provided for in section 310. (b) Tuition levels.--(1) The department shall annually establish three average tuition levels for public institutions corresponding approximately to the average tuition charges for that year at the Commonwealth's community colleges, at universities in the State System of Higher Education and at State-related universities. The department may annually establish an average tuition level or levels for private institutions corresponding to average tuition charges at private institutions, as the department deems appropriate.(2) A contribution may be made at the tuition level designated in the Tuition Account Guaranteed Savings Program Contract. With the approval of the department, an account owner may change the designated tuition level.(c) Tuition credits.--Contributions made pursuant to a Tuition Account Guaranteed Savings Program Contract will be converted to the equivalent amount of tuition credits as follows:(1) A contribution made pursuant to a Tuition Account Guaranteed Savings Program Contract shall be divided by the tuition credit price in the year of contribution at the tuition level designated by the account owner.(2) For contributions made during the period from September 1 to August 31, tuition credit prices for the corresponding academic year shall be used.(3) The number of tuition credits calculated at the time of contribution in accordance with paragraphs (1) and (2) may be reduced in a manner determined by the department reasonably to reflect potential investment loss resulting from the time of year when the contribution is made.(d) Process for public institutions.--The process for certifying tuition, converting tuition credits, issuing and redeeming tuition credits and making tuition payments for public institutions shall be as follows:(1) On or before July 31, a public institution shall certify to the department the tuition to be charged by that institution for the academic year beginning on or after August 1 and, at such times as the department shall determine, each public institution shall certify to the department the tuition charged by that institution for the current or any previous academic year.(2) Upon application, the department shall issue to an account owner a statement of accumulated tuition credits available for the payment of qualified higher education expenses for a specific academic period at the specific public institution or the public institution average tuition level designated by the account owner. In the event the account owner decides to redeem the available tuition credits, the account owner shall notify the department of the institution at which the beneficiary intends to enroll. In the event the institution is:(i) The public institution last designated by the account owner in the Tuition Account Guaranteed Savings Program Contract as the tuition level, the account owner shall submit to the department adequate documentation of enrollment, the qualified higher education expenses and the number of credits or dollar value of the credits that the account owner has decided to redeem. The account owner shall authorize payment of that amount to the institution, a specified third party, the account owner and/or beneficiary. Payment shall be made as specified in subsection (d)(3).(ii) A public institution other than that last designated by the account owner in the Tuition Account Guaranteed Savings Program Contract as the tuition level, a conversion shall be made pursuant to subsection (g) and the department shall issue a revised statement of accumulated tuition credits and their dollar value available for payment of qualified higher education expenses at the newly designated public institution. The account owner shall submit to the department adequate documentation of enrollment, the qualified higher education expenses and the number of credits or dollar value of the credits that the account owner has decided to redeem. The account owner shall authorize payment of that amount to the institution, a specified third party, the account owner and/or beneficiary. Payment shall be made as specified in subsection (d)(3).(iii) A private institution that has not entered into an agreement with the department pursuant to section 308(b) , the available tuition credits shall be redeemable for the payment of qualified higher education expenses at the value they would have had if they had been redeemed at the tuition level last designated by the account owner in the Tuition Account Guaranteed Savings Program Contract. The account owner shall submit to the department adequate documentation of enrollment, the qualified higher education expenses and the number of credits or dollar value of the credits that the account owner has decided to redeem. The account owner shall authorize payment of that amount to the institution, a specified third party, the account owner and/or beneficiary. Payment shall be made as specified in subsection (d)(3).(iv) A private institution that has entered into an agreement with the department pursuant to section 308(b), payment shall be governed by the terms of the agreement, provided, however, that in no event shall the payment be less than what would have been paid if the beneficiary were attending a private institution that has not entered into an agreement with the department. Payment shall be made as specified in the agreement.(3) Upon submission of such documentation, the department shall make the payment as authorized by the account owner. Before making the payment authorized by the account owner, the department shall determine whether the available portion of the value of the account equals or exceeds the authorized payment. If it does not equal or exceed the authorized payment, two separate payments shall be made. The first payment shall be in the amount of the available portion of the value of the account. The second payment shall be in the amount of the difference between the amount of the payment authorized by the account owner and the available portion of the value of the account, and it shall be paid pursuant to the tuition shortfall provision of section 310.(e) Process for private institution average tuition levels.--The process of establishing private institution average tuition credit prices, redeeming those tuition credits and making tuition payments when an account owner has designated a private institution average tuition level shall be as follows: (1) On or before August 31, the department shall determine the average tuition credit price or prices for average tuition level or levels for private institutions established pursuant to subsection (b) for the academic year beginning on or after August 1 of that year.(2) Upon application, the department shall issue to an account owner a statement of accumulated tuition credits available for the payment of qualified higher education expenses for a specific academic period at the private institution average tuition level designated by the account owner. In the event the account owner decides to redeem the available tuition credits, the account owner shall notify the department of the public or private institution at which the beneficiary intends to enroll. In the event the institution is:(i) A public institution, the process for conversion and payment shall be as set forth in subsections (d)(3) and (g).(ii) A private institution that has not entered into an agreement with the department pursuant to section 308(b), the available tuition credits shall be redeemable at the average tuition credit price determined by the department before adjustments, if any, made pursuant to section 306(b)(2) , of the designated tuition level established by the department for the year in which they are redeemed. The account owner shall submit to the department adequate documentation of enrollment, the qualified higher education expenses and the number of credits or dollar value of the credits that the account owner has decided to redeem. The account owner shall authorize payment of that amount to the institution, a specified third party, the account owner and/or beneficiary. The department shall make the payment in substantially the same manner as specified in subsection (d)(3). Payment under this subsection for any one academic period shall not exceed the amount of the beneficiary's tuition and other qualified higher education expenses for that academic period. If the average tuition level in the year of redemption is insufficient to pay the actual tuition, the department shall have no obligation or authority to pay the insufficiency.(iii) A private institution that has entered into an agreement with the department pursuant to section 308(b), payment shall be governed by the terms of the agreement, provided, however, that in no event shall the payment be less than what would have been paid if the beneficiary were attending a private institution that has not entered into an agreement with the department.(f) Process for specific private institutions with which the department has an agreement.--The making and redeeming of contributions for use at private institutions that have entered into agreements with the department pursuant to section 308(b) shall be governed by the terms of those respective agreements. Upon request of an account owner who has made contributions at a tuition level of a specific private institution, a conversion to an average tuition level, a specific public institution or a different private institution that has entered into an agreement with the department, if permitted by the terms of that particular agreement between the department and that particular private institution, shall be made using substantially the same procedure as specified in subsection (g). Upon a decision by the beneficiary for whom contributions have been made at a tuition level of a private institution that has entered an agreement with the department pursuant to section 308(b) to attend a different private institution that has entered into an agreement with the department but for which the terms of that particular agreement do not provide for a conversion, or to attend a different private institution that has not entered into an agreement with the department pursuant to section 308(b), at the direction of the account owner, payment shall be made in substantially the same manner as is specified in subsection (e)(2) except that in no event shall the department pay more than it would have paid had the beneficiary attended the previously designated private institution.(g) Conversion of tuition credits.--At any time during the existence of the tuition account payment contract, upon the request of an account owner, the department may convert tuition credits for contributions made at any tuition level to any other tuition level. The method by which the conversion is made shall be determined by the department. Following conversion, the department shall issue to the account owner a statement of the number of tuition credits converted.(h) Other uses of tuition credits.--The department shall permit the use of tuition credits for master's degree and other postbaccalaureate programs at eligible educational institutions, after an appropriate conversion. The department also may permit tuition credits to be converted into other educational expense credits to be applied for the payment of qualified higher education expenses other than tuition. Use of tuition credits for payment of qualified higher education expenses other than tuition shall correspondingly decrease the number of tuition credits available for payment of tuition. The Commonwealth, the department or the Tuition Account Guaranteed Savings Program Fund shall not be obligated and is not authorized to make up any deficiency in tuition credits available for payment of tuition resulting from the use of tuition credits for payment of qualified higher education expenses other than tuition.(i) Course load or credit hours.--A beneficiary attending an eligible educational institution may apply tuition credits to a specific academic year at the maximum course load or maximum number of credit hours generally permitted to full-time undergraduates at that institution.(j) Residency.--The tuition credit price shall be determined with reference to the residency of the beneficiary at the time a contribution is made pursuant to a Tuition Account Guaranteed Savings Program Contract, except that, for a resident beneficiary, an account owner may elect to save at a nonresident rate. If the residency of the beneficiary at the time the credits are redeemed is different from the residency designated in the Tuition Account Guaranteed Savings Program Contract or as thereafter changed with the consent of the department, there shall be an appropriate conversion of tuition credits to reflect the differential in tuition caused by the change of designated residency, if any.1992, April 3, P.L. 28, No. 11, § 309, imd. effective. Amended 2000, June 22, P.L. 418, No. 58, § 3, effective in 60 days.