TTF_II.ppt
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Texas Tuition Promise Fund BUC$ Conference October 15, 2008 Linda Fernandez Comptroller Educational Opportunities and Investment Division Manager and CFO [email protected] s
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Transcript of TTF_II.ppt
Texas Tuition Promise Fund
BUC$ ConferenceOctober 15, 2008
Linda FernandezComptroller Educational Opportunities and Investment DivisionManager and [email protected], Ext. 3-4863
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Meet the StaffEducational Opportunities and Investment Division
• Customer Service-Higher Education– Diane Schmidt, Team Lead– Cookie Wheeler– Alex Mendez
• Kevin Deiters, Director
• Linda Fernandez, Manager and CFO
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Texas Tomorrow Funds’ Program
Prepaid Plans Savings Plans
Closed to new enrollment in 2003
Opened Sept 10, 2008
Direct-Sold
Advisor-Sold
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Texas Tuition Promise Fund (TTPF)
Objective
• Allows participants to lock in tuition price• Promotes targets and goals of “Closing the Gaps” • Establishes Texas Save and Match Program
Plan Design
• Sold in tuition units• Must meet Texas residency requirements (either beneficiary or parent-purchaser)• Use at Texas public 4-year and 2-year colleges, Texas private schools, and out-of-state
schools
Governance
• Authorized by IRS Code, Section 529 (“529 Plans”)• Administered by Texas Prepaid Higher Education Tuition Board (Agency #315)• Established by Texas Education Code, Subchapter H (HB 3900)• Implemented by Administrative Rules (34 TAC, Sections 7.121-7.145)
– Posted for 30-day comment period– Sent to representatives of UT, A&M, and Texas Tech
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TTPF Key Dates
HB 3900 signed into law June 2007
RFP issued for plan manager Nov 2007
Board selected OppenheimerFunds, Inc. Feb 2008
Contract signed June 2008
Administrative Rules adopted Aug 2008
Enrollment opened Sept 10, 2008
Enrollment period Sept 2008 – Feb 2009
Newborn enrollment period Sept 2008 – July 2009
Sales period for current prices Sept 2008 – Aug 2009
1st payment due May 2009
Disbursements to colleges June 2012
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Costs
In-State
Public Senior
Institutions
Public Junior
Colleges
Career Schools / Colleges
Private Institutions
Tuition *
Required Fees *
Lab Fees
Books & Materials
Room & Board
•TTPF will only cover out-of-state accredited career schools/colleges.
•Guaranteed tuition plan will pay for career schools/colleges.
•Both plans pay portion of tuition and required fees at out-of-state colleges.
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Costs
Public Senior
Institutions
Public Junior
Colleges
Career Schools / Colleges
Private Institutions
Tuition
Required Fees
Lab Fees
Books & Materials
Room & Board
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How TTPF Works 2008-2009 Unit Types and Prices
Units represent a fixed amount of tuition – 1 unit = 1% of 1 academic year100 units = 1 academic year, 30 semester credit hours
• TYPE I ($98.50 per unit) Type I units are priced to cover undergraduate resident tuition and required fees at
the most expensive four-year public college or university in Texas
• TYPE II ($67.65 per unit)
Type II units are priced at the current weighted average cost of undergraduate resident tuition and required fees across all Texas public 4-year schools
• TYPE III ($16.99 per unit) Type III units are priced at the current weighted average cost of undergraduate
resident tuition and required fees across all Texas public 2-year schools
Minimum Unit Purchase: 1 unit of any type needed to establish an accountPayments as low as $15 after establishing an account
Maximum Unit Purchase: 600 Type I units; 873 Type II units; 3,478 Type III units
Max of $320,000 per beneficiary in all Texas 529 plans
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Example of Tuition Units Needed for Selected Colleges for 2008-2009
University/CollegeTuition
and Fees Type I Type II Type IIIUT-Dallas 2008 Guaranteed 9,850$ 100.0 145.6 579.9UT Austin Business 9,354$ 95.0 138.3 550.7UT Austin Communication 8,430$ 85.6 124.6 496.3UT Austin Engineering 8,930$ 90.7 132.0 525.7Texas Tech 6,783$ 68.9 100.3 399.3Texas A & M 7,844$ 79.6 116.0 461.8U of Houston 6,772$ 68.8 100.1 398.7U of North Texas 6,767$ 68.7 100.0 398.4TAMU Texarkana 4,236$ 43.0 62.6 249.3TX Southmost 5,258$ 53.4 77.7 309.5Lamar Inst of Tech 4,294$ 43.6 63.5 252.8Houston CC 1,704$ 17.3 25.2 100.3El Paso CC 1,701$ 17.3 25.1 100.1Collin CC 1,110$ 11.3 16.4 65.3
Figures shown represent tuition and required fee costs for the 2008-2009 academic year and tuition units that would be needed to cover that academic year.
ABOVEWeighted Average Cost of Tuition
EQUAL to Weighted Average Cost of Tuition
BELOWWeighted Average Cost of Tuition
Example: Type II Unit Redemption
Unit Redemption – 100 Type II Units @ $67.65 per unit = $6,765
Cost of Tuition and Required Fees
Value of your tuition units compared to the Weighted
Average Value
Amount of Tuition and Required Fees covered
School A
$7,000
You will need to make up the cost difference:
Purchaser or Beneficiary responsible for balance of $235 due for tuition and
required fees
School B
$6,765
You are fully coveredNo extra money needs to be paid for tuition and required
fees
School C
$5,800
You are fully covered, and you will have reserve units
in your account.$965 of excess tuition units
available for use
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Payment Options for Participants Lump Sum Plan
– Purchase set number of units or dollar amount in a single purchase
Installment Plans
– Price is locked in for the life of the installment plan – All installment payments include annual interest component – Annual or Monthly Payment Plan options include 5 Year, 10 Year or
# of Years to Projected High School Graduation Date
Pay-As-You-Go Plan
– Buy units whenever you want– Contribute as little as $15 once minimum of one unit is purchased– Plan prices change annually
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Payment Comparison 100 Type I Units
Beneficiary’s Age
Payment Option
Total Cost of Contract
# of Payments
Payment Amount
Newborn Lump Sum $9,850.00 1 $9,850.00
Newborn
Mo Installment Until High School Grad $18,492.00 216 $85.61
10 Yrs of Age
Mo Installment Until High School Grad $13,279.00 96 $138.32
15 Yrs of Age
Only Lump or Pay-As-You-Go Due to Beneficiary’s Age-Installment Not Available $9,850.00
1 Lump Sum Payment or
Multiple Pay-As-You-Go Payments
$9,850.00
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Use of Units Flexibility
– Any of the three unit types can be redeemed to pay tuition and required fees at any eligible school
Unused Units - 3 Options
– Transfer units to any 529 college savings plan where proceeds can then be applied to other costs such as room and board, books, etc.
– Transfer extra or reserve units to another qualified beneficiary
– Request a refund for remaining units
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Redemption of Units• 3-Year holding period (June 2012)• Units must be paid-in-full prior to use• Texas public colleges will receive lesser
of:– Amount paid for units, plus earnings,
• Earnings = greater of:– actual return on investments OR– 5% return on investments, subject to the availability of
money in the fund for that purpose
OR– 101% of current tuition and required fees at
the time of redemption• Residency established at purchase for
semester hours paid by tuition units
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Private and Out-of-State Colleges
• Private or out-of-state colleges will receive lesser of:– Redemption value of the tuition units if
redeemed at a Texas public college, OR– Amount paid for the tuition units plus
actual earnings
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Disbursements to Colleges
• Track purchase price and earnings
• Develop procedures for paying colleges– Implement legislative requirements
• Payments based on purchase price of units plus actual earnings or 5%, subject to availability of money in the fund for that purpose
– Involve colleges in developing procedures
• Distribute written procedures to colleges
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Program Suspension or Termination
• Board may suspend enrollment to ensure actuarial soundness
• Comptroller can recommend termination if program is financially infeasible– Contracts remain in effect at termination
if:• Beneficiary accepted by or enrolled in college• Beneficiary is projected to graduate within 3
years of program termination
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Financial Stability
• Non-Refundable $25 administrative fee to be used directly in maintaining actuarial soundness
• 3-Year holding period for redemption• 8% interest charge on installment
contracts• Cap on refunds (2% below actual
earnings, not to exceed 5%)• Program may be suspended or
terminated
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Information and Enrollment
www.TexasTuitionPromiseFund.com
1-800-445-GRAD (4723), option #5
www.everychanceeverytexan.org
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TTPF Calculator
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Compare up to 5 Schools
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Upgrades to Texas Guaranteed Tuition Plan
• Short-Term Goal – Establish secure Web site for colleges
to obtain information on plan participants and their benefits
• Long-Term Goals – Establish online electronic annual
survey document for tuition and fees– Establish electronic invoice submittal
and tracking process for colleges
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Update on HB 2173 Survey Yes No No Response Total Tuition Discounts Public 2 29 7 38 Private 7 19 22 48 Junior College 4 32 19 55
Total 13 80 48 141 Fee Discounts Public 1 30 7 38 Private 0 26 22 48 Junior College 3 32 20 55
Total 4 88 49 141 Other Discounts Public 2 29 7 38 Private 4 22 22 48 Junior College 1 35 19 55
Total 7 86 48 141
Of the colleges that responded “Yes” to offering discounts toindividuals in the Texas Tomorrow Funds, the majority notedincreased enrollment as the primary reason.
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Questions? Contact info:
Diane Schmidt
1-800-531-5441, Ext. 6-6188
Cookie Wheeler
1-800-531-5441, Ext. 6-6642
Alex Mendez
1-800-531-5441, Ext. 3-8370
Thank you!
