(a) The board shall establish an investment policy for each trust fund. The board may authorize assets of the trust funds to be invested in any instrument, obligation, security or property that constitutes legal investments for assets of the Tennessee consolidated retirement system, or any other investment deemed appropriate by the board. The board may authorize assets of the funds for the educational services program to be pooled for investment purposes with the assets of the Tennessee consolidated retirement system or any other assets under the custody of the state treasurer.

(b) In conjunction with § 49-7-805(1) and subsection (a), the board shall cause the amounts on deposit in the educational investment program trust established under § 49-7-812(a)(1) to be invested in any instrument or investment vehicle that the board deems reasonable and appropriate to achieve the objectives of the trust, exercising the discretion and care of a prudent person in similar circumstances with similar objectives. The board shall not require the trust to invest directly in obligations of the state or any political subdivision of the state or in any investment or other fund administered by the state treasurer or any other state entity. The assets of the trust shall be continuously invested and reinvested in a manner consistent with the objectives of the trust until disbursed for qualified higher education expenses, expended on expenses incurred by the operations of such trust or distributed to the account owner in accordance with the participation agreement.