Sec. 54.620. PREPAID TUITION CONTRACT. (a) The board may contract with a purchaser for the purchaser to prepay the tuition and required fees for a beneficiary to attend an institution of higher education or private or independent institution of higher education to which the beneficiary is admitted as a student.

(b) The terms of a prepaid tuition contract shall be based on an actuarial analysis of:

(1) the rates of increase of:

(A) tuition and required fees at institutions of higher education; or

(B) estimated average private tuition and required fees;

(2) expected investment returns;

(3) estimated administrative costs; and

(4) the period between the date the contract is entered into and the date the beneficiary is projected to graduate from high school.

(c) The board shall adopt a form for a prepaid tuition contract to be used by the board and purchasers.

(d) A prepaid tuition contract must:

(1) specify the amount and number of payments required from the purchaser on behalf of the beneficiary;

(2) specify the terms under which the purchaser shall make payments, including the date on which each payment is due;

(3) specify the consequences of default;

(4) specify the name and date of birth of the beneficiary of the contract and the terms under which another person may be substituted as the beneficiary;

(5) specify the number of credit hours contracted by the purchaser;

(6) specify the type of plan toward which the contracted credit hours shall be applied;

(7) contain an assumption of a contractual obligation by the board to the beneficiary to provide for a specified number of credit hours of undergraduate instruction at an institution of higher education or private or independent institution of higher education, not to exceed the typical number of credit hours required for the degree that corresponds to the plan purchased on behalf of the beneficiary;

(8) specify the date the beneficiary is projected to graduate from high school; and

(9) contain any other provisions the board considers necessary or appropriate.

(e) A prepaid tuition contract does not cover the cost of laboratory fees charged for specific courses.

Added by Acts 1995, 74th Leg., ch. 1032, Sec. 1, eff. Sept. 1, 1995.