By Carona S.B. No. 1527
76R6066 AJA-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to authorization of prepaid tuition contracts for
1-3 proprietary schools under the prepaid higher education tuition
1-4 program.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 54.6001, Education Code, is amended to
1-7 read as follows:
1-8 Sec. 54.6001. PUBLIC PURPOSE. An educated population being
1-9 necessary to the social development and economic health of this
1-10 state, the legislature finds and declares it to be an urgent public
1-11 necessity to assist young Texans in obtaining a higher education.
1-12 Because the state's population is rapidly growing and is diverse,
1-13 the state is required to use all of the higher education facilities
1-14 and resources within the state, both public and private, to provide
1-15 a wide variety of educational environments and instructional
1-16 options and to preserve the partnership between the state and
1-17 private or independent institutions of higher education and
1-18 proprietary schools. Therefore, the prepaid higher education
1-19 tuition program is established to help Texas students attend the
1-20 institution that best meets their individual needs.
1-21 SECTION 2. Section 54.601, Education Code, is amended to
1-22 read as follows:
1-23 Sec. 54.601. DEFINITIONS. In this subchapter:
1-24 (1) "Beneficiary" means a person who is entitled to
2-1 receive benefits under a prepaid tuition contract.
2-2 (2) "Board" means the Prepaid Higher Education Tuition
2-3 Board.
2-4 (3) "Estimated average private tuition and required
2-5 fees" means an estimated average of tuition and required fees to be
2-6 charged by private or independent institutions of higher education
2-7 as determined annually by the board.
2-8 (4) "Fund" means the Texas tomorrow fund.
2-9 (5) "Institution of higher education" has the meaning
2-10 assigned by Section 61.003.
2-11 (6) "Prepaid tuition contract" means a contract
2-12 entered into under this subchapter by the board and a purchaser to
2-13 provide for the payment of higher education tuition and required
2-14 fees of a beneficiary.
2-15 (7) "Private or independent institution of higher
2-16 education" has the meaning assigned by Section 61.003.
2-17 (8) "Program" means the prepaid higher education
2-18 tuition program.
2-19 (9) "Proprietary school" means a proprietary school,
2-20 as defined by Section 132.001, that offers a degree approved by the
2-21 Texas Higher Education Coordinating Board.
2-22 (10) "Public junior college" has the meaning assigned
2-23 by Section 61.003.
2-24 (11) [(10)] "Public senior college or university" has
2-25 the meaning assigned by Section 61.003.
2-26 (12) [(11)] "Purchaser" means a person who is
2-27 obligated to make payments under a prepaid tuition contract.
3-1 SECTION 3. Section 54.605(a), Education Code, is amended to
3-2 read as follows:
3-3 (a) A prepaid tuition contract remains in effect after the
3-4 program is terminated if, when the program is terminated, the
3-5 beneficiary:
3-6 (1) has been accepted by or is enrolled in an
3-7 institution of higher education, [or] a private or independent
3-8 institution of higher education, or a proprietary school; or
3-9 (2) is projected to graduate from high school not
3-10 later than the third anniversary of the date the program is
3-11 terminated.
3-12 SECTION 4. Section 54.618(b), Education Code, is amended to
3-13 read as follows:
3-14 (b) The board may:
3-15 (1) adopt an official seal;
3-16 (2) adopt rules to implement this subchapter;
3-17 (3) sue and be sued;
3-18 (4) enter into contracts and other necessary
3-19 instruments;
3-20 (5) enter into agreements or other transactions with
3-21 the United States, state agencies, including institutions of higher
3-22 education, private or independent institutions of higher education,
3-23 proprietary schools, and local governments;
3-24 (6) appear in its own behalf before governmental
3-25 agencies;
3-26 (7) contract for necessary goods and services and
3-27 engage the services of private consultants, actuaries, trustees,
4-1 records administrators, managers, legal counsel, and auditors for
4-2 administrative or technical assistance;
4-3 (8) solicit and accept gifts, grants, loans, and other
4-4 aid from any source or participate in any other way in any
4-5 government program to carry out this subchapter;
4-6 (9) impose administrative fees;
4-7 (10) contract with a person to market the program;
4-8 (11) purchase liability insurance covering the board
4-9 and employees and agents of the board; and
4-10 (12) establish other policies, procedures, and
4-11 eligibility criteria to implement this subchapter.
4-12 SECTION 5. Section 54.619, Education Code, is amended to
4-13 read as follows:
4-14 Sec. 54.619. PREPAID HIGHER EDUCATION TUITION PROGRAM. (a)
4-15 Under the program, a purchaser may enter into a prepaid tuition
4-16 contract with the board under which the purchaser agrees to prepay
4-17 the tuition and required fees for a beneficiary to attend an
4-18 institution of higher education, a [or] private or independent
4-19 institution of higher education, or a proprietary school.
4-20 (b) The board shall deposit the money paid under a prepaid
4-21 tuition contract in the fund, invest the money and credit the
4-22 income earned to the fund, and apply money in the fund to the
4-23 tuition and required fees of the institution of higher education,
4-24 [or] private or independent institution of higher education, or
4-25 proprietary school in which the beneficiary enrolls as provided by
4-26 the prepaid tuition contract.
4-27 (c) If the beneficiary of a plan described by Section
5-1 54.623, 54.624, [or] 54.625, or 54.6253 enrolls in a private or
5-2 independent institution of higher education, the board shall pay:
5-3 (1) to the institution the lesser of:
5-4 (A) the tuition and required fees of the
5-5 institution; or
5-6 (B) an amount equal to the amount of the tuition
5-7 and required fees the board would have paid had the beneficiary
5-8 enrolled in an institution of higher education or proprietary
5-9 school covered by the plan selected in the prepaid tuition
5-10 contract; and
5-11 (2) to the beneficiary, the amount by which the amount
5-12 described by Subdivision (1)(B) exceeds the tuition and required
5-13 fees of the private or independent institution.
5-14 (d) If the beneficiary of a plan described by Section
5-15 54.623, 54.624, 54.625, or 54.6253 enrolls in a private or
5-16 independent institution of higher education, the [The] beneficiary
5-17 is responsible for paying the private or independent institution of
5-18 higher education the amount by which the tuition and required fees
5-19 of the institution exceed the amount [tuition and required fees]
5-20 paid by the board.
5-21 (e) [(d)] If the beneficiary of a plan described by Section
5-22 54.6251 enrolls in an institution of higher education, the board
5-23 shall pay:
5-24 (1) to the institution the tuition and required fees
5-25 of the institution; and
5-26 (2) to the purchaser the amount by which the estimated
5-27 average private tuition and required fees exceeds the tuition and
6-1 required fees of the institution.
6-2 (f) [(e)] If the beneficiary of a plan described by Section
6-3 54.6251 enrolls in a private or independent institution of higher
6-4 education, the board shall pay:
6-5 (1) to the institution the lesser of:
6-6 (A) the tuition and required fees of the
6-7 institution; or
6-8 (B) the estimated average private tuition and
6-9 required fees; and
6-10 (2) to the purchaser the amount by which the estimated
6-11 average private tuition and required fees exceeds the tuition and
6-12 required fees of the institution.
6-13 (g) [(f)] If the beneficiary of a plan described by Section
6-14 54.6251 enrolls in a private or independent institution of higher
6-15 education, the beneficiary is responsible for paying the
6-16 institution the amount by which the tuition and required fees of
6-17 the institution exceeds the estimated average private tuition and
6-18 required fees.
6-19 (h) If the beneficiary of a plan described by Section
6-20 54.6253 enrolls in a proprietary school, the board shall pay:
6-21 (1) to the school the lesser of:
6-22 (A) the tuition and required fees of the school;
6-23 or
6-24 (B) the estimated average proprietary school
6-25 tuition and required fees; and
6-26 (2) to the beneficiary the amount by which the
6-27 estimated average proprietary school tuition and required fees
7-1 exceeds the tuition and required fees of the school.
7-2 (i) If the beneficiary of a plan described by Section
7-3 54.623, 54.624, 54.625, or 54.6251 enrolls in a proprietary school,
7-4 the board shall pay:
7-5 (1) to the school the least of the following amounts:
7-6 (A) the tuition and required fees of the school;
7-7 (B) the estimated average proprietary school
7-8 tuition and required fees; or
7-9 (C) the tuition and required fees the board
7-10 would have paid had the beneficiary enrolled in an institution
7-11 covered by the plan selected in the prepaid tuition contract; and
7-12 (2) to the beneficiary the amount by which the tuition
7-13 and required fees the board would have paid had the beneficiary
7-14 enrolled in an institution covered by the plan selected in the
7-15 prepaid tuition contract exceeds the tuition and required fees of
7-16 the school.
7-17 (j) If the beneficiary of a plan described by Section
7-18 54.623, 54.624, 54.625, or 54.6251 enrolls in a proprietary
7-19 school, the beneficiary is responsible for paying the school the
7-20 amount by which the tuition and required fees of the school exceeds
7-21 the amount paid by the board.
7-22 (k) If the beneficiary of a plan described by Section
7-23 54.6253 enrolls in an institution of higher education, the board
7-24 shall pay:
7-25 (1) to the institution the lesser of:
7-26 (A) the tuition and required fees of the
7-27 institution; or
8-1 (B) the estimated average proprietary school
8-2 tuition and required fees; and
8-3 (2) to the purchaser the amount by which the estimated
8-4 average proprietary school tuition and required fees exceeds the
8-5 tuition and required fees of the institution.
8-6 (l) If the beneficiary of a plan described by Section
8-7 54.6253 enrolls in an institution of higher education, the
8-8 beneficiary is responsible for paying the institution the amount by
8-9 which the tuition and required fees of the institution exceed the
8-10 amount paid by the board.
8-11 (m) [(g)] If in any fiscal year there is not enough money in
8-12 the fund to pay the tuition and required fees of the institution of
8-13 higher education in which a beneficiary enrolls or the appropriate
8-14 portion of the tuition and required fees of the private or
8-15 independent institution of higher education or proprietary school
8-16 in which the beneficiary enrolls as provided by the prepaid tuition
8-17 contract, the comptroller shall transfer to the fund out of the
8-18 first money coming into the state treasury not otherwise
8-19 appropriated by the constitution the amount necessary for the board
8-20 to pay the applicable amount of tuition and required fees of the
8-21 institution.
8-22 SECTION 6. Sections 54.620(a), (b), and (d), Education Code,
8-23 are amended to read as follows:
8-24 (a) The board may contract with a purchaser for the
8-25 purchaser to prepay the tuition and required fees for a beneficiary
8-26 to attend an institution of higher education, a [or] private or
8-27 independent institution of higher education, or a proprietary
9-1 school to which the beneficiary is admitted as a student.
9-2 (b) The terms of a prepaid tuition contract shall be based
9-3 on an actuarial analysis of:
9-4 (1) the rates of increase of:
9-5 (A) tuition and required fees at institutions of
9-6 higher education; [or]
9-7 (B) estimated average private tuition and
9-8 required fees; or
9-9 (C) the estimated average proprietary school
9-10 tuition and required fees;
9-11 (2) expected investment returns;
9-12 (3) estimated administrative costs; and
9-13 (4) the period between the date the contract is
9-14 entered into and the date the beneficiary is projected to graduate
9-15 from high school.
9-16 (d) A prepaid tuition contract must:
9-17 (1) specify the amount and number of payments required
9-18 from the purchaser on behalf of the beneficiary;
9-19 (2) specify the terms under which the purchaser shall
9-20 make payments, including the date on which each payment is due;
9-21 (3) specify the consequences of default;
9-22 (4) specify the name and date of birth of the
9-23 beneficiary of the contract and the terms under which another
9-24 person may be substituted as the beneficiary;
9-25 (5) specify the number of credit hours contracted by
9-26 the purchaser;
9-27 (6) specify the type of plan toward which the
10-1 contracted credit hours shall be applied;
10-2 (7) contain an assumption of a contractual obligation
10-3 by the board to the beneficiary to provide for a specified number
10-4 of credit hours of undergraduate instruction at an institution of
10-5 higher education, a [or] private or independent institution of
10-6 higher education, or a proprietary school, not to exceed the
10-7 typical number of credit hours required for the degree that
10-8 corresponds to the plan purchased on behalf of the beneficiary;
10-9 (8) specify the date the beneficiary is projected to
10-10 graduate from high school; and
10-11 (9) contain any other provisions the board considers
10-12 necessary or appropriate.
10-13 SECTION 7. Section 54.622, Education Code, is amended to
10-14 read as follows:
10-15 Sec. 54.622. TYPES OF PLANS. The board shall make prepaid
10-16 tuition contracts available for the:
10-17 (1) junior college plan;
10-18 (2) senior college plan;
10-19 (3) junior-senior college plan; [and]
10-20 (4) private college plan; and
10-21 (5) proprietary school plan.
10-22 SECTION 8. Subchapter F, Chapter 54, Education Code, is
10-23 amended by adding Section 54.6253 to read as follows:
10-24 Sec. 54.6253. PROPRIETARY SCHOOL PLAN. Through the
10-25 proprietary school plan, a prepaid tuition contract shall provide
10-26 prepaid tuition and required fees for the beneficiary to attend a
10-27 proprietary school for a specified number of credit hours not to
11-1 exceed the typical number of hours required for a degree approved
11-2 by the Texas Higher Education Board and awarded by a proprietary
11-3 school.
11-4 SECTION 9. Section 54.630, Education Code, is amended to
11-5 read as follows:
11-6 Sec. 54.630. PROMISE OR GUARANTEE OF ADMISSION. This
11-7 subchapter is not a promise or guarantee that a beneficiary will
11-8 be:
11-9 (1) admitted to any institution of higher education,
11-10 [or] private or independent institution of higher education, or
11-11 proprietary school;
11-12 (2) admitted to a particular institution of higher
11-13 education, [or] private or independent institution of higher
11-14 education, or proprietary school;
11-15 (3) allowed to continue enrollment at an institution
11-16 of higher education, [or] private or independent institution of
11-17 higher education after admission, or proprietary school; or
11-18 (4) graduated from an institution of higher education,
11-19 [or] private or independent institution of higher education, or
11-20 proprietary school.
11-21 SECTION 10. Section 54.637, Education Code, is amended to
11-22 read as follows:
11-23 Sec. 54.637. USE OF FUND ASSETS. The assets of the fund may
11-24 be used only to:
11-25 (1) pay the costs of program administration and
11-26 operations;
11-27 (2) make payments to institutions of higher education,
12-1 [or] private or independent institutions of higher education, or
12-2 proprietary schools on behalf of beneficiaries; and
12-3 (3) make refunds under prepaid tuition contracts.
12-4 SECTION 11. Sections 54.639(b) and (c), Education Code, are
12-5 amended to read as follows:
12-6 (b) The rights of a purchaser, beneficiary, or successor in
12-7 interest of a purchaser or beneficiary in and under a prepaid
12-8 tuition contract and the payment of tuition and required fees for a
12-9 beneficiary under a prepaid tuition contract to an institution of
12-10 higher education, [or] a private or independent institution of
12-11 higher education, or a proprietary school under this chapter are
12-12 exempt from attachment, levy, garnishment, execution, and seizure
12-13 for the satisfaction of any debt, judgment, or claim against a
12-14 purchaser, beneficiary, or successor in interest of a purchaser or
12-15 beneficiary.
12-16 (c) A claim or judgment against a purchaser, beneficiary, or
12-17 a successor in interest of a purchaser or beneficiary does not
12-18 impair or entitle the claim or judgment holder to assert or enforce
12-19 a lien against:
12-20 (1) the rights of a purchaser, beneficiary, or
12-21 successor in interest of a purchaser or beneficiary in and under a
12-22 prepaid tuition contract; or
12-23 (2) the right of a beneficiary to the payment of
12-24 tuition and required fees to an institution of higher education,
12-25 [or] a private or independent institution of higher education, or a
12-26 proprietary school under a prepaid tuition contract.
12-27 SECTION 12. This Act takes effect September 1, 1999.
13-1 SECTION 13. The importance of this legislation and the
13-2 crowded condition of the calendars in both houses create an
13-3 emergency and an imperative public necessity that the
13-4 constitutional rule requiring bills to be read on three several
13-5 days in each house be suspended, and this rule is hereby suspended.