The Plan provides a manageable and affordable way to help pay for your child’s future college undergraduate resident tuition and schoolwide Required Fees: Required fees are only those that must be paid by all students as a condition of enrollment in the college or university. They do not include course-specific fees such as equipment usage or lab fees, or fees related to your major or year of study. . If used for a Texas public college or university, excluding medical and dental schools institutions, you can purchase those future benefits at today’s rates.
Lock in Savings at Texas Public Colleges and Universities
The Plan offers an opportunity to protect against rising tuition costs at Texas two- and four-year public colleges or universities, excluding medical and dental schools, health science centers and other health-related institutions.
Use at Colleges in Texas and Around the Country
The Plan is designed to be used at Texas public colleges or universities where undergraduate resident tuition and schoolwide Required Fees: Required fees are only those that must be paid by all students as a condition of enrollment in the college or university. They do not include course-specific fees such as equipment usage or lab fees, or fees related to your major or year of study. are locked in, but you have the flexibility to use the Transfer Value: Transfer value is limited to the lesser of: 1) the costs the unit would cover at a Texas public college; or, 2) the price paid for the unit, plus or minus the Plan’s net investment earnings or losses on that amount. Transfer value does not include any state-provided or procured matching contributions or earnings thereon. toward tuition and schoolwide required fees at a medical or dental institution, private or out-of-state college or university, career school or registered apprenticeship program.
Federal Tax Advantages
- Any earnings on prepaid tuition contracts are Federal Tax Free: Any earnings on prepaid tuition contracts are federal tax free if used to pay eligible tuition and required fees. Refunds of earnings on contract payments are subject to federal income taxes and may be subject to an additional 10% federal tax penalty. See Plan Description and Master Agreement for details. if used to pay eligible tuition and Required Fees: Required fees are only those that must be paid by all students as a condition of enrollment in the college or university. They do not include course-specific fees such as equipment usage or lab fees, or fees related to your major or year of study. .
- Parents, grandparents or even friends may make contributions of up to $18,000: Contributions are “completed gifts” for gift tax purposes and qualify for the $18,000 annual exclusion per Beneficiary. ($36,000 for married couples) per child each year, or up to : ($180,000 for married couples) prorated over five years to an account, without incurring federal gift tax. Although contributions under these limits are treated as completed gifts by federal tax law, the account owner retains ownership and control over the account. If the Account Owner dies before the first day of the fifth calendar year, the portion of the prorated contributions allocable to calendar years following the year of death (except for earnings on such investment) would be includible in the estate of the Account Owner for federal estate tax purposes. More information can be found in the Plan Description and Master Agreement. Purchasers should consult with a qualified tax advisor.
Tailor the Plan to Your Needs
Choose from a variety of educational goals and payment options. You can select more than one way to pay for your Tuition Units: Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure. .
Low Impact on Federal Financial Aid Requirements
When applying for federal financial aid, a Plan account owned by the parent is treated as an asset of the parent just like other 529 plans. This means a smaller impact on federal financial aid than if the Plan is an asset of the child.
It’s Easy to Open an Account
Open a Texas Tuition Promise Fund account online in about 15 minutes. Before opening an account, you should first review the Plan Description and Master Agreement for important details about the Plan. You will need to pay a one-time administrative fee of $25 and purchase as little as one Tuition Unit to establish an account. You may also download and mail an enrollment application.
You Control the Account
The Purchaser:
- Is the owner of the account and has control over how and when Tuition Units: Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure. are used.
- May change the Beneficiary to another qualified Beneficiary.
- May cancel the account and
Request a Refund:
For all units held at least three years (and for contracts cancelled due to the Beneficiary’s death, disability, receipt of scholarship or admission to a U.S. Military Academy), the Purchaser will receive the Refund Value, which is an amount equal to the price you paid for the unit plus or minus adjusted net investment earnings or losses on that amount, with the earnings rate set annually by the Board at a rate that is up to 2% less than the actual net earnings, is capped at 5%, and is net of any fees due and payable. The earnings portion of a Refund is also subject to federal income taxes plus a 10% federal tax as well as any state or local taxes that may apply. Earnings may only be paid on a refund subject to the actuarial soundness of the fund. Refund Value does not include any state-provided or procured matching contributions or earnings thereon.
For units that do not meet the three-year holding period requirement, the Purchaser will receive the Reduced Refund Value. It will be limited to the lesser of (1) the price you paid for the unit, or (2) the price you paid for the unit, plus or minus net investment earnings or losses on that amount, and is net of any fees due and payable. This means the Reduced Refund Value will not include any positive net earnings, but can be less than the purchase price if there have been periods of negative returns in the market. Reduced Refund Value does not include any state-provided or procured matching contributions or earnings thereon.
Entire Family Can Give
Once you open an account, you can invite the entire family, as well as friends, to Contribute: Contributions are “completed gifts” for gift tax purposes and qualify for the $16,000 annual exclusion per Beneficiary. The program limits purchases to dollar equivalent of 600 Type I units and also limits the aggregate amounts in all Texas 529 accounts to $370,000 per Beneficiary. to your Beneficiary’s account. The Plan makes it easy for your relatives and friends to give Tuition Units: Tuition Units are the unit of measure used to purchase prepaid tuition. Generally, one unit represents one percent of the cost of tuition and required fees for 30 semester hours at the school that most closely matches the unit’s pricing structure. to your Beneficiary on special occasions, such as holidays, birthdays, and elementary school graduations. And though the family will help you save, you will control how the money is spent.