H 3087 Session 111 (1995-1996)
H 3087 General Bill, By J.L.M. Cromer, Bailey, J.M. Baxley, Delleney, Gamble,
Kelley, Richardson, Riser, J.S. Shissias, Stuart, Walker, Wilder and
Young-Brickell
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Chapter
118 to Title 59, so as to enact the South Carolina Prepaid Post-Secondary
Education Expense Program; to establish the South Carolina Prepaid
Post-Secondary Education Expense Board to implement the program; to amend
Section 12-7-435, as amended, relating to deductions from South Carolina
taxable income, so as to allow the deduction of payments for and benefits from
an advance payment contract for university and community college advance
payment plans, to require the Board to obtain rulings from the Internal
Revenue Service and the Securities and Exchange Commission with respect to the
program and to require the information to be provided to participants.
12/14/94 House Prefiled
12/14/94 House Referred to Committee on Ways and Means
01/10/95 House Introduced and read first time HJ-33
01/10/95 House Referred to Committee on Ways and Means HJ-33
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA,
1976, BY ADDING CHAPTER 118 TO TITLE 59, SO AS TO
ENACT THE SOUTH CAROLINA PREPAID
POST-SECONDARY EDUCATION EXPENSE PROGRAM; TO
ESTABLISH THE SOUTH CAROLINA PREPAID
POST-SECONDARY EDUCATION EXPENSE BOARD TO
IMPLEMENT THE PROGRAM; TO AMEND SECTION
12-7-435, AS AMENDED, RELATING TO DEDUCTIONS FROM
SOUTH CAROLINA TAXABLE INCOME, SO AS TO ALLOW
THE DEDUCTION OF PAYMENTS FOR AND BENEFITS
FROM AN ADVANCE PAYMENT CONTRACT FOR
UNIVERSITY AND COMMUNITY COLLEGE ADVANCE
PAYMENT PLANS, TO REQUIRE THE BOARD TO OBTAIN
RULINGS FROM THE INTERNAL REVENUE SERVICE AND
THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO THE PROGRAM AND TO REQUIRE THE
INFORMATION TO BE PROVIDED TO PARTICIPANTS.
Be it enacted by the General Assembly of the State of South
Carolina:
SECTION 1. Title 59 of the 1976 Code is amended by adding:
"CHAPTER 118
The South Carolina Prepaid Post-secondary
Education Expense Program
Section 59-118-10. This chapter may be cited as the South
Carolina Prepaid Post-secondary Education Expense Program.
Section 59-118-20. As used in this chapter:
(1) `Advance payment contract' means a contract entered into
by the board and a purchaser pursuant to this chapter.
(2) `Board' means the South Carolina Prepaid Post-secondary
Education Expense Board.
(3) `Community college' means a two-year state
post-secondary institution offering an associate degree.
(4) `Fund' means the Prepaid Post-secondary Education
Expense Trust Fund.
(5) `Program' means the South Carolina Prepaid
Post-secondary Education Expense Program.
(6) `Purchaser' means a person who makes or is obligated to
make advance registration or dormitory residence payments in
accordance with an advance payment contract.
(7) `Qualified beneficiary' means:
(a) A resident of this State at the time a purchaser enters
into an advance payment contract on behalf of the resident; or
(b) A nonresident who is the child of a noncustodial parent
who is a resident of this State at the time that the parent enters into
an advance payment contract on behalf of the child.
(8) `State post-secondary institution' means a public
institution of higher learning as defined in Section 59-103-5.
(9) `Registration fee' means the semester charges imposed to
attend a state post-secondary institution and all mandatory fees
required as a condition for enrolling as determined by the board.
(10) `University' means a four-year state post-secondary
institution which offers a baccalaureate degree.
Section 59-110-25. (A) There is created the South Carolina
Prepaid Post-secondary Education Expense Program Board
consisting of nine members as follows:
(1) the State Treasurer, ex officio;
(2) eight members appointed by the Governor with the advice
and consent of the Senate as follows:
(a) one member nominated by the President Pro Tempore
of the Senate for a term coterminous with that of the President Pro
Tempore;
(b) one member nominated by the Speaker of the House of
Representatives for a term coterminous with that of the Speaker of
the House;
(c) one member nominated by the Council of Presidents of
State Institutions of Higher Learning for a term of four years;
(d) one member nominated by the Advisory Council of
Private College Presidents for a term of four years;
(e) four members who shall serve for terms of four years,
one of whom must be designated chairman.
(B) Vacancies must be filed in the manner of original
appointment for the unexpired portion of the term. Members shall
receive the per diem, mileage, and subsistence authorized by law
for members of state boards, committees, and commissions.
Section 59-118-27. The board shall appoint an executive
director to serve as the chief administrative and operational officer
of the board and to perform other duties assigned to him by the
board.
The board has the powers necessary to carry out the provisions of
this chapter, including, but not limited to, the power to:
(1) adopt an official seal and rules;
(2) sue and be sued;
(3) make and execute contracts and other necessary
instruments;
(4) establish agreements or other transactions with federal,
state, and local agencies, including state post-secondary institutions;
(5) invest funds not required for immediate disbursement;
(6) appear in its own behalf before boards, commissions, or
other governmental agencies;
(7) hold, buy, and sell any instruments, obligations, securities,
and property determined appropriate by the board;
(8) require a reasonable length of state residence for qualified
beneficiaries;
(9) restrict the number of participants in the various plans.
However, any person denied participation solely on the basis of the
restriction must be granted priority for participation during the
succeeding year.
(10) segregate contributions and payments to the fund into
various accounts and funds;
(11) contract for necessary goods and services, employ
necessary personnel, and engage the services of private consultants,
actuaries, managers, legal counsel, and auditors for administrative
or technical assistance;
(12) solicit and accept gifts, grants, loans, and other aids from
any source or participate in any other way in any government
program to carry out the purposes of this chapter;
(13) require and collect administrative fees and charges in
connection with any transaction and impose reasonable penalties,
including default, for delinquent payments or for entering into an
advance payment contract on a fraudulent basis;
(14) procure insurance against any loss in connection with the
property, assets, and activities of the fund or the board;
(15) impose reasonable time limits on use of the tuition
benefits provided by the program. However, any such limitation
must be specified within the advance payment contract;
(16) delineate the terms and conditions under which payments
may be withdrawn from the fund and impose reasonable fees and
charges for the withdrawal. The terms and conditions must be
specified within the advance payment contract.
(17) provide for the receipt of contributions in lump sums or
installment payments;
(18) establish other policies, procedures, and criteria to
implement and administer the provisions of this chapter.
Section 59-118-30. (A) There is created the South Carolina
Prepaid Post-secondary Education Expense Program to provide a
medium through which the cost of registration and dormitory
residence may be paid in advance of enrollment in a state
post-secondary institution at a rate lower than the projected
corresponding cost at the time of actual enrollment. These
payments must be combined and invested in a manner that yields, at
a minimum, sufficient interest to generate the difference between
the prepaid amount and the cost of registration and dormitory
residence at the time of actual enrollment. Students who enroll in a
state post-secondary institution pursuant to this chapter may be
charged no fees in excess of the terms delineated in the advance
payment contract.
(B) The board shall administer the fund in a manner that is
sufficiently actuarially sound to defray the obligations of the
program. The board shall annually evaluate or cause to be
evaluated the actuarial soundness of the fund. If the board
perceives a need for additional assets in order to preserve actuarial
soundness, the board may adjust the terms of subsequent advance
payment contracts to ensure such soundness.
(C) The board, acting with the approval of the State Budget and
Control Board, shall establish a comprehensive investment plan for
the purposes of this chapter. The comprehensive investment plan
shall specify the investment policies to be utilized by the board in
its administration of the fund. The board may place assets of the
fund in savings accounts or use assets to purchase fixed or variable
life insurance or annuity contracts, securities, evidence of
indebtedness, or other investment products pursuant to the
comprehensive investment plan and in the proportions as may be
designated or approved under that plan. The insurance, annuity,
savings, or investment products must be underwritten and offered in
compliance with the applicable federal and state laws, regulations,
and rules by persons who are authorized by applicable federal and
state authorities. Within the comprehensive investment plan, the
board may authorize investment vehicles, or products incident to
investment vehicles, as may be available or offered by qualified
companies or persons.
(D) The board may delegate responsibility for administration of
the comprehensive investment plan required in subsection (C) of
this section to a person the board determines to be qualified. This
person must be compensated by the board. Directly or through this
person, the board may contract with a private corporation or
institution to provide those services as may be a part of the
comprehensive investment plan or as considered necessary by the
board or the person, including, but not limited to, providing
consolidated billing, individual and collective recordkeeping and
accountings, and asset purchase, control, and safekeeping.
(E) The board shall annually prepare or cause to be prepared a
report setting forth in appropriate detail an accounting of the fund
and a description of the financial condition of the program at the
close of each fiscal year. The report must be submitted to the
President of the Senate, the Speaker of the House of
Representatives, the State Budget and Control Board, and members
of the Commission on Higher Education before March first of each
year. In addition, the board shall make the report available to
purchasers of advance payment contracts. The accounts of the fund
are subject to annual audits by the State Auditor or his designee.
(F) The board shall solicit answers to applicable ruling requests
from the Internal Revenue Service regarding the tax status of fees
paid pursuant to an advance payment contract to the purchaser or
qualified beneficiary and from the Securities and Exchange
Commission regarding the application of federal securities laws to
the fund. The board shall make the status of these requests known
before entering into an advance payment contract.
(G) The board shall solicit proposals for the marketing of the
South Carolina Prepaid Post-secondary Education Expense Program
pursuant to the South Carolina Consolidated Procurement Code.
The entity designated pursuant to this subsection shall serve as a
centralized marketing agent for the program and is solely
responsible for the marketing of the program. Any materials
produced for the purpose of marketing the program must be
submitted to the board for review. No materials may be made
available to the public before the materials are approved by the
board. Any educational institution may distribute marketing
materials produced for the program; however, all the materials must
have been approved by the board before distribution. Neither the
State nor the board shall be liable for misrepresentation of the
program by a marketing agent.
(H) The board may establish a direct-support organization which
is:
(1) A South Carolina corporation, not for profit, organized
under the applicable laws of this State.
(2) Organized and operated exclusively to receive, hold,
invest, and administer property and to make expenditures to or for
the benefit of the program.
(3) An organization which the board, after review, has
certified to be operating in a manner consistent with the goals of
the program and in the best interests of the State. Unless so
certified, the organization may not use the name of the program.
(4) Subject to an annual post audit by an independent
certified public accountant in accordance with rules prescribed by
the board. The annual audit must be submitted to the Department
of Insurance and the State Auditor for review. The Department of
Insurance and the State Auditor may require and receive from the
organization or its independent auditor any detail or supplemental
data relative to the operation of the organization. The identity of
donors who desire to remain anonymous must be protected, and this
anonymity must be maintained in the auditor's report. All records
of the organization other than the auditor's report and the
supplemental data requested by the Department of Insurance or the
State Auditor are not considered public records for the purpose of
the Freedom of Information Act.
The chairman of the board and the executive director must be
directors of the direct-support organization and shall jointly name
three other individuals to serve as directors of the organization.
(I) The board may endorse insurance coverage written
exclusively for the purpose of protecting advance payment
contracts, and the purchasers or beneficiaries of the contracts, which
may be issued in the form of a group life policy.
Section 59-118-40. (A) The board shall construct advance
payment contracts for registration and advance payment contracts
for dormitory residence in accordance with the provisions of this
chapter. Advance payment contracts constructed for the purposes of
this section are exempt from the provisions of the South Carolina
insurance laws. The board may request assistance from the
Attorney General in the development of the advance payment
contracts. The contents of both contracts must include, but not be
limited to, the following:
(1) the amount of the payment or payments and the
number of payments required from a purchaser on behalf of a
qualified beneficiary;
(2) the terms and conditions under which purchasers
shall remit payments including, but not limited to, the date or dates
upon which each payment is due;
(3) provisions for late payment charges and for default;
(4) provisions for penalty fees for withdrawals from the
fund;
(5) the name and date of birth of the qualified
beneficiary on whose behalf the contract is drawn and the terms and
conditions under which another person may be substituted as the
qualified beneficiary;
(6) the name of a person who may terminate the
contract. The terms of the contract must specify whether the
contract may be terminated by the purchaser, the qualified
beneficiary, a specific designated person, or any combination of
these persons;
(7) the terms and conditions under which a contract may
be terminated, the name of the person entitled to a refund due as a
result of termination of the contract pursuant to the terms and
conditions, and the amount of refund, if any, due to the person so
named;
(8) the time limitations, if any, within which the
qualified beneficiary must claim his benefits through the program;
(9) other terms and conditions considered by the board
to be appropriate.
(B) In addition to the provisions of Subsection (A), an
advance payment contract for registration must include, but not be
limited to, the following:
(1) the number of credit hours contracted by the
purchaser;
(2) the state post-secondary system toward which the
contracted credit hours will be applied;
(3) the assumption of a contractual obligation by the
board to the qualified beneficiary to provide for a specified number
of credit hours of undergraduate instruction at a state
post-secondary institution, not to exceed the average number of
credit hours required for the conference of the degree that
corresponds to the plan purchased on behalf of the qualified
beneficiary.
(C) In addition to the provisions of subsection (A), an
advance payment contract for dormitory residence must include, but
not be limited to, the following:
(1) the number of semesters of dormitory residence
contracted by the purchaser;
(2) the assumption of a contractual obligation by the
board to the qualified beneficiary to provide for a specified number
of semesters of dormitory residence at a state university, not to
exceed the maximum number of semesters of full-time enrollment
required for the conference of a baccalaureate degree.
(D) An advance payment contract may provide that
contracts which have not been terminated or the benefits exercised
within a specified period of time are considered terminated. Time
expended by a qualified beneficiary as an active duty member of
any of the armed services of the United States must be added to the
time specified pursuant to this subsection. No purchaser or
qualified beneficiary whose advance payment contract is terminated
pursuant to this subsection is entitled to a refund. The board shall
retain any monies paid by the purchaser for an advance payment
contract that has been terminated in accordance with this subsection.
Monies retained by the board must be used by the board to further
the purposes of this chapter.
(E) No refund provided pursuant to Subsection (A)(7) may
exceed the amount paid into the fund by the purchaser. If an
advance payment contract is converted from a university to a
community college registration plan, the refund amount must be
reduced by the amount transferred to a community college on
behalf of the qualified beneficiary. However, refunds may exceed
the amount paid into the fund in the following circumstances:
(a) If the beneficiary is awarded a scholarship, the
terms of which cover the benefits included in the advance payment
contracts, monies paid for the purchase of the advance payment
contracts must be returned to the purchaser in semester installments
coinciding with the matriculation by the beneficiary in amount of
the original purchase price plus five percent compounded interest.
(b) In the event of the death or total disability of
the beneficiary, monies paid for the purchase of advance payment
contracts must be returned to the purchaser together with five
percent compounded interest.
(c) (i) If an advance payment contract is
converted from a university plan to a community college plan or a
community college plus university plan, or is converted from a
community college plus university plan to a community college
plan, the amount refunded must be the value of the original advance
payment contract minus the value of the contract after the
conversion.
(ii) No refund is authorized through an
advance payment contract for any school year partially attended but
not completed. For purposes of this chapter, a school year partially
attended but not completed shall mean any one semester in which
the student is still enrolled at the conclusion of the official drop-add
period, but withdraws before the end of the semester. If a
beneficiary does not complete a community college plan or
university plan for reasons other than specified in this section, the
purchaser shall receive a refund of the amount paid into the fund
for the remaining unattended years of the advance payment contract
pursuant to rules prescribed by the board.
Section 59-118-50. At a minimum, the board shall make
advance payment contracts available for three independent plans to
be known as the community college plan, the university plan, and
the dormitory residence plan, respectively.
(1) Through the community college plan, the advance
payment contract must provide prepaid registration fees for a
specified number of undergraduate semester credit hours not to
exceed the average number of hours required for the conference of
an associate degree. The cost of participation in the community
college plan must be based primarily on the average current and
projected registration fees within the Technical Education System
and the number of years expected to elapse between the purchase of
the plan on behalf of a qualified beneficiary and the exercise of the
benefits provided in the plan by the beneficiary. Qualified
beneficiaries shall bear the cost of any laboratory fees associated
with enrollment in specific courses. Each qualified beneficiary
must be classified as a resident for tuition purposes regardless of his
actual legal residence.
(2) Through the university plan, the advance payment
contract must provide prepaid registration fees for a specified
number of undergraduate semester credit hours not to exceed the
average number of hours required for the conference of a
baccalaureate degree. The cost of participation in the university
plan must be based primarily on the current and projected
registration fees of state four-year post-secondary institutions and
the number of years expected to elapse between the purchase of the
plan on behalf of a qualified beneficiary and the exercise of the
benefits provided in the plan by the beneficiary. Qualified
beneficiaries must bear the cost of any laboratory fees associated
with enrollment in specific courses. If a qualified beneficiary fails
to be admitted to a state four-year post-secondary institution or
chooses to attend a community college, the qualified beneficiary
may convert the average number of semester credit hours required
for the conference of an associate degree from a university plan to a
community college plan and may retain the remaining semester
credit hours in the university plan or may request a refund for
prepaid credit hours in excess of the average number of semester or
quarter credit hours required for the conference of an associate
degree pursuant to Section 59-118-40(A)(7). Each qualified
beneficiary must be classified as a resident for tuition purposes
regardless of his actual legal residence.
(3) Through the dormitory residence plan, the advance
payment contract must provide prepaid housing fees for a maximum
of ten semesters of full-time undergraduate enrollment in a state
four-year post-secondary institution. Dormitory residence plans are
optional and may be purchased only in conjunction with a
university plan. Dormitory residence plans must be purchased in
increments of two semesters. The cost of participation in the
dormitory residence plan must be based primarily on the average
current and projected housing fees for state four-year
post-secondary institutions and the number of years expected to
elapse between the purchase of the plan on behalf of a qualified
beneficiary and the exercise of the benefits provided in the plan by
the beneficiary. Qualified beneficiaries must bear the cost of any
additional elective charges such as laundry service or long distance
telephone service. Each four-year post-secondary institution may
specify the residence halls eligible for inclusion in the plan. In
addition, any such institution may request immediate termination of
a dormitory residence contract based on a violation or multiple
violations of rules of the residence hall. Qualified beneficiaries
must have the highest priority in the assignment of housing within
residence halls. If sufficient housing is not available for all
qualified beneficiaries, the board shall refund the purchaser or
qualified beneficiary an amount equal to the fees charged for
dormitory residence during that semester.
(4) A qualified beneficiary may apply a community college
plan, university plan, or dormitory residence plan toward any
eligible independent college or university in this State as defined in
Section 59-113-50. In order to be eligible for participation in the
dormitory residence plan, an eligible independent college or
university must provide written certification to the board that it
complies with the provisions of item (3) of this section. The board
shall transfer or cause to have transferred to the eligible
independent college or university designated by the qualified
beneficiary an amount not to exceed the redemption value of the
plan within a state post-secondary institution. If the cost of
registration or housing fees at the independent college or university
is less than the corresponding fees at a state post-secondary
institution, the amount transferred may not exceed the actual cost of
registration or housing fees. No transfer authorized pursuant to this
item may exceed the number of semester credit hours or semesters
of dormitory residence contracted on behalf of a qualified
beneficiary.
Section 59-118-60. The board shall solicit proposals for the
operation of the South Carolina Post-secondary Education Expense
Program pursuant to the South Carolina Consolidated Procurement
Code, through which the board shall contract for the services of a
records administrator, a trustee services firm, and one or more
product providers.
(1) The records administrator must be the entity designated by
the board to conduct the daily operations of the program on behalf
of the board. The goals of the board in selecting a records
administrator must be to provide all purchasers with the most
secure, well-diversified, and beneficially administered
post-secondary education expense plan possible, to allow all
qualified firms invested in providing the services equal
consideration and to provide the services to the State at no cost and
to the purchasers at the lowest cost possible. Evaluations of
proposals submitted pursuant to this paragraph must include, but not
be limited to, the following criteria:
(a) fees and other costs charged to purchasers that affect
account values or operational costs related to the program;
(b) past experience in records administration and current
ability to provide timely and accurate service in the areas of records
administration, audit, and reconciliation, plan communication,
participant service, and complaint resolution;
(c) sufficient staff and computer capability for the scope and
level of service expected by the board;
(d) financial history and current financial strength and capital
adequacy to provide administrative services required by the board.
(2) The trustee services firm must be the entity designated by
the board to select and supervise investment programs on behalf of
the board. The goals of the board in selecting a trustee services
firm must be to obtain the highest standards of professional trustee
services, to allow all qualified firms interested in providing these
services equal consideration, and to provide the services to the State
at no cost and to the purchasers at the lowest cost possible. The
trustee services firm shall agree to meet the obligations of the board
to qualified beneficiaries if monies in the fund fail to offset the
obligations of the board as a result of imprudent selection or
supervision of investment programs by the firm. Evaluation of
proposals submitted pursuant to this item must include, but not be
limited to, the following criteria:
(a) adequacy of trustee services for supervision and
management of the program, including current operations and staff
organization and commitment of management to the proposal;
(b) capability to execute program responsibilities within time
and regulatory constraints;
(c) past experience in trustee services and current ability to
maintain regular and continuous interactions with the board, records
administrator, and product provider;
(d) the minimum purchaser participation assumed within the
proposal and any additional requirements of purchasers;
(e) adequacy of technical assistance and services proposed for
staff;
(f) adequacy of a management system for evaluation and
improving overall trustee services to the program;
(g) adequacy of facilities, equipment, and electronic data
processing services;
(h) detailed projections of administrative costs, including the
amount and type of insurance coverage, and detailed projections of
total costs.
(3) (a) The product providers must be the entities designated
by the board to develop investment portfolios on behalf of the
board to achieve the purposes of this chapter. Product providers are
limited to authorized insurers, banks, savings and loan associations,
authorized Securities and Exchange Commission investment
advisors, and investment companies as defined in the Investment
Company Act of 1940. All product providers must have their
principal place of business and corporate charter located and
registered in the United States. In addition, each product provider
must agree to meet the obligations of the board to qualified
beneficiaries if monies in the fund fail to offset the obligations of
the board as a result of imprudent investing by the provider. Each
authorized insurer shall evidence superior performance overall on an
acceptable level of surety in meeting its obligations to its
policyholders and other contractual obligations. Only qualified
public depositories approved by the Director of the Department of
Insurance and State Treasurer are eligible for board consideration.
Each investment company shall provide investment plans as
specified within the request for proposals.
(b) The goals of the board in selecting a product provider
company must be to provide all purchasers with the most secure,
well-diversified, and beneficially administered post-secondary
education expense plan possible, to allow all qualified firms
interested in providing the services equal consideration, and to
provide the services to the State at no cost and to the purchasers at
the lowest cost possible. Evaluations of proposals submitted
pursuant to this section must include, but not be limited to, the
following criteria:
(i) fees and other costs charged to purchasers that affect
account values or operational costs related to the program;
(ii) past and current investment performance, including
investment and interest rate history, guaranteed minimum rates of
interest, consistence of investment performance, and any terms and
conditions under which monies are held;
(iii) past experience and ability to provide timely and accurate
service in the areas of records administration, benefit payments,
investment management, and complaint resolution;
( iv) financial history and current financial strength and
capital adequacy to provide products, including operating
procedures and other methods of protecting program assets.
Section 59-118-70. The State shall agree to meet the obligations
of the board to qualified beneficiaries if monies in the fund fail to
offset the obligations of the board. The General Assembly shall
appropriate to the Prepaid Post-secondary Education Expense Trust
Fund the amount necessary to meet the obligations of the board to
qualified beneficiaries.
Section 59-118-80. The assets of the fund must be maintained,
invested, and expended solely for the purposes of this chapter and
may not be loaned, transferred, or otherwise used by the State for
any purpose other than the purposes of this chapter. This section
may not be construed to prohibit the board from investing in, by
purchase or otherwise, bonds, notes, or other obligations of the
State or an agency or instrumentality of the State. Unless otherwise
specified by the board, assets of the fund must be expended in the
following order of priority:
(1) to make payments to state post-secondary institutions on
behalf of qualified beneficiaries;
(2) to make refunds upon termination of advance payment
contracts;
(3) to pay the costs of program administration and operations.
Section 59-118-90. Monies paid into or out of the fund by or on
behalf of a purchaser or qualified beneficiary of an advance
payment contract made under this chapter, which contract has not
been terminated, are exempt from all claims of creditors of the
purchaser or the beneficiary.
Section 59-118-100. The State or a county, municipality, or
other political subdivision may by contract agree with any employee
to remit payments toward advance payment contracts through
payroll deductions made by the appropriate officer or officers of the
State, county, municipality, or political subdivision. The payments
must be held and administered in accordance with this chapter.
Section 59-118-110. Nothing in this chapter may be construed
as a promise or guarantee that a qualified beneficiary will be
admitted to a state post-secondary institution or to a particular state
post-secondary institution, will be allowed to continue enrollment at
a state post-secondary institution after admission, or will be
graduated from a state post-secondary institution.
Section 59-118-120. If the State determines the program to be
financially infeasible, the state may discontinue the program. Any
qualified beneficiary who has been accepted by and is enrolled or is
within five years of enrollment in an eligible independent college or
university or state post-secondary institution is entitled to exercise
the complete benefits for which he has contracted. All other
contract holders shall receive a refund, pursuant to Section
58-118-40(A)(7), of the amount paid in and an additional amount in
the nature of interest at a rate that corresponds, at a minimum, to
the prevailing interest rates for savings accounts provided by banks
and savings and loan associations."
SECTION 2. Section 12-7-435 of the 1976 Code, as last
amended by Act 497 of 1994, Part II, Section 3, is further amended
by adding an appropriately lettered item to read:
"( ) An amount paid to purchase a university or
community college advance payment plan, not including a
dormitory residence plan, pursuant to Chapter 118 of Title 59 and
an amount equal to income attributable for federal income tax
purposes to a beneficiary from payments of tuition and fees by a
university or community college advance payment contract in the
year the beneficiary's tuition is paid."
SECTION 3. The initial terms of two of the four members of
the South Carolina Prepaid Post-secondary Education Expense
Program Board established by this act is two years and the
Governor shall note the term of the appointment.
SECTION 4. This act takes effect July 1, 1995.
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