H 3309 Session 109 (1991-1992)
H 3309 General Bill, By J. Rama
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 Postsecondary
Education Expense Program; to establish the South Carolina Prepaid
Postsecondary 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.
01/24/91 House Introduced and read first time HJ-6
01/24/91 House Referred to Committee on Ways and Means HJ-7
04/23/91 House Tabled in committee
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 POSTSECONDARY EDUCATION
EXPENSE PROGRAM; TO ESTABLISH THE SOUTH CAROLINA
PREPAID POSTSECONDARY 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 Postsecondary
Education Expense Program
Section 59-118-10. This chapter may be cited as the South Carolina
Prepaid Postsecondary 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 Postsecondary
Education Expense Board.
(3) `Community college' means a two-year state postsecondary
institution offering an associate degree.
(4) `Fund' means the Prepaid Postsecondary Education
Expense Trust Fund.
(5) `Program' means the South Carolina Prepaid
Postsecondary 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 postsecondary 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 postsecondary institution and all mandatory fees required
as a condition for enrolling as determined by the board.
(10) `University' means a four-year state postsecondary institution
which offers a baccalaureate degree.
Section 59-110-25. (A) There is created the South Carolina
Prepaid Postsecondary 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 postsecondary 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 Postsecondary 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 postsecondary 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 postsecondary 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 Postsecondary 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 postaudit 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 postsecondary 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 postsecondary
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) (1) 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 postsecondary
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 postsecondary 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
postsecondary 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 postsecondary 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 postsecondary 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 postsecondary institution. If
the cost of registration or housing fees at the independent college or
university is less than the corresponding fees at a state postsecondary
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 Postsecondary 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 postsecondary 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 Chief Insurance Commissioner 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 postsecondary 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 Postsecondary 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 postsecondary 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 postsecondary institution or to a particular state postsecondary
institution, will be allowed to continue enrollment at a state
postsecondary institution after admission, or will be graduated from a
state postsecondary 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 postsecondary 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, as last amended by Act 189 of 1989, 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 payme6
nt 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 Postsecondary 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, 1991.
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