101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB4129

 

Introduced 1/22/2020, by Rep. Joe Sosnowski

 

SYNOPSIS AS INTRODUCED:
 
110 ILCS 979/45

    Amends the Illinois Prepaid Tuition Act. Provides that Illinois prepaid tuition contracts may not be entered into after the effective date of the amendatory Act. Effective June 30, 2020.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning education.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Prepaid Tuition Act is amended by
5changing Section 45 as follows:
 
6    (110 ILCS 979/45)
7    Sec. 45. Illinois prepaid tuition contracts.
8    (a) The Commission may enter into an Illinois prepaid
9tuition contract with a purchaser under which the Commission
10contracts on behalf of the State to pay full tuition and
11mandatory fees at an Illinois public university or Illinois
12community college for a qualified beneficiary to attend the
13eligible institution to which the qualified beneficiary is
14admitted. However, Illinois prepaid tuition contracts may not
15be entered into after the effective date of this amendatory Act
16of the 101st General Assembly. Each contract shall contain
17terms, conditions, and provisions that the Commission
18determines to be necessary for ensuring the educational
19objectives and sustainable financial viability of the Illinois
20prepaid tuition program.
21    (b) Each contract shall have one designated purchaser and
22one designated qualified beneficiary. Unless otherwise
23specified in the contract, the purchaser owns the contract and

 

 

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1retains any tax liability for its assets only until the first
2distribution of benefits. Contracts shall be purchased in units
3of 15 credit hours.
4    (c) Without exception, benefits may be received by a
5qualified beneficiary of an Illinois prepaid tuition contract
6no earlier than 3 years from the date the contract is
7purchased.
8    (d) A prepaid tuition contract shall contain, but is not
9limited to, provisions for (i) refunds or withdrawals in
10certain circumstances, with or without interest or penalties;
11(ii) conversion of the contract at the time of distribution
12from accrued prepayment value at one type of eligible
13institution to the accrued prepayment value at a different type
14of eligible institution; (iii) portability of the accrued value
15of the prepayment value for use at an eligible institution
16located outside this State; (iv) transferability of the
17contract benefits within the qualified beneficiary's immediate
18family; and (v) a specified benefit period during which the
19contract may be redeemed.
20    (e) Each Illinois prepaid tuition contract also shall
21contain, at minimum, all of the following:
22        (1) The amount of payment or payments and the number of
23    payments required from a purchaser on behalf of a qualified
24    beneficiary.
25        (2) The terms and conditions under which purchasers
26    shall remit payments, including, but not limited to, the

 

 

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1    date or dates upon which each payment shall be due.
2        (3) Provisions for late payment charges and for
3    default.
4        (4) Provisions for penalty fees payable incident to an
5    authorized withdrawal.
6        (5) The name, date of birth, and social security number
7    or taxpayer identification number of the qualified
8    beneficiary on whose behalf the contract is drawn and the
9    terms and conditions under which the contract may be
10    transferred to another qualified beneficiary.
11        (6) The name and social security number or taxpayer
12    identification number of any person who may terminate the
13    contract, together with terms that specify whether the
14    contract may be terminated by the purchaser, the qualified
15    beneficiary, a specific designated person, or any
16    combination of these persons.
17        (7) The terms and conditions under which a contract may
18    be terminated, the name and social security number or
19    taxpayer identification number of the person entitled to
20    any refund due as a result of the termination of the
21    contract pursuant to those terms and conditions, and the
22    method for determining the amount of a refund.
23        (8) The time limitations, if any, within which the
24    qualified beneficiary must claim his or her benefits
25    through the program.
26        (9) Other terms and conditions determined by the

 

 

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1    Commission to be appropriate.
2    (f) In addition to the contract provisions set forth in
3subsection (e), each Illinois prepaid tuition contract shall
4include:
5        (1) The number of credit hours contracted by the
6    purchaser.
7        (2) The type of eligible institution and the prepaid
8    tuition plan toward which the credit hours shall be
9    applied.
10        (3) The explicit contractual obligation of the
11    Commission to the qualified beneficiary to provide a
12    specific number of credit hours of undergraduate
13    instruction at an eligible institution, not to exceed the
14    maximum number of credit hours required for the conference
15    of a degree that corresponds to the plan purchased on
16    behalf of the qualified beneficiary.
17    (g) The Commission shall indicate by rule the conditions
18under which refunds are payable to a contract purchaser.
19Generally, no refund shall exceed the amount paid into the
20Illinois Prepaid Tuition Trust Fund by the purchaser. In the
21event that a contract is converted from a Public University
22Plan described in subsection (j) of this Section to a Community
23College Plan described in subsection (k) of this Section, the
24refund amount shall be reduced by the amount transferred to the
25Illinois community college on behalf of the qualified
26beneficiary. Except where the Commission may otherwise rule,

 

 

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1refunds may exceed the amount paid into the Illinois Prepaid
2Tuition Trust Fund only under the following circumstances:
3        (1) If the qualified beneficiary is awarded a grant or
4    scholarship at a public institution of higher education,
5    the terms of which duplicate the benefits included in the
6    Illinois prepaid tuition contract, then moneys paid for the
7    purchase of the contract shall be returned to the
8    purchaser, upon request, in semester installments that
9    coincide with the matriculation by the qualified
10    beneficiary, in an amount equal to the current cost of
11    tuition and mandatory fees at the public institution of
12    higher education where the qualified beneficiary is
13    enrolled.
14        (1.5) If the qualified beneficiary is awarded a grant
15    or scholarship while enrolled at either an eligible
16    nonpublic institution of higher education or an eligible
17    public or private out-of-state higher education
18    institution, the terms of which duplicate the benefits
19    included in the Illinois prepaid tuition contract, then
20    money paid for the purchase of the contract shall be
21    returned to the purchaser, upon request, in semester
22    installments that coincide with the matriculation by the
23    qualified beneficiary. The amount paid shall not exceed the
24    current average mean-weighted credit hour value of the
25    registration fees purchased under the contract.
26        (2) In the event of the death or total disability of

 

 

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1    the qualified beneficiary, moneys paid for the purchase of
2    the Illinois prepaid tuition contract shall be returned to
3    the purchaser together with all accrued earnings.
4        (3) If an Illinois prepaid tuition contract is
5    converted from a Public University Plan to a Community
6    College Plan, then the amount refunded shall be the value
7    of the original Illinois prepaid tuition contract minus the
8    value of the contract after conversion.
9    No refund shall be authorized under an Illinois prepaid
10tuition contract for any semester partially attended but not
11completed.
12    The Commission, by rule, shall set forth specific
13procedures for making contract payments in conjunction with
14grants and scholarships awarded to contract beneficiaries.
15    Moneys paid into or out of the Illinois Prepaid Tuition
16Trust Fund by or on behalf of the purchaser or the qualified
17beneficiary of an Illinois prepaid tuition contract are exempt
18from all claims of creditors of the purchaser or beneficiary,
19so long as the contract has not been terminated.
20    The State or any State agency, county, municipality, or
21other political subdivision, by contract or collective
22bargaining agreement, may agree with any employee to remit
23payments toward the purchase of Illinois prepaid tuition
24contracts through payroll deductions made by the appropriate
25officer or officers of the entity making the payments. Such
26payments shall be held and administered in accordance with this

 

 

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1Act.
2    (h) Nothing in this Act shall be construed as a promise or
3guarantee that a qualified beneficiary will be admitted to an
4eligible institution or to a particular eligible institution,
5will be allowed to continue enrollment at an eligible
6institution after admission, or will be graduated from an
7eligible institution.
8    (i) The Commission shall develop and make prepaid tuition
9contracts available under a minimum of at least 2 independent
10plans to be known as the Public University Plan and the
11Community College Plan.
12    Contracts shall be purchased in units of 15 credit hours at
13either an Illinois public university or an Illinois community
14college. The minimum purchase amount per qualified beneficiary
15shall be one unit or 15 credit hours. The maximum purchase
16amount shall be 9 units (or 135 credit hours) for the Public
17University Plan and 4 units (or 60 credit hours) for the
18Community College Plan.
19    (j) Public University Plan. Through the Public University
20Plan, the Illinois prepaid tuition contract shall provide
21prepaid registration fees, which include full tuition costs as
22well as mandatory fees, for a specified number of undergraduate
23credit hours, not to exceed the maximum number of credit hours
24required for the conference of a baccalaureate degree. In
25determining the cost of participation in the Public University
26Plan, the Commission shall reference the combined

 

 

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1mean-weighted current registration fees from Illinois public
2universities.
3    In the event that a qualified beneficiary for whatever
4reason chooses to attend an Illinois community college, the
5qualified beneficiary may convert the average number of credit
6hours required for the conference of an associate degree from
7the Public University Plan to the Community College Plan and
8may retain the remaining Public University Plan credit hours or
9may request a refund for prepaid credit hours in excess of
10those required for conference of an associate degree. In
11determining the amount of any refund, the Commission also shall
12recognize the current relative credit hour cost of the 2 plans
13when making any conversion.
14    Qualified beneficiaries shall bear the cost of any
15laboratory or other non-mandatory fees associated with
16enrollment in specific courses. Qualified beneficiaries who
17are not Illinois residents shall bear the difference in cost
18between in-state registration fees guaranteed by the prepaid
19tuition contract and tuition and other charges assessed upon
20out-of-state students by the eligible institution.
21    (k) Community College Plan. Through the Community College
22Plan, the Illinois prepaid tuition contract shall provide
23prepaid registration fees, which include full tuition costs as
24well as mandatory fees, for a specified number of undergraduate
25credit hours, not to exceed the maximum number of credit hours
26required for the conference of an associate degree. In

 

 

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1determining the cost of participation in the Community College
2Plan, the Commission shall reference the combined
3mean-weighted current registration fees from all Illinois
4community colleges.
5    In the event that a qualified beneficiary for whatever
6reason chooses to attend an Illinois public university, the
7qualified beneficiary's prepaid tuition contract shall be
8converted for use at that Illinois public university by
9referencing the current average mean-weighted credit hour
10value of registration fees at Illinois community colleges
11relative to the corresponding value of registration fees at
12Illinois public universities.
13    Qualified beneficiaries shall bear the cost of any
14laboratory or other non-mandatory fees associated with
15enrollment in specific courses. Qualified beneficiaries who
16are not Illinois residents shall bear the difference in cost
17between in-state registration fees guaranteed by the prepaid
18tuition contract and tuition and other charges assessed upon
19out-of-state students by the eligible institution.
20    (l) A qualified beneficiary may apply the benefits of any
21Illinois prepaid tuition contract toward a nonpublic
22institution of higher education. In the event that a qualified
23beneficiary for whatever reason chooses to attend a nonpublic
24institution of higher education, the qualified beneficiary's
25prepaid tuition contract shall be converted for use at that
26nonpublic institution of higher education by referencing the

 

 

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1current average mean-weighted credit hour value of
2registration fees purchased under the contract. The Commission
3shall transfer, or cause to have transferred, this amount, less
4a transfer fee, to the nonpublic institution on behalf of the
5beneficiary. In the event that the cost of registration charged
6to the beneficiary at the nonpublic institution of higher
7education is less than the aggregate value of the Illinois
8prepaid tuition contract, any remaining amount shall be
9transferred in subsequent semesters until the transfer value is
10fully depleted.
11    (m) A qualified beneficiary may apply the benefits of any
12Illinois prepaid tuition contract toward an eligible
13out-of-state college or university. Institutional eligibility
14for out-of-state colleges and universities shall be determined
15by the Commission according to standards substantially
16equivalent to those for an eligible institution located in this
17State, as described in the definition of "institution of higher
18learning" in Section 10 of the Higher Education Student
19Assistance Act. In the event that a qualified beneficiary for
20whatever reason chooses to attend an eligible out-of-state
21college or university, the qualified beneficiary's prepaid
22tuition contract shall be converted for use at that college or
23university by referencing the current average mean-weighted
24credit hour value of registration fees purchased under the
25contract. The Commission shall transfer, or cause to have
26transferred, this amount, less a transfer fee, to the college

 

 

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1or university on behalf of the beneficiary. In the event that
2the cost of registration charged to the beneficiary at the
3eligible out-of-state college or university is less than the
4aggregate value of the Illinois prepaid tuition contract, any
5remaining amount shall be transferred in subsequent semesters
6until the transfer value is fully depleted.
7    (n) Illinois prepaid tuition contracts may be purchased
8either by lump sum or by installments. No penalty shall be
9assessed for early payment of installment contracts.
10    (o) The Commission shall annually adjust the price of new
11contracts, in accordance with the annual changes in
12registration fees at Illinois public universities and
13community colleges.
14(Source: P.A. 96-1282, eff. 7-26-10; 97-233, eff. 8-1-11.)
 
15    Section 99. Effective date. This Act takes effect June 30,
162020.