Q & A on the Texas Tomorrow Fund

What is the Texas Tomorrow Fund?
The Texas Tomorrow Fund is a fund administered by the Texas Pre-Paid Higher Education Tuition Board that gives individuals a chance to prepay tomorrow’s college tuition and required fees at Texas public and private colleges and universities for about what it would cost today. The Board invests these payments and uses the investments earnings to cover the full cost of college tuition and required fees at Texas public colleges and universities, or the estimated average tuition and required fees at Texas private colleges and universities, for students enrolled in the program.

Exactly what does the Texas Tomorrow Fund cover?
A prepaid tuition contract can pay up to 160 credit hours of tuition and required fees for students at any public college or university or the estimated average private tuition and required fees for students at any private university. Required fees are those fees that are charged to all students as a condition of enrollment at a particular institution of higher education.

The Texas Tomorrow Fund does not cover room and board, transportation, books, laboratory fees or other fees required for specific courses.

The fund will pay the maximum number of credit hours listed below for the type of plan purchased:

• The junior college plan covers 64 credit hours of tuition and required fees.
• The senior college plan and private college plans can cover 160 credit hours of tuition and required fees.
• The junior-senior college plan covers 64 credit hours at a community or technical college and 64 hours at a senior college or university, for 128 total credit hours of tuition and required fees.

It should be noted that some degrees require more credit hours than those paid for by a Texas Tomorrow Fund contract. Likewise, some degrees or courses require specific fees that are not covered by the Texas Tomorrow Fund. In both these cases, the student will be responsible for paying any additional amount due.

Why should I prepay my child’s tuition?
Although Texas tuition and required fees remain below the national average, in recent years they have been increasing at a rate of about 8 percent annually. That’s more than twice the rate of increase in the average family’s household income and considerably higher than the interest rate paid on a passbook savings account, certificate of deposit, or other insured investment. By pre-paying tuition and required fees through the Texas Tomorrow Fund, you don’t have to worry about keeping up with tuition inflation: your future college student’s tuition and required fees will be paid at a price locked in by your contract – no matter how much these costs skyrocket in the future.

What colleges & universities are covered by the four plans?
The Texas Tomorrow Fund is accepted at all accredited in-state and out-of-state public and private junior/community and senior colleges and universities, and Texas propriety schools accredited by the Texas Higher Education Coordinating Board. You do not have to name a specific school when you buy a contract.

Who is eligible?
Anyone may purchase a prepaid tuition contract – parents, grandparents, relatives, friends, businesses, civic organizations or clubs. The beneficiary must not have graduated from high school and must be a Texas resident for at least the 12-month period immediately preceding the date of the application. Or the beneficiary can be a nonresident child of a parent who is a Texas resident if that parent is the purchaser. A beneficiary will be considered a Texas resident for tuition purposes for the semesters that the beneficiary is receiving contract benefits. The beneficiary is considered a resident for tuition purposes regardless of the beneficiary’s residence at the time of enrollment in college. In accessing the 12 months of continuous residency requirement, brief absences may be waived by the board. However, out-of-state beneficiaries are not considered residents for admission purposes.

What are the types of prepaid tuition contracts?
The Texas Tomorrow Fund offers four plans:

The Junior College Plan allows a person to prepay up to 64 credit hours of tuition and required fees at any public junior or community college in the state. The plan also covers the Texas State Technical Colleges.

The Senior College Plan allows a person to prepay up to 160 credit hours of tuition and required fees at any public senior college or university in the state.

The Junior-Senior College Plan allows a person to prepay up to 64 credit hours of tuition and required fees at any public, community or technical college in the state. In addition, this plan provides prepaid tuition and required fees for any public senior college or university in the state, up to 64 credit hours.

The Private College Plan provides and estimated average private tuition and required fees, as determined by the board each year, and applies this amount toward any of Texas’ private or independent colleges for up to 160 credit hours. IMPORTANT: If tuition and required fees at the private college chosen exceeds the estimated average, the beneficiary is responsible for the remaining balance. If the private school charges are less than the estimated average, the purchaser will receive a refund for the difference.

Can I make changes to my contract in the future?
Yes, the Fund allows the flexibility to meet the changing needs of your family by allowing changes in your prepaid tuition contract. You may change your contract to reduce benefits (such as changing from the Senior College Plan to the Junior College Plan) at any time. Just write the Texas Tomorrow Fund and ask them to change you to a lower priced plan. You can also change payment schedules such as changing from five-year to ten-year payments. There is a $15 fee for these plan changes.

What payment options are available?
Contract purchasers may choose from the following:

• A one-time lump sum payment
• Fixed five-year or 10-year periods, paid in monthly installments
• Monthly installments until August of the beneficiary’s projected high school graduation
• Annual installments

Any of the monthly installment options may be made through electronic funds transfer (automatic bank draft), coupons mailed directly to the Fund or through payroll deductions. Regardless of the payment option, the agreed upon amount at the time of purchase will not change over the life of the contract. Any installment option (monthly or annually) will make the total amount paid into the contract more than the lump sum cost of the contract.

When is the enrollment period?
The current enrollment period runs until May 24, 2002. To lock in this year’s prices, applications must be postmarked or an on-line application must be received by May 24, 2002. The first payment is due August 1, 2002.

How do I enroll or obtain program information?
Parents, grandparents, friends, businesses or any other person may buy a contract with the state to prepay up to five years’ worth of in-state credit hours and required fees for students at any public or private college and university in the state. You may obtain an application by calling 1-800-445-GRAD (4723) or from participating banks and financial institutions, schools, or public libraries. You may also apply on-line at www.texastomorrowfund.org.