23-38.81 - Prepaid tuition contracts and savings trust agreements; terms; termination; etc.
§ 23-38.81. Prepaid tuition contracts and savings trust agreements; terms;termination; etc.
A. Each prepaid tuition contract made pursuant to this chapter shall includethe following terms and provisions:
1. The amount of payment or payments and the number of payments required froma purchaser on behalf of a qualified beneficiary;
2. The terms and conditions under which purchasers shall remit payments,including the dates of such payments;
3. Provisions for late payment charges, defaults, withdrawals, refunds, andany penalties;
4. The name and date of birth of the qualified beneficiary on whose behalfthe contract is made;
5. Terms and conditions for a substitution for the qualified beneficiaryoriginally named;
6. Terms and conditions for termination of the contract, including anyrefunds, withdrawals, or transfers of tuition prepayments, and the name ofthe person or persons entitled to terminate the contract;
7. The time period during which the qualified beneficiary must claim benefitsfrom the Plan;
8. The number of credit hours or quarters, semesters, or terms contracted forby the purchaser;
9. All other rights and obligations of the purchaser and the trust; and
10. Any other terms and conditions which the Board deems necessary orappropriate, including those necessary to conform the contract with therequirements of Internal Revenue Code § 529, as amended, which specifies therequirements for qualified state tuition programs.
B. Each savings trust agreement made pursuant to this chapter shall includethe following terms and provisions:
1. The maximum and minimum contribution allowed on behalf of each qualifiedbeneficiary for the payment of qualified higher education expenses ateligible institutions, both as defined in § 529 of the Internal Revenue Codeof 1986, as amended, or other applicable federal law;
2. Provisions for withdrawals, refunds, transfers, and any penalties;
3. The name, address, and date of birth of the qualified beneficiary on whosebehalf the savings trust account is opened;
4. Terms and conditions for a substitution for the qualified beneficiaryoriginally named;
5. Terms and conditions for termination of the account, including anyrefunds, withdrawals, or transfers, and applicable penalties, and the name ofthe person or persons entitled to terminate the account;
6. The time period during which the qualified beneficiary must use benefitsfrom the savings trust account;
7. All other rights and obligations of the contributor and the Plan; and
8. Any other terms and conditions which the Board deems necessary orappropriate, including those necessary to conform the savings trust accountwith the requirements of § 529 of the Internal Revenue Code of 1986, asamended, or other applicable federal law.
C. In addition to the provisions required by subsection A of this section,each prepaid tuition contract shall include provisions for the application oftuition prepayments (i) at accredited, nonprofit, independent institutions ofhigher education located in Virginia, including actual interest and incomeearned on such prepayments and (ii) at public and at accredited, nonprofit,independent institutions of higher education located in other states,including principal and reasonable return on such principal as determined bythe Board. Payments authorized for accredited, nonprofit, independentinstitutions located in Virginia may not exceed the projected highest paymentmade for tuition at a public institution of higher education in Virginia inthe same academic year, less a fee to be determined by the Board. Paymentsauthorized for public and for accredited, nonprofit, independent institutionsof higher education located in other states may not exceed the projectedaverage payment made for tuition at a public institution of higher educationin Virginia in the same academic year, less a fee to be determined by theBoard.
D. All prepaid tuition contracts and savings trust agreements shallspecifically provide that, if after a specified period of time the contractor savings trust agreement has not been terminated nor the qualifiedbeneficiary's rights exercised, the Board, after making reasonable effort tocontact the purchaser or contributor and the qualified beneficiary or theiragents, shall report such unclaimed moneys to the State Treasurer pursuant to§ 55-210.12.
E. Notwithstanding any provision of law to the contrary, money in the Planshall be exempt from creditor process and shall not be liable to attachment,garnishment, or other process, nor shall it be seized, taken, appropriated,or applied by any legal or equitable process or operation of law to pay anydebt or liability of any purchaser, contributor or beneficiary.
F. No contract or savings trust account shall be assigned for the benefit ofcreditors, used as security or collateral for any loan, or otherwise subjectto alienation, sale, transfer, assignment, pledge, encumbrance or charge.
G. The Board's decision on any dispute, claim, or action arising out of orrelated to a prepaid tuition contract or savings trust agreement made orentered into pursuant to this chapter or benefits thereunder shall beconsidered a case decision as defined in § 2.2-4001 and all proceedingsrelated thereto shall be conducted pursuant to Article 3 (§ 2.2-4018 et seq.)of the Administrative Process Act. Judicial review shall be exclusivelyprovided pursuant to Article 5 (§ 2.2-4025 et seq.) of the AdministrativeProcess Act.
(1994, c. 661; 1995, c. 315; 1997, cc. 785, 861; 1999, cc. 485, 518; 2000,cc. 382, 400.)