What college expenses are covered by a SCTPP contract?

SCTPP contract benefits are used to pay undergraduate tuition equal to block pricing and most mandatory fees at South Carolina’s public colleges and universities. If you previously purchased a Four-Year College/University Plan, SCTPP will pay tuition expenses for 8 semesters. If you previously purchased a Two-Year College/University Plan, SCTPP will pay tuition expenses for 4 semesters.

The benefits may also be applied toward the cost of undergraduate tuition and fees at private schools and out-of-state schools, although full coverage of these costs is not guaranteed. An amount up to the average tuition rate for public universities in South Carolina will be applied toward private and out-of-state college tuition costs.

Mandatory fees are those fees required as a condition of enrollment for all students attending a particular college or university, regardless of the student’s year or program of study. At this time, your SCTPP contract does not include the cost of books, room and board, uniforms, laundry, or transportation, even if these types of expenses are considered mandatory by the university your child chooses to attend. Fees associated with a particular class or field of study, such as lab and equipment fees, are not considered mandatory fees by SCTPP and are not paid by SCTPP.

Is there another plan that will cover higher education expenses not covered by the SCTPP?

Yes. South Carolina has another 529 plan called Future Scholar 529 College Savings Plan. It was designed with more flexibility to allow for funding of all qualified higher education costs, including room and board as well as expenses for books, supplies, and even graduate school tuition. It is strictly a savings plan for which you have the option of how to invest your money. There is no "open enrollment" period for this plan. You can open an account at any time during the year. Even if your child is already in college you can open a Future Scholar account and receive a state tax deduction for qualified expenses. For additional information about Future Scholar, call 1-888-244-5674, or visit the program website at http://www.futurescholar.com/.

When can I enroll in SCTPP?

Enrollment in the plan is closed. The legislature voted during the 2008 session to close SCTPP enrollment but honor the existing contracts. The actual legislation is stated below and is effective July 1, 2008.

S.75 (Rat #0296, Act #0246 of 2008)
Section 59-4-110

(A) Notwithstanding another provision of law, the South Carolina Tuition Prepayment Program may not accept new participants until the General Assembly authorizes the program to accept new participants by joint resolution.

(B) This section does not affect the existing participants in the program, and the South Carolina Tuition Prepayment Program remains in full operation for this purpose.

For the purpose of the Tuition Prepayment Program, the annual increase in tuition for an institution cannot exceed seven percent per year from Fiscal Year 2006-2007. To the extent that actual tuition for an institution exceeds an annual growth of seven percent per year, the institution shall grant a waiver of the difference to the designated beneficiary and must not pass along the difference to any student.

Why doesn’t SCTPP guarantee tuition at private colleges in South Carolina or out-of-state colleges and universities?

Tuition rates can vary greatly among private colleges, and each state’s university system has its own pricing structure. The contract you purchase through SCTPP is based solely on the tuition rates for in-state resident students at South Carolina’s four–year public colleges and universities. It does not consider the rates of private or out-of-state schools. Even so, the benefits of your South Carolina contract can be applied toward the cost of tuition at any accredited college or university in the country. SCTPP staff will work with you to maximize your contract benefits at whatever school your child decides to attend. Future Scholar can also help you plan for the cost of a private college education. Usage flexibility and higher investment maximums with Future Scholar allow you to set aside the amount you believe you will need to cover all your child’s future higher education expenses.

Does my SCTPP contract guarantee my child will be able to attend a college in South Carolina?

If you previously purchased a SCTPP contract, it does not guarantee, or in any way provide for, a student’s acceptance to, continued enrollment at, graduation from, or residency status at any college or university. The student must meet the admission and residency requirements of the college or university he or she wishes to attend.

How do I cancel my existing SCTPP account?

Your SCTPP account may be canceled at any time and for any reason. The Cancellation Form.pdf (ink) makes it easy. Just fill it out and mail it to us. This form will need to be signed by the account owner and notarized with a notary seal.

Is there a tax advantage to having my SCTPP contract?

Tax benefits have been implemented at both the State and federal levels. The contributor of a SCTPP account may claim a South Carolina income tax deduction for all contributions received by SCTPP during a tax year. Account earnings are exempt from federal and South Carolina income taxation while they are held in your SCTPP account. The earnings included in refunds made for any reason, however, are subject to income taxation unless those funds are rolled into another 529 plan or other qualified investment.

Federal legislation now makes qualified distributions from Section 529 Plans permanently federally tax free. The ruling is part of the Pension Protection Act of 2006 approved by Congress and signed into law by the President on August 17, 2006.

Contributions are treated federally as completed gifts so the contributed amount is removed from the giftor’s estate.

What is SCTPP?

The South Carolina Tuition Prepayment Program, SCTPP, is a college savings plan for children that reside in South Carolina. Created by the 1997 General Assembly, it is one of the IRS Section 529 Qualified Tuition Plans administered by the Office of the State Treasurer. SCTPP is currently closed to new participants but allowed for the advance purchase of either two years or four years of college tuition for a child as young as infant or any student who has not yet completed the tenth grade. The cost of a SCTPP contract was based on today’s tuition rates at South Carolina’s four-year public colleges and universities. You locked in a tuition rate, potentially with significant savings over the actual tuition costs at the time your child enrolled in college. Once enrolled in the program, your SCTPP contract payments did not increase regardless of how much college tuition in South Carolina increased over the years. Some of the most talked about features of the program are the tax benefits. Not only can you receive a South Carolina State income tax deduction for your contributions, but those contributions currently also grow State and federal tax free. Grandparents, in particular, appreciate the benefits of the federal gift tax provisions granted to SCTPP account contributors, and they don’t have to give up control of their SCTPP accounts to take advantage of these features. You did not need to select the college your child would have been attending at that time. The SCTPP tuition benefits apply to all South Carolina public colleges and universities and can even be transferred, at an equivalent rate, to private or out-of-state schools. If your child receives a scholarship and you will not need your SCTPP contract benefits, you can request a refund which generally includes all account earnings and is penalty-free. Partial refunds are not accepted. Of course, you can request a refund of your contributions at any time for any reason or rollover your SCTPP account value to the Future Scholar 529 College Savings Plan.

How is the money I contribute to my SCTPP account invested?

The Office of State Treasurer has entered into a contract with Columbia Management Investment Advisers, LLC (“Columbia Management”), pursuant to which Columbia Management acts as the SCTPP Fund manager. Your contract payments are pooled in the Fund with the contract payments of all other SCTPP participants to maximize the rate of return potential and decrease fee expenses to the Fund. The Fund’s investment strategy targets a portfolio mix of fixed income, equity, and alternative investments. Currently, the SCTPP Fund has diversified holdings in corporate, government, and other bonds, in addition to a diversified mix of equity, alternative, and fixed income funds.

What is the rate of return on my SCTPP account?

Because SCTPP is not a traditional savings account, interest is not posted to your account in the same manner as you may see for your bank or other investment accounts. Through SCTPP, you purchased a contract offering benefits which are redeemed by your contract beneficiary to pay for certain higher education expenses. Payments you make on your contract are credited to your SCTPP account. Essentially, your SCTPP account grows at the same rate as tuition inflation in South Carolina each year. When your contract is paid in full, SCTPP provides for your child’s tuition to be fully paid at any of the State’s public colleges or universities.

Each January, you will receive an Annual Statement of Account reflecting the contributions to your SCTPP account and certain other activity to your account during the previous calendar year. You may also view this activity online when you login using your SCTPP account number and your personal password.

Earnings are not reflected on your account until withdrawals are made to pay tuition expenses directly to a school or to refund you in the event of the account cancellation or the beneficiary’s receipt of scholarship funds. The amount of account earnings included in any payment or refund will be reflected in the 1099-Q statements issued by SCTPP each January.

What happens if my child or I move away from South Carolina?

You do not have to cancel your contract if you move out of state. Your child may still use the SCTPP benefits at a university in South Carolina, or the benefits may be used at any eligible college or university anywhere in the nation. If he or she no longer meets in-state residency requirements for a South Carolina school, you may have to make up the difference in the cost of out-of-state tuition versus in-state tuition. SCTPP contract pricing is based on what it costs today for an in-state resident student to attend a public college or university in South Carolina.

Why do you need Social Security Numbers?

We must have the Social Security Number of the SCTPP account contributor and the account beneficiary for our reporting requirements to the Internal Revenue Service. We issue a 1099-Q form or forms for any year that a refund (other than refunds for over payments), school payment, or other type of withdrawal is made from an account. We store your Social Security Number, as well as any other individual account information in the program’s secure environment and take safeguards to ensure that it is accessible only to individuals employed directly by the State Treasurer’s Office or under contract by the State Treasurer’s Office to provide specific services to the State’s 529 Qualified Tuition Plans. Individual SCTPP account information is never sold to third parties for marketing purposes. If there is not a social security number on file or if the one on file is incorrect you may fill out the Social Security Number Add/Change Form.pdf (.pdf).

SCTPP contract benefits can only be applied toward the cost of tuition and mandatory fees. Scholarship funding is generally more flexible and may be used to cover “cost of attendance” such as dormitory expenses, meals, laboratory fees, books, etc. Due to the rise in tuition and other fees, in most cases, it takes the SCTPP funding and scholarship funding to pay for the cost of attendance. Your SCTPP benefits can be held for future use or may be refunded to the contributor (owner) of the account on a semester-by-semester basis.

SCTPP will issue scholarship reimbursement if the scholarship is for the full amount of the tuition and mandatory fee charges for a semester. The amount of the scholarship refund will include either the original purchase price plus the compounded Rate of Return earned by the Fund OR the current weighted average payout rate at colleges and universities in South Carolina, WHICHEVER IS LESS. Benefits will be deducted based on the actual credit hours billed/paid and capped at 16 credit hours.

SCTPP DOES NOT ISSUE PARTIAL REFUNDS.

YOU SHOULD COORDINATE BILLING AND PAYMENT OF SCTPP BENEFITS WITH THE UNIVERSITY'S BILLING OFFICE WHEN APPLIED IN CONJUCTION WITH A SCHOLARSHIP. The school's billing office will be able to tell you how they apply all forms of payments, whether it be scholarships or funds from your SCTPP account. Payment from SCTPP can reduce the amount of the scholarship award (including the LIFE Scholarship) in some instances. In the event that you do not properly coordinate your benefits and SCTPP pays the school for tuition expenses also covered by your scholarship award, THE PAID BENEFITS WILL BE DEDUCTED FROM YOUR SCTPP CONTRACT. THE PAYMENTS MADE TO A SCHOOL BY SCTPP ON YOUR BEHALF CANNOT BE RESERVED. THEREFORE, IT IS IMPORTANT THAT YOU PAY CLOSE ATTENTION TO THE INVOICES FROM YOUR SCHOOL.

In order to process a scholarship refund, you must print the Scholarship Refund Request Form (.pdf), attach appropriate documentation and mail it to us or fax it to 800-519-4652.