Refunds & Other FAQ's
- Covered Expenses
- Enrollment
- In-State vs. Out-of-State
- Canceling an Account
- Scholarship / Financial Aid / Tax Credits
- Tax Advantage
- What is SCTPP?
- Scholarship Refund
Covered Expenses
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/.
Why aren’t other college expenses, including dormitory and meal plan costs, provided for as part of the benefits of a SCTPP contract?
SCTPP contract pricing was based only on the current undergraduate tuition and mandatory fee costs in South Carolina. The many options available for housing and meal plans cause a great deal of variance in costs among each of the universities in South Carolina and make it difficult to fairly price contracts that include these expenses. South Carolina’s Future Scholar 529 College Savings Plan 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. For more information about Future Scholar, call 1-888-244-5674, or visit the program website at http://www.futurescholar.com/.
Will the legislation effective July 1, 2008 affect how much is paid to the school?
It could if you attend an in-state public university. The bill states “the annual increase in tuition for an institution cannot exceed seven percent per year from Fiscal Year 2006-2007”. You can go to “What Does It Cost To Go To College?” and find out exactly how much the cap is and how much the actual tuition is.
If you attend an in-state public university and the tuition is higher than the cap, SCTPP will only pay the cap. In this case, you may notice on your college bill a “tuition waiver”. This should be the difference in the actual tuition and the cap. The university should not bill you for the difference.
Enrollment
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.
Section 59-4-120For 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.
In-State vs Out-of-State
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.
What if my child decides to attend an out-of-state college?
You will be able to use your SCTPP benefits at any accredited college or university your child attends. Generally, your account balance increases at the same rate tuition increases at South Carolina’s four-year public colleges and universities. The tuition rate paid by SCTPP to a private or out-of-state school will be an amount up to the average rate that the program is paying at that time to South Carolina’s public universities. A small processing fee is applied to each payment made to an out-of-state school. Typically, private college tuition and out-of-state tuition are higher than what is required for an in-state student to attend a public university in South Carolina, so you may have to make up that difference. If you anticipate this extra cost, you can open a Future Scholar account for your child, in addition to the SCTPP account, and use it to pay for the expenses not covered by SCTPP. For information on opening a Future Scholar account, visit www.futurescholar.com or call 1-888-244-5674.
Canceling an Account
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.
Am I entitled to a refund if there is a remaining balance in my existing SCTPP account after my child graduates?
No. Unused benefits are terminated when the beneficiary has graduated (or received his/her baccalaureate degree), all purchased semesters are depleted, or when the beneficiary reaches the age of 30.
Scholarship / Financial Aid / Tax Credits
Can I still claim the federal HOPE or Lifetime Learning tax credits for college expenses if my child is using the SCTPP benefits?
If you meet the income requirements for the HOPE or Lifetime Learning federal tax credits in the year that you are paying higher education costs, you may be able to coordinate those benefits with the benefits from your SCTPP contract. However, you cannot claim the tax credits for the same tuition expenses that are paid by SCTPP on your child’s behalf. You should consult with your tax adviser or the Internal Revenue Service to determine how best to utilize both types of benefits within your specific circumstances.
How is having a SCTPP account considered in the financial aid process?
Under current federal guidelines, tuition prepayment plans, including SCTPP, are treated as a parental asset on the Free Application for Federal Student Aid (FAFSA) form, like 529 savings plans. Most SCTPP accounts are owned by parents and in these cases, should be reported as a parental asset on the FAFSA. When reporting SCTPP accounts on the FAFSA, the account owner should report the total refund value of ALL SCTPP accounts held by the same owner, regardless if the beneficiary of those accounts is not the student for whom financial aid is being requested.
To help complete your FAFSA form, the FAFSA reporting value is located on any of the following:
- The account owner's annual statement, mailed in January of each year,
- on line at www.sctpp.sc.gov by accessing the "Benefits Information" screen of the "My Account" link, or
- By contacting a customer service representative at 1-888-772-4723.
Will my SCTPP account impact my child’s ability to get financial aid?
Effective July 1, 2006, the treatment of both types of 529 plans (prepaid and savings) will be considered parental assets in the determination of federal financial aid. If the 529 plan is owned by someone other than the parent, the assets may not need to be considered at all when applying for assistance.
What if my child earns a scholarship?
You may still be able to use the money you have saved and earned through SCTPP to pay tuition and fees. SCTPP contract benefits can only be applied toward the cost of tuition and mandatory fees. Scholarship funding often is more flexible and may be used to cover other expenses such as dormitory, meal plan, or book costs. Due to the rise in tuition and other fees, in most cases, it takes the SCTPP funding and the scholarship funding to pay for the total cost of attendance. In the case of a full scholarship, or scholarship which covers your tuition cost and mandatory fees in full, your SCTPP benefits can be held for future use or may be refunded to the contributor of the account. The amount of refund in this situation will include either the original purchase price plus the compounded rate of return earned by the fund OR the current tuition charged at colleges or universities in South Carolina, whichever is less. The scholarship refund will include accumulated interest with no penalties. A refund request must be submitted for each semester that the scholarship is awarded. It is your responsibility to coordinate billing and payment of SCTPP benefits with the university's billing office when applied in conjunction with a scholarship. You may also roll your SCTPP refund into a Future Scholar account if you have additional college expenses to pay. Rolling the refund into Future Scholar may defer or eliminate your income tax liability on the interest portion of the refunded amount. And, if you did not previously receive a South Carolina income tax deduction for the SCTPP contribution amount that you roll into a Future Scholar account, you may claim the deduction in the tax year that the rollover is made.
» In order to request a scholarship refund: Access the Scholarship Refund Request Form.pdf (ink) which outlines eligibility and documentation requirements.
Tax Advantage
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?
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).
Is my SCTPP account guaranteed?
The South Carolina General Assembly created the Fund in 1997 as a separate, non-public Fund. This provision ensures that SCTPP funds may only be used for the purposes of fulfilling program contractual obligations. As long as your SCTPP contract benefits are used to pay undergraduate tuition expenses, the SCTPP Fund provides that the value of those benefits will be equal to your child’s actual tuition costs at a public college or university in South Carolina.
The SCTPP Fund is managed by Columbia Management and evaluated annually by an outside independent actuarial firm. In addition, SCTPP and the Fund must meet the federal guidelines to be an IRS 529 Qualified Tuition Plan. SCTPP is not backed by the full faith and credit of the State of South Carolina. However, the General Assembly approved legislation during the 1998 session to provide for a guaranteed refund of SCTPP account contributions and payments of interest in the amount of four percent per annum on those contributions in the event that the program should ever be discontinued and the SCTPP Fund dissolved.
The General Assembly passed the legislation below which was 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.
Section 59-4-120
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.
What is the difference between the Four-Year and Two-Year College/University Plans?
The Four-Year College/University Plan may be used to pay eligible undergraduate tuition (equal to block pricing) and mandatory fees for four years or eight semesters, at any accredited senior (four-year) higher education institution. Alternatively, the Two-Year College/University Plan may be used to pay eligible tuition (equal to block pricing) and mandatory fees for up to two years or four semesters, at any accredited junior (two-year) higher education institution or at a senior (four year) higher education institution.
A child may be named as a SCTPP contract beneficiary in only one Four-Year College/University Plan for a total of no more than the equivalent of four years (8 semesters) of SCTPP contract benefits. The Two-Year College/University Plan may be used to pay eligible undergraduate tuition (equal to block pricing) and mandatory fees for two years (4 semesters), at any accredited senior or junior higher education institution. A child may be named as a SCTPP contract beneficiary in two Two-Year College/University Plans for a total of no more than four years or eight semesters, of SCTPP contract benefits.
What if my child decides not to attend college or is unable to attend because of a disability?
You have several options to consider. If your child decides not to attend college after high school graduation, keep in mind that the benefits are good through the age of 30 (the age limit may be extended up to four years for his or her service in the military), or the contract is transferable to a younger family member, provided there is no usage on the account.
Refunds can be processed in any situation. In the event that your child decides not to attend college or you need to withdraw the funds in your SCTPP account for a reason other than paying college expenses, a 10% IRS penalty will be imposed on the earnings portion of your refund. The account earnings will also then be subject to federal and State income taxation. The IRS penalty is waived if the refund is a result of the beneficiary’s death, disability, or receipt of a scholarship.
Is there a deadline by which my child must finish college or lose the benefits?
Your SCTPP contract beneficiary has until age 30 to use the program’s tuition benefits. The age limit may be extended up to four years for his or her service in the military. SCTPP benefits terminate when the beneficiary uses all semesters available, beneficiary receives an undergraduate degree OR the beneficiary reaches the age of 30 or 34 if beneficiary had military service.
***The information provided in the question and answer section is intended to be general guidance related to this program. The answers do not nor are they intended to create a contract or any contractual rights nor do they replace or modify the statutes, rules, or regulations related to this program. The South Carolina Tuition Prepayment Program is created by statutory law and governed by rules and regulations, and the terms and conditions and benefits of the program are prescribed by law. Since these laws and regulations are frequently changed, you may obtain the most current information by contacting SCTPP. No representation made in the website or by any program official or employee, modifies or expands the benefits provided by law.
Please consult your attorney or tax adviser concerning any legal questions or tax advice related to your situation and the program. The information provided on this website is not meant to be tax or investment advice nor do any program officials, employees, service providers or agents provide legal, tax or investment advice.
Scholarship Refund
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.