Frequently Asked Questions
Covered Expense
Do I Need to Save?
Enrollment
In State vs. Out-of-State
Payment
Scholarship/Financial Aid/Tax Credits
Tax Advantage
What is SCTPP?
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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. You may purchase either a Four-Year College/University Plan to pay tuition expenses for 8 semesters or a Two-Year College/University Plan to 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.
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 is 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/
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 anytime during the year. Even if your child is already in college you can open a Future Scholar account and get the 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/.
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DO I NEED TO SAVE?
Do I Really Need to Save for my Child’s College Tuition?
Financing a child’s dream of becoming a college graduate does require thoughtful planning. The College Board recently reported that for the past 20 years, college costs have increased faster than the overall rate of inflation. While it is true that there are many scholarship and grant opportunities available to college students today, the reality is that more parents are borrowing money to send their children to college and the amount parents must borrow is increasing (according to information from the South Carolina Student Loan Corporation). Since SCTPP held its first open enrollment period in 1998, the average tuition rate, as calculated by SCTPP, at South Carolina’s public, four-year colleges and universities has jumped from $3,475 to the current rate of $8,418. That is a 131% increase in just nine years! If you find that figure startling, you are not alone. Parents in South Carolina, and across the nation, are turning to 529 plans - both tuition prepayment programs and college savings programs - in increasing numbers as a method for reaching their college savings goals. The College Savings Plan Network reports that as of March 31, 2007, investments in 529 accounts nationwide total more than $113 billion, representing college savings accounts for close to 10 million children. What do those tuition inflation rates mean to you and your family? When you factor in tuition increases comparable to South Carolina’s historical average tuition inflation rate, the parents of an infant can expect to pay more than $181,593 just for tuition expenses at a public university in South Carolina for four years beginning with the 2025 fall semester.
Why Choose SCTPP Over Other Available Investments and Savings Plans?
There are many investment and college savings options available to you today as well as various tax credits or other incentives for higher education funding. You should study each of these options carefully before you select any savings plan to make sure your choice is right for you and your family’s particular situation. Please consult with your tax, legal, and/or financial advisor for specific questions or concerns about the tax implications and other personal financial impacts of your college planning decisions.
SCTPP has the advantage of being an investment that is set aside for the sole purpose of paying for your child’s college tuition. It helps you avoid the temptation of spending these funds for other expenses. When your child is ready to attend college, you can be financially prepared as well. SCTPP offers structured monthly payment plans to keep you disciplined in saving for your child’s college education. If you prefer more flexibility, you may be able to customize your own payment schedule by making a down payment of at least $3,000. While the monthly payment amounts total more than the amount under the lump sum payment option, they still are much less than you can expect to pay when your child starts college. The SCTPP Fund is designed for your investment to keep pace with tuition inflation at South Carolina’s public universities. You purchase tuition based on today’s average prices, adjusted for tuition inflation and Fund earnings projections, and your investment is paid out at the price of tomorrow’s tuition in the years you use your SCTPP tuition benefits. SCTPP tracks tuition inflation to keep you on the path to meet your goal of funding a child’s future tuition costs at a South Carolina university. Most other investment opportunities are directly vulnerable to market volatility which may cause those investments to be less than you expected. Unlike many trust accounts established with the intent of funding a child’s college education, you can maintain authority over the use of the assets in your SCTPP account. Although you must name a minor as the beneficiary of the SCTPP contract benefits, you are not necessarily required to relinquish control of the account when the beneficiary reaches majority age. You may claim a South Carolina State income tax deduction for the full amount of your contribution to SCTPP during the tax year the contribution is made. The deduction is not capped by the program, and you may claim the deduction regardless of your income. The increased value of your SCTPP investment is exempt from South Carolina taxes when the funds are used for qualified higher education expenses. These earnings currently also grow exempt from federal income taxes while in your SCTPP account. Thus, while your SCTPP account’s potential value is increasing at the rate of tuition inflation in South Carolina, you do not have to claim the annual increase as a taxable earnings amount each year when you file you income tax statements. That means more money available to you to invest in your child’s future. You can make contributions to a SCTPP account on behalf of a child without incurring federal gift taxes, up to certain limits, and you can even take advantage of a special forward gifting provision that allows you to contribute up-front, during a single year a combined five-year gifting total for a beneficiary. Your contributions to a SCTPP account are considered completed gifts and are excluded from your taxable estate, yet you can maintain control of the account. With the help of a professional advisor, SCTPP can be a beneficial estate planning option.
Each individual SCTPP contract balance is maintained with separate accounting. However, for the purpose of investing your contributions, they are pooled into one account, the SCTPP Fund, that includes the contributions of all other contract purchasers. This benefit allows for more efficient, tax-exempt investment by the State Treasurer’s Office to keep administrative costs low and increase the overall rate of return on the Fund.
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ENROLLMENT
When can I enroll in SCTPP?
The SCTPP Enrollment period will be set each year by the State Treasurer. However, due to the proviso (see below) that was attached to the 2007-08 budget, we will NOT have an open enrollment this year. The website will be updated with enrollment information in July 2008.
Section 60.13 The South Carolina Tuition Prepayment Program shall not accept any new enrollment for Fiscal Year 2007-08. Beginning with the current fiscal year, the increase in the average tuition from the 2006-07 level cannot exceed seven percent on an annual basis. To the extent that actual tuition exceeds tuition as calculated in this proviso, colleges and universities must grant a waiver of the difference to the designated beneficiary and shall not pass along this difference to any student.
How do I enroll in SCTPP?
We are not currently in an open enrollment period. This website will be updated in July 2008 if an enrollment period is established for next year.
How will I know that you have received and accepted my Enrollment Form?
SCTPP staff will review your Enrollment Form to make sure you have included everything needed to establish your account. If we find that any required information is excluded from your form or notice any other discrepancies, we will send you a letter notifying you of the specific item or items requiring your immediate attention.
Once we have all the necessary information and your Enrollment Form is complete, we will establish your SCTPP account. You then are mailed a welcome package containing the Master Agreement, payment schedule, and a certificate suitable for framing or gift giving.
Your Enrollment Form, the Master Agreement.(pdf) (37k), and your personalized payment schedule comprise your contract with SCTPP. Please note that it may take up to four weeks for you to receive these materials. If you become concerned about our receiving your Enrollment Form, you may verify with your bank that the check for your enrollment fee payment was processed.
Can I enroll in SCTPP online?
We are not currently in an open enrollment period. This website will be updated if/when an enrollment period is established in July 2008.
Do I have to indicate on the Enrollment Form which college my child will attend?
You do not have to specify the college or university at which your child will use his or her SCTPP benefits at the time you enroll in the program. The contract price you lock in provides for payment of tuition and mandatory fees at all public colleges and universities in South Carolina. The contract benefits may also be used at qualifying accredited private and public schools across the nation and even some international institutions.
Generally, SCTPP benefits may be used at any college, university, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. The school your child is considering attending should be able to tell you if it is an eligible educational institution.
How is the SCTPP contract price determined?
The pricing calculation model is the same each year but the assumption figures used in the calculation generally change based on the best available information SCTPP has each year. The primary assumptions used in calculating the prices are the tuition inflation rate and the Fund earnings rate. The earnings rate remained the same in 2007 as last year - 7.25% for all future years. The tuition inflation assumption changed for the 2006 Spring pricing. Last year, SCTPP assumed 8.5% tuition inflation for two years followed by 7% inflation for each year thereafter. This year, SCTPP assumes that tuition will increase 9% every year. The base for the pricing calculation is always the Current Weighted Average Tuition(word) (32k) rate at SC's public universities. Last year that amount was $7,954; this year the base amount is $8,417.
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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 the purchase of a SCTPP contract guarantee my child will be able to attend a college in South Carolina
The purchase of a SCTPP contract 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 coved by SCTPP. For information on opening a Future Scholar account, visit www.futurescholar.com or call 1-888-244-5674.
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PAYMENT
May two people, such as a husband and wife or a parent and a grandparent, jointly purchase a SCTPP contract?
Certainly. One of the purchasers must be named as the primary contributor. The primary contributor will receive any correspondence from the SCTPP office, including an Annual Statement of Account indicating the total amount of contributions eligible for the South Carolina income tax deduction. The primary contributor also has sole responsibility for changes to the SCTPP contract. Refunds can be made payable only to the primary contributor.
While the joint contributor can make inquiries about a SCTPP account, he or she is not authorized to make any changes to that account. The joint contributor maintains the right of survivorship in the event of the primary contributor’s death.
As an alternative to jointly purchasing a Four-Year College/University Plan, both parties may each purchase a Two-Year College/University Plan for the same beneficiary so that each is named as the primary contributor on his or her SCTPP contract.
You can add a joint contributor at anytime by filling out the Add Joint Contributor Form.pdf (46k).
What payment options are available?
SCTPP offers several payment options and program staff may be able to accommodate an adjusted contract payment schedule to suit your preferences. The most popular payment options available are a lump sum payment, 48 consecutive monthly payments, or monthly payments extended over the number of years until your child enters college. As long as you meet the minimum monthly payments required under the extended payment plan for your child’s age, SCTPP may be able to work with you to customize a payment schedule that meets your goals and takes advantage of early payoff discounts. You may make a down payment of at least $3,000 to adjust your monthly payments to a lesser amount. You also may pay off or make additional payments to your account at any time. Doing so will reduce the total amount of your contract obligation. For more information about the payment options or making a down payment when you enroll in the program, call SCTPP at 1-888-772-4723 (in Columbia, dial 737-2033) and select option 1 to speak with a customer service representative.
If you need more flexibility in funding options than SCTPP is able to offer, you should consider the Future Scholar 529 College Saving Plan. Future Scholar allows you to contribute to a child’s college savings account in amounts as little as $50 each time you decide to make a contribution. An initial investment of only $250 is required to establish the Future Scholar account. Please call 1-888-244-5674 or click here for information on opening a Future Scholar account.
How do I make payments?
Monthly payments can be made by using a coupon book or you can have the monthly payment amount deducted directly from your checking or savings account. Completion of the Automatic Payment Authorization.pdf (68k) is all that is required to set up the automatic payments from your bank account. Monthly payments are due on the first day of each month. Payments received by SCTPP after the first of the month are subject to a late payment fee which generally will not be waived. You should mail payments at least seven days prior to the due date to SCTPP, PO Box 8025, Columbia, SC 29202. When mailing payments, be sure to enclose a payment coupon or write your SCTPP account number on the front of your payment check or money order. You can verify that the program received your payment by checking your account activity online at https://www.prima-wave.com/redirectsc.asp.
Why is the lump sum payment amount less than the total of the 48-month or extended monthly payment plan?
The more money you’re able to invest in SCTPP initially, the more interest it is assumed your contributions will accumulate in the Fund. Therefore, SCTPP is able to offer pricing with larger discounts on projected future tuition costs to purchasers who choose the lump sum payment option. Actuarial assumptions for tuition increases and Fund earning rates are calculated into each of the pricing options.
If I select one of the monthly payment plans, may I pay off my contract balance at any time?
Yes. Your payoff amount will be lower than the total of all your remaining monthly payments. You may lock in a payoff amount at any time by accessing your SCTPP account online by selecting the My Account Login or by calling the program office toll-free at 1-888-772-4723 (in Columbia, dial 737-2033) and select option 1 to speak with a customer service representative.
After I purchase a contract, can someone else make a payment to be applied to my child’s account - - as a birthday or holiday gift, for example?
Anyone may make payments on a SCTPP contract. Please give the person or organization making the contribution one of your payment coupons or your account number to ensure the payment is credited to the proper account.
Even though other individuals may make a payment to your account, only those listed on the SCTPP account (the Contributor or Joint-Contributor) may make inquiries about the account status or receive other information about the account. Prior to the student using the SCTPP benefits, mailed account information, including documentation for tax purposes, will only be sent to the person named as the primary contributor. When your child is ready to start college, we will contact him or her directly with instructions for using SCTPP to pay tuition expenses.
May I redeem my Education US Savings Bonds or rollover funds from another 529 plan to purchase a SCTPP contract?
Yes. The Internal Revenue Service allows the redemption of Series EE U.S. Savings Bonds issued after December 31, 1989, in order to purchase or make payment on an IRS Section 529 Qualified Tuition Plan. Earnings generated from these bonds are not included as part of your taxable income if you meet income requirements. Please refer to IRS Form 8815 (http://www.irs.gov/pub/irs-pdf/f8815.pdf) and consult a tax advisor or the Internal Revenue Service to determine how the redemption of these bonds will affect you. To rollover funds from another 529 plan into your SCTPP account, please refer to the Rollover Request Form.pdf (52k) and call the program office at 1-888-772-4723 (in Columbia, dial 737-2033), option 1, for specific instructions about either rolling funds into or out of SCTPP. If you did not previously claim a South Carolina income tax deduction on the funds you roll into SCTPP, you should be able to list the total rollover amount as a South Carolina tax deduction for the year in which the rollover is processed.
Can I transfer funds from my child’s UGMA account to SCTPP?
A trust may be named as the primary contributor of a SCTPP account. If you are interested in transferring funds from a UTMA or UGMA account, please refer to the Release on UTMA/UGMA Rollover Form.pdf (87k). SCTPP accounts that are opened with or accept any payments from a UGMA or UTMA account must continue to comply with the rules under which the trust account was established – even if only a portion of the total payments made to the SCTPP account are from UTMA or UGMA transfers.
How do I cancel my SCTPP account?
A SCTPP account may be cancelled at anytime and for any reason. The Cancellation Form.pdf (155k)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 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 the beneficiary reaches the age of 30.
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SCHOLARSHIP/FINANCIAL AID/TAX CREDITS
Will participation in SCTPP 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.
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,
- online 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 (in Columbia, dial 737-2033), select option 1.
For more information regarding the effect of the SCTPP contract on your eligibility for financial aid, contact the financial aid office of the college or university the student plans to attend.
Can I still claim the federal HOPE or Lifetime Learning tax credits for college expenses if my child is using 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 advisor or the Internal Revenue Service to determine how best to utilize both types of benefits within your specific circumstances.
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. Scholarship funding often is more flexible and may be used to cover other expenses such as dormitory, meal plan, or book costs. In the case of a full scholarship, or scholarship which covers your tuition cost and mandatory fees, 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. A refund request must be submitted for each semester that the scholarship is awarded. The scholarship refund will include accumulated interest with no penalties. 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 also may 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 process a scholarship refund:
- Fill out the Scholarship Refund Request Form.pdf(50k), or submit a written request signed by the contributor of the account.
- The request must be notarized with an official notary seal.
- Attach proof of scholarship by the institution.
- Mail to SCTPP, PO Box 11778 Columbia, SC 29211.
This request must be provided to SCTPP each semester.
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TAX ADVANTAGE
Is there a tax advantage to purchasing a 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. Please consult your tax advisor or attorney for details on using SCTPP in your estate planning efforts and for more information on the tax benefits and liabilities of opening and using a SCTPP account.
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WHAT IS SCTPP
What is SCTPP?
The South Carolina Tuition Prepayment Program, SCTPP, is a unique college savings opportunity for families of 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 allows 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 purchased this year is based on today’s tuition rates at South Carolina’s four-year public colleges and universities. You can lock in a tuition rate today, potentially with significant savings over the actual tuition costs at the time your child enrolls in college. Once enrolled in the program, your SCTPP contract payments will not increase regardless of how much college tuition in South Carolina may increase 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 do not need to select the college that your child will be attending at this 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 won’t need your SCTPP contract benefits, you can request a refund which generally includes all account earnings and is penalty-free. 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.
Who can participate in SCTPP?
Anyone of legal age, parents, grandparents, aunts and uncles, or even family friends, whether they live in South Carolina or outside of the State, may purchase a SCTPP contract on behalf of a child who is a resident of South Carolina. Even corporations, not-for-profit organizations, or trusts may be named as the SCTPP contract contributor. The contract beneficiary must meet South Carolina residency requirements, be 21 years of age or younger, and must not have completed the tenth grade at the time the Enrollment Form is submitted to SCTPP. Once a SCTPP account is established for a child, anyone may make a payment toward the account’s remaining balance.
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 (154k).
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 the Office of State Treasurer and evaluated, at least quarterly, 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.
How is the money I contribute to my SCTPP account invested?
The Office of State Treasurer 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 and equity investments. Currently, the SCTPP Fund has diversified holdings in corporate, government, and other bonds, various short term investments, and an S&P Index Fund.
What is the rate of return I can expect 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 purchase 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 in January.
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 Four-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 followed by up to two years or four semesters at a senior 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.
May I transfer the benefits of a SCTPP contract that I purchased for one child to another child later down the road?
Generally, you may change the contract beneficiary at any time prior to usage of contract benefits as long as the new beneficiary is the same age as or younger than the original beneficiary and is a member of the current beneficiary’s immediate family (sibling, half brother or half sister, step-brother or stepsister, or cousin). For contracts sold during the 2006 enrollment period, substitution to a younger beneficiary will take into consideration the balance previously paid for the original beneficiary and a new contract price for the new beneficiary. These changes will require an actuarial fee and immediate payment to ensure your account is up-to-date on the new payments due. This change may also result in an increased monthly payment amount. All change of beneficiary requests will be subject to the normal processing fee of $25 (except in cases of death and/or disability or the original beneficiary).
The benefits cannot be transferred to a child that already is named as the beneficiary in a Four-Year College/University Plan or in two Two-Year College/University Plans.
You may also transfer the funds in your SCTPP account to a Future Scholar account for the same beneficiary or another member of that beneficiary’s family. Future Scholar offers more flexible options for how you use the funds in your college savings account. You can find out more about Future Scholar and transferring funds from SCTPP by calling 1-888-244-5674.
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, 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.
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.
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. If all the contract benefits have not been used when your child reaches the age limit, you should request a refund of your account balance or roll the balance into a Future Scholar account. 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.
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***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 advisor 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 or employees provide legal, tax or investment advice.