General Frequently Asked Questions (FAQs)

Is the Texas Guaranteed Tuition Plan open again for new enrollment?

No, the Texas Guaranteed Tuition Plan is closed to new enrollment.

Does the State of Texas offer another way to save for college expenses?

Yes, the state's new prepaid tuition plan, the Texas Tuition Promise Fund, is now open to enrollment!

In addition, the Texas College Savings Plan (sponsored by the Texas Tomorrow Funds and managed by NorthStar Financial Services Group, LLC) remains open to new investors and offers a variety of college savings opportunities.

Can I add more years to the plan I purchased?

No. The Texas Guaranteed Tuition Plan is closed to new enrollment. However, Texas does offer a new prepaid tuition plan, the Texas Tuition Promise Fund. For more information on that plan, go to www.TexasTuitionPromiseFund.com or call 1-800-445-4723, Option 5.

What are required fees?

Required fees are those fees that are mandatory as a condition of enrollment for all students attending a college, regardless of major or program of study. In other words, the Texas Guaranteed Tuition Plan pays for the fees that every student must pay just to enroll at the university. This does not include course specific fees such as lab fees or any fees that are charged just to certain students in specified majors. For example, many colleges charge students fees based on what course of study they are pursuing; these fees would not be covered by the Fund because they are not charged to every student enrolling at the university. However, tuition rates that vary by major are covered by the plan.

What colleges and universities are covered by the Texas Guaranteed Tuition Plan?

The Texas Guaranteed Tuition Plan can pay directly to all accredited in-state and out-of-state public and private junior/community and senior colleges and universities that participate in the U.S. Department of Education federal financial aid programs. To view participating schools, visit the school code search section at www.fafsa.ed.gov.

The Plan can also pay Texas career schools that both participate in the U.S. Department of Education federal financial aid programs and offer a two-year associate degree approved by the Texas Higher Education Coordinating Board (THECB). To view career schools that have a THECB approved two-year associate degree, visit www.thecb.state.tx.us.

Can my child use the funds for any college?

Yes. The Texas Guaranteed Tuition Plan's tuition benefits can be used at any Texas public or private college or university covered by the particular plan chosen by the purchaser. You do not have to name a specific school when you buy the contract. There is even a provision that allows students to attend out-of-state colleges and use their Plan benefits.

When the beneficiary graduates from high school and is accepted at a college or university, the contract becomes redeemable. In the spring of his or her senior year in high school, the beneficiary is sent a student identification card and handbook describing the procedures for using contract benefits the semester before high school graduation. The college or university will bill the Plan for tuition and required fees on behalf of the beneficiary; the beneficiary will be required to pay any additional charges not covered by the Plan.

If the beneficiary plans to go to school outside of Texas, an Intent to Enroll in an Out-of-State College or University form should be submitted to the Plan 60 days in advance of enrollment. After the Plan receives the form, a third-party bill letter is sent to the school. The letter will contain billing instructions and the amount the Plan will pay per credit hour on behalf of the beneficiary.

What if a beneficiary decides to go to an out-of-state school, either public or private?

You will owe the difference in the amount of tuition and required fees that exceed the amount the Texas Guaranteed Tuition Plan will pay on your behalf. The program will transfer to the out-of-state school an amount equal to the current hourly rate for tuition and required fees at Texas colleges for the type of plan you have and the number of hours taken each term, or you can specify a set amount to be paid by the plan and hours will be deducted from your plan sufficient to cover the designated amount.

Please note: the Texas Guaranteed Tuition Plan cannot pay more than the total amount due for your tuition and required fees. If the out-of-state tuition and required fees are less than the Texas hourly rate per plan type multiplied by the hours enrolled, then the hours deducted will be prorated to pay the invoice in full. Your fund is depleted by hours.

Example: You have an account for your child and you're planning for them to attend a Texas college. Your child is accepted into a private school outside of Texas. The value of your account is $56,000. After receiving an invoice from the private out-of-state college, the Texas Guaranteed Tuition Plan would send a check to the school that would equal the hourly rate for tuition and required fees at Texas colleges for the type of plan you have and the number of hours taken each term. The out-of-state private school costs $18,000 per year, while the current average rate of tuition and required fees at Texas colleges for your plan equals $8,000 per year, so you would have to cover the difference, $10,000 a year.

Or you could specify that you want to pay the out-of-state school a designated amount of $18,000 and the plan would deduct from your hours a sufficient amount to cover the $18,000. For instance, if you had a Senior College Plan with 128 hours and you instructed the plan to pay $18,000, we would deduct 78.24 hours from your plan. That is based on dividing $18,000 by the 2009-2010 hourly reimbursement rate of $230.06 per hour.

A $25 out-of-state transfer fee will be assessed on each payment to an out-of-state school.

What if a beneficiary enrolls in a private college within Texas?

The Texas Guaranteed Tuition Plan will pay even when the beneficiary attends a school that is not in your selected plan. If you have a junior or senior college plan and the beneficiary attends a private institution, the amount paid by the Texas Guaranteed Tuition Plan will be the actual number of hours enrolled multiplied by the current hourly rate for your type of contract.

Example: The beneficiary has a senior public college contract and is taking 15 hours at a private university where the tuition and fee charges are $9,000. The Texas Guaranteed Tuition Plan would pay $3,450.90 (15 hours multiplied by $230.06 - the average rate per hour.) If the tuition and required fee charges are greater than the hourly rate payment, you will need to make payment directly to the school for the amount not covered by the Texas Guaranteed Tuition Plan.

Is my contribution guaranteed against loss?

Yes. The Texas Guaranteed Tuition Plan is backed by a constitutionally guaranteed trust fund and the full faith and credit of the State of Texas.

The Texas Guaranteed Tuition Plan was created by the Texas Legislature in 1996. In November 1997, Texas voters passed Proposition 13 - a constitutional amendment that put the state's official backing behind the Texas Prepaid Higher Education Tuition Program-thereby guaranteeing the Fund with the full faith and credit of the State of Texas.

What payment options are available?

Monthly installment payments can be made via electronic funds transfer (automatic bank draft); payment coupons; or payroll deduction. See forms page for automatic draft authorization or payroll deduction forms.

You can also change your payment schedule. Installment plans are available for five or ten years, or they can be calculated based on the number of years until the beneficiary's high school graduation. There is a $15 fee for changing your contract's payment schedule. To request a change in your payment schedule, please submit a written request signed by the Purchaser and Joint Purchaser, if applicable, to our office at the address listed below or you may fax it to 512-475-0081.

Texas Guaranteed Tuition Plan
P.O. Box 13407
Austin, TX 78711-3407

Lowering payment or changing payment installments

To lower your scheduled payment, you may change your contract to reduce benefits at any time or change your payment option.

For example: You can downgrade a Senior 4 year Plan to a Senior 1 year Plan or change a Senior 4 year Plan to a Junior 2 year Plan. The downgrade has to be done in 1 year increments. Once a contract is downgraded, it cannot be restored to its former status. There is a $50 fee for this plan change. It is not necessary to include your fee with your request. In most instances, we are able to deduct the $50 fee from the proceeds of the downgrade. In the event that sufficient funds are not available from the proceeds to pay the fee, we will notify you and request payment. Should you wish to downgrade your contract, please download the Contract Downgrade Form [PDF]. Contracts cannot be downgraded once contract benefits have been used.

You may also change payment schedules such as changing from a five year installment plan to a ten year installment plan. There is a $15 fee for changing a contract's payment schedule. To change your payment schedule, please submit a written request signed by the Purchaser and Joint Purchaser, if applicable, to our office at the address listed below or you may fax it to 512-475-0081.

Texas Guaranteed Tuition Plan
P.O. Box 13407
Austin, TX 78711-3407

What if my child decides not to go to college?

If the beneficiary of a Texas Guaranteed Tuition Plan contract decides not to attend college, the purchaser can receive a refund. This refund is payable within 4 to 6 weeks after a fully completed and notarized cancellation form is received by our office. If the beneficiary is under the age of 18 or has not graduated from high school, the refund value will be the amount paid, less cancellation and administrative fees. If the beneficiary is 18 or older or has graduated from high school, the hours will be refunded based on the hourly rate that would have been paid to the college for the contract type, less fees. The contract may also be transferred to another beneficiary if no benefits have been used. The new beneficiary must meet the requirements of a qualified beneficiary on the date the designation is changed. The new beneficiary must be a member of the family of the original beneficiary as defined by Section 529 of the Internal Revenue Code. Member of the family includes, but is not limited to, a brother, sister, stepbrother, stepsister, or first cousin of the beneficiary.

A qualified beneficiary is defined by the Board's program rules as an individual who is under the age of 18 or who is 18 years of age or older and enrolled in high school at the time the purchaser changes the beneficiary, who has not graduated from high school nor obtained high school equivalency certification, and is either:

  1. a resident of the State of Texas; or
  2. a nonresident who is the child of a purchaser who is a resident of Texas at the time that purchaser changes the beneficiary.

The new beneficiary cannot have more than five years or 160 credit hours of combined TGTP contract benefits or exceed the maximum contribution limit of $370,000 for one beneficiary for all Texas 529 plans combined.

Please Note: The purchaser must redeem contract benefits within ten years of the beneficiary's projected high school graduation date or the contract will automatically terminate. Under Article VII of the Master Agreement [PDF] available under the Forms section at www.tgtp.org, the amount refunded when a contract is terminated on the 10th anniversary of the beneficiary's projected high school graduation date, will be calculated as the amount of contract payments made for the hours refunded less any fees due the Plan. See Article IX of the Master Agreement for information about Fees. No earnings will be paid on refund of a contract terminated under the automatic ten-year termination provision.

Any time spent by the beneficiary as an active duty member of the United States Armed Services will be added to the ten-year period.

Once a contract is automatically terminated under the automatic ten-year termination provision, the beneficiary cannot be changed and the contract cannot be reinstated.

The purchaser’s annual statement includes a reminder of the automatic ten-year termination deadline. The Plan will not send a separate communication to the purchaser regarding the automatic termination deadline.

Information about Texas colleges and universities

The Minnie Stevens Piper Foundation publishes a list of admission requirements by institution and financial aid information for young men and women residents of Texas, attending or wishing to attend colleges and universities in the state of Texas - Compendium of Texas Colleges and Financial Aid Calendar - available on the Comptroller's Every Chance Every Texan College Savings Portal.

The Texas Higher Education Coordinating Board (THECB) can provide a wealth of information about higher education. Please visit the THECB Web site or College for All Texans Web site.

The Texas Guaranteed Student Loan Corporation offers information about career planning, college selection and paying for school in Adventures In Education.

Rolling Over a Texas Guaranteed Tuition Plan Contract

If a purchaser chooses to roll over a Guaranteed Tuition Plan contract into another Internal Revenue Code Section 529 qualified tuition program (such as Texas College Savings Plan, sponsored by the Comptroller's office), the purchaser must first cancel the contract and receive a refund.

What if I rolled over the amount distributed by TGTP to another qualified tuition program or 529 plan?

Any refund amount or any amount distributed from the Texas Guaranteed Tuition Plan is not taxable if, within 60 days of the distribution (typically considered the date of the check), the funds are reinvested by the purchaser in:

  • another qualified tuition plan for the benefit of the same beneficiary or for the benefit of a member of the beneficiarys family;
  • or a 529 plan.

Rollovers are discussed in detail in IRS Publication 970. Consult your tax advisor or the IRS for more information on rollovers.

The Texas Guaranteed Tuition Plan (TGTP) cannot provide investment or tax advice, and the foregoing information should not be construed as legal, financial, or tax advice with respect to the consequences for any particular individual as a result of the purchase of or distribution from a TGTP prepaid tuition contract. This information is not a substitute for discussing your particular situation with a tax professional or the IRS.

See Tax Issues

What happens if we move out of state?

Students who live out of state and return to attend college as non-resident students will receive in-state rates for any term Texas Guaranteed Tuition Plan pays on their behalf.

Can a Joint Purchaser be removed?

Purchasers have ownership rights in the account. To remove a Joint Purchaser from an account, you must have either a properly completed and signed Removal of Purchaser form or a court order that gives you ownership of the account. The right or duty to manage the account, even if it is an exclusive right, does not give you ownership rights in the account. The Removal of Purchaser form can be downloaded from TGTP Forms.

How do I change a Purchaser?

To change the Purchaser of an account you must submit a properly completed and signed Change of Purchaser form. There is a $20.00 processing fee to change the Purchaser and the form can be downloaded from TGTP Forms.

Your payment of $20 payable to the Texas Guaranteed Tuition Plan must accompany the completed form or it will not be processed. You are not required to pay the $20 processing fee if the Change of Purchaser is due to death of the current Purchaser and a copy of the death certificate has been submitted to our office.

My spouse and I were Purchaser and Joint-Purchaser of a TGTP contract. My spouse has passed away. Can I remove my spouse’s name from the contract?

If the deceased spouse filed a valid Survivorship form with the Plan, the Survivorship form will govern who owns the contract.

If the deceased spouse did not file a valid Survivorship form with the Plan, Texas law (or the law of the state where the deceased spouse lived when he or she died) governs who owns the contract, and you must take steps to establish who the legal owners of the spouse’s interest in the contract are, either under the spouse’s will or under heirship laws. The deceased spouse’s ownership interest in the TGTP contract does not necessarily or automatically pass to the surviving spouse.

My bank took my deceased spouse off of our joint account. Why won’t TGTP do the same?

A TGTP contract is not a bank account; and Texas law treats joint-ownership of TGTP contracts differently than it treats joint-ownership of bank accounts.

Will TGTP accept an Affidavit of Heirship to clear title to a TGTP contract?

No, the Plan does not accept Affidavits of Heirship. An Affidavit of Heirship may establish prima facie evidence of who owns a deceased person’s property, but it does not establish legal title. TGTP’s policy is to accept only those documents that comply with the methods for establishing legal title under the Probate Code.

What types of documents will the Plan accept to transfer ownership of a TGTP contract from a deceased Purchaser to the new Purchaser, or from a deceased Joint-Purchaser to the remaining Joint-Purchaser?

The Plan will accept any of the following types of documents, if submitted in good order, and with a death certificate. You should consult an attorney to see which method of establishing ownership is appropriate for your situation.

  1. Certified copies of a Small Estate Affidavit and court Order approving the affidavit, if the Small Estate Affidavit lists the TGTP contract as an estate asset
  2. Certified copies of Order Probating Will as Muniment of Title and Will
  3. Letters Testamentary or Letters of Administration
  4. Certified copy of Order of No Administration

When you see an attorney, it may be helpful to note that the value of a TGTP contract is exempt from creditor’s claims. Tex. Educ. Code § 54.639(b) &(c)(1).

How long does the beneficiary have to use the Plan?

The purchaser must redeem contract benefits within ten years of the beneficiary’s projected high school graduation date or the contract will automatically terminate. The purchaser may cancel the contract and request a refund or, if no contract benefits have been used, change the beneficiary to a new qualified beneficiary at any time before the automatic ten-year termination date.

Under Article VII of the Master Agreement [PDF] available under the Forms section at www.tgtp.org, the amount refunded when a contract is terminated on the 10th anniversary of the beneficiary’s projected high school graduation date, will be calculated as the amount of contract payments made for the hours refunded less any fees due the Plan. See Article IX of the Master Agreement for information about Fees. No earnings will be paid on refund of a contract terminated under the automatic ten-year termination provision.

Any time spent by the beneficiary as an active duty member of the United States Armed Services will be added to the ten-year period.

Once a contract is automatically terminated under the ten-year provision, the beneficiary cannot be changed and the contract cannot be reinstated.

The purchaser’s annual statement includes a reminder of the automatic ten-year termination. The Plan will not send a separate communication to the purchaser regarding the automatic termination deadline.

How does military service affect use of the Plan?

Any time spent by a Beneficiary as an active duty member of the United States Armed Services will be added to the ten-year period. Proof of time enlisted must be provided to our office.

How do I cancel my Texas Guaranteed Tuition Plan contract?

Purchasers will be able to track the status of their contract cancellation by logging onto their account online. When a cancellation request is received by TGTP the contract is changed to a 'Pending Cancellation' status. Once the contract has been cancelled the status will be updated to cancelled status. Please allow 4-6 weeks from the time of receipt for the refund to be issued.

A contract can be canceled at any time. Download a Cancellation Form [PDF] and follow the instructions on the form.

The completed form can then be faxed to:

Attn: Cancellations
512-475-0081

Or via mail to:

Texas Guaranteed Tuition Plan
P.O Box 13407
Austin, Texas 78711-3407

Please allow 4-6 weeks to receive your refund.

Can I change the Beneficiary on my Texas Guaranteed Tuition Plan contract?

If you'd like to change your beneficiary, you can do so as long as you meet the following criteria:

  • The original beneficiary has not used any contract benefits.
  • The new beneficiary is a member of the beneficiary's family and meets residency requirements (see "Ways to prove Texas residency for the beneficiary" below).
  • The new beneficiary is younger than 18 years of age and has not graduated from high school or 18 years of age or older and enrolled in high school at the time of the change request.
  • The new beneficiary cannot have more than five years of combined TGTP contract benefits.

Please download and complete the Change of Beneficiary Form (PDF). There is a $50 fee to change the beneficiary. Please send the completed form and fee and proof of residency for the new beneficiary to:

Texas Guaranteed Tuition Plan
P.O. Box 13407
Austin, Texas 78711-3407

Your payment of $50 payable to the Texas Guaranteed Tuition Plan must accompany the completed form or it will not be processed.

A confirmation packet will be mailed to the Purchaser's address within 2-4 weeks of the receipt of the request.

Ways to prove Texas residency for the beneficiary

  • Less than one year old: birth certificate
  • Ages 1-5: documentation from a child care center or provider that reflects 12 months of continuous residency, or a written statement from a parent or guardian that care is provided in the home.
  • Grades K-12: report card, progress report, or transcript issued within the past 12 months.

What are the hourly reimbursement rates paid by the plan?

2016-2017 Academic Year approved tuition and required fee hourly reimbursement rates effective Fall 2016 - Summer 2017

  • $97.89 for junior college contract hours
  • $304.83 for senior college contract hours
  • $829.35 for private college contract hours

(These rates are based on the plan type you purchased)

2015-2016 Academic Year approved tuition and required fee hourly reimbursement rates effective Fall 2015 - Summer 2016

  • $93.97 for junior college plan hours
  • $293.36 for senior college plan hours
  • $780.24 for private college plan hours

(These rates are based on the plan type you purchased)

Cancellation forms received prior to September 1 each year will be refunded at the prior academic year rates.