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The
Master Covenant describes the policies
for the Florida Prepaid College Plan in detail. The
account owner (purchaser) automatically receives an updated
Master Covenant each year until the student starts
college.
More About
the Master Covenant
Definitions
Rights
of Purchasers, Co-Purchasers and Beneficiaries
Plan
Types and Payment Options
Payments
and Fees
Use of
Benefits
Contract
Changes
Refunds
Termination
and Reinstatement
Miscellaneous
MORE ABOUT THE MASTER COVENANT
This Master
Covenant describes the policies and terms
of the Florida Prepaid College Plan (the Stanley G.
Tate Florida Prepaid College Program established under
s. 1009.98, Florida Statutes; hereinafter the
"Program").
Upon
acceptance of the application by the Florida Prepaid College Board
(the “Board”) in accordance with Rule 19B-4.001, Florida Administrative Code, the purchaser
is issued a Participation and Payment Schedule.
The application, this Master Covenant and the
Participation and Payment Schedule constitute the
advance payment contract (the “contract”).
Additional
documents relating to the contract, issued or received by
the Board, will be incorporated into the
contract.
The applicable provisions of part
IV, Chapter 1009, Florida Statutes, rules contained in
Chapter 19B, Florida Administrative Code, and s. 529
of the Internal Revenue Code, as amended from time to
time, shall apply to the contract and are incorporated
by reference.
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SECTION
1 – DEFINITIONS
1.01
“Application” means the application form
adopted by Rule 19B-4.001, Florida Administrative Code,
which has been completed by the purchaser.
1.02
“Beneficiary” means the person for whom a
plan is purchased, as defined in s. 1009.97(3)(f),
Florida Statutes. A specific beneficiary may be named in
only one contract.
The beneficiary must
be a United States citizen or a resident alien with a
valid social security number.
1.03
“Co-Purchaser” means the person who is
designated on the application as the survivor, unless
the purchaser has changed the co-purchaser for the
account, and who will enjoy the right of survivorship as
outlined in Paragraph 2.02.
Any natural person
named as the co-purchaser must be 18 years old or older
and must be a United States citizen or resident alien with a
valid social security number.
1.04
“Dormitory fee” means the fee charged by
state universities for residence in a double-occupancy,
air-conditioned dormitory room.
1.05
“Local fee” means the activity and
service, health, and athletic fees charged by state
universities or the student activity fee charged by
state community colleges.
The community college technology fee is also
covered by local fee contracts purchased after July 1,
1999.
1.06
“Participation and Payment Schedule”
means the document which identifies the purchaser,
co-purchaser, beneficiary, plan(s) purchased, and
payment information.
1.07 “Purchaser” means the
person who is designated on
the application as the account owner, unless the purchaser of
the account was subsequently changed, and who is the
contract owner of record. Any natural person named as
the purchaser must be 18 years old or older
and must be a United States citizen or resident alien with a
valid social security number.
1.08
“Registration fee” means the fee charged
for tuition and includes the tuition fee,
financial aid fee, building fee, and Capital Improvement
Trust Fund fee.
1.09 “Tuition
Differential fee” means the supplemental fee
charged to a student for instruction provided by a
public university in the state pursuant to Section
1009.24 (15) F.S.
1.10
“Residency” means that a beneficiary must
have been domiciled in Florida at least 12 consecutive
months prior to and including the date the application
is signed. A
beneficiary under the age of one year must have been
born and continuously domiciled in Florida from birth
through the date the application is signed.
A beneficiary may be a resident of another state
if the non-custodial parent has been domiciled in
Florida at least 12 consecutive months prior to and
including the date the application is signed.
1.11
“State community college”
means any community
college in the State Community College System as
defined in s. 1000.21(3) , Florida Statutes.
1.12
“State university” means any university in
the State University System as defined in s. 1000.21(4)
, Florida Statutes.
1.13
“Vocational-technical program”
means an applied
technology diploma program or vocational certificate
program conducted by a community college listed
in s. 1000.21(3) , Florida Statutes, or an area
technical center operated by a district school board.
of the
qualified beneficiary, based on the information
about the qualified beneficiary’s age or grade contained in the
application, or similar information received subsequently by the
Board from the purchaser.
1.15 “Member of the family” means the
same as defined in s. 529 of the Internal Revenue
Code
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SECTION 2 – RIGHTS OF PURCHASERS, CO-PURCHASERS, AND
BENEFICIARIES
2.01
Rights of Purchasers.
The purchaser may, without the consent or
authorization of the co-purchaser, make all contract
changes, conversions, transfers, cancellations, and
refund requests. The
purchaser may remove the co-purchaser from a contract
without the consent of the co-purchaser.
Refunds will be made payable to the purchaser
only.
2.02
Rights of Co-Purchasers.
The co-purchaser may obtain information regarding
the account, but may not make any contract change,
conversion, transfer, or cancellation.
The consent or authorization of the co-purchaser
is not required for the purchaser to modify or cancel
the contract. The
co-purchaser becomes the owner of the contract upon the
death of the purchaser.
Refunds will not be made payable to a
co-purchaser.
2.03 Rights of Beneficiaries.
The beneficiary may obtain information regarding
the account, but may not make any contract change,
conversion, transfer, or cancellation.
Refunds will not be made payable to a
beneficiary.
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SECTION
3 – PLAN TYPES AND PAYMENT OPTIONS
3.01
General.
Tuition and local fee plans may be purchased for
community colleges, universities, or community colleges
plus universities. A local fee plan may only be
purchased in conjunction with or added to a tuition plan
of the same type. A tuition differential fee plan may
only be purchased in conjunction with a university or
community college plus university tuition (2+2) plan. A
dormitory plan may only be purchased in conjunction with
or added to a university or community college plus
university tuition (2+2) plan. The local fee, tuition
differential fee and/or the dormitory plans and the
corresponding tuition plan are considered one contract.
3.02
Tuition Plan.
The purchaser prepays 120 semester credit hours
of tuition at a state university through the purchase of
a four-year university tuition plan.
The purchaser prepays 120 semester credit hours
of tuition which are divided equally between a state
university and a community college through the purchase
of a community college plus university tuition (2+2)
plan. The purchaser prepays 60 semester credit hours of
tuition at a community college through the purchase of a
two-year community college tuition plan.
3.03
Local Fee Plan. The
purchaser prepays 120 semester credit hours of local
fees at a state university through the purchase of a
four-year university local fee plan. The purchaser
prepays 120 semester credit hours of local fees which
are divided equally between a state university and a
community college through the purchase of a community
college plus university local fee (2+2) plan. The
purchaser prepays 60 semester credit hours of local fees
at a community college through the purchase of a
two-year community college local fee plan. Local fee plans may be purchased only for
beneficiaries who are in the eighth grade or lower at
the time of purchase.
3.04
Tuition Differential Fee Plan. The tuition
differential fee plan consists of two separate plans:
(a) University Tuition Differential Fee Plan – The
university tuition differential fee plan specifies that
120 credit hours at a state university authorized to
assess the tuition differential fee are purchased for
the benefit of the qualified beneficiary. The 120 credit
hour university tuition differential fee plan may only
be purchased in conjunction with a university tuition
plan; and (b) Community College Plus University Tuition
Differential Fee Plan - The community college plus
university tuition differential fee plan specifies that
only 60 credit hours at a state university authorized to
assess the tuition differential fee are purchased for
the benefit of the qualified beneficiary. The 60 credit
hour tuition differential fee plan may only be purchased
in conjunction with a community college plus university
tuition (2+2) plan. Tuition differential fee plans may
be only purchased for beneficiaries who are in the
eighth grade or lower at the time of purchase.
3.05
Dormitory Plan. The purchaser may prepay a maximum of 10
semesters of university dormitory housing fees, in
increments of two semesters, for a dormitory plan
purchased in conjunction with a four-year university
tuition plan. The
purchaser may prepay a maximum of four semesters of
university dormitory housing fees, in increments of two
semesters, for a dormitory plan purchased in conjunction
with a community college plus university tuition (2+2)
plan. The
number of semesters purchased is specified in the
Participation and Payment Schedule.
Residence
in a university dormitory is subject to available space
and is not guaranteed by the Board. The dormitory plan
provides payment for a double-occupancy, air-conditioned
dormitory room specified by the state university and is
subject to availability. The dormitory plan does not
cover security/damage deposits, meal plans or any other
fees. If a
state university does not offer double-occupancy dorm
rooms, the Board will pay the average cost of a
double-occupancy, air-conditioned dormitory room in the
State University System. Dormitory plans may be purchased only for beneficiaries who
are in the eighth grade or lower at the time of
purchase.
3.06 Payment Options.
Purchasers may
choose a lump-sum payment plan, a 55-month payment
schedule, or a monthly payment schedule.
Payment amounts are determined based on the age
of the beneficiary when the contract is purchased. Payments
may
be made by checks, money orders, cashier’s checks,
electronic funds transfer, automatic contribution plan or employer payroll
deductions. Payments may not be made by credit cards
or other means of credit,
rollover distributions, third party checks of $10,000.00 or
more or traveler’s checks.
3.07 Maximum Account Balance Limit.
The
redemption value of a contract and any amount paid under
any participation agreement under the Florida College
Investment Plan, for the same beneficiary cannot exceed
the account balance limit.
If the Board receives an application for a contract
for a beneficiary and the sum of the redemption value
of that contract, the redemption value of any
existing contract for that beneficiary and the account
balance of an account in the Florida College Investment
Plan for that beneficiary exceeds the maximum account
balance limit, the Board will return the application to
the purchaser. The redemption value of an
advance payment contract will be determined pursuant to Rule
19B-4.005(2), Florida Administrative Code. The maximum account
balance limit is currently $341,000 and is determined annually by
the Board by multiplying the qualified higher education expenses,
including tuition fees, room and board, and supplies, at the most
expensive eligible educational institution, as reported in
College Cost and Financial Aid Handbook 2006, published by
The College Board, by seven (7), and rounding the resulting product
downward to the nearest $1,000.00 increment. The Board will publish
the amount of the maximum account balance limit annually in the
Florida Administrative Weekly
.
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SECTION
4 – PAYMENTS AND FEES
4.01
Payment Due Date.
Payments are due on the 20th day of each month,
beginning in April after the close of the enrollment
period during which the contract was purchased.
4.02
Default.
Failure to make payment within 30 days of a due
date will result in default by the purchaser and
suspension of the beneficiary’s contract benefits.
4.03
Prepayment.
A lump-sum or partial prepayment may be made on a
55-month or monthly payment schedule with no prepayment
penalty. A
lump-sum or partial prepayment prepays in advance the
monthly payments equal to the amount of the lump-sum or
partial prepayment, but does not change the total amount
due for the contract.
4.04
Lump-Sum Payoff.
A purchaser may prepay a 55-month or monthly
payment schedule in full at any time with no prepayment
penalty. A
lump-sum payoff may reduce the total amount due for the
contract.
4.05
Application Fees.
(a)
A $50 non refundable application fee will be
collected at the time an application is submitted.
(b) If the account owner named on the application for the Florida Prepaid
College Plan has a Florida College Investment Plan
account and the designated beneficiary of that account
is the same as the beneficiary named in the application,
a $30 nonrefundable application fee will be collected at
the time the application is submitted.
(c) If an application is submitted for the Program
and the Florida College Investment Plan, an
$80 application fee will be collected at the time the
application is submitted.
(d)
A separate $10 fee will be assessed to add a dormitory
plan to a tuition plan contract.
(e) A separate $10 fee will be assessed to add a
local fee plan to a tuition plan contract.
(f) A separate $10 fee will be assessed to add a tuition differential
fee plan to a tuition plan contract. \
4.06
Cancellation Fee for Residency Fraud.
A fee of up to $250 or 100 percent of the amount
paid into the plan, whichever is less, will be assessed
if the Board determines that a purchaser has made
fraudulent statements relating to the residency of an
allegedly qualified beneficiary.
4.07
Insufficient Funds Fee.
A $20 fee will be assessed for each payment
returned for insufficient funds.
4.08
Late Payment Fee.
A $10 fee will be assessed for each payment not
received by the Board within 15 days of the date due.
All assessed late fees must be paid prior to the
use of plan benefits.
4.09
Reinstatement Fee.
A $50 fee will be assessed to reinstate each cancelled tuition, local
fee, tuition differential fee and dormitory account.
4.10
Termination Fee. A $50 fee or 50 percent of the amount paid into the
plan, whichever is less, will be assessed upon the termination
of any tuition contract owned for less than two
years from the first payment due date. The termination fee will be waived for refunds
requested as the result of the death or disability of
the beneficiary.
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SECTION
5 – USE OF BENEFITS
5.01
General.
Benefits are not available until the summer
semester of the matriculation year unless otherwise
provided herein. Prior
to using plan benefits, all payments and fees must be
current. The
Board must have the valid social security number of the
beneficiary before the use of contract benefits can be
authorized.
5.02
Benefit Period.
Benefits of a plan are valid for a 10-year period
from the beneficiary’s matriculation year.
Time spent by a beneficiary as an active duty
member of the U.S. Armed Services will be added to this
period if evidence of military service is provided to
the Board. At
the end of the 10-year period from the beneficiary’s
matriculation year, or any extension thereof, the
contract shall be cancelled and the value of the
contract shall escheat to the Florida Prepaid College
Trust Fund.
5.03
Extension of Benefits.
The time to exercise the rights under the plan
may be extended for up to 10 years after the
matriculation date.
Purchasers may request an extension by providing
written notification to the Board before the expiration
of each 10-year period.
5.04
Early Use of Benefits.
To use the benefits of the plan before the
projected matriculation date:
(a) the purchaser must provide written notice to the
Board no less than 180 days before the new matriculation
date and pay any revised contract amounts.
(b) all payments and fees due to the Board must be
current.The
Board must have the valid social security number of the
beneficiary before the use of contract benefits can be
authorized.
5.05
Use of Benefits at In-State Private Colleges and
Universities. The contract may be applied to a
degree-granting Florida private college or university
that is accredited by the Commission on Colleges of the
Southern Association for Colleges and Schools or the
Accrediting Council for Independent Colleges and
Schools. The
purchaser must provide written authorization to the
Board to allow the transfer of benefits to a qualified
in-state private college or university. The Board will
transfer an amount not to
exceed the current rates at state universities and
community colleges in Florida. Amounts transferred cannot exceed the actual
tuition or housing fees of the eligible independent
college or university.
5.06
Use of Benefits at Out-of-State Colleges and
Universities. The contract may be applied to a
regionally-accredited, not-for-profit, degree-granting,
out-of-state community college, college or university.
The Board will transfer an amount not to exceed
the current rates at state universities and community
colleges in Florida. The purchaser must provide written authorization to the Board
to allow the transfer of benefits to a qualified
out-of-state college or university.
5.07
Use of Benefits at In-State Vocational-Technical
Schools. The contract may be applied to an applied
technology diploma or vocational certificate program
conducted by a community college or an area technical
center operated by a district school board. The
Board will transfer an amount not to exceed the current
rates at state universities and community colleges in
Florida. Amounts
transferred cannot exceed the actual fees of the
vocational technology program.
5.08
Use of Dormitory Benefits.
Beneficiaries must file a complete and timely
housing application with the applicable state
university. A
dormitory plan may be transferred to other
university-held housing approved by a state university
or to community college housing that is operated by the
community college or community college direct-support
organization. Funds
transferred to other university-held housing shall not
exceed the lesser of the actual fees or the fees for a
double occupancy, air-conditioned dormitory room at that
state university. Funds
transferred to community colleges or community college
direct-support organizations shall not exceed the lesser
of the actual fees or the average statewide fees
associated with state university housing.
The Board will pay the first housing prepayment
invoice received each academic year on behalf of the
beneficiary. The
beneficiary is responsible for other housing prepayments
to other universities.
Subsequent applications to alternate housing
authorities will require payment by the purchaser of the
appropriate prepayment fee.
Beneficiaries must comply with all housing
authority rules and regulations. Each year, the
state universities determine which dormitories will be
available for use by beneficiaries.
Not all dorms at each state university
are available. The number of dormitory rooms allocated
by state universities for use by beneficiaries is
limited, and rooms are assigned on a first-come, first-served
basis. The
Board cannot guarantee that any beneficiary will receive
a dormitory room assignment.
Refer to Paragraph 7.06.
The dormitory plan may not be used during the
summer term. Private dorms are not covered.
5.09
Conversions.
(1)
Tuition plans and local fee plans may only be
converted to a plan of a lesser value pursuant to a
conversion/refund request.
Once a contract has been converted in this
manner, it cannot be reinstated back to the original
plan. A
plan may not be converted to a plan of lesser value
after the beneficiary has begun to use plan benefits.
Conversion/refund requests must be received prior
to April 1 of the matriculation date of the beneficiary.
Under no circumstances will the Board consider an
upgrade of a tuition plan, local fee plan, or dormitory
plan.
(2)
Refunds based upon a conversion/refund request
will equal the difference between the amount paid for the
original plan and the amount that would have been paid
for the converted plan had the converted plan been
purchased under the same payment plan at the time of
purchase of the original plan.
(3)
The Board will
automatically convert a four-year university plan used
by the beneficiary at a state community college, and
will automatically convert community college or
community college plus university (2+2) plans that are
initially used by the beneficiary at a state university,
to permit such usage. The automatic conversion calculations will be based upon the
respective tuition and local fees when the beneficiary
enrolls in college.
For example, if the community college fee rate is
two-thirds of the university rate at the time of
matriculation, three community college credit hours will
be used to pay for two university credit hours or if the
university fee rate is one and one-half times the
community college rate, two university hours will be
used to pay for three community college hours.
If a conversion results in the use of a
fractional credit hour of plan benefits, the Board will
deduct a whole credit hour of plan benefits when the
fractional hour required is equal to or greater than .50
credit hour and will not deduct a credit hour when the
fractional hour required is less than .50 credit hour.
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SECTION
6 – CONTRACT CHANGES
6.01
Change of Beneficiary.
The benefits and rights of the contract may be
transferred (partial transfers are not permitted) to an
eligible substitute beneficiary if:
(a)
the purchaser executes a
notarized statement verifying the person
who is to be substituted is a member
of the family of the original beneficiary; and
(b) the proposed substitute beneficiary meets the
Florida residency requirement at the time of
substitution; and
(c) in addition to (a) and (b) of this paragraph, if the
projected matriculation date of the substituted
beneficiary is more than three years before the
projected matriculation date of the original
beneficiary, the Board may assess a payment at a level
determined necessary to ensure the actuarial soundness
of the Program.
6.02
Change of Purchaser.
Any request to change the purchaser designated on
the contract must be in writing, signed by the original
purchaser, notarized, and received by the Board.
Such request must also be signed by the purchaser
to whom the contract is being transferred.
6.03 Change of
Co-Purchaser.
Any request to change
the co-purchaser designated on the contract must be in
writing, signed by the purchaser, and received by the
Board.
6.04
Other Contract
Changes.
During the official change period published
annually by the Board, the purchaser may change from one
type of tuition plan to another; from one type of
tuition plan and local fee plan to another; from one
dormitory plan to another; or from one payment option to
another. Additional
fees or payments may be assessed. Under no circumstances will the Board consider an upgrade of
a tuition plan, local fee plan, or dormitory plan after
the official change period.
All contract changes must be in writing, signed
by the purchaser, and received by the Board.
The Board is not responsible for the validity of
documentation related to contract changes.
If acceptable to the Board, contract changes will
take effect as of the date a change is processed by the
Board.
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SECTION 7 –
REFUNDS
7.01
General.
Except for the circumstances in paragraphs
7.02, 7.03 and 7.06, termination will result in a refund
of the amount paid into the plan, minus a termination
fee and any other outstanding fees.
Refunds will be made payable to the purchaser
only.
7.02 Death or
Disability.
If the beneficiary dies or is disabled, the
purchaser will be refunded an amount not to exceed the
current rates at state universities and community
colleges in Florida.
Any request
for a refund based on the death of the beneficiary must
be in writing, signed by the purchaser, and include a
copy of the death certificate.
Any request for a refund based on the disability
of the beneficiary must be in writing, signed by the
purchaser, and include a letter from the beneficiary’s
physician specifically describing the beneficiary’s
disability. No
termination fee will be assessed.
7.03
Scholarship.
If the beneficiary attending an eligible college
or university is awarded a scholarship, including, but
not limited to, the Florida Bright Futures Scholarship,
which pays the same fees covered in the contract, the
purchaser may be refunded, in semester installments
coinciding with the matriculation by the beneficiary, an
amount not to exceed the current rates at state
universities and community colleges in Florida.
Proof of the scholarship shall be given to the
Board each semester, in the form of the institutional
scholarship award notification and class schedule for
the semester, and a signed, written request from the
purchaser. No
fees will be assessed for this refund.
7.04
Termination. The
purchaser may terminate an account and request a refund.
The Board will issue a refund, if applicable, within 45
days of receipt of a valid, written termination request
that includes the purchaser’s notarized signature. The
refund will consist of the total amount
of payments received, minus any other outstanding
fees. No refund under this paragraph shall exceed the amount
of the total of all contract payments. Termination of
a tuition plan will automatically terminate the dormitory plan,
local fee plan, or tuition differential fee plan and only one
termination fee, if applicable, will be assessed.
7.05
Unused Contract Benefits; Withdrawal after
Enrollment. If the beneficiary does not use all the contract benefits
available under the contract plan that was purchased,
the purchaser may request and receive a refund of the
pro rata balance of the total amount paid for the
contract, minus any outstanding fees.
If the beneficiary withdraws or is terminated
from postsecondary enrollment during an academic term,
the fees paid for that term will not be refunded.
7.06 Unavailable
Dormitory.
A refund may be requested if a double occupancy,
air-conditioned dormitory room is not available for the
beneficiary at a state university during the fall or
spring semester of postsecondary enrollment.
The refund will equal the dormitory fees charged
by the university for the semester during which housing
is unavailable. Where
a state universitydoes
not offer a double-occupancy, air-conditioned dormitory
room, the Board will refund the purchaser the statewide
average cost of an eligible double-occupancy,
air-conditioned dormitory room. The Board will require documentation from the university
prior to processing an unavailable dormitory refund.
7.07
Residency Fraud.
The Board may terminate a contract if it
determines that fraudulent statements were used to
establish the residency of an allegedly qualified
beneficiary. If the contract is terminated pursuant to this paragraph, a
cancellation fee of 100 percent of monies paid into this
plan or $250, whichever amount is less, will be assessed
and any remaining balance will be refunded.
8.01
Voluntary Termination.
Any request to terminate a contract must be in
writing, signed by the purchaser, notarized, and
received by the Board.
Within 45 days of receipt of a complete request,
the Board will send a refund to the purchaser.
8.02
Involuntary Termination.
A contract will be terminated by the Board if the
full amount of the payment due is not received by the
Board within 120 days after the first payment due date
or if the full amount of any subsequent payment is not
received by the Board within 210 days after any
subsequent payment due date.
8.03
Reinstatement.
A purchaser may reinstate an account in good
standing within 180 days of termination by paying all applicable
reinstatement fees, any delinquent amounts owed on the
account, and any amounts previously refunded to the
purchaser.
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SECTION 9
– MISCELLANEOUS
9.01
Additional Fees.
State universities and community colleges may
charge fees in addition to tuition, local, and dormitory
fees described here.
The beneficiary will bear the cost of any such
additional fees including, but not limited to,
application fees, laboratory fees, meal plan fees, and
security deposits.
9.02 Disclaimers.
Nothing in the contract will be construed as a
promise or guarantee by the Board or the State of
Florida that a beneficiary (a) will be admitted to a
state university or community college, (b) will be
allowed to continue to attend a state university or
community college after having been admitted, (c) will
graduate from a state university or community college,
(d) will be admitted to a particular dormitory, or (e)
will be allowed to continue to reside in a dormitory
after having been admitted.
9.03
Assignment or Transfer. Except as
specifically provided in this Master Covenant, the
purchaser may not assign or transfer the contract, nor
any interest, rights, or benefits in the contract.
9.04 Tax
Status.
The Program is a “qualified tuition program”
under s. 529 of the Internal Revenue Code.
Generally, there are
no income tax ramifications to the purchaser or
beneficiary until contract benefits are received. When
benefits are received and as long as the distributions
are used to pay for qualified higher education expenses,
pursuant to s. 529 of the Internal Revenue Code, the
contract benefits received in excess of the allocable
portion of the amount paid for the contract will not be
considered income to the beneficiary. Generally, payments to the
Program are treated as a completed gift from the
purchaser to the beneficiary, at the time of purchase.
The purchaser is subject to federal income tax on
the earnings portion of a scholarship or death or
disability refund and the IRS requires the Board to
issue a Form 1099-Q to the purchaser for the calendar
year in which such a refund is issued. The application
and impact of tax laws vary widely based upon the specific facts involved.
Accordingly, this information is not intended to
serve as legal, accounting, financial or tax advice.
Purchasers and beneficiaries should consult their
professional tax advisor(s).
9.05
Securities Status.
In response to a request by the Board, the
Securities and Exchange Commission has issued a "No
Action" letter determining that sales of contracts
as currently authorized by the Florida Statutes, Board
rules, and the terms of this Master Covenant, are not
subject to the enforcement provisions of the securities
laws of the United States.
9.06
Creditors.
This Master Covenant is not a debt instrument.
Pursuant to ss. 222.22 and 732.402, Florida
Statutes, contracts are exempt from the claims of
creditors. Neither
monies paid into the Program nor benefits accrued
through the Program may be pledged for the purpose of
securing a loan.
9.07
Account Confidentiality.
Account information is exempt from public
inspection pursuant to s. 119.07, Florida Statutes.
9.08
State Guarantee and Discontinuation.
The statute requires the State to agree to meet
the obligations of the Board to qualified beneficiaries
if monies in the fund fail to offset the obligations of
the Board. The
statute also requires the Legislature to appropriate to
the Florida Prepaid College Trust Fund an amount
necessary to meet the obligations of the Board to
qualified beneficiaries.
In the event the State determines the Program to
be financially infeasible, the State may discontinue the
Program. Any
qualified beneficiary who has been accepted by and is
enrolled or is within five years of enrollment in an
eligible independent college or university or state
postsecondary institution shall be entitled to exercise
the complete benefits for which he or she has
contracted. All
other contract holders shall receive a refund of the
amount paid into the Program, and an additional amount
in the nature of interest at a rate that corresponds, at
a minimum, to the prevailing interest rates of savings
accounts provided by banks and savings and loan
associations. The
State considers this an essential governmental operation
to assist its citizens’ access to higher education.
All legal and beneficial interests in the assets
held by the trust fund are vested in the State for its
exclusive benefit and the exclusive benefit of the
colleges and universities, therefore, payments are
guaranteed to be made on the beneficiary's behalf to the
state university or community college.
Exercise of full benefits under the
contract guarantees that the beneficiary receives.
9.09
Unclaimed Refunds.
Any unclaimed refunds for terminated accounts and
any unclaimed credit balances shall escheat to the
Florida Prepaid College Trust Fund seven years after the
date the account was terminated or such amounts became
unclaimed, respectively.
9.10
Interpretation.
This agreement is to be interpreted under the
laws of the State of Florida.
9.11
Severability.
In the event that any clause or portion of the
contract is found to be invalid or unenforceable by a
court of competent jurisdiction, that clause or portion
shall be severed from the contract and the remainder of
the contract will remain in full force and effect.
9.12
Maximum Account Balance.
The redemption value of the contract and any
amount invested in the Florida College Investment Plan,
for the same beneficiary cannot exceed the maximum
account balance established by the Board pursuant to
Rules 19B-4.005 and 19B-16.005, Florida Administrative
Code.
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Updated
October 2007
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