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ACU Home > Major Events > News > 2003 News Archive > Pre-paid tuition

ACU joins 200 private colleges in national pre-paid tuition plan

For immediate release,
Sept. 11, 2003

Abilene Christian University is one of more than 200 institutions participating in the Independent 529 Plan, a new national pre-paid college tuition plan tailored specifically for private colleges and universities.

The plan is in response to a national call to make higher education more affordable and more accessible to students, said Robert Heil, director of enrollment at ACU.

"We see this new plan as part of our ongoing effort to make higher education accessible to more families," Heil said. "Independent 529 Plan allows contributors to lock in tomorrow's tuition at less than today's price."

Section 529 Plans, so named for the IRS code that defines them, have gained in popularity in the past decade. Families have been attracted to them because accounts generate no federal income tax if used as intended, benefits are transferable to other members of the family, and refunds are available if the child receives a scholarship or decides not to attend college.

For purchasers, the effectiveness of Independent 529 Plan is not dependent on the performance of the stock or bond markets. Contributions are actually pre-purchasing tuition, in part or in whole, at less than today's prices.

Funds in the plan are managed by TIAA-CREF, the giant New York-based financial services company.

ACU is one of 15 colleges and universities in Texas to participate in this new 529 plan.

"Whether a student attends ACU or another one of the member institutions, Independent 529 Plan represents a way for parents to contribute and pay for private college without worrying about investment risk or tuition inflation," Heil said.

"Independent 529 Plan proceeds can be used at any of the participating colleges. Think of it as buying a shopping certificate for use at any of the stores at a mall," said Doug Brown, president and CEO of Tuition Plan Consortium, the Albuquerque, N.M.,-based nonprofit group that oversees the plan. "Students don't choose their college at purchase, but after they have applied (to a college) and are accepted in the regular manner."

The purchase of a tuition certificate does not guarantee admission or enrollment at participating institution and may have an adverse effect on the beneficiary's eligibility for financial aid.

For example, private colleges A and B have agreed to honor certificates purchased under Independent 529 Plan. College A has a tuition cost of $30,000 for this current year and college B $10,000. A person who makes a $10,000 contribution to Independent 529 Plan this year would receive tuition certificates that would cover 33.3 percent of a year's tuition at College A or a whole year at College B, regardless of how high tuition may be at the time the student eventually chooses to use the certificates.

Participating institutions must offer a discount of at least 0.5 percent off their current tuition.

Individuals can open Independent 529 Plan accounts at no charge as well as locate member institutions and learn about refund policies and other plan features by calling 888-718-7878 or visiting Other features of the plan include:

  • No fees of any kind to the consumer.

  • A parent, relative or friend at any income level can establish an Independent 529 Plan for a beneficiary (eventual student) and may also transfer use of the tuition certificates to a wide range of relatives of the beneficiary.

  • Accounts can be opened for as little as $25 provided contributions total at least $500 within two years. The maximum lifetime contribution limit is equal to five years worth of tuition at the most expensive participating college in the plan.

  • The number of participating colleges and universities may increase over time.

  • Contributions are made on an after-tax basis, and any increase in value realized when a tuition certificate is redeemed at a member college will be free of federal and state taxes. However, a sunset provision in the current tax law calls for the tax-free features of all 529 plans to end in 2011.

If the tuition certificates cannot be used by the beneficiary, they can be transferred to a wide range of relatives of the beneficiary, or the adjusted value of the certificates can be rolled over into another 529 plan without penalty. Refunds of the amount may also be given, capped at plus or minus two percent of the fund's performance in any year contributions were made. The refund may be used to pay for college expenses at non-member institutions without incurring federal income tax or penalties on any investment income or gains. If, however, the refund is not used within one year or to pay qualified higher education expense, the account owner will be subject to taxation on any income gains plus a 10 percent additional tax.

Tuition Plan Consortium was formed in 1996 to make education at independent colleges and universities more affordable and more accessible for families in the United States.

TIAA-CREF Tuition Financing, Inc. will administer the plan, and TIAA-CREF Trust Company, FSB, will manage its investments. Teacher Personal Investor Services, Inc. distributes the Independent 529 Plan Tuition Certificates.

For more information, contact Robert Heil at 325-674-2765.


If you are a member of the media who would like more information about this release, please contact Wendy Kilmer, media relations coordinator.

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