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PRINTER'S NO. 1670
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1539
Session of
2021
INTRODUCED BY PEIFER, JUNE 3, 2021
REFERRED TO COMMITTEE ON FINANCE, JUNE 3, 2021
AN ACT
Amending the act of April 3, 1992 (P.L.28, No.11), entitled "An
act providing for the establishment of two programs for
postsecondary educational savings, a guaranteed savings
program and an investment program; establishing the Tuition
Account Programs Bureau within the Treasury Department and
providing duties for the Treasury Department; establishing
tuition account funds; providing for Tuition Account Program
Contracts; providing for the establishment of scholarship
programs; and further providing for duties of the
Pennsylvania Higher Education Assistance Agency," in tuition
account program, further providing for declaration of policy,
for definitions, for Tuition Account Programs Bureau, for
powers of department, for Tuition Account Guaranteed Savings
Program, for Tuition Account Investment Program, for general
provisions governing both tuition account programs, for
Federal taxation; establishing the Keystone Scholars Grant
Program and the Keystone Scholars Grant Program Account; and
making a related repeal.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 301(5)(iv) of the act of April 3, 1992
(P.L.28, No.11), known as the Tuition Account Programs and
College Savings Bond Act, is amended to read:
Section 301. Declaration of policy.
The General Assembly finds and declares as follows:
* * *
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(5) The purposes of this chapter are to:
* * *
(iv) Provide to the citizens of this Commonwealth
means of saving for elementary, secondary and
postsecondary education that provides them with the
advantages of "qualified State tuition programs" as
defined by section 529 of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. ยง 529).
Section 2. The definitions of "other educational expense
credits" and "Tuition Account Program Contract" in section 302
of the act are amended and the section is amended by adding
definitions to read:
Section 302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Eligible elementary or secondary educational institution."
A day or residential school which provides kindergarten,
elementary or secondary education in this Commonwealth,
including both public and nonpublic schools, at which a resident
of this Commonwealth may legally fulfill the compulsory school
attendance requirements of Article XIII of the act of March 10,
1949 (P.L.30, No.14), known as the Public School Code of 1949,
and which meets the requirements of Title VI of the Civil Rights
Act of 1964 (Public Law 88-352, 78 Stat. 241).
* * *
"Other educational expense credits." Tuition credits that
are converted for payment of qualified higher education expenses
other than tuition for an eligible educational institution, as
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provided in section 309(h).
* * *
"Qualified education loan." Any indebtedness on behalf of a
beneficiary or sibling of a beneficiary to pay qualified higher
education expenses as defined under section 221 of the Internal
Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. ยง 221) as of
the time the indebtedness was incurred, which are:
(1) paid or incurred within a reasonable period of time
before or after the indebtedness is incurred; and
(2) attributable to education furnished during a period
during which the recipient was an eligible student.
* * *
"Registered apprenticeship program." An apprenticeship
program registered and certified with the United States
Secretary of Labor under section 1 of the National
Apprenticeship Act (50 Stat. 664, 29 U.S.C. ยง 50).
"Sibling." A brother, sister, stepbrother or stepsister.
* * *
"Tuition Account Program Contract." A Tuition Account
Guaranteed Savings Program Contract or a Tuition Account
Investment Program Contract entered into by an account owner and
the department to provide for savings to meet the future
qualified [higher] education expenses [of a beneficiary
attending an eligible educational institution].
* * *
Section 3. Sections 303 and 305(4) of the act are amended to
read:
Section 303. Tuition Account Programs Bureau.
The State Treasurer is directed to establish a bureau within
the Treasury Department, which shall be known as the Tuition
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Account Programs Bureau, for the purpose of establishing and
administering two programs for [postsecondary] educational
savings, a guaranteed savings program for postsecondary
education and an investment program for elementary, secondary
and postsecondary education. The guaranteed savings program
shall provide that money may be contributed pursuant to a
Tuition Account Guaranteed Savings Program Contract for the
future payment of qualified higher educational expenses for
attendance at eligible educational institutions as described in
section 309. Money contributed pursuant to a Tuition Account
Guaranteed Savings Program Contract shall increase in value by,
at a minimum, the increase in the tuition at the tuition level
designated in the contract. The investment program shall provide
that money may be contributed pursuant to a Tuition Account
Program Investment Contract for the future payment of qualified
[higher] educational expenses for attendance at eligible
elementary or secondary educational institutions, or eligible
educational institutions as described in section 309.1. The
investment program shall have no guarantee. Money contributed
pursuant to a Tuition Account Guaranteed Savings Program
Contract may be withdrawn for the payment of the following:
(1) Qualified educational expenses.
(2) Qualified education loans.
(3) Fees, books and supplies for participation in a
Registered Apprenticeship Program.
(4) Attendance at an eligible elementary or secondary
educational institution under section 309.
Section 305. Powers of department.
In addition to the powers granted by other provisions of this
chapter, the department shall have the powers necessary or
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convenient to carry out this chapter, including, but not limited
to, the power to:
* * *
(4) Pay directly to an eligible educational institution
or an eligible elementary or secondary educational
institution, an account owner, a beneficiary or a third party
authorized by the account owner, upon the receipt of
appropriate documentation, the funds due pursuant to a
Tuition Account Program Contract.
* * *
Section 4. Section 309 is amended by adding subsections to
read:
Section 309. Tuition Account Guaranteed Savings Program.
* * *
(g.1) Conversion of tuition credits for use at an eligible
elementary or secondary educational institution.--Upon the
request of the account holder, the department shall permit the
use of tuition credits for the payment of qualified education
expenses at eligible elementary or secondary educational
institutions, subject to an appropriate conversion as determined
by the department.
(g.2) Conversion of tuition credits for repayment of
qualified education loans.--Upon the request of an account
holder, the department shall permit the use of tuition credits
to repay qualified education loans, subject to appropriate
conversion as determined by the department.
(g.3) Conversion of tuition credits for use in a registered
apprenticeship program.--Upon the request of an account holder,
the department shall permit the use of tuition credits to pay
fees, books and supplies for participation in a registered
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apprenticeship program, subject to an appropriate conversion as
determined by the department.
* * *
Section 5. Sections 309.1 and 309.2(b) and (d) of the act
are amended to read:
Section 309.1. Tuition Account Investment Program.
The department shall establish an investment plan that
defines the Tuition Account Investment Program structure and
sets forth investment policies and guidelines to be utilized in
administering the program and may, in its discretion, obtain the
services of investment managers, program managers and trustees
as described in section 307(b) to assist in establishing and
administering the plan. The department, pursuant to a Tuition
Account Investment Program Contract, shall specify the minimum
and maximum amounts of contributions, the terms and conditions
for transferring the Tuition Account Investment Program Contract
to another account owner or substituting a beneficiary for the
originally named beneficiary, the terms and conditions for
withdrawing contributions or terminating the Tuition Account
Investment Program Contract, the method and procedures for
making payments pursuant to the Tuition Account Investment
Program Contracts for the payment of beneficiaries' qualified
[higher] education expenses and all other rights and obligations
of the account owner and the department.
Section 309.2. General provisions governing both tuition
account programs.
* * *
(b) Period of participation.--Notwithstanding any of the
provisions of this chapter, the following shall apply:
(1) Except as provided in paragraph (2), a minimum
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period of one year must elapse between the time a
contribution is made pursuant to a Tuition Account Program
Contract and the time that contribution and any increase in
its value may be used for payment of qualified [higher]
education expenses pursuant to section 309 or 309.1.
(2) The board may prescribe an alternative minimum
period of time which must elapse between a contribution and
its use for payment of qualified [higher] education expenses.
* * *
(d) Excess contributions.--The department shall institute
adequate safeguards to prevent contributions to an account or
multiple accounts that are in excess of those necessary to
provide for the qualified [higher] education expenses of the
beneficiary of that account or accounts, as specified in section
529 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
U.S.C. ยง 529).
* * *
Section 6. Section 317 of the act is amended to read:
Section 317. Federal taxation.
The department may take appropriate action in order to obtain
a determination from the Internal Revenue Service or the Federal
courts as to whether contributions made pursuant to a Tuition
Account Program Contract, the increase in value of such
contributions and payment of qualified [higher] education
expenses pursuant to a Tuition Account Program Contract shall be
a transaction which will subject account owners or the income of
either or both of the funds to Federal taxation and may respond
to such determination in any manner permitted under this
chapter.
Section 7. The act is amended by adding a section to read:
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Section 320. Keystone Scholars Grant Program.
(a) Establishment.--The department shall establish a grant
program as part of the Tuition Account Guaranteed Savings
Program Fund established under section 306 to be known as the
Keystone Scholars Grant Program. The purpose of the program
shall be to promote access to postsecondary educational
opportunities for each eligible child.
(b) Administration.--
(1) No later than 90 days following the birth of an
eligible child, the Department of Health shall transmit
information and record data to the department necessary to
administer the program and establish the eligibility of each
child born after December 31, 2018. Information under this
subsection shall include, but not be limited to, record data
such as the full name and residential address of the child's
parent or legal guardian and birth date of the child.
(2) Following receipt of the information under paragraph
(1), the department shall notify each parent or guardian of
each eligible child about the program.
(3) The department shall provide an opportunity to be
excluded from the program.
(4) The department shall ensure the security and
confidentiality of the information and record data provided
under paragraph (1).
(c) Keystone Scholars Grant Program Account.--
(1) The Keystone Scholars Grant Program Account is
established as a separate account within the Tuition Account
Guaranteed Savings Program Fund. Money contained in this
account shall be for the exclusive purpose of providing
scholarship grants to eligible children to pay for qualified
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higher education expenses associated with the attendance at
an eligible educational institution.
(2) (i) Subject to subparagraphs (ii) and (iii), at the
end of each fiscal year, assets of the Tuition Account
Guaranteed Savings Program Fund that are in excess of 10%
of the actuarially determined liabilities of the Tuition
Account Guaranteed Savings Program Fund shall be
allocated to the account.
(ii) Annual allocations under subparagraph (i) may
not exceed an amount equal to $100 multiplied by the
number of children born in this Commonwealth in the
fiscal year.
(iii) An allocation under subparagraph (i) may not
be made if the allocation would cause the actuarially
determined surplus of the Tuition Account Guaranteed
Savings Program to fall below 10% of the Tuition Account
Guaranteed Savings Program's actuarially determined
liabilities.
(iv) The department may invest and reinvest money in
the account as provided for under section 307.
(v) Annually, the State Treasurer shall report to
the Governor, the chairperson and minority chairperson of
the Appropriations Committee of the Senate and the
chairperson and minority chairperson of the
Appropriations Committee of the House of Representatives
the actuarial status of the Tuition Account Guaranteed
Savings Program Fund as required under section 306(b)(2).
(vi) This paragraph shall expire December 31, 2029.
(3) Money in the account shall be used for the purpose
of providing grants for qualified higher education expenses
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associated with the attendance at an eligible educational
institution and for costs associated with the administration
of the program. Costs associated with the administration of
the program shall be reported to the Governor, the
chairperson and minority chairperson of the Appropriations
Committee of the Senate and the chairperson and minority
chairperson of the Appropriations Committee of the House of
Representatives in the same manner as required under
paragraph (2)(v).
(d) Amount of grant.--To an eligible child for whom a
Tuition Account Program Contract has been entered into, and upon
application and the submission of documentation necessary to
establish the child's eligibility and enrollment as a student at
an eligible educational institution, the department shall
provide a scholarship grant in the amount of $100, plus such
investment earnings attributed to the initial grant amount since
the birth date of the eligible child as calculated by the
department, for qualified higher education expenses associated
with attendance at an eligible educational institution.
(e) Availability of account balances.--The department shall
make program account balances available to each parent or
guardian of an eligible child through a secured Internet
account.
(f) Authorization of annual match of contributions.--
(1) Subject to the availability of money under
subsection (g), the State Treasurer may establish an annual
match of contributions made by a parent or guardian of an
eligible child into an established Guaranteed Savings Plan
Account under section 309.
(2) Subject to the availability of money from
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contributions made under subsection (g), the State Treasurer
may establish financial incentives, such as school
attendance, for additional grants for an eligible child with
an established Guaranteed Savings Plan Account under section
309.
(3) Money from the Tuition Account Guaranteed Savings
Program Fund may not be used for purposes under paragraphs
(1) and (2).
(g) Contributions from persons and entities.--
Notwithstanding subsection (c)(2)(iii), the department may
receive contributions from any person or legal entity to the
account on behalf of, and make grants to, eligible children to
pay for qualified higher education expenses associated with
attendance at an eligible educational institution.
(h) Monitoring of program by board.--In addition to the
duties under section 304, the board shall consider, study and
review the work of the program, advise the department on request
and make recommendations for the improvement of the program.
(i) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Account." The Keystone Scholars Grant Program Account
established under subsection (c).
"Eligible child." An individual born after December 31,
2018, who is less than 29 years of age and is:
(1) a resident of this Commonwealth at the time of birth
and at the time that the grant for qualified higher education
expenses is applied for or received; or
(2) an adoptee in receipt of a valid decree of adoption
under 23 Pa.C.S. ยง 2902 (relating to requirements and form of
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decree of adoption), whose adopting parent or parents were
residents of this Commonwealth at the time the decree of
adoption was entered and who is a resident at the time that
the grant for qualified higher education expenses is applied
for or received.
"Program." The Keystone Scholars Grant Program established
under subsection (a).
Section 8. Repeals are as follows:
(1) The General Assembly finds and declares that the
repeal under paragraph (2) is necessary to effectuate this
act.
(2) Section 312 of the act of April 9, 1929 (P.L.343,
No.176), known as The Fiscal Code, is repealed.
Section 9. This act shall take effect in 60 days.
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