(a) General description.--Each contribution made pursuant to a Tuition Account Guaranteed Savings Program Contract will be considered the equivalent of a purchase of tuition credits at the tuition level designated by the account owner in the Tuition Account Guaranteed Savings Program Contract. All contributions will be held in a beneficiary's account and will be converted to the tuition level of the institution to be attended by the beneficiary. At the time of redemption, the tuition to be paid will be calculated based on the tuition level designated and the institution being attended as described in this section. A public institution attended by a beneficiary shall accept that beneficiary's tuition credits when presented. Payments on account of tuition shortfalls shall be made as provided for in section 310.¹

(c) Tuition credits.--Contributions made pursuant to a Tuition Account Guaranteed Savings Program Contract will be converted to the equivalent amount of tuition credits as follows:

(d) Process for public institutions.--The process for certifying tuition, converting tuition credits, issuing and redeeming tuition credits and making tuition payments for public institutions shall be as follows:

(e) Process for private institution average tuition levels.--The process of establishing private institution average tuition credit prices, redeeming those tuition credits and making tuition payments when an account owner has designated a private institution average tuition level shall be as follows:

(f) Process for specific private institutions with which the department has an agreement.--The making and redeeming of contributions for use at private institutions that have entered into agreements with the department pursuant to section 308(b) shall be governed by the terms of those respective agreements. Upon request of an account owner who has made contributions at a tuition level of a specific private institution, a conversion to an average tuition level, a specific public institution or a different private institution that has entered into an agreement with the department, if permitted by the terms of that particular agreement between the department and that particular private institution, shall be made using substantially the same procedure as specified in subsection (g). Upon a decision by the beneficiary for whom contributions have been made at a tuition level of a private institution that has entered an agreement with the department pursuant to section 308(b) to attend a different private institution that has entered into an agreement with the department but for which the terms of that particular agreement do not provide for a conversion, or to attend a different private institution that has not entered into an agreement with the department pursuant to section 308(b), at the direction of the account owner, payment shall be made in substantially the same manner as is specified in subsection (e)(2) except that in no event shall the department pay more than it would have paid had the beneficiary attended the previously designated private institution.

(g) Conversion of tuition credits.--At any time during the existence of the tuition account payment contract, upon the request of an account owner, the department may convert tuition credits for contributions made at any tuition level to any other tuition level. The method by which the conversion is made shall be determined by the department. Following conversion, the department shall issue to the account owner a statement of the number of tuition credits converted.

(h) Other uses of tuition credits.--The department shall permit the use of tuition credits for master's degree and other postbaccalaureate programs at eligible educational institutions, after an appropriate conversion. The department also may permit tuition credits to be converted into other educational expense credits to be applied for the payment of qualified higher education expenses other than tuition. Use of tuition credits for payment of qualified higher education expenses other than tuition shall correspondingly decrease the number of tuition credits available for payment of tuition. The Commonwealth, the department or the Tuition Account Guaranteed Savings Program Fund shall not be obligated and is not authorized to make up any deficiency in tuition credits available for payment of tuition resulting from the use of tuition credits for payment of qualified higher education expenses other than tuition.

(i) Course load or credit hours.--A beneficiary attending an eligible educational institution may apply tuition credits to a specific academic year at the maximum course load or maximum number of credit hours generally permitted to full-time undergraduates at that institution.

(j) Residency.--The tuition credit price shall be determined with reference to the residency of the beneficiary at the time a contribution is made pursuant to a Tuition Account Guaranteed Savings Program Contract, except that, for a resident beneficiary, an account owner may elect to save at a nonresident rate. If the residency of the beneficiary at the time the credits are redeemed is different from the residency designated in the Tuition Account Guaranteed Savings Program Contract or as thereafter changed with the consent of the department, there shall be an appropriate conversion of tuition credits to reflect the differential in tuition caused by the change of designated residency, if any.