SCHOLARS SAVINGS PROGRAM

FORMS AND DOCUMENTATION: TERMS AND CONDITIONS

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TERMS AND CONDITIONS FOR

SCHOLARS SAVINGS PROGRAM

Rev. 4/29/2016

 

IN THIS AGREEMENT

This agreement between El Monte Promise Foundation, henceforth referred to as the Agency, and the Scholars Savings Program (SSP) participant listed at the bottom of this agreement, henceforth the Participant, details the responsibilities of both parties. Both Parties understand that participation in this program is voluntary and involves opening a special college savings account for the benefit of the Participant’s child (or another eligible beneficiary), henceforth the Beneficiary. In the course of the program, the Participant will receive program statements on a quarterly or biannual basis via mail, email, or other means.

 

These statements will contain important information regarding the program, including a list of activities or upcoming events, as well as other useful tips and information regarding saving and financial well being. It is the Participant’s responsibility to notify the Agency if s/he does not receive these statements.

ELIGIBILITY TO PARTICIPATE

Generally, Participants with Beneficiaries attending public elementary schools in the greater El Monte Community are eligible to enroll in the Scholars Savings Program.

This means students within El Monte City School District and Mountain View School District are eligible to enroll in the Scholars Savings Program, regardless of the school the student attends.

 

The program offers Savings Scholarships henceforth referred as Scholar Dollars on an ongoing basis ONLY to Beneficiaries who are enrolled in kindergarten through fourth grade levels in the school listed in TABLE 1.

The following are abbreviated below:
El Monte City School District – EMCSD
Mountain View School District – MVSD
El Monte Union High School District - EMUHSD.

 

Important Note: Occasional credits (such as a credit for opening an account or raffle prizes) might be offered from time to time to all Participants including those whose Beneficiaries are enrolled in higher grades or are attending schools other than the ones listed in TABLE 1.

 

TABLE 1 lists the schools in which Beneficiaries attending schools are eligible to earn Scholar Dollars for qualifying accounts.

 

The Beneficiary shall be granted the Scholar Dollars earned in the account upon verification of graduation from El Monte Union High School District and completion of Scholars Savings Program as outlined in section 3 of Mutual Understandings.

 

What this mean is if a Participant enrolls a Beneficiary to open a Scholars Savings Program account, and the Beneficiary is not a kindergarten through fourth grade student attending a school listed in TABLE 1 at the time of enrollment, the Beneficiary will not qualify to receive the Scholar Dollars offered as outlined in section 2 and section 3 of Responsibilities of the Agency.

RESPONSIBILITIES OF THE AGENCY

THE AGENCY AGREES TO PROVIDE THE FOLLOWING:

 

1- Scholar Dollars (Savings Scholarships)

The Agency will provide financial incentives or benefits in the form of Scholar Dollars according to the selected savings plan, which is based on the Beneficiary’s grade level and school at the time of enrollment. Scholar Dollars are offered in the form of a credit on the account and may include a subsidized rate of return on monthly contributions or a straight (per contribution) credit, as well as occasional raffled prizes. Specific definitions for these components appear in sections 2 and 3 of Responsibilities of the Agency. The Scholar Dollar portion of SSP savings can be used to pay for tuition and fees, books, supplies and/or equipment required by the qualified educational institution for enrollment and attendance. 100% of the Scholar Dollars offered in SSP is secured by the Agency and is offered only at the time of graduation from SSP and upon enrollment in eligible educational institutions, including any accredited college, university, or technical school in the United States or abroad that participates in federal financial aid programs for students.

 

The Agency is solely responsible for offering the Scholar Dollar credits in this program. The Financial Provider, as noted in section 1 under Responsibilities of the Participant, is not in any way responsible for offering any part of the Scholar Dollars noted in this Savings Plan Agreement.

 

2- Savings Plan (Tier One)

Except for the kindergarten program, SSP features a two-tier savings plan for qualifying Beneficiaries as outlined in the section Eligibility to Participate. In Tier One, which covers grades one to four, every monthly contribution will earn a fixed amount of Scholar Dollars for a designated period of time starting from the month the Participant opens the account. Scholar Dollars will not be offered in months where no contribution is made by the Participant.

 

3- Savings Plan (Tier Two)

Qualifying Beneficiaries outlined in the section Eligibility to Participate graduate to Tier Two of the program once Tier One savings is complete and the Beneficiary is in the fifth grade. The savings plan will be automatically changed to Tier Two. The Beneficiary will remain in Tier Two until completing the program. Other than continuing to save every month, the Participant does not need to take any additional action.

 

4- Additional Incentives and Rewards

Scholar Dollars offered in Tier One and Tier Two plans are completed by the time the Beneficiary completes ninth grade for qualifying accounts. However, additional benefits in the form of raffled prizes or other benefits will be offered to participants throughout the program and until graduation from El Monte Union High School District.

 

Specifics of these additional benefits will be announced periodically by the Agency and through program statements as well as the Agency’s website (PromiseNow.org). Raffled prizes do not follow a standard structure in terms of amount or timing.

 

Scholar Dollars offered as part of a promotion are subject to their own terms and rules independent of the Savings Plan for Tier One and Tier Two as outlined in Section 2 and 3 of Responsibilities of the Agency.

 

5- Total Scholar Dollars
Due to inclusion of raffled prizes and other benefits, the total amount of Scholar Dollars is undetermined. Inclusion of raffled prizes, rewards, or other benefits that are announced from time to time may increase the total Scholar Dollar amounts for Beneficiaries who earn these additional credits.

RESPONSIBILITIES OF THE PARTICIPANT

THE PARTICIPANT AGREES TO THE FOLLOWING TERMS:

 

1- Financial Provider

By participating in SSP, the Participant agrees to establish an individual 529 college savings plan with the designated program Financial Provider, the Utah Educational Savings Plan (UESP). In order to participate in SSP, applicants must agree to all terms and conditions of the account/plan as set by the Financial Provider (UESP).

 

2- Interested Party Access

In order to calculate and track Scholar Dollars in SSP, the Participant agrees to release its account information to the Agency and/or the contractors representing the Agency. By signing the Interested Party Access form on the UESP website as part of the enrollment process and at the time of opening the account, the Participant allows the Agency and/or contractors representing the Agency to have “read-only” access to basic account information, and the transaction history on the account.

 

3- Monthly Contributions

On qualifying accounts as outlined in the section Eligibility to Participate, in order to receive the maximum Scholar Dollars available through SSP, the Participant is responsible to make a contribution every month. Scholar Dollars forfeited as a result of missed contributions, cannot be made up in subsequent months. In Tier One, the amount of contribution will not impact the amount of Scholar Dollars; however, a monthly contribution is still required to earn the Scholar Dollars for that month. In Tier Two, missed deposits or contributions smaller than the recommended level will reduce the overall Scholar Dollars. Deposit amounts higher than the recommended levels are strongly encouraged but will not result in higher Scholar Dollars.

 

4- Reporting Change of Address

The Participant will provide program staff with written updated information in the event of a change of address, phone number, or emergency contact information within a reasonable amount of time.

 

Failure to inform the program administrator of current contact information may be grounds for termination from the program or may disqualify the Participant from other occasional rewards and benefits if and when such benefits are included in the program. Moreover it is the Participant’s responsibility to inform the Agency if the Participant has reason to believe they are not receiving any notification or communication including account statements issued by the Agency to the Beneficiary or the Participant.

 

Failure on part of the Participant to inform the Agency of any changes in contact information may prevent the Participant from receiving communication from the Agency in a timely fashion. The Agency cannot be held liable for missed communication granted the Participant or Beneficiary does not make a reasonable effort to reach out and document communication with the Agency to ensure the Participant is receiving communication from the Agency.

 

5- Participation in Financial Education Workshops

It is the Agency’s intention to offer quality financial education workshops and classes to the Participant. Beneficiaries will receive financial education in school as part of the school curriculum for Beneficiaries attending school sites present in TABLE 1, while the Participant will be invited to attend financial workshops offered by industry professionals in various occasions throughout the year. These workshops are part of the SSP benefits and participation is required for all Participants.

MUTUAL UNDERSTANDINGS

THE AGENCY AND THE PARTICIPANT JOINTLY AGREE TO THE FOLLOWING TERMS:

 

1- Joint Participation

For the purpose of this Savings Plan Agreement, the Beneficiary, and the Participant are jointly participating in the program. Any notification or communication including account statements issued by the Agency could be sent to the Beneficiary or the Participant. In all cases, both the Beneficiary and the Participant are responsible to abide by the rules and conditions set forth in this agreement.

 

2- Setting up FDIC-Insured Savings Account

The Participant may set up only one SSP account per Beneficiary as part of SSP. To provide maximum protection from unexpected market fluctuations, the type of 529 plan selected for SSP at the time of enrollment is defaulted to UESP’s FDIC-insured savings account option held at the Sallie Mae Bank and U.S. Bank (Banks).

 

Since SSP accounts are individually owned, the Participant can change the investment option to a higher-return vehicle in no less than 30-days from the date of opening the account. However, changing the investment vehicle from an FDIC-insured savings account to another investment option may subject the Participant to additional fees (see section 7 and 8 of Mutual Understandings).

 

3- Payment of Scholar Dollars

Payment of the Scholar Dollars is subject to the rules of the Scholars Savings Program. Specifically, the Participant understands that Scholar Dollars represent account credits and will be made available only upon graduation from the program and enrollment in an eligible institution of higher education as referenced above. Upon receiving proof of graduation from El Monte Union High School District (EMUHSD), the Agency will transfer the corresponding amount of the Participant’s Scholar Dollars into the Participant’s individual SSP account. Both conditions must be met to receive the accrued Scholar Dollars.

 

4- Unqualified Withdrawals, Termination, and the Calculation of Scholar Dollars

Scholar Dollars in SSP are calculated based on a formula that maximizes the amount of Scholar Dollars if and when contributions are made consistently throughout the program. Partial withdrawals (prior to graduation) in Tier One and Tier Two, for any reason, may substantially reduce the amount of benefits in subsequent months even if the funds are replaced at a later date. Also, early withdrawals from SSP due to termination will result in complete forfeiture of Scholar Dollars.

 

5- Withdrawals

Once enrolled in SSP, the Participant can continue saving until the Beneficiary graduates from high school, at which point the Beneficiary can use the Participant’s savings to pay for Qualified Higher Education Expenses as defined in Section 529 of the Internal Revenue Code of 1986, as amended. It is expected that the Participant will make deposits regularly into the Beneficiary’s account on a monthly basis.
The process of withdrawal for qualified as well as unqualified purposes is solely governed by UESP and is subject to the terms and conditions set forth by UESP (available at www.UESP.org.)

 

6- Eligibility for Other Scholarships and Public Benefit Programs

The Participant understands that in most cases, saving in this account and at levels recommended by the program will generally not have a significant impact on the Beneficiary’s eligibility to receive financial aid upon attending college.
The federal government determines the eligibility criteria for federal financial aid. These rules and regulations change from time to time. According to the existing rules, only 5.64% of the value of individual contributions into the 529 plan is counted towards Expected Family Contribution (EFC) in the financial aid formula. However, EFC requirements are completely waived for many low income students who meet certain eligibility guidelines.
Moreover, 529 plans are generally not subject to property limit calculations in public benefit programs such as TANF. However, participants who are receiving such benefits are advised to consult their public benefits counselors prior to participating in this program.

 

7- No Investment or Tax Advice

Nothing contained in SSP materials, in any Financial Provider materials, or on the Agency or Financial Provider’s website is intended to constitute investment or tax advice, nor does the Agency give advice or offer any opinion or recommendation on the suitability or tax consequences of any investment plan, strategy, or account, including the FDIC-insured Savings Account option that is used as the default vehicle at the time of enrollment. Any investment decision the Participant makes for a 529 account that the Participant may choose to open and own will be based solely on the Participant’s own evaluation of the merits of a particular investment decision and tax consequences in light of financial circumstances and investment objectives.

 

8- Minimizing Account Fees

All investment options in a 529 plan, including the FDIC-insured savings accounts are subject to fees. However, by investing in an FDIC-insured savings account and viewing quarterly account statements online (rather than receiving them in the mail), the Participant will be able to avoid paying for most fees that are currently assessed on 529 accounts with the program Financial Provider.
Accordingly, the Agency has worked with the Financial Provider to make both,

i) Enrollment in an FDIC-insured savings account

ii) Online access to account statements, the default enrollment options in SSP.
Using the default options, the only remaining fee, the UESP Administrative Asset Fee, is assessed at 0.0167% monthly (based on prevailing rates in March 2016) or $1.002 annually per every $500 invested. Typically, this amount will be fully or partially offset by the regular interest earned on the FDIC-insured savings accounts. The Participant understands that these rates are subject to change and current information regarding these rates is available on the Financial Provider’s website, www.uesp.org.
Moreover, the Participant understands that by making changes to the default options, the amount of fees assessed on their 529 plan will increase.

 
9- Premature Termination of the Program

The Agency reserves the right to prematurely terminate the program. In the unlikely event of such an occurrence, the Agency will announce its decision three months in advance of the termination date and will provide the accrued Scholar Dollars in full for the same period.

 
10- Statements, Letters, and Program Surveys

As part of this college savings program, the Participant will receive quarterly or biannual program statements and deposit reminders from the Agency and/or contractors representing the Agency. Program statements will contain information regarding amounts saved by the Participant, as well as the amount of Scholar Dollars. UESP Statements are also available online but they will not contain information pertaining to Scholar Dollars. From time to time, the Participant may also receive text messages, emails, letters, or short questionnaires for general data collection purposes. The information provided by the Participant will help improve the program in the future.

 

11- Confidentiality

The Agency and/or contractors representing the Agency will make all reasonable efforts in order to protect the Participant’s privacy by securing all personal and financial records and keeping all such information confidential within the Agency or its designated agents. While the information collected on program enrollment forms are mainly used for identification purposes, the Agency may occasionally use the data collectively to produce year-end reports for its members and/or donors. However, under no circumstances will this information be used to report individual outcomes by identifying the Participant. The Agency and/or contractors representing the Agency will not share any personal or contact information with other entities.
12- Acknowledgement

By opening a Scholars Savings Account you (the Participant) acknowledge that you have read and understood the contents of this agreement and agree to all terms and conditions of the program and are willing to meet your responsibilities under it.
Services offered to you (the Participant) by the Agency are free of charge because the Agency is supported by government and/or private funding. Periodically, these funders must audit Agency records and files to ensure that it is providing the services it says it will.
By opening a Scholars Savings Account you understand and acknowledge that records may be viewed by a funding auditor to verify that you received the services you were entitled to.
The Agency reserves the right to revise and change the terms and conditions of this agreement from time to time. In the event of a change in terms of this agreement, the Agency will inform the Participant of these changes in writing.