Section 69986 Of Article 19. Golden State Scholarshare Trust Act From California Education Code >> Division 5. >> Title 3. >> Part 42. >> Chapter 2. >> Article 19.
69986
. For all purposes of California law, the following apply:
(a) The participant shall retain ownership of all contributions
made under any participation agreement up to the date of utilization
for payment of higher education costs for the beneficiary, and all
interest derived from the investment of the payments made by the
participant shall be deemed to be held in Scholarshare trust for the
benefit of the beneficiary. Neither the contributions, nor any
interest derived therefrom, may be pledged as collateral for any
loan.
(b) If the participation agreement is canceled prior to payment of
higher education expenses for the beneficiary, the participant shall
retain ownership of all contributions made under the participation
agreement and reversionary right to receive interest on all the
contributions at the rate of interest at which the contributions were
invested.
(c) Notwithstanding subdivision (b), if there has been a decrease
in the value of the funds in a participant's account at the time of
cancellation of the participation agreement, the participant shall
not have ownership rights to any amount above the market value of the
funds in the account at the time of cancellation.
(d) The board shall develop adequate measures to prevent
contributions on behalf of a designated beneficiary in excess of the
maximum contribution limits provided for in this article.
(e) If the beneficiary graduates from an institution of higher
education and has no intention of further attendance at an
institution of higher education, and a balance remains in the
participant's account, then the Scholarshare trust shall pay the
balance to the participant.
(f) The board shall develop a method to make payment of qualified
higher education expenses directly to higher education institutions
for the benefit of designated beneficiaries and to control for fraud
under any direct reimbursement method of payment that it may adopt.
The institution of higher education shall obtain ownership of the
payments made for the higher education expenses paid to the
institution at the time each payment is made to the institution.
(g) The board may also develop a method to make payment of
qualified higher education expenses directly to beneficiaries in a
manner that is consistent with applicable federal requirements and
restrictions.
(h) Any amounts paid pursuant to the Scholarshare trust that are
not listed in this section shall be owned by the Scholarshare trust.
(i) A participant may transfer ownership rights to another
eligible participant, including, but not necessarily limited to, a
gift of the ownership rights to an eligible minor beneficiary
pursuant to this article. The transfer shall be effected and the
property distributed in accordance with administrative regulations
adopted by the board or the terms of the participation agreement.
(j) Custodians for a minor under the California Uniform Transfers
to Minors Act (Part 9 (commencing with Section 3900) of Division 4 of
the Probate Code) or similar provisions adopted by another state may
enter into participation agreements in accordance with regulations
adopted by the board.