The BEST program was launched in 1997 under Bartlett banker and State Representative Dan Byrd. There were two parts: a prepaid tuition program and a college savings program.
The prepaid tuition program assumed that tuition would rise at an annual rate of about 6 percent a year and earnings on investments would rise about 7.5 percent a year. Under the prepaid program, enrollees purchased tuition units at the current rate and then redeemed them when the beneficiary went to college. A unit was valued at one one-hundredth of the average cost of one year’s mandatory registration fees at four-year state universities in Tennessee. In November 2010 State Treasurer David H. Lillard Jr. won approval for the suspension of the prepaid tuition plan from BEST’s trustees, making Tennessee the eighth state to cancel such a plan. The state had to pump $40 million of taxpayer money into the prepay program, including $14.75 million in 2010, to cover the gap between its payout and investment earnings because tuition increases had averaged 9.5 percent and earnings about 2.5 percent. At the time of suspension, the program had 9,043 enrollees who would continue to receive tuition payouts but would not be able to purchase new units.
The second arm of the program, Tennessee Cash4College, continued. Under this program, if an individual, his child, or family members are Tennessee residents, and the individual contributed at least $50 to a 529 plan during the qualifying period, Tennessee Cash4College would match the contribution up to $50.