What's happening
This bill establishes a tuition reimbursement fund for students harmed by proprietary colleges, funded by annual fees from those colleges.
Why it matters
Creates robust protections for students. This bill establishes a process for students harmed by proprietary colleges—either through closure or misconduct—to seek tuition refunds, including clear eligibility criteria and a formal complaint and investigation process.
Holds colleges financially accountable. Proprietary colleges must pay annual fees, scaled to their gross income, into the fund; if colleges are found responsible for student harm, they must reimburse the fund with interest, adding a direct financial deterrent to bad practices.
Establishes strong oversight and transparency. The law requires public posting of violations, regular audits of the fund, and mandates swift action and communication with affected students, fostering greater accountability and public awareness of college conduct.
Provides backup for student records and emergencies. The fund can be used to preserve and provide access to student transcripts from closed colleges, and allows the state to supplement the fund if needed, ensuring students’ educational investments and records are protected even in sudden closures.
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Who cares
Headline styles
Protect Proprietary College Students
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to higher education
- Print number 5562a
- Amend and recommit to rules
- Reported and committed to rules
- Referred to higher education
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Protect Proprietary College Students
In Assembly Committee · Higher Education · Sponsor Alicia Hyndman
Full text
7 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5562--A
2019-2020 Regular Sessions
IN SENATE
May 7, 2019
Introduced by Sen. STAVISKY -- read twice and ordered printed, and when printed to be committed to the Committee on Higher Education -reported favorably from said committee and committed to the Committee on Rules -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the education law, in relation to degree-granting proprietary colleges; and to amend the state finance law, in relation to creating the proprietary college tuition reimbursement account
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. This act shall be known and may be cited as the "degreegranting proprietary college supervision and student protection act".
§ 2. The education law is amended by adding a new section 212-d to read as follows:
§ 212-d. Proprietary college tuition reimbursement account. 1. Fee assessment. (a) The commissioner shall annually assess and have each proprietary degree-granting college pay a fee based on that college's gross annual income into a proprietary college tuition reimbursement account. The gross annual income shall be determined by annual financial statements that are submitted to the commissioner.
(b) The gross annual income fee shall be assessed according to the following schedule:
GROSS ANNUAL INCOME FEE
Gross Annual Income between 0-$199,999 - Assessed Fee = $1,000.00
Gross Annual Income between $200,000-$499,999 - Assessed Fee = $1,500.00
Gross Annual Income between $500,000-$999,999 - Assessed Fee = $2,500.00
Gross Annual Income between $1,000,000-$4,999,999 - Assessed Fee = $5,000.00
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11523-04-9
S. 5562--A 2
Gross Annual Income between $5,000,000-$9,999,999 - Assessed Fee = $10,000.00
Gross Annual Income between $10,000,000 or above - Assessed Fee = $20,000.00
This assessment shall be based upon each college's gross annual income from the previous year, and shall be payable to the commissioner in equal quarterly installments which shall be due on December first, March first, June first, and September first.
(c) All of the total assessment provided for within this section shall accrue to the credit of the proprietary college tuition reimbursement account.
(d) In the event that the balance of the proprietary college tuition reimbursement account provided for in this section exceeds three million dollars, all additional funds shall be dedicated to fund the department's supervision, regulation, and publicly accessible website of proprietary degree-granting colleges pursuant to an annual appropriation and an annual plan of expenditure prepared by the commissioner and approved by the director of the budget.
(e) Payments made within thirty days following the due date shall be subject to interest at one percent above the prevailing prime rate. Thereafter, late payments may result in enrollment caps on the number of new students a college has the ability to register and the department shall approve no new programs at a college that is in arrears to the proprietary college tuition reimbursement account.
(f) Nothing in this section shall prohibit the state, if it determines that there is a need, to allocate additional funding to the proprietary college tuition reimbursement account to provide for the needs of harmed students.
2. Complaint process for access to the proprietary college tuition reimbursement account. (a)(i) Claimants who had been enrolled in proprietary degree-granting colleges which have not closed or ceased operation shall be required to show, in a manner determined by the commissioner, that:
(1) the student is eligible pursuant to subparagraph (ii) of this paragraph for a refund amount up to the total cost of tuition expended by the student as determined using a refund formula to be promulgated by the commissioner;
(2) the student has made a request to the college for a refund amount up to the total cost of tuition expended by the student and has done so in a manner consistent with any existing complaint process as outlined by the department prior to the effective date of this section or any future process promulgated by the department;
(3) the college has failed to provide a refund amount up to the total cost of tuition expended by the student within the ninety days of the complaint being submitted by the student to the college;
(4) the student has in their complaint clearly identified the program or degree that the student believes is not compliant with this section and has included information necessary for the department to complete an investigation of the program; and
(5) the student has, if applicable, attempted to have any federal student loans discharged pursuant to a borrower defense to repayment claim with the United States department of education.
(ii) The commissioner shall compute the total refund amount, if any, in an amount up to the total cost of tuition expended by the student using a refund formula to be promulgated by the department. The commis-
S. 5562--A 3
sioner shall act on each refund request within thirty business days of such request.
(iii) Utilizing any existing complaint process at the department that may exist or any new complaint process that the department may promulgate, if a student who meets the eligibility requirements of subparagraph (i) of this paragraph and can in such complaint make a good cause showing of a violation pursuant to paragraph (c) of this subdivision has occurred then that student shall be deemed eligible for a refund in an amount up to the total cost of tuition expended by the student as determined using a refund formula to be promulgated by the commissioner.
(iv) For a student who had been enrolled in a proprietary degreegranting college that has not closed or ceased operation, the refund shall be an amount up to the total cost of tuition, however, any discharge of student loans as prescribed under borrower defense to repayment claims with the United States department of education that the student has successfully received shall be deducted from any refund calculation under this section.
(v) (1) Where a claim is paid to a student relating to a verified complaint asserting a violation by a degree-granting proprietary college that has not closed or ceased operation the commissioner shall immediately notify the college within thirty days of its decision on a student's complaint to the department.
(2) Within fifteen days of the receipt of the notice, the college shall either request a hearing to challenge the commissioner's determination that a refund was owed to the student or reimburse the fund the amount paid to the claimant. This payment shall also incur interest for each day it remains unpaid at an annual interest rate of one percent above the prime rate. The commissioner may promulgate streamlined procedures for conducting hearings pursuant to this clause.
(vi) Persons and entities receiving refunds under this section shall be deemed to have assigned or subrogated their proprietary college tuition reimbursement account rights to the commissioner on behalf of the proprietary college tuition reimbursement account only for the amount refunded by the proprietary college tuition reimbursement account. Within ninety days of any refund made pursuant to this section, the commissioner or the attorney general shall take appropriate action to recover the total amount of the refunds made, plus administrative costs, from the college.
(b) The commissioner shall develop a complaint form for students of closed or closing institutions and provide such form to students. In order to claim a refund amount up to the total cost of tuition expended by the student from the proprietary college tuition reimbursement account, a student, for the section also referred to as a claimant, shall apply to the department with a complaint form pursuant to the following requirements:
(i) Claimants who had been enrolled in proprietary degree-granting colleges which have closed or ceased operation shall be required to show in a manner determined by the commissioner that:
(1) the student is eligible pursuant to subparagraph (ii) of this paragraph for a refund amount equal up to the total cost of tuition expended by the student as determined using a refund formula to be promulgated by the commissioner;
(2) the student has in their complaint clearly identified the program or degree that the student believes was not compliant with this section at the closed college and has included information necessary for the department to complete and make a determination of the program; and
S. 5562--A 4
(3) the student has, if applicable, attempted to have any federal student loans discharged pursuant to a borrower defense to repayment claim with the United States department of education.
(ii) The commissioner shall compute the total refund amount, if any, in an amount up to the total cost of tuition expended by the student using a refund formula to be promulgated by the department. The commissioner shall act on each refund request within thirty business days of such request, unless such request relates to a recent or impending college closure in which case the department shall handle all similarly situated claims within a reasonable amount of time but in no instance shall that time be longer than ninety business days.
(iii) Utilizing any existing complaint process at the department that may exist or any new complaint process that the department may promulgate, if a student who meets the eligibility requirements of subparagraph (i) of this paragraph and can in such complaint make a good cause showing of a violation pursuant to paragraph (c) of this subdivision has occurred then that student shall be deemed eligible for a refund in an amount up to the total cost of tuition expended by the the student as determined using a refund formula to be promulgated by the commissioner.
(iv) For a student who has been enrolled in a proprietary degreegranting college that has closed or ceased operation, the refund shall be paid in an amount up to the total cost of tuition expended by a student for the program the student was enrolled in at college closure, however, any discharge of student loans as prescribed under borrower defense to repayment claims with the United States department of education that the student has successfully received shall be deducted from any refund calculation under this subdivision.
(v) A student who is offered a teachout plan approved by an institutional accrediting agency for the program in which the student was enrolled at the time the college closed or ceased operation may elect to continue instruction pursuant to the teachout plan or may decline to continue instruction and may instead apply for a refund in an amount up to the total cost of tuition expended by the student under this section. The option to apply for a refund shall extend to the end of the first week of instruction at the teachout college.
(vi) A student who was enrolled in a proprietary degree-granting college at the time the college closes or ceases operation shall be entitled to a refund of the full amount any prepaid tuition or expenses the student expended. In addition, commencing September first, two thousand twenty, a student who drops out of a college, where such college closes within thirty days of the student's withdrawal and prior to completion of such student's program, shall be entitled to a refund in an amount up to the total cost of tuition expended by the student.
(vii) Notwithstanding all notice procedures described in this subdivision, in the event of a proprietary degree-granting college closing, the commissioner on his or her own initiative may take appropriate action in accordance with this section to process refund claims on behalf of all of the students of the closed college.
(c) For the purposes of this section a good cause showing that a violation has occurred shall include any of the following:
(i) fraudulent statements or representations to the department, the public or to the student in connection with any program that the student was enrolled in while matriculating at the proprietary degree-granting college;
(ii) violation of any provisions of this article or regulation of the commissioner that occurred within a program that the student was
S. 5562--A 5
enrolled in while matriculating at the proprietary degree-granting college;
(iii) conviction or a plea of no contest on the part of any owner, operator, or member of the proprietary degree-granting college's board of trustees, if such conviction negatively impacts the student's program of study:
(1) to any of the following felonies defined in the penal law: bribery involving public servants; commercial bribery; perjury in the second degree; rewarding official misconduct; larceny, in connection with the provision of services or involving the theft of governmental funds; offering a false instrument for filing, falsifying business records; tampering with public records; criminal usury; scheme to defraud; or defrauding the government; or
(2) in any other jurisdiction for an offense which is substantially similar to any of the felonies set forth in clause one of this subparagraph and for which a sentence to a term of imprisonment in excess of one year was authorized and is authorized in this state regardless of whether such sentence was imposed; or
(iv) incompetence of any owner or operator to operate a college that negatively impacted any program that the student was enrolled in while matriculating at the college.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the education law, in relation to degree-granting proprietary colleges; and to amend the state finance law, in relation to creating the proprietary college tuition reimburse- ment account
Purpose
To strengthen protections for students and bolster oversight of degree- granting proprietary schools.
Summary of provisions
Section 1 of the bill provides for the short title of the bill, the "Degree-Granting Proprietary School Supervision and Student Protection Act."
Section 2 amends the education law to create a tuition reimbursement account for the degree-granting proprietary sector similar to the extant account for the non-degree granting sector, funded by fees assessed on schools on the basis of their gross annual income. Excess funds above $3 million in the tuition reimbursement account may be allocated towards staff necessary to conduct oversight of proprietary schools.
Section 2 also details the complaint process for students to access the proprietary college tuition reimbursement account, and gives students six years from the date of the alleged violation to file a complaint.
Section 3 amends the finance law to create the tuition reimbursement account for degree-granting institutions.
Section 4 contains a severability clause.
Section 5 provides that the act shall take effect one year after enact- ment.
Justification
The bill enhances protections for students at proprietary degree-grant- ing institutions by barring forced arbitration clauses, creating a tuition reimbursement account for the degree-granting sector for the first time, ensuring the department has sufficient staff to oversee schools, and give students sufficient time to file complaints.
Legislative history
New bill.
Differences between original and amended versions
- Effective date changed from six months to one year - Section 2 adds a publicly accessible website for student complaints as an acceptable expenditure of excess funds over three million dollars in the tuition reimbursement account.
- Clarifies that SED shall respond to substantiated complaints in the following ways: beginning a review of the program in question, providing notice to students of the institution of the violation on a publicly accessible website, and referring violations to the attorney general.
- Provides for an allocation to the department of one million dollars from the state general fund to carry out investigations pursuant to the act, reduced by any excess funds apportioned to the department through the tuition reimbursement account as specified in this act.
Fiscal implications
None.
Effective date
One year after enactment.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.