What's happening
This bill requires for-profit colleges in New York to spend at least 50% of annual revenue on instruction, academic support, or career services, or face penalties.
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Set Spending Rules for For-Profit Colleges
Plain English, a few words. Used as the page title.
Sponsors
3 Co-sponsors
History
- Referred to higher education
- 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.
Require For-Profit Colleges Spend More
In Assembly Committee · Higher Education · Sponsor Harvey Epstein
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5800
2019-2020 Regular Sessions
IN SENATE
May 15, 2019
Introduced by Sen. THOMAS -- read twice and ordered printed, and when printed to be committed to the Committee on Higher Education
AN ACT to amend the education law, in relation to standards for for-profit higher education institutions
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The education law is amended by adding a new section 239-c to read as follows:
§ 239-c. Standards for for-profit higher education institutions. 1. For the purposes of this section the following terms shall have the following meanings:
(a) "For-profit institution of higher education" means a school that:
(i) provides a program leading to an associates or baccalaureate degree;
(ii) is legally authorized in New York state to provide a program of education beyond secondary education; and
(iii) is neither a public or non-profit institution.
(b) "Student instruction" means expenditures for salaries, fringe benefits, professional development expenses, and other payments made to instructors related to classroom instruction.
(c) "Academic support and advising" means expenditures related to the advisement of students on course selection or out of classroom tutoring.
(d) "Career services" means expenditures in assisting students in the areas of resume and cover letter writing, interviewing and strategies for getting a job.
2. (a) Commencing in the two thousand nineteen--two thousand twenty academic year and thereafter, a for-profit institution of higher education shall spend no less than fifty percent of such institution's annual revenues on expenditures in the areas of student instruction, academic support and advising, or career services.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10823-01-9
S. 5800 2
(b) Expenditures made for in the areas of student instruction, academic support and advising, or career services shall not include expenditures for student recruitment, marketing, direct mailing or expenses of non-instructional staff whose primary duties are not student instruction, academic support and advising, or career services.
(c) A for-profit institution of higher education that fails to meet the requirement of paragraph (a) of this subdivision shall be ineligible to enroll new students participating in any program authorized under this chapter for a period of not less than two academic years, commencing with the academic year immediately following the year in which the institution's financial statement demonstrating failure to meet the requirement for the academic year is submitted to the commissioner pursuant to subdivision three of this section. To regain eligibility to enroll new students participating in the programs authorized under this chapter, a for-profit institution of higher education shall demonstrate compliance with paragraph (a) of this subdivision for a minimum of two consecutive academic years after the academic year in which the institution became ineligible.
3. On or before September first, a for-profit institution of higher education shall annually submit to the commissioner a detailed financial statement disclosing the institution's revenues and expenditures for the prior academic year and shall disclose the sources of revenue by type as well as types of expenditures. Such statement shall also include a listing of the total individual compensation from the institution to all officers, directors, board members, trustees, shareholders, members, owners, and senior administrators, including all fringe benefits, bonuses, and performance incentives paid in the prior academic year. Such statement shall adhere to generally accepted accounting principles and shall be certified by an independent certified public accountant and certified by the president of the institution. Such statement shall be submitted in a form and manner as determined by the commissioner.
4. The commissioner is authorized to promulgate rules and regulations, and may promulgate emergency regulations, necessary for the implementation of the provisions of this section.
§ 2. This act shall take effect immediately.
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 standards for for-profit higher education institutions
Purpose or general idea of bill
Beginning in the 2019-2020 academic year, a for-profit school must spend no less than 50% of school's annual revenue on student instruction, academic support and advising and career services. If a school does not meet this new requirement, they are not allowed to enroll new students for at least two academic years following the year the school failed to meet the 50% requirement. To be able to re-enroll students, the school must show that they met the 50% requirement for two academic years following the year in which they did not meet the 50% requirement.
Summary of provisions
Section 1 amends the education law by adding a new section 239-c to:
- define terms
- require that all for-profit schools spend no less than 50% of their revenues on student instruction, academic support and advising or career services.
- make explicit that expenditures in the areas of student instruction, academic support and advising or career services does not include expenditures for marketing student recruitment or the expenses of staff whose duties do not relate to student instruction, academic support and advising, or career services
- describe a for-profit school's reporting requirement to the commis- sioner to determine whether the school is meeting the guidelines estab- lished by the section
- outline penalties for failure to meet the provisions of the section
- authorize the commissioner to promulgate emergency rules and regu- lations necessary to implement the provisions of the section
Section 2 provides the effective date
Justification
For-profit colleges depend on students spending their state-funded aid packages at their institutions like non-profit and public schools but unlike those schools, for-profits spend far less of their students' tuition dollars on services on which students rely while charging far more in tuition. Analysis of for-profit schools' financial statements has shown that on average these institutions spend $0.41 for every $1 of tuition revenue received. Nonprofit schools spent more than double that in 2015.
If for-profit students' employment outcomes were significantly better than students at their nonprofit and public counterparts, perhaps the higher tuition and the choice to spend relatively little on instruction would be acceptable. Data show the opposite is true. Close to 40 percent of for-profit schools leave degree-holders with earnings below those of an average worker with a high school diploma, according to a 2018 report.
Spending a comparably small sum on student instruction leaves for-pro- fits plenty of revenue to pay executives' salaries and implement aggres- sive recruitment and marketing campaigns to target prospective students, many of whom would be the first in their families to attend college. According to New York City's Department of Consumer Affairs, some for- profits' recruiters have engaged in misrepresentation to deceive students into enrolling in a program that does not meet their career goals or turns out to be more expensive than what the student had initially understood. As a result of these practices, many of these students wind up with suffocating student debt and lackluster job pros- pects.
This bill would bring for-profits in line with the best practices of nonprofit and public institutions by requiring them to spend more of their annual revenues on resources that their students need to succeed such as high quality classroom instruction, academic support and advis- ing, and career services.
Prior legislative history
New bill.
Fiscal implications for state and local governments
To be determined.
Effective date
Immediately after becoming law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.