•  Summary 
  •  
  •  Actions 
  •  
  •  Committee Votes 
  •  
  •  Floor Votes 
  •  
  •  Memo 
  •  
  •  Text 
  •  
  •  LFIN 
  •  
  •  Chamber Video/Transcript 

A05411 Summary:

BILL NOA05411
 
SAME ASNo Same As
 
SPONSORHyndman
 
COSPNSR
 
MLTSPNSR
 
Add §212-d, Ed L; add §97-m, St Fin L
 
Relates to degree-granting proprietary colleges; creates the proprietary college tuition reimbursement account for the refund of tuition paid by eligible students asserting certain violations; establishes an assessment to be paid by proprietary schools to fund the account.
Go to top    

A05411 Actions:

BILL NOA05411
 
03/10/2023referred to higher education
01/03/2024referred to higher education
Go to top

A05411 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A5411
 
SPONSOR: Hyndman
  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 reimbursement 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 1.-1E,..s sufficient staff to over- see schools, and give students sufficient time to file complaints.   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.
Go to top

A05411 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          5411
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                     March 10, 2023
                                       ___________
 
        Introduced  by M. of A. HYNDMAN -- read once and referred to the Commit-
          tee on Higher Education
 
        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  Assem-
        bly, do enact as follows:
 
     1    Section  1.  This  act shall be known and may be cited as the "degree-
     2  granting proprietary college supervision and student protection act".
     3    § 2. The education law is amended by adding a  new  section  212-d  to
     4  read as follows:
     5    §  212-d.  Proprietary  college tuition reimbursement account. 1.  Fee
     6  assessment.  (a) The commissioner shall annually assess  and  have  each
     7  proprietary  degree-granting  college  pay a fee based on that college's
     8  gross annual income into a  proprietary  college  tuition  reimbursement
     9  account. The gross annual income shall be determined by annual financial
    10  statements that are submitted to the commissioner.
    11    (b)  The  gross  annual  income fee shall be assessed according to the
    12  following schedule:
    13                           GROSS ANNUAL INCOME FEE
    14    Gross Annual Income between 0-$199,999 - Assessed Fee = $1,000.00
    15    Gross  Annual  Income  between  $200,000-$499,999  -  Assessed  Fee  =
    16  $1,500.00
    17    Gross  Annual  Income  between  $500,000-$999,999  -  Assessed  Fee  =
    18  $2,500.00
    19    Gross Annual Income between $1,000,000-$4,999,999  -  Assessed  Fee  =
    20  $5,000.00
    21    Gross  Annual  Income  between  $5,000,000-$9,999,999 - Assessed Fee =
    22  $10,000.00
    23    Gross Annual Income between $10,000,000 or  above  -  Assessed  Fee  =
    24  $20,000.00

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD06435-01-3

        A. 5411                             2
 
     1    This assessment shall be based upon each college's gross annual income
     2  from  the  previous  year,  and  shall be payable to the commissioner in
     3  equal quarterly installments which shall be due on December first, March
     4  first, June first, and September first.
     5    (c) All of the total assessment provided for within this section shall
     6  accrue  to  the  credit of the proprietary college tuition reimbursement
     7  account.
     8    (d) In the event that the balance of the proprietary  college  tuition
     9  reimbursement account provided for in this section exceeds three million
    10  dollars,  all  additional  funds  shall be dedicated to fund the depart-
    11  ment's supervision,  regulation,  and  publicly  accessible  website  of
    12  proprietary degree-granting colleges pursuant to an annual appropriation
    13  and  an  annual  plan  of  expenditure  prepared by the commissioner and
    14  approved by the director of the budget.
    15    (e) Payments made within thirty days following the due date  shall  be
    16  subject  to  interest  at  one  percent above the prevailing prime rate.
    17  Thereafter, late payments may result in enrollment caps on the number of
    18  new students a college has the ability to register  and  the  department
    19  shall  approve  no  new  programs at a college that is in arrears to the
    20  proprietary college tuition reimbursement account.
    21    (f) Nothing in this section shall prohibit the state, if it determines
    22  that there is a need, to allocate additional funding to the  proprietary
    23  college tuition reimbursement account to provide for the needs of harmed
    24  students.
    25    2.  Complaint  process  for  access to the proprietary college tuition
    26  reimbursement account.   (a)(i)  Claimants  who  had  been  enrolled  in
    27  proprietary  degree-granting  colleges  which  have not closed or ceased
    28  operation shall be required to show,  in  a  manner  determined  by  the
    29  commissioner, that:
    30    (1)  the  student  is  eligible  pursuant to subparagraph (ii) of this
    31  paragraph for a refund amount up to the total cost of  tuition  expended
    32  by the student as determined using a refund formula to be promulgated by
    33  the commissioner;
    34    (2)  the student has made a request to the college for a refund amount
    35  up to the total cost of tuition expended by the student and has done  so
    36  in  a  manner consistent with any existing complaint process as outlined
    37  by the department prior to the effective date of  this  section  or  any
    38  future process promulgated by the department;
    39    (3)  the college has failed to provide a refund amount up to the total
    40  cost of tuition expended by the student within the ninety  days  of  the
    41  complaint being submitted by the student to the college;
    42    (4)  the student has in their complaint clearly identified the program
    43  or degree that the student believes is not compliant with  this  section
    44  and has included information necessary for the department to complete an
    45  investigation of the program; and
    46    (5)  the  student  has,  if  applicable, attempted to have any federal
    47  student loans discharged pursuant to a  borrower  defense  to  repayment
    48  claim with the United States department of education.
    49    (ii)  The  commissioner shall compute the total refund amount, if any,
    50  in an amount up to the total cost of tuition  expended  by  the  student
    51  using  a refund formula to be promulgated by the department. The commis-
    52  sioner shall act on each refund request within thirty business  days  of
    53  such request.
    54    (iii)  Utilizing any existing complaint process at the department that
    55  may exist or any new complaint process that the department  may  promul-
    56  gate,  if  a  student who meets the eligibility requirements of subpara-

        A. 5411                             3
 
     1  graph (i) of this paragraph and can in such complaint make a good  cause
     2  showing of a violation pursuant to paragraph (c) of this subdivision has
     3  occurred  then  that student shall be deemed eligible for a refund in an
     4  amount up to the total cost of tuition expended by the student as deter-
     5  mined using a refund formula to be promulgated by the commissioner.
     6    (iv)  For  a  student  who  had been enrolled in a proprietary degree-
     7  granting college that has not closed or  ceased  operation,  the  refund
     8  shall  be  an  amount  up  to  the  total  cost of tuition, however, any
     9  discharge of student loans  as  prescribed  under  borrower  defense  to
    10  repayment claims with the United States department of education that the
    11  student  has  successfully  received  shall  be deducted from any refund
    12  calculation under this section.
    13    (v) (1) Where a claim is paid to a  student  relating  to  a  verified
    14  complaint asserting a violation by a degree-granting proprietary college
    15  that  has  not  closed  or ceased operation the commissioner shall imme-
    16  diately notify the college within thirty  days  of  its  decision  on  a
    17  student's complaint to the department.
    18    (2)  Within  fifteen  days  of  the receipt of the notice, the college
    19  shall either request a hearing to challenge the commissioner's  determi-
    20  nation  that  a refund was owed to the student or reimburse the fund the
    21  amount paid to the claimant. This payment shall also incur interest  for
    22  each  day  it  remains  unpaid at an annual interest rate of one percent
    23  above the prime rate. The commissioner may promulgate streamlined proce-
    24  dures for conducting hearings pursuant to this clause.
    25    (vi) Persons and entities receiving refunds under this  section  shall
    26  be  deemed  to  have  assigned  or  subrogated their proprietary college
    27  tuition reimbursement account rights to the commissioner  on  behalf  of
    28  the  proprietary  college  tuition  reimbursement  account  only for the
    29  amount  refunded  by  the  proprietary  college  tuition   reimbursement
    30  account. Within ninety days of any refund made pursuant to this section,
    31  the  commissioner  or the attorney general shall take appropriate action
    32  to recover the total amount of the  refunds  made,  plus  administrative
    33  costs, from the college.
    34    (b)  The  commissioner  shall develop a complaint form for students of
    35  closed or closing institutions and provide such  form  to  students.  In
    36  order  to claim a refund amount up to the total cost of tuition expended
    37  by the  student  from  the  proprietary  college  tuition  reimbursement
    38  account,  a  student,  for  the  section also referred to as a claimant,
    39  shall apply to the department with a  complaint  form  pursuant  to  the
    40  following requirements:
    41    (i)  Claimants  who  had  been enrolled in proprietary degree-granting
    42  colleges which have closed or ceased operation shall be required to show
    43  in a manner determined by the commissioner that:
    44    (1) the student is eligible pursuant  to  subparagraph  (ii)  of  this
    45  paragraph  for  a  refund  amount  equal up to the total cost of tuition
    46  expended by the student as determined  using  a  refund  formula  to  be
    47  promulgated by the commissioner;
    48    (2)  the student has in their complaint clearly identified the program
    49  or degree that the student believes was not compliant with this  section
    50  at  the  closed  college  and has included information necessary for the
    51  department to complete and make a determination of the program; and
    52    (3) the student has, if applicable,  attempted  to  have  any  federal
    53  student  loans  discharged  pursuant  to a borrower defense to repayment
    54  claim with the United States department of education.
    55    (ii) The commissioner shall compute the total refund amount,  if  any,
    56  in  an  amount  up  to the total cost of tuition expended by the student

        A. 5411                             4
 
     1  using a refund formula to be promulgated by the department. The  commis-
     2  sioner  shall  act on each refund request within thirty business days of
     3  such request, unless such request  relates  to  a  recent  or  impending
     4  college  closure in which case the department shall handle all similarly
     5  situated claims within a reasonable amount of time but  in  no  instance
     6  shall that time be longer than ninety business days.
     7    (iii)  Utilizing any existing complaint process at the department that
     8  may exist or any new complaint process that the department  may  promul-
     9  gate,  if  a  student who meets the eligibility requirements of subpara-
    10  graph (i) of this paragraph and can in such complaint make a good  cause
    11  showing of a violation pursuant to paragraph (c) of this subdivision has
    12  occurred  then  that student shall be deemed eligible for a refund in an
    13  amount up to the total cost of tuition expended by the  the  student  as
    14  determined using a refund formula to be promulgated by the commissioner.
    15    (iv)  For  a  student  who  has been enrolled in a proprietary degree-
    16  granting college that has closed or ceased operation, the  refund  shall
    17  be  paid  in  an  amount  up  to the total cost of tuition expended by a
    18  student for the program the student was enrolled in at college  closure,
    19  however,  any  discharge  of  student loans as prescribed under borrower
    20  defense to repayment claims with the United States department of  educa-
    21  tion  that  the student has successfully received shall be deducted from
    22  any refund calculation under this subdivision.
    23    (v) A student who is offered a teachout plan approved by  an  institu-
    24  tional  accrediting  agency  for  the  program  in which the student was
    25  enrolled at the time the college closed or ceased operation may elect to
    26  continue instruction pursuant to the teachout plan  or  may  decline  to
    27  continue  instruction and may instead apply for a refund in an amount up
    28  to the total cost of tuition expended by the student under this section.
    29  The option to apply for a refund shall extend to the end  of  the  first
    30  week of instruction at the teachout college.
    31    (vi)  A  student  who  was  enrolled  in a proprietary degree-granting
    32  college at the time the college closes  or  ceases  operation  shall  be
    33  entitled  to a refund of the full amount any prepaid tuition or expenses
    34  the student expended. In addition, commencing September first, two thou-
    35  sand twenty-four, a student who drops  out  of  a  college,  where  such
    36  college  closes within thirty days of the student's withdrawal and prior
    37  to completion of such student's program, shall be entitled to  a  refund
    38  in an amount up to the total cost of tuition expended by the student.
    39    (vii) Notwithstanding all notice procedures described in this subdivi-
    40  sion, in the event of a proprietary degree-granting college closing, the
    41  commissioner on his or her own initiative may take appropriate action in
    42  accordance  with  this section to process refund claims on behalf of all
    43  of the students of the closed college.
    44    (c) For the purposes of this section  a  good  cause  showing  that  a
    45  violation has occurred shall include any of the following:
    46    (i)  fraudulent  statements  or representations to the department, the
    47  public or to the student in connection with any program that the student
    48  was enrolled in while matriculating at the  proprietary  degree-granting
    49  college;
    50    (ii)  violation of any provisions of this article or regulation of the
    51  commissioner that  occurred  within  a  program  that  the  student  was
    52  enrolled  in  while  matriculating  at  the  proprietary degree-granting
    53  college;
    54    (iii) conviction or a plea of no contest on the  part  of  any  owner,
    55  operator,  or  member of the proprietary degree-granting college's board

        A. 5411                             5
 
     1  of trustees, if such conviction negatively impacts the student's program
     2  of study:
     3    (1) to any of the following felonies defined in the penal law: bribery
     4  involving  public  servants;  commercial  bribery; perjury in the second
     5  degree; rewarding official misconduct; larceny, in connection  with  the
     6  provision  of  services  or  involving  the theft of governmental funds;
     7  offering a false instrument for  filing,  falsifying  business  records;
     8  tampering  with  public  records;  criminal usury; scheme to defraud; or
     9  defrauding the government; or
    10    (2) in any other jurisdiction for an offense  which  is  substantially
    11  similar  to any of the felonies set forth in clause one of this subpara-
    12  graph and for which a sentence to a term of imprisonment  in  excess  of
    13  one  year  was  authorized and is authorized in this state regardless of
    14  whether such sentence was imposed; or
    15    (iv) incompetence of any owner or operator to operate a  college  that
    16  negatively  impacted  any program that the student was enrolled in while
    17  matriculating at the college.
    18    3.  Management  of  the  proprietary  college  tuition   reimbursement
    19  account.  (a) As used in this subdivision, net balance is defined as the
    20  actual  cash  balance  of  the  account as determined by the state comp-
    21  troller on November thirtieth, two thousand twenty-four and every  three
    22  months  thereafter.  For the purpose of calculating the net balance, the
    23  state comptroller shall not take into  consideration  any  refunds  made
    24  from  the  account  pursuant  to  this  section for the year immediately
    25  preceding the date on which the calculation is made.
    26    (b) (i) In the event that the account has accumulated a net balance in
    27  excess of three  million  dollars,  the  commissioner  shall,  with  the
    28  approval  of  the  director of the budget, waive an amount not to exceed
    29  the amount due for the  next  quarterly  assessment  for  a  proprietary
    30  degree-granting  college  that  has  paid  sixteen  quarters  or more of
    31  assessments pursuant to this section. In such event, payment  of  future
    32  quarterly  assessments  shall  be suspended for colleges which have paid
    33  sixteen quarters or more of assessments until the  net  balance  of  the
    34  account falls below two million three hundred thousand dollars.
    35    (ii)  In  the  event  the  net  balance of the account falls below two
    36  million three hundred thousand dollars, if the quarterly assessment  has
    37  been  suspended for colleges which have paid sixteen quarters or more of
    38  assessments pursuant to subparagraph (i) of this paragraph, it shall  be
    39  reinstated for the next quarterly assessment and all subsequent quarter-
    40  ly assessments until the account has accumulated a net balance in excess
    41  of three million dollars.
    42    (c)  The  commissioner  may  annually  apportion  from the proprietary
    43  college tuition reimbursement account an amount up to two hundred  thou-
    44  sand  dollars for the purpose of securing, scanning and otherwise making
    45  student transcripts from  closed  colleges  available  to  students  who
    46  attended  such  proprietary degree-granting colleges. Provided, however,
    47  that in no case shall such apportionment cause the account to fall below
    48  a balance of two million dollars.
    49    (d) The state comptroller shall audit  or  cause  to  be  audited  the
    50  proprietary  college  tuition reimbursement account once every two years
    51  and produce  an  audited  financial  statement  according  to  generally
    52  accepted accounting principles.
    53    (e)  Within  the first year that a proprietary degree-granting college
    54  begins operation as a fully accredited degree-granting institution,  the
    55  commissioner  shall  assess  such college an amount to be deposited into
    56  the account in an amount to  be  determined  by  the  commissioner.  The

        A. 5411                             6
 
     1  amount  determined  by  the  commissioner shall not exceed the amount of
     2  five payments of the maximum assessed fee collected  by  the  department
     3  under this section.
     4    4. Proprietary college tuition reimbursement account student complaint
     5  verification.  (a)  Any  current  or  former  student  of  a proprietary
     6  degree-granting college who believes he or she has been aggrieved  by  a
     7  violation  of  this  section  shall  have  the  right  to file a written
     8  complaint within:
     9    (i) six years of the alleged violation; or
    10    (ii) one year after receiving notification from the  higher  education
    11  services  corporation or any other guarantee agency that the student has
    12  defaulted on a student loan payment as long as that remains  within  six
    13  years  of  completed  matriculation  from their program or the student's
    14  withdrawal  from  their  program  at  the  proprietary   degree-granting
    15  college.
    16    (b) The commissioner shall maintain a written record of each complaint
    17  that is made. The commissioner shall also send to the complainant a form
    18  acknowledging the complaint and requesting further information if neces-
    19  sary  and  shall advise the director of the college that a complaint has
    20  been made and, where appropriate, the nature of the complaint.
    21    5.  Proprietary  college  complaint  investigation  process.  (a)  The
    22  commissioner  shall  within  twenty  days  of  receipt  of  such written
    23  complaint commence an investigation of the alleged violation  and  shall
    24  within  ninety  days  of  the receipt of such written complaint, issue a
    25  written finding. The commissioner shall furnish  such  findings  to  the
    26  person who filed the complaint and to the chief operating officer of the
    27  college cited in the complaint. If the commissioner finds that there has
    28  been  a violation of this section, the commissioner shall take appropri-
    29  ate action, including but not limited to referring cases  of  misconduct
    30  to  the  state  attorney  general,  beginning a review of the program in
    31  violation, and providing notice to students of the  institution  of  the
    32  violation by a publicly accessible website.
    33    (b)  If the commissioner finds that there has been a violation of this
    34  section, the commissioner shall also place such finding  on  a  publicly
    35  accessible  website disclosing the institution that was in violation and
    36  the substance of the complaint within thirty days of the  commissioner's
    37  finding.
    38    (c)  The  department  shall  annually  be  allocated up to one million
    39  dollars from the state general  fund  to  carry  out  investigations  of
    40  student complaints pursuant to this subdivision.
    41    (d) Any allocation pursuant to paragraph (c) of this subdivision shall
    42  be reduced by the amount of funding apportioned to the department pursu-
    43  ant to paragraph (d) of subdivision one of this section.
    44    §  3. The state finance law is amended by adding a new section 97-m to
    45  read as follows:
    46    § 97-m. Proprietary college tuition reimbursement account. 1.    There
    47  is  hereby  established  in the joint custody of the comptroller and the
    48  commissioner of taxation and finance a fund to be known as the "proprie-
    49  tary college tuition reimbursement account".
    50    2. The proprietary college tuition reimbursement  account  established
    51  in  this  section  shall  be  for  reimbursement  of  tuition to certain
    52  students of proprietary degree-granting colleges  pursuant  to  sections
    53  two hundred twelve-b and two hundred twelve-d of the education law.
    54    3.  (a)  Notwithstanding  any  other  law,  rule, or regulation to the
    55  contrary, the state comptroller is hereby  authorized  and  directed  to
    56  receive  for  deposit  to  the credit of the account established in this

        A. 5411                             7
 
     1  section moneys collected pursuant to sections two hundred  twelve-b  and
     2  two hundred twelve-d of the education law including, but not limited to,
     3  all  fees  and  assessments  relating  to the supervision of proprietary
     4  degree-granting  colleges  received  after September first, two thousand
     5  twenty-three pursuant to such sections and all other moneys credited  or
     6  transferred  to  such accounts from any other fund or source pursuant to
     7  law.
     8    (b) The comptroller is hereby authorized and directed to permit inter-
     9  est earnings on any account balances on  accounts  established  in  this
    10  section to accrue to the benefit of each of the accounts.
    11    4.  Monies  of  the  accounts  established  in this section, following
    12  appropriation by the legislature, shall be available  to  the  education
    13  department and may be expended pursuant to sections two hundred twelve-b
    14  and  two hundred twelve-d of the education law. Monies shall be paid out
    15  of such accounts on the audit and warrant of the state comptroller.
    16    § 4. Severability clause. If any clause, sentence, paragraph, subdivi-
    17  sion, section or part of this act shall be  adjudged  by  any  court  of
    18  competent  jurisdiction  to  be invalid, such judgment shall not affect,
    19  impair, or invalidate the remainder thereof, but shall  be  confined  in
    20  its  operation  to the clause, sentence, paragraph, subdivision, section
    21  or part thereof directly involved in the controversy in which such judg-
    22  ment shall have been rendered. It is hereby declared to be the intent of
    23  the legislature that this act would  have  been  enacted  even  if  such
    24  invalid provisions had not been included herein.
    25    § 5.  This act shall take effect one year after it shall have become a
    26  law.  Effective immediately, the addition, amendment  and/or  repeal  of
    27  any  rule  or regulation necessary for the implementation of this act on
    28  its effective date are authorized to be made and completed on or  before
    29  such effective date.
Go to top