NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8170
SPONSOR: Hyndman TITLE OF BILL: An act to amend the education law, in relation to
enacting the "Non-Degree Proprietary School Supervision and Student
Protection Act"
PURPOSE OR GENERAL IDEA OF BILL:
To strengthen protections for students and bolster oversight of non-de-
gree granting proprietary schools.
SUMMARY OF PROVISIONS:
Section 1 of the bill provides for the short title of the bill, the
"Non-Degree Proprietary School Supervision and Student Protection Act."
Section. 2 adds a new section 239-c to the education law to bar arbi-
tration clauses in student enrollment contracts.
Section 3 extends the time period for students to file complaints from
two to six years from the date of the alleged violation, requires the
commissioner to publicly disclose violations.
Section 4 raises the maximum penalties for non-compliance and raises the
statutory cap on the tuition reimbursement account from $2 million to
$3.5 minion.
Section 5 allows the state education department to allocate not more
than five hundred thousand dollars towards staff necessary to provide
oversight of proprietary schools if the tuition reimbursement account
balance is equal to or exceeds $3 million.
Section 6 requires schools to submit gainful employment data, attest to
the completeness and accuracy of the data, and penalizes misrepresen-
tations.
Section 7 provides for the severability clause.
Section 8 provides for the act to take effect 180 days after enactment.
JUSTIFICATION:
The bill enhances protections for students at proprietary non-degree
granting institutions by barring forced arbitration clauses, increasing
penalties for schools that are out of compliance with extant SED regu-
lations, and ensuring sufficient monies are available for tuition
refunds for students with substantiated complaints.
PRIOR LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
180 days after enactment.
STATE OF NEW YORK
________________________________________________________________________
8170
2019-2020 Regular Sessions
IN ASSEMBLY
June 4, 2019
___________
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 enacting the "Non-De-
gree Proprietary School Supervision and Student Protection Act"
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "Non-Degree Proprietary School Supervision and Student Protection
3 Act".
4 § 2. The education law is amended by adding a new section 239-c to
5 read as follows:
6 § 239-c. Arbitration clauses in proprietary institution enrollment
7 contracts. 1. No proprietary institution of higher education shall
8 include any provision requiring mandatory binding arbitration of
9 disputes regarding any student enrollment contract or agreement.
10 2. For purposes of this section, "proprietary institution" shall be
11 defined as any licensed private career school, certified English as a
12 second language school, or online education marketplace as defined in
13 paragraph c of subdivision one of section five thousand one of this
14 chapter or any approved for-profit degree-granting institution pursuant
15 to the department.
16 § 3. Subparagraphs 1 and 2 of paragraph c of subdivision 1 of section
17 5003 of the education law, as amended by chapter 381 of the laws of
18 2012, are amended to read as follows:
19 (1) Any person who believes he or she has been aggrieved by a
20 violation of this section, except a person aggrieved by the actions or
21 omissions of a candidate school, shall have the right to file a written
22 complaint within: (A) [two] six years of the alleged violation; or (B)
23 one year of receiving notification from the higher education services
24 corporation or any other guarantee agency that the student has defaulted
25 on a student loan payment[; provided, however, that no complaint may be
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11533-04-9
A. 8170 2
1 filed after three years from the date of the alleged violation]. The
2 commissioner shall maintain a written record of each complaint that is
3 made. The commissioner shall also send to the complainant a form
4 acknowledging the complaint and requesting further information if neces-
5 sary and shall advise the director of the school that a complaint has
6 been made and, where appropriate the nature of the complaint.
7 (2) The commissioner shall within twenty days of receipt of such writ-
8 ten complaint commence an investigation of the alleged violation and
9 shall within ninety days of the receipt of such written complaint, issue
10 a written finding. The commissioner shall furnish such findings to the
11 person who filed the complaint and to the chief operating officer of the
12 school cited in the complaint. If the commissioner finds that there has
13 been a violation of this section, the commissioner shall take appropri-
14 ate action. If the commissioner shall find that there has been a
15 violation of this section, the commissioner shall also place such a
16 finding on a publicly accessible website disclosing the institution that
17 was in violation and the substance of the complaint within thirty days
18 of the commissioner's finding.
19 § 4. Paragraphs a and b of subdivision 6 of section 5003 of the educa-
20 tion law, as amended by chapter 381 of the laws of 2012, are amended to
21 read as follows:
22 a. A hearing officer may recommend, and the commissioner may impose, a
23 civil penalty not to exceed [three] five thousand [five hundred] dollars
24 for any violation of this article, including a school's failure to offer
25 a course or program as approved by the commissioner. In the case of a
26 second or further violation committed within five years of the previous
27 violation, the liability shall be a civil penalty not to exceed [seven]
28 ten thousand [five hundred] dollars for each such violation.
29 b. Notwithstanding the provisions of paragraph a of this subdivision,
30 a hearing officer may recommend, and the commissioner may impose a civil
31 penalty not to exceed [seventy-five] one hundred thousand dollars or
32 double the documented amount from which the school benefited, whichever
33 is greater, for any of the following violations: (1) operation of a
34 school without a license in violation of section five thousand one of
35 this article; (2) operation of a school knowing that the school's
36 license has been suspended or revoked; (3) use of false, misleading,
37 deceptive or fraudulent advertising; (4) employment of recruiters on the
38 basis of a commission, bonus or quota, except as authorized by the
39 commissioner; (5) directing or authorizing recruiters to offer guaran-
40 tees of jobs upon completion of a course; (6) failure to make a tuition
41 refund when such failure is part of a pattern of misconduct; (7) the
42 offering of a course or program that has not been approved by the
43 commissioner; (8) admitting students, who subsequently drop out, who
44 were admitted in violation of the admission standards established by the
45 commissioner, where such admissions constitute a pattern of misconduct
46 and where the drop out resulted at least in part from such violation;
47 (9) failure to provide the notice of discontinuance and the plan
48 required by subdivision seven of section five thousand one of this arti-
49 cle; or (10) violation of any other provision of this article, or any
50 rule or regulation promulgated pursuant thereto, when such violation
51 constitutes part of a pattern of misconduct which significantly impairs
52 the educational quality of the program or programs being offered by the
53 school. For each enumerated offense, a second or further violation
54 committed within five years, shall be subject to a civil penalty not to
55 exceed one and one-half times the amount of the previous violation for
56 each such violation.
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1 § 5. Subdivision 10 of section 5007 of the education law, as amended
2 by chapter 381 of the laws of 2012, is amended to read as follows:
3 10. Management of the tuition reimbursement account. a. As used in
4 this subdivision, net balance is defined as the actual cash balance of
5 the account as determined by the commissioner on June thirtieth, nine-
6 teen hundred ninety-three and every three months thereafter. For the
7 purpose of calculating the net balance, the commissioner shall not take
8 into consideration any refunds made from the account pursuant to para-
9 graphs d and f of subdivision four of this section for the year imme-
10 diately preceding the date on which the calculation is made.
11 b. In the event that the account has accumulated a net balance in
12 excess of [one] two million eight hundred thousand dollars, the commis-
13 sioner shall, with the approval of the director of the budget, waive an
14 amount not to exceed the amount due for the next quarterly assessment
15 pursuant to this section and subdivision nine of section five thousand
16 one of this article for schools which have paid sixteen quarters or more
17 of assessments only. In such event, payment of future quarterly assess-
18 ments shall be suspended for schools which have paid sixteen quarters or
19 more of assessments until the net balance of the account falls below
20 [one] two million three hundred thousand dollars.
21 c. In the event the net balance of the account falls below [one] two
22 million three hundred thousand dollars, if the quarterly assessment has
23 been suspended for schools which have paid sixteen quarters or more of
24 assessments pursuant to paragraph b of this subdivision, it shall be
25 reinstated for the next quarterly assessment and all subsequent quarter-
26 ly assessments until the account has accumulated a net balance in excess
27 of [one] two million eight hundred thousand dollars.
28 d. Notwithstanding the provisions of paragraph b of this subdivision,
29 in the event that the balance of the account is in excess of [one] two
30 million three hundred thousand dollars, all schools licensed after June
31 thirtieth, nineteen hundred ninety-nine shall be required to pay into
32 the account the equivalence of three years of annual assessments over a
33 five year period.
34 e. Notwithstanding the provisions of paragraph b of this subdivision
35 all schools licensed after June thirtieth, nineteen hundred ninety-three
36 and before July first, nineteen hundred ninety-nine will be required to
37 pay into the account the equivalence of three years of annual assess-
38 ments within four years of the effective date of this paragraph. This
39 amount to be assessed shall be determined based upon the school's gross
40 tuition in its first three years of licensure.
41 f. In the event that the balance of the tuition reimbursement account
42 is equal to or in excess of three million dollars, up to five hundred
43 thousand dollars of the amounts assessed to schools in accordance with
44 the provisions of paragraphs d and e of this subdivision shall be appro-
45 priated to the department for the hiring of additional staff to perform
46 regulatory oversight of the schools covered under this article.
47 g. In the event that the balance of the tuition reimbursement account
48 is equal to or in excess of [two] three million five hundred one
49 dollars, the amounts assessed the schools in accordance with the
50 provisions of paragraphs d and e of this subdivision shall be deposited
51 directly to the proprietary vocational school supervision account.
52 h. The commissioner may annually apportion from the account an amount
53 up to two hundred thousand dollars for the purpose of securing, scanning
54 and otherwise making student records from closed schools available to
55 students who attended such schools. Provided, however, that in no case
56 shall such apportionment cause the account to fall below the balance set
A. 8170 4
1 forth in paragraph c of this subdivision, nor shall such apportionment
2 cause schools whose quarterly assessments have been suspended to pay
3 additional quarterly assessments.
4 § 6. Subdivision 5 of section 5002 of the education law is amended by
5 adding a new paragraph g to read as follows:
6 g. (1) The commissioner shall require annually, that available data be
7 submitted on the gainful employment outcomes of students for each
8 curriculum, course, or program of any school licensed pursuant to
9 section five thousand one of this article. The commissioner shall be
10 authorized to promulgate rules and regulations that define and detail
11 what shall be required as part of such submission. The submission must,
12 at a minimum include the average amount of student debt a student has
13 incurred through a school's curriculum, course, or program and the aver-
14 age adjusted gross income that students attain three years after the
15 students have completed the curriculum, course, or program.
16 (2) Schools submitting student data pertaining to gainful employment
17 outcomes shall attest to the completeness and accuracy of the informa-
18 tion submitted to the commissioner under penalty for violation of frau-
19 dulent statements or representations to the department as outlined under
20 section five thousand three of this article.
21 (3) For the purpose of this section, a school shall have satisfied the
22 completeness and accuracy of the information submitted if they reported
23 the average adjusted gross income of applicable former students through
24 such school's available access to tax data of such applicable former
25 students. However, if the school does not have available access to tax
26 data of such applicable former students then the school can satisfy the
27 completeness and accuracy of the information submitted requirement by
28 conducting a survey of applicable former students related to their
29 earned income. Such survey shall be done pursuant to regulations and
30 guidance promulgated by the commissioner.
31 § 7. If any clause, sentence, paragraph, or part of this act or the
32 application thereof to any person or circumstances, shall, for any
33 reason, be adjudged by a court of competent jurisdiction to be invalid,
34 such judgment shall not affect, impair, or invalidate the remainder of
35 this act, and the application thereof to other person or circumstances,
36 but shall be confined in its operation to the clause, sentence, para-
37 graph, or part thereof directly involved in the controversy in which
38 such judgment shall have been rendered and to the person or circum-
39 stances involved. It is hereby declared to be the legislative intent
40 that this act would have been adopted had such invalid provisions not
41 been included.
42 § 8. This act shall take effect on the one hundred eightieth day after
43 it shall have become a law. Effective immediately, the addition, amend-
44 ment and/or repeal of any rule or regulation necessary for the implemen-
45 tation of this act on its effective date are authorized to be made and
46 completed on or before such effective date.
