Bill Text: CA AB2581 | 2015-2016 | Regular Session | Amended
Bill Title: Higher education: campus closures: Corinthian Colleges,
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Failed) 2016-11-30 - From Senate committee without further action. [AB2581 Detail]
Download: California-2015-AB2581-Amended.html
BILL NUMBER: AB 2581 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 27, 2016
AMENDED IN ASSEMBLY APRIL 18, 2016
AMENDED IN ASSEMBLY APRIL 6, 2016
INTRODUCED BY Assembly Member Medina
( Coauthor: Assembly Member
Brown )
FEBRUARY 19, 2016
An act to add Sections 69433.61, 69999.19, 94051, and 94926.5 to
the Education Code, relating to higher education, making an
appropriation therefor, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 2581, as amended, Medina. Higher education: campus closures:
Corinthian Colleges, Inc.
(1) The California Private Postsecondary Education Act of 2009
provides for the regulation of private postsecondary educational
institutions by the Bureau for Private Postsecondary Education in the
Department of Consumer Affairs. The act also establishes the Student
Tuition Recovery Fund and requires the bureau to adopt regulations
governing the administration and maintenance of the fund, including
requirements relating to assessments on students and student claims
against the fund, and establishes that the moneys in this fund are
continuously appropriated to the bureau for specified purposes.
This bill would appropriate the sum of $1,300,000 from the Student
Tuition Recovery Fund to the Attorney General for the purposes of
providing grants to eligible nonprofit community service
organizations to assist eligible students affected by the closure of
Corinthian Colleges, Inc., as defined, with loan discharge and other
student loan-related requests and tuition recovery-related claims,
and to pay an amount not to exceed $150,000 for the reasonable
administrative costs of the Attorney General's office related to
these grants, as specified. The bill would require the bureau to
notify the Attorney General of all unlawful Corinthian Colleges
closures within 15 days of the effective date of these provisions.
The bill would require the Attorney General to, among other things,
within 90 days of the notification, solicit grant applications from
eligible nonprofit community service organizations, select one or
more of these organizations deemed to be qualified, and set
additional terms and conditions of the grants as necessary. The bill
would provide that any unused funds are to be returned to the
Attorney General for return to the Student Tuition Recovery Fund,
except that, upon the approval of the Attorney General, an eligible
nonprofit community service organization may expend those unused
funds to provide assistance to students who were enrolled at an
institution approved to operate by the bureau and who were harmed by
the unlawful closure of that institution. The bill would set a
schedule for how grant funds are to be distributed. The bill would
require the grantee to submit specified information to the Attorney
General on a quarterly basis, and require the Attorney General to
make these reports available to the Legislature and the bureau upon
request. The bill would require the Attorney General to provide the
Legislature and the bureau a final report summarizing all the
information submitted to it by grantees, promptly following the time
when all funds are expended by the grantees, or by January 1, 2019,
whichever is earlier. The bill would authorize the Attorney General
to contract with another qualified entity to perform the Attorney
General's duties under these provisions.
(2) This bill would, until July 1, 2020, authorize state agencies
that provide licensure to consider for licensure students who were
enrolled in an educational program of Corinthian Colleges, Inc.,
designed to lead to licensure from that state agency, and who did not
receive that licensure due to the institution's closure.
(3) The Cal Grant Program prohibits an applicant from receiving
Cal Grant awards totaling in excess of the amount equivalent to the
award level for a total of 4 years of full-time attendance in an
undergraduate program, except as provided.
This bill would partially exempt from this limitation on Cal Grant
awards a student who was enrolled and received a Cal Grant award at
a California campus of Heald College, and who was unable to complete
an educational program offered by the campus due to its closure.
(4) The California National Guard Education Assistance Award
Program authorizes the renewal of California National Guard Education
Assistance Awards, for a maximum of the greater of either 4 years of
full-time equivalent enrollment or the duration for which the
qualifying member would otherwise be eligible pursuant to the Cal
Grant Program, if specified conditions are met.
This bill would partially exempt from this limitation on
California National Guard Education Assistance Awards a student who
was enrolled and received a California National Guard Education
Assistance Award at a California campus of Heald College, and who was
unable to complete an educational program offered by the campus due
to its closure.
(5) This bill would declare that it is to take effect immediately
as an urgency statute.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Corinthian Colleges, Inc., was the target of consumer and
taxpayer protection enforcement efforts by the federal government,
the Attorney General, and other state and federal authorities.
(b) Based on findings of harm to students enrolled at Corinthian
Colleges campuses, the United States Department of Education
announced debt relief programs to assist students, including all of
the following:
(1) A student who attended a Corinthian Colleges campus that
closed on April 27, 2015, and withdrew any time after June 20, 2014,
is eligible to apply for a closed school loan discharge, so long as
the student does not transfer earned credit and subsequently
complete completes a comparable program at
another institution.
(2) A student who believes he or she was a victim of fraud or
other violations of state law by Corinthian Colleges can apply for
debt relief under borrower defense to repayment. The United States
Department of Education has determined that Corinthian Colleges
misrepresented job placement rates for a majority of programs at its
Heald College campuses between 2010 and 2014, and California Everest
College and WyoTech campuses between 2010 and 2013, and is in the
process of establishing a specific process for federal loan discharge
for these students.
(3) A Corinthian Colleges student who intends to submit a borrower
defense claim may request loan forbearance while a claims review
process is established and his or her claim is reviewed.
(c) On March 25, 2016, the United States Department of Education
announced the approval of 6,838 of the 11,740 closed school loan
discharge claims and approval of 2,048 of the approximately 11,000
borrower defense to repayment loan forgiveness claims received. Rough
estimates place the number of students with eligibility to file a
closed school loan discharge or defense to repayment claim at over
350,000 students.
(d) According to testimony provided at the November 10, 2015,
advisory committee meeting, the Bureau for Private Postsecondary
Education staff indicated that Corinthian Colleges students have
largely needed assistance in working with loan servicers to secure a
closed school loan discharge and in applying to the United States
Department of Education for loan forgiveness based on borrower
defense to repayment. According to that testimony, the Bureau for
Private Postsecondary Education at that time had one employee
responsible for assisting the hundreds of thousands of California
students eligible for loan forgiveness and tuition recovery.
(e) Without assistance, evidence shows that only a small fraction
of students eligible for tuition recovery or federal loan discharge
will file a claim.
(f) Pursuant to Section 94923, the Student Tuition Recovery Fund
exists to relieve or mitigate a student's economic loss caused by a
documented violation of certain laws or by institutional closure, as
specified.
(g) It is consistent with the purpose of the Student Tuition
Recovery Fund to provide assistance to Corinthian Colleges students
to obtain federal and private loan discharge and other financial aid
relief.
(h) It is the intent of the Legislature that unencumbered
restitution funds awarded to the state from a lawsuit involving
Corinthian Colleges and its affiliate institutions, including Heald
College, be used to repay any funds provided to students pursuant to
this act.
SEC. 2. Section 69433.61 is added to the Education Code, to read:
69433.61. (a) Notwithstanding any other law, a student who was
enrolled and received a Cal Grant award in the 2013-14 or 2014-15
academic year at a California campus of Heald College, and was unable
to complete an educational program offered by the campus due to the
campus' closure on April 27, 2015, shall not have the award years
used at a Heald College campus considered for purposes of the
limitation on the number of years of Cal Grant award eligibility.
This restoration of award years for Cal Grant eligibility shall not
exceed two years.
(b) A student shall be eligible for the restoration of award years
if the student was enrolled at a campus of Heald College on April
27, 2015, or withdrew from enrollment between July 1, 2014, and April
27, 2015. The Bureau for Private Postsecondary Education shall
provide the commission with information, if available, to confirm
student enrollment for purposes of this section.
(c) An eligible student shall, before July 1, 2018, notify the
commission of his or her intent to use the restoration of award years
provided under this section and to enroll in an institution eligible
for initial and renewal Cal Grant awards to be eligible for that
restoration.
SEC. 3. Section 69999.19 is added to the Education Code, to read:
69999.19. (a) Notwithstanding any other law, a student who was
enrolled and received a California National Guard Education
Assistance Award in the 2013-14 or 2014-15 academic year at a
California campus of Heald College, and was unable to complete an
educational program offered by the campus due to the campus' closure
on April 27, 2015, shall not have the award years used at a Heald
College campus considered for purposes of the limitation on the
number of years of California National Guard Education Assistance
Award eligibility. This restoration of award years for California
National Guard Education Assistance Award eligibility shall not
exceed two years.
(b) A student shall be eligible for the restoration of award years
if the student was enrolled at a campus of Heald College on April
27, 2015, or withdrew from enrollment between July 1, 2014, and April
27, 2015. The Bureau for Private Postsecondary Education shall
provide the commission with information, if available, to confirm
student enrollment for purposes of this section.
(c) An eligible student shall, before July 1, 2018, notify the
commission of his or her intent to use the restoration of award years
provided under this section and to enroll in an institution eligible
for initial and renewal California National Guard Education
Assistance Awards to be eligible for that restoration.
SEC. 4. Section 94051 is added to the Education Code, to read:
94051. (a) Notwithstanding any other law, until July 1, 2020, a
state agency that provides licensure may consider for licensure any
student who was enrolled in an educational program of Corinthian
Colleges, Inc., designed to lead to licensure from that state agency,
and who did not receive that licensure due to the institution's
closure. This consideration shall be provided at the discretion of
the state agency in accordance with its public protection mandate and
applicable criteria established by the agency for consumer safety.
(b) A state agency, as specified in subdivision (a), may require
coursework or passage of a California law and ethics examination, if
not already required, to ensure that the potential licensee is versed
in the most recent and relevant state laws applicable to the
license.
SEC. 5. Section 94926.5 is added to the Education Code, to read:
94926.5. (a) Upon appropriation by the Legislature from the
Student Tuition Recovery Fund, in response to the student harm caused
by the practices and unlawful closure of Corinthian Colleges, Inc.,
grant funds shall be timely provided in accordance with this section
to eligible nonprofit community service organizations to assist the
eligible students of that closed institution by relieving or
mitigating the economic and educational opportunity loss incurred by
those students.
(b) (1) The terms and conditions of the grant agreements shall
ensure that grant funds are used for the exclusive purpose of
assisting eligible students with federal and private loan discharge
and other financial aid relief, and that students eligible to claim
recovery through the Student Tuition Recovery Fund are referred to
the bureau for assistance with claim processing.
(2) This subdivision is not intended to prohibit a nonprofit
community service organization from using grant funds to screen
student requests for assistance in order to determine if a student
meets assistance eligibility requirements.
(c) Services provided by eligible nonprofit community service
organizations may include, but are not to be limited to, outreach and
education, screening requests for assistance, referring students for
additional legal assistance through pro bono referral programs, and
legal services.
(d) For purposes of this section, an "eligible nonprofit community
service organization" is an organization that satisfies all of the
following conditions:
(1) The organization is a 501(c)(3) tax-exempt organization in
good standing with the Internal Revenue Service and in compliance
with all applicable laws and requirements.
(2) The organization demonstrates expertise in assisting students
with, and currently provides free direct legal services to students
for, or will work in partnership with with,
or under the supervision of of,
an attorney or a nonprofit legal services organization that has
demonstrated expertise in assisting students with, student loan and
tuition recovery-related matters.
(3) The organization does not charge students for services,
including services provided pursuant to this section.
(e) For purposes of this section, an "eligible student" is a
student who was enrolled at a California campus of, or a California
student who was enrolled in an online campus of, a Corinthian
Colleges institution, and who has been screened by the nonprofit
community service organization and determined to be eligible for debt
relief from the United States Department of Education or other
student financial aid relief.
(f) (1) The bureau shall notify the Attorney General of all
unlawful Corinthian Colleges closures within 15 days of the effective
date of this section.
(2) The notification shall include the name and location of the
school, the programs, and the number of students affected at each
site of the school, as appropriate. The bureau shall provide the
Attorney General with all additional information that the Attorney
General may request, if the bureau has access to the requested
information.
(3) The Attorney General shall, within 90 days of receipt of the
notification, solicit grant applications from eligible nonprofit
community service organizations as described in subdivision (d),
select one or more of these organizations from among the applicants
who are deemed to be qualified by the Attorney General, set
additional terms and conditions of the grants as necessary, and
notify the bureau and the recipient organization or organizations of
the selection and the share of grant funds available that the
organization shall receive. The Attorney General may enter into a
contract with another qualified entity to perform the Attorney
General's duties under this subdivision.
(g) Within 30 days of selection pursuant to paragraph (3) of
subdivision (f), an eligible nonprofit community service organization
that receives funds pursuant to this section shall enter into a
grant agreement with the Attorney General, or a qualified entity
entrusted with this authority pursuant to paragraph (3) of
subdivision (f), as applicable, and shall use grant funds exclusively
for the purposes set forth in this section in accordance with the
agreement. Any unused funds shall be returned to the Attorney General
for return to the Student Tuition Recovery Fund, except that, upon
the approval of the Attorney General, an eligible nonprofit community
service organization may expend those unused funds to provide
assistance to students who were enrolled at an institution approved
to operate by the bureau and who were harmed by the unlawful closure
of that institution. The Attorney General, or a contracted qualified
entity, may terminate the grant agreement for material breach, and
may require repayment of funds provided to the nonprofit community
service organization during the time that the agreement was being
materially breached. However, the Attorney General, or a qualified
entity, shall provide the grantee with written notice of the breach
and a reasonable opportunity of not less than 30 days to resolve the
breach.
(h) An eligible nonprofit community service organization that
receives a grant may give priority to low-income students if demand
exceeds available grant funds. Otherwise, the organization may
provide assistance regardless of student income level.
(i) (1) An eligible nonprofit community service organization that
receives a grant shall report to the Attorney General, or a qualified
entity pursuant to paragraph (3) of subdivision (f), as applicable,
quarterly through the grant period on all of the following:
(A) The number of eligible students served pursuant to the grant
agreement.
(B) A detailed summary of services provided to those students.
(C) The number of Student Tuition Recovery Fund claims referred to
the bureau.
(D) The number of federal loan forgiveness claims filed and the
number of those claims approved, denied, and pending.
(E) The number of students screened by the nonprofit community
service organization who were determined ineligible for assistance
with debt relief pursuant to subdivision (e), a summary of reasons
for ineligibility, and a summary of any services or referral
information provided to those students.
(F) Any other information that is deemed appropriate by the
Attorney General or qualified entity, as applicable.
(2) The Attorney General or qualified entity, as applicable, shall
make the reports submitted pursuant to paragraph (1) available to
the Legislature and the bureau upon request.
(3) The Attorney General or qualified entity, as applicable, shall
provide the Legislature and the bureau a final report summarizing
the information submitted pursuant to paragraph (1) promptly
following the time when all funds are expended by the grantees or by
January 1, 2019, whichever is earlier.
(j) Funds shall be distributed to preapproved nonprofit community
service organizations as follows:
(1) Fifty percent shall be distributed to the grantee within 30
days of the grantee entering into a grant agreement.
(2) Twenty-five percent shall be distributed to the grantee upon
the submission of the grantee's second quarterly report.
(3) Twenty-five percent shall be distributed to the grantee upon
the submission of the grantee's third quarterly report.
(k) The adoption of any regulation pursuant to this section shall
be deemed to be an emergency and necessary for the immediate
preservation of the public health and safety, or general welfare.
SEC. 6. (a) It is the intent of the Legislature that grant funds
be made available from the Student Tuition Recovery Fund to assist
former students of Corinthian Colleges, Inc., in obtaining federal
and private loan discharge and other financial aid related relief,
that the amount of funds available be calculated by multiplying the
number of students (13,000) enrolled at the time of the institution's
unlawful closure by one hundred dollars ($100), and that
organizations receiving grants use available funds in ways that
maximize the number of California students that apply for and receive
loan discharge and tuition recovery.
(b) Consistent with subdivision (a), the sum of one million three
hundred thousand dollars ($1,300,000) is hereby appropriated from the
Student Tuition Recovery Fund to the Attorney General for the
purposes of providing grants pursuant to Section 94926.5 of the
Education Code, and to pay an amount not to exceed one hundred fifty
thousand dollars ($150,000) for the reasonable administrative costs
of the Attorney General's office related to these grants.
SEC. 7. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to provide immediate educational and economic relief to
the thousands of students harmed by the closure of Corinthian
Colleges, it is necessary for this act to take effect immediately.
