Amended in Assembly May 7, 2015

Amended in Assembly May 4, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 573

Introduced by Assembly Members Medina and McCarty

(Coauthors: Assembly Members Alejo, Atkins, begin insert Baker, end insert Bonilla, Brown, Calderon, Chau, begin insert Chávez, end insert Chiu, Chu, Cooley, Dababneh, Eggman, Frazier, Gipson, begin insert Kim, end insert O’Donnell, Olsen, Quirk, Ridley-Thomas, Rodriguez, Santiago, begin insert and end insert Thurmond)

February 24, 2015

An act to amend Sections 69433.5, 76300, 94923, and 94925 of, and to add Sections 69433.61 and 94926.5 to, the Education Code, relating to higher begin delete education. end delete begin insert education, and declaring the urgency thereof, to take effect immediately. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 573, as amended, Medina. Higher education: campus closures: Corinthian Colleges.

(1) Existing law establishes the California Community Colleges under the administration of the Board of Governors of the California Community Colleges, and establishes community college districts throughout the state that operate community colleges and provide instruction to students. Existing law requires community college districts to charge each student a fee of $46 per unit per semester. Existing law requires the waiver of this fee for students meeting prescribed requirements.

This bill would authorize the board of governors to waive the fee for students who were enrolled in a private postsecondary educational institution that provided educational services in California or online educational services to California students at the time the institution closed or otherwise ceased to operate an academic program in which they were enrolled, and for students who withdrew from the institution within 120 days, or any greater period determined by the bureau, of the closure or cessation.

(2) 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 requires an institution subject to its provisions to follow certain requirements prior to closing.

This bill would require the bureau to establish a task force to respond to the closure of an institution that does not comply with these requirements prior to closing. The bill would require the task force to assist the students who were enrolled at, or in an online program offered by, the institution in, among other things, obtaining refunds, loan discharges, and tuition recovery.

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. The act caps the amount that may be in the fund at any time at $25,000,000.

This bill would deem a student who was enrolled at a California campus of a Corinthian Colleges, Inc. institution, or a California student who was enrolled in an online program offered by an out-of-state campus of a Corinthian Colleges, Inc., institution, to be eligible for recovery from the fund under specified circumstances. The bill would raise the cap for the fund to $50,000,000.

(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 four years of full-time attendance in an undergraduate program, except as provided.

This bill would exempt from this limitation on Cal Grant awards a student who was enrolled at a California campus of a Corinthian Colleges, Inc. institution, and who was unable to complete an educational program offered by the campus due to its closure.

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(4) This bill would declare that it is to take effect immediately as an urgency statute.

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Vote:  begin delete majority end delete begin insert ²⁄₃ end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

It is the intent of the Legislature that the
California Community Colleges shall utilize available resources
to provide matriculation services, including, but not limited to,
assessments, counseling, and academic planning to a student who,
as of April 26, 2015, was enrolled at a California campus of a
Corinthian Colleges, Inc. institution, including Heald College, or
was a California student enrolled in one or more online programs
offered by an out-of-state campus of a Corinthian Colleges, Inc.
institution.

SEC. 2.  

It is the intent of the Legislature that unencumbered
funds awarded to the state from a lawsuit involving Corinthian
Colleges, Inc. and its affiliate institutions, including Heald College,
shall be used to fund this act.

SEC. 3.  

Section 69433.5 of the Education Code is amended to
read:

69433.5.  

(a) Only a resident of California, as determined by
the commission pursuant to Part 41 (commencing with Section
68000), is eligible for an initial Cal Grant award. The recipient
shall remain eligible for award renewal only if he or she is a
California resident, in attendance, and making satisfactory
academic progress at a qualifying institution, as determined by the
commission.

(b) A part-time student shall not be discriminated against in the
selection of Cal Grant Program award recipients, and an award to
a part-time student shall be approximately proportional to the time
the student spends in the instructional program, as determined by
the commission. A first-time Cal Grant Program award recipient
who is a part-time student shall be eligible for a full-time renewal
award if he or she becomes a full-time student.

(c) Cal Grant Program awards shall be awarded without regard
to race, religion, creed, sex, sexual orientation, gender identity,
gender expression, or age.

(d) An applicant shall not receive more than one type of Cal
Grant Program award concurrently. An applicant shall not:

(1) Receive one or a combination of Cal Grant Program awards
in excess of the amount equivalent to the award level for a total
of four years of full-time attendance in an undergraduate program,
except as provided in Sections 69433.6 and 69433.61.

(2) Have obtained a baccalaureate degree before receiving a
Cal Grant Program award.

(e) A Cal Grant Program award, except as provided in Section
69440, may only be used for educational expenses of a program
of study leading directly to an undergraduate degree or certificate,
or for expenses of undergraduate coursework in a program of study
leading directly to a first professional degree, but for which no
baccalaureate degree is awarded.

(f) The commission shall, for students who accelerate college
attendance, increase the amount of award proportional to the period
of additional attendance resulting from attendance in classes that
fulfill requirements or electives for graduation during summer
terms, sessions, or quarters. In the aggregate, the total amount a
student may receive in a four-year period may not be increased as
a result of accelerating his or her progress to a degree by attending
summer terms, sessions, or quarters.

(g) The commission shall notify Cal Grant award recipients of
the availability of funding for the summer term, session, or quarter
through prominent notice in financial aid award letters, materials,
guides, electronic information, and other means that may include,
but not necessarily be limited to, surveys, newspaper articles, or
attachments to communications from the commission and any
other published documents.

(h) The commission may require, by the adoption of rules and
regulations, the production of reports, accounting, documents, or
other necessary statements from the award recipient and the college
or university of attendance pertaining to the use or application of
the award.

(i) A Cal Grant Program award may be utilized only at a
qualifying institution.

(j) A recipient who initially qualified for both a Cal Grant A
award and a Cal Grant B award, and received a Cal Grant B award,
may be awarded a renewal Cal Grant A award if that recipient
subsequently became ineligible for a renewal Cal Grant B award
and meets the applicable Cal Grant A financial need and income
and asset criteria.

SEC. 4.  

Section 69433.61 is added to the Education Code, to
read:

69433.61.  

A student who was enrolled at a California campus
of a Corinthian Colleges, Inc. institution, including Heald College,
and was unable to complete an educational program offered by
the campus due to the campus’s closure on April 27, 2015, shall
be exempt from the limitation on Cal Grant Program awards in
paragraph (1) of subdivision (d) of Section 69433.5.

SEC. 5.  

Section 76300 of the Education Code is amended to
read:

76300.  

(a) The governing board of each community college
district shall charge each student a fee pursuant to this section.

(b) (1) The fee prescribed by this section shall be forty-six
dollars ($46) per unit per semester, effective with the summer term
of the 2012 calendar year.

(2) The board of governors shall proportionately adjust the
amount of the fee for term lengths based upon a quarter system,
and also shall proportionately adjust the amount of the fee for
summer sessions, intersessions, and other short-term courses. In
making these adjustments, the board of governors may round the
per unit fee and the per term or per session fee to the nearest dollar.

(c) For the purposes of computing apportionments to community
college districts pursuant to Section 84750.5, the board of
governors shall subtract, from the total revenue owed to each
district, 98 percent of the revenues received by districts from
charging a fee pursuant to this section.

(d) The board of governors shall reduce apportionments by up
to 10 percent to any district that does not collect the fees prescribed
by this section.

(e) The fee requirement does not apply to any of the following:

(1) Students enrolled in the noncredit courses designated by
Section 84757.

(2) California State University or University of California
students enrolled in remedial classes provided by a community
college district on a campus of the University of California or a
campus of the California State University, for whom the district
claims an attendance apportionment pursuant to an agreement
between the district and the California State University or the
University of California.

(3) Students enrolled in credit contract education courses
pursuant to Section 78021, if the entire cost of the course, including
administrative costs, is paid by the public or private agency,
corporation, or association with which the district is contracting
and if these students are not included in the calculation of the
full-time equivalent students (FTES) of that district.

(f) The governing board of a community college district may
exempt special part-time students admitted pursuant to Section
76001 from the fee requirement.

(g) (1) The fee requirements of this section shall be waived for
any student who meets all of the following requirements:

(A) Meets minimum academic and progress standards adopted
by the board of governors, which fulfill the requirements outlined
in this paragraph and paragraphs (2) to (5), inclusive. Any
minimum academic and progress standards adopted pursuant to
this section shall be uniform across all community college districts
and campuses. These standards shall not include a maximum unit
cap, and community college districts and colleges shall not impose
requirements for fee waiver eligibility other than the minimum
academic and progress standards adopted by the board of governors
and the requirements of subparagraph (B).

(B) Meets at least one of the following criteria:

(i) At the time of enrollment, is a recipient of benefits under the
Temporary Assistance for Needy Families program, the
Supplemental Security Income/State Supplementary Payment
Program, or a general assistance program.

(ii) Demonstrates eligibility according to income standards
established by regulations of the board of governors.

(iii) Demonstrates financial need in accordance with the
methodology set forth in federal law or regulation for determining
the expected family contribution of students seeking financial aid.

(iv) Was enrolled in a private postsecondary educational
institution that provided educational services in California, or
online educational services to a California student, at the time the
institution closed or otherwise ceased to operate an academic
program in which the student was enrolled.

(v) Withdrew from a private postsecondary educational
institution that provided educational services in California, or
online educational services to a California student, that closed or
otherwise ceased to operate an academic program in which the
student was enrolled, within 120 days of the closure or cessation,
or any greater period determined by the bureau pursuant to Section
94923.

(2) (A) The board of governors, in consultation with students,
faculty, and other key stakeholders, shall consider all of the
following in the development and adoption of minimum academic
and progress standards pursuant to subparagraph (A) of paragraph
(1):

(i) Minimum uniform academic and progress standards that do
not unfairly disadvantage financially needy students in pursuing
their education.

(ii) Criteria for reviewing extenuating circumstances and
granting appeals that, at a minimum, take into account and do not
penalize a student for circumstances outside his or her control,
such as reductions in student support services or changes to the
economic situation of the student.

(iii) A process for reestablishing fee waiver eligibility that
provides a student with a reasonable opportunity to continue or
resume his or her enrollment at a community college.

(B) To ensure that students are not unfairly impacted by the
requirements of subparagraph (A) of paragraph (1), the board of
governors shall establish a reasonable implementation period that
commences no sooner than one year from adoption of the minimum
academic and progress standards, or any subsequent changes to
these standards, pursuant to subparagraph (A) of paragraph (1)
and that is phased in to provide students adequate notification of
this requirement and information about available support resources.

(3) It is the intent of the Legislature that minimum academic
and progress standards adopted pursuant to subparagraph (A) of
paragraph (1) be implemented only as campuses develop and
implement the student support services and interventions necessary
to ensure no disproportionate impact to students based on ethnicity,
gender, disability, or socioeconomic status. The board of governors
shall consider the ability of community college districts to meet
the requirements of this paragraph before adopting minimum
academic and progress standards, or any subsequent changes to
these standards, pursuant to subparagraph (A) of paragraph (1).

(4) It is the intent of the Legislature to ensure that a student shall
not lose fee waiver eligibility without a community college campus
first demonstrating a reasonable effort to provide a student with
adequate notification and assistance in maintaining his or her fee
waiver eligibility. The board of governors shall adopt regulations
to implement this paragraph that ensure all of the following:

(A) Students are provided information about the available
student support services to assist them in maintaining fee waiver
eligibility.

(B) Community college district policies and course catalogs
reflect the minimum academic and progress standards adopted
pursuant to subparagraph (A) of paragraph (1) and that appropriate
notice is provided to students before the policies are put into effect.

(C) A student does not lose fee waiver eligibility unless he or
she has not met minimum academic and progress standards adopted
pursuant to subparagraph (A) of paragraph (1) for a period of no
less than two consecutive academic terms.

(5) The board of governors shall provide notification of a
proposed action to adopt regulations pursuant to this subdivision
to the appropriate policy and fiscal committees of the Legislature
in accordance with the requirements of paragraph (1) of subdivision
(a) of Section 70901.5. This notification shall include, but not be
limited to, all of the following:

(A) The proposed minimum academic and progress standards
and information detailing how the requirements of paragraphs (1)
to (4), inclusive, have been or will be satisfied.

(B) How many students may lose fee waiver eligibility by
ethnicity, gender, disability, and, to the extent relevant data is
available, by socioeconomic status.

(C) The criteria for reviewing extenuating circumstances,
granting appeals, and reestablishing fee waiver eligibility pursuant
to paragraph (2).

(h) The fee requirements of this section shall be waived for any
student who, at the time of enrollment, is a dependent or surviving
spouse who has not remarried, of any member of the California
National Guard who, in the line of duty and while in the active
service of the state, was killed, died of a disability resulting from
an event that occurred while in the active service of the state, or
is permanently disabled as a result of an event that occurred while
in the active service of the state. “Active service of the state,” for
the purposes of this subdivision, refers to a member of the
California National Guard activated pursuant to Section 146 of
the Military and Veterans Code.

(i) The fee requirements of this section shall be waived for any
student who is the surviving spouse or the child, natural or adopted,
of a deceased person who met all of the requirements of Section
68120.

(j) The fee requirements of this section shall be waived for any
student in an undergraduate program, including a student who has
previously graduated from another undergraduate or graduate
program, who is the dependent of any individual killed in the
September 11, 2001, terrorist attacks on the World Trade Center
and the Pentagon or the crash of United Airlines Flight 93 in
southwestern Pennsylvania, if that dependent meets the financial
need requirements set forth in Section 69432.7 for the Cal Grant
A Program and either of the following applies:

(1) The dependent was a resident of California on September
11, 2001.

(2) The individual killed in the attacks was a resident of
California on September 11, 2001.

(k) A determination of whether a person is a resident of
California on September 11, 2001, for purposes of subdivision (j)
shall be based on the criteria set forth in Chapter 1 (commencing
with Section 68000) of Part 41 of Division 5 for determining
nonresident and resident tuition.

(l) (1) “Dependent,” for purposes of subdivision (j), is a person
who, because of his or her relationship to an individual killed as
a result of injuries sustained during the terrorist attacks of
September 11, 2001, qualifies for compensation under the federal
September 11th Victim Compensation Fund of 2001 (Title IV
(commencing with Section 401) of Public Law 107-42).

(2) A dependent who is the surviving spouse of an individual
killed in the terrorist attacks of September 11, 2001, is entitled to
the waivers provided in this section until January 1, 2013.

(3) A dependent who is the surviving child, natural or adopted,
of an individual killed in the terrorist attacks of September 11,
2001, is entitled to the waivers under subdivision (j) until that
person attains 30 years of age.

(4) A dependent of an individual killed in the terrorist attacks
of September 11, 2001, who is determined to be eligible by the
California Victim Compensation and Government Claims Board,
is also entitled to the waivers provided in this section until January
1, 2013.

(m) (1) It is the intent of the Legislature that sufficient funds
be provided to support the provision of a fee waiver for every
student who demonstrates eligibility pursuant to subdivisions (g)
to (j), inclusive.

(2) From funds provided in the annual Budget Act, the board
of governors shall allocate to community college districts, pursuant
to this subdivision, an amount equal to 2 percent of the fees waived
pursuant to subdivisions (g) to (j), inclusive. From funds provided
in the annual Budget Act, the board of governors shall allocate to
community college districts, pursuant to this subdivision, an
amount equal to ninety-one cents ($0.91) per credit unit waived
pursuant to subdivisions (g) to (j), inclusive. It is the intent of the
Legislature that funds provided pursuant to this subdivision be
used to support the determination of financial need and delivery
of student financial aid services, on the basis of the number of
students for whom fees are waived. It also is the intent of the
Legislature that the funds provided pursuant to this subdivision
directly offset mandated costs claimed by community college
districts pursuant to Commission on State Mandates consolidated
Test Claims 99-TC-13 (Enrollment Fee Collection) and 00-TC-15
(Enrollment Fee Waivers). Funds allocated to a community college
district for determination of financial need and delivery of student
financial aid services shall supplement, and shall not supplant, the
level of funds allocated for the administration of student financial
aid programs during the 1992-93 fiscal year.

(n) The board of governors shall adopt regulations implementing
this section.

(o) This section shall become operative on May 1, 2012, only
if subdivision (b) of Section 3.94 of the Budget Act of 2011 is
operative.

SEC. 6.  

Section 94923 of the Education Code is amended to
read:

94923.  

(a) The Student Tuition Recovery Fund relieves or
mitigates economic loss suffered by a student while enrolled in an
educational program, as defined in Section 94837, at an institution
not exempt from this article pursuant to Article 4 (commencing
with Section 94874), who, at the time of his or her enrollment,
was a California resident or was enrolled in a California residency
program, prepaid tuition, and suffered economic loss.

(b) The bureau shall adopt by regulation procedures governing
the administration and maintenance of the Student Tuition
Recovery Fund, including requirements relating to assessments
on students and student claims against the Student Tuition
Recovery Fund. The regulations shall provide for awards to
students who suffer economic loss.

The regulations shall ensure that the following students, and any
other students deemed appropriate, are eligible for payment from
the Student Tuition Recovery Fund:

(1) Any student who was enrolled at an institution, at a location
of the institution, or in an educational program offered by the
institution, at the time that institution, location, or program was
closed or discontinued, as applicable, who did not choose to
participate in a teach-out plan approved by the bureau or did not
complete a chosen teach-out plan approved by the bureau.

(2) Any student who was enrolled at an institution or a location
of the institution within the 120-day period before the closure of
the institution or location of the institution, or who was enrolled
in an educational program within the 120-day period before the
program was discontinued, if the bureau determines there was a
significant decline in the quality or value of that educational
program during that time period.

(3) Any student who was enrolled at an institution or a location
of the institution more than 120 days before the closure of the
institution or location of the institution, in an educational program
offered by the institution as to which the bureau determines there
was a significant decline in the quality or value of the program
more than 120 days before closure.

(4) A student to whom an institution has been ordered to pay a
refund by the bureau but has failed to do so.

(5) A student to whom an institution has failed to pay or
reimburse loan proceeds under a federal student loan program as
required by law, or has failed to pay or reimburse proceeds received
by the institution in excess of tuition and other costs.

(6) A student who has been awarded restitution, a refund, or
other monetary award by an arbitrator or court, based on a violation
of this chapter by an institution or representative of an institution,
but who has been unable to collect the award from the institution.
The bureau shall review the award or judgment and shall ensure
the amount to be paid from the fund does not exceed the student’s
economic loss.

(7) Notwithstanding the begin delete requirements end delete begin insert requirement end insert of subdivision
(a) that the institution not be exempt from this article, a student
who was enrolled at a California campus of a Corinthian Colleges,
Inc. institution, including Heald College, or was a California
student enrolled in an online program offered by an out-of-state
campus of a Corinthian Colleges, Inc. institution, who also meets
all of the other requirements in subdivision (a), if the student was
enrolled as of April 26, 2015, or withdrew within 120 days of that
date or any greater period determined by the bureau pursuant to
this section.

(c) Any student who is required to pay a Student Tuition
Recovery Fund assessment who pays tuition equal to or greater
than the required assessment shall be deemed to have paid the
required assessment, whether or not his or her enrollment
agreement specifies collection of the required assessment, and
whether or not the institution identifies any money collected from
the student as a Student Tuition Recovery Fund assessment.

(d) The bureau shall establish regulations ensuring, as
permissible under California law, that a student who suffers
educational opportunity losses, whose charges are paid by a
third-party payer, is eligible for educational credits under the fund.

(e) The bureau may seek repayment to the Student Tuition
Recovery Fund from an institution found in violation of the law
for which a student claim was paid. An institution shall not be
eligible to renew its approval to operate with the bureau if the
repayment is not made to the bureau as requested.

(f) The bureau shall, by regulation, define “economic loss.” The
regulation shall ensure that the definition of “economic loss”
includes, but is not necessarily limited to, pecuniary loss, which
is the sum of the student’s tuition, all other institutional charges
as defined in Section 94844, the cost of equipment and materials
required for the educational program as defined in Section 94837,
interest on any student loan used to pay for such charges, collection
costs, penalties, and any license or examination fees the student
paid to the institution but is unable to recover. Economic loss shall
also include the amount the institution collected and failed to pay
to third parties on behalf of the student for license fees or any other
purpose. Economic loss does not include Student Tuition Recovery
Fund assessments, unless the student is entitled to a full refund
under Section 94919 or 94920, room and board, supplies,
transportation, application fees, or nonpecuniary damages such as
inconvenience, aggravation, emotional distress, or punitive
damages. Economic loss does not include legal fees, attorney fees,
court costs, or arbitration fees. Nothing in this subdivision shall
prevent the bureau from further defining economic loss to include
loss of educational opportunity.

SEC. 7.  

Section 94925 of the Education Code is amended to
read:

94925.  

(a) The amount in the Student Tuition Recovery Fund
shall not exceed fifty million dollars ($50,000,000) at any time.

(b) If the bureau has temporarily stopped collecting the Student
Tuition Recovery Fund assessments because the fund has
approached the fifty million dollar limit in subdivision (a), the
bureau shall resume collecting Student Tuition Recovery Fund
assessments when the fund falls below forty-five million dollars
($45,000,000).

(c) An otherwise eligible student who enrolled during a period
when institutions were not required to collect Student Tuition
Recovery Fund assessments is eligible for Student Tuition
Recovery Fund payments despite not having paid any Student
Tuition Recovery Fund assessment.

(d) A student who is eligible for recovery from the Student
Tuition Recovery Fund pursuant to paragraph (7) of subdivision
(b) of Section 94923 shall be eligible for payments despite not
having paid any Student Tuition Recovery Fund assessment.

SEC. 8.  

Section 94926.5 is added to the Education Code, to
read:

94926.5.  

(a) (1) The bureau shall establish and coordinate a
closed school task force to respond to the closure of an institution
that does not comply with the requirements, as applicable, of this
article. The task force shall ensure that students who were enrolled
at, or in an online program offered by, the institution receive
accurate and uniform information regarding the school closure
process and the students’ rights and responsibilities. The task force
shall assist these students in all of the following:

(A) Obtaining refunds, loan discharges, and tuition recovery
for which the student is eligible.

(B) Obtaining information regarding the option to transfer credits
that the student earned while attending the institution, including
information necessary to help the student make an informed
decision about whether to seek a loan discharge or to transfer
credits.

(C) Providing other support deemed necessary by the task force
in accordance with the bureau's consumer protection mission.

(2) The members of the task force should include, but not
necessarily be limited to, representatives on behalf of the Student
Aid Commission, the Department of Justice, the Office of the
Chancellor of the California Community Colleges, the Department
of Veterans Affairs, and one or more legal aid organizations.

(b) Upon the unlawful closure of an institution, the bureau shall
establish a grant fund in order to provide financial grants, not to
exceed one hundred dollars ($100) per student, to local legal aid
organizations, which may include local legal aid organizations
designed specifically to assist veteran students, to assist the students
of that institution with completing loan discharge requests and
tuition recovery claims.

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begin insert SEC. 9. end insert   

end insert begin insert

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:

end insert begin insert

In order to provide immediate educational and economic relief
to the thousands of students harmed by the closure of Corinthian
Colleges, Inc., it is necessary for this act to take effect immediately.

end insert