BILL ANALYSIS                                                                                                                                                                                                    

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          Date of Hearing:  May 12, 2015


                                 Jose Medina, Chair

          AB 573  
          (Medina) - As Amended May 11, 2015

          SUBJECT:  Higher education: campus closures: Corinthian  

          SUMMARY:  Provides financial and other assistance to students  
          impacted by recent closing of all Heald, Everest, and WyoTech  
          campuses in California, which were owned by Corinthian Colleges,  
          Inc. (CCI).  Specifically, this bill:  

          1)Provides for the following with regards to California  
            Community Colleges (CCC):

             a)   Declares legislative intent that the CCC provide  
               matriculation services, including assessment, counseling,  
               and academic planning to students enrolled at CCI  
               institutions and harmed by the April 27, 2015 closure;

             b)   Appropriates $100,000 from the General Fund (GF) to the  


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               CCC Chancellor, from GF revenues appropriated for community  
               college districts (Prop 98), for the purposes of a CCC  
               district conducting a statewide media campaign to inform  
               students affected by the CCI closure of educational  
               opportunities available at CCCs; and,

             c)   Provides a CCC Board of Governors (BOG) Fee Waiver,  
               until July 1, 2018, to a student who was enrolled at a CCI  
               campus on April 27, 2015, or withdrew within 120 days (or  
               period determined) prior to the CCI closure on April 27,  
               2015, and did not complete their educational program.  

          2)Provides that Cal Grant recipient students enrolled at a CCI  
            campus that were unable to complete their educational program  
            due to the closure shall not have the award years utilized at  
            a CCI campus included in the limitation on the number of award  
            years of Cal Grant Awards eligibility. 

          3)Provides for the following regarding the Student Tuition  
            Recovery Fund (STRF) administered by the Bureau for Private  
            Postsecondary Education (BPPE):

             a)   Provides that a student enrolled at a California campus  
               of a CCI institution, including Heald College, or a  
               California student enrolled in an online program offered by  
               an out-of-state CCI campus, who meets all other eligibility  
               requirements, and was enrolled as of April 27, 2015, or  
               withdrew within 120 days of that date (or period  
               determined) is eligible for the STRF;


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             b)   Increases the maximum allowable fund balance in the STRF  
               from $25 million to $50 million, and requires the Bureau  
               for Private Postsecondary Education (BPPE), if it stops  
               collecting STRF assessments because the fund has approached  
               the new maximum balance, to resume collecting assessments  
               when the fund balance falls below $45 million (instead of  
               $20 million currently); and,
             c)   Establishes legislative intent that unencumbered  
               restitution funds awarded to students of this state from a  
               lawsuit involving CCI be used to repay any STRF funds  
               provided to those students pursuant to this act. 

          4)Requires the BPPE to establish and coordinate a standing  
            closed school task force:

             a)   Requires the task force to respond to the closure of  
               institutions that do not comply with the requirements, as  
               applicable, of the law.  

             b)   Requires the task force to ensure that students affected  
               by a closed school receive accurate and timely information  
               regarding the school closure process and the students'  
               rights and responsibilities under federal and state law.   
               Requires the task force to ensure students are provided  
               assistance in all of the following:

               i)     Obtaining refunds, loan discharges, and tuition  
                 recovery for which the student is eligible;


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               ii)    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; and, 

               iii)   Other support deemed necessary by the task force in  
                 accordance with the bureau's consumer protection mission.

             c)   Provides that the members of the task force should  
               include, but not necessarily be limited to, representatives  
               on behalf of the California Student Aid Commission (CSAC),  
               the Department of Justice (DOJ), the Office of the CCC  
               Chancellor, the Department of Veterans Affairs (CalVet),  
               and one or more legal aid organizations.

          5)Provides for legal assistance for student loan related  
            purposes for students affected by a school closure, as  

             a)   Requires BPPE, upon the unanticipated closure of an  
               institution, to provide timely (within 30 days) grant funds  
               to local legal aid organizations, which may include  
               organizations designed specifically to assist veteran  
               students, to assist students, for no less than one year  
               following the closure of the institution, with loan  
               discharge and tuition recovery related claims;


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             b)   Provides that the amount of grant funds shall be  
               calculated by multiplying the number of students affected  
               by the school closure by one hundred dollars ($100);

             c)   Provides that legal aid organizations that receive  
               grants should be located in the areas of the state affected  
               by the institutions closure and that legal aid  
               organizations that receive grants may give priority to low  
               income students if demand exceeds available grant funds;  

             d)   Requires legal aid organizations that receive grants to  
               report to the BPPE at the end of the grant on the number of  
               students served from the date of the institution's closure;  

             e)   Appropriates one million three-hundred thousand dollars  
               ($1,300,000) from the BPPE Administrative Fund to the BPPE  
               for the aforementioned purposes to assist students affected  
               by the closure of CCI.

          6)Extends the suspension of the requirement that the BPPE  
            Administrative Fund reserve not exceed six months of operating  
            expenses for an additional year (to July 1, 2016).

          7)Declares this bill an urgency statute to take effect  


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          EXISTING LAW:  

          1)Establishes the CCC with oversight and coordination provided  
            by the CCC BOG and Chancellor, and provides that the mission  
            of CCC is to offer lower-division academic and vocational  
            instruction to younger and older students, including those  
            returning to school.  (Education Code Section 66010.4)

          2)Requires the forty-six dollars per unit per semester fee to be  
            waived for CCC students who meet specified income  
            requirements.  The BOG is required to establish minimum  
            academic and progress standards for students receiving a BOG  
            Fee Waiver. (EDC Sec. 76300) 

          3)Establishes the Cal Grant Program, administered by CSAC, to  
            provide tuition and access cost assistance to eligible  
            students attending qualified institution. Institutions are  
            required to meet a series of performance standards; including,  
            a three-year Cohort Default Rate (CDR) of less than 15.5% and  
            a Graduation Rate (GR) of no less than 20% (this rate  
            increases to 30% in 2016-17).  (EDC Sec. 69430 et seq.)

          4)Establishes the BPPE within the Department of Consumer Affairs  
            with the primary function of providing protection of  
            students/consumers through the regulation and oversight of  


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            private postsecondary educational institutions.  BPPE  
            oversight activities are funded by licensing fees paid by  
            regulated institutions.  Existing law also provides for a  
            variety of exemptions from oversight by the Bureau for  
            specific types of institutions, including institutions  
            accredited by the Western Association of Schools and Colleges  
            (WASC).  However, pursuant to SB 1247 (Lieu, Statutes of  
            2014), all for-profit institutions serving veterans and  
            receiving federal Title 38 funds, regardless of accreditation  
            status, are required to obtain BPPE approval by January 1,  
            2016. (EDC Sec. 94800 et seq.)

          5)Establishes the STRF, administered by the BPPE, to relieve or  
            mitigate economic loss suffered by students enrolled at a  
            non-exempt private postsecondary education institution due to  
            the institutions' closure, the institutions' failure to pay  
            refunds or reimburse loan proceeds, or the institutions'  
            failure to pay students' restitution award for a violation of  
            the Private Postsecondary Education Act.  STRF is capped in  
            statute at $25 million.  Institutions are required to assess  
            students an amount established in regulation by the BPPE and  
            remit fund to the BPPE for STRF.  In 2010, that amount was  
            established at $2.50 per $1000 of tuition charged.  In 2013,  
            that amount was reduced to $0.50 per $1000.  In 2015, this  
            amount was reduced to $0.00, as the STRF had exceeded the  
            statutory cap (STRF is currently at approximately $28  
            million).  (EDC Sec. 94923 - 94925)

          6)Establishes the California State Approving Agency for Veterans  
            Education within CalVet and requires minimum requirements for  
            postsecondary institutions approved to participate in federal  
            veteran's education benefits (Title 38), including requiring  
            for-profit institutions to obtain BPPE approval by January 1,  
            2016.  (EDC 67100 et seq.)


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          7)Title IV of the Federal Higher Education Act of 1965 (HEA), as  
            amended, establishes the federal student aid program,  
            administered by the United States Department of Education  
            (USDE) to provide grants, loans and work-study funds from the  
            federal government to eligible students enrolled in eligible  
            colleges or career schools. (20 U.S.C. Sec. 1070 et seq.)

            Recent federal regulations to improve integrity of the  
            programs authorized under Title IV of the HEA established new  
            institutional eligibility requirements for financial aid,  
            including that institutions be "authorized" by each state in  
            which they operate, and have an independent state-level  
            student complaint process.  (34 CFR Sec. 600.9)

          8)Federal law establishes Legal Services Corporation (LSC) as a  
            501(c)(3) nonprofit that provides grants for legal assistance  
            to low-income Americans.  LSC distributes funding to 134  
            independent nonprofit legal aid programs with nearly 800  
            offices nationwide. LSC is headed by a bipartisan board of  
            directors whose 11 members are appointed by the President and  
            confirmed by the Senate.  (42 U.S.C. 2996 et seq.) 

          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee it has been estimated that approximately 16,000  
          students have been impacted by the school closures, including  
          almost 12,000 from Heald.


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          1)BOG Fee Waiver. The reduction in CCC fee revenues would depend  
            on the number of impacted students who enroll at a CCC, how  
            many CCC units these students take to complete their CCC  
            educational goals, and how many of these students would not  
            otherwise qualify for a BOG fee waiver. (About two-thirds of  
            the entire CCC course load is taken by students currently  
            receiving a BOG waiver.) For every 1,000 full-time equivalent  
            students (FTES) from the impacted schools who would not  
            otherwise obtain a fee waiver, the revenue loss to the  
            community colleges would be $1.4 million annually.

          2)Legal Assistance Grants. Special fund costs to the BPPE of  
            $1.3 million dollars to legal aid organizations received  
            grants from the BPPE for assisting impacted students. [BPPE  
            Administrative Fund] 

          3)STRF Payments.  STRF costs will depend on the number of  
            impacted Heald students making STRF claims and the amounts of  
            those claims eligible for reimbursement. If a Heald student  
            transfers no credits to another educational institution and in  
            turn receives forgiveness of their federal loans, the state  
            will incur costs only to the extent that the loan forgiveness  
            does not cover the student's economic loss. If a student  
            transfers some or all of their credits to another institution,  
            their federal loan will not be forgiven, and they may be  
            eligible for a STRF payment equivalent to the value of the  
            loan associated with those credits earned at Heald that are  
            not accepted for transfer.

            STRF payments could be in the low tens of millions of dollars.  
            In the past, STRF payments have averaged around $6,000 per  


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            student. If around one-half of the impacted Heald students  
            received the average payment, costs would total $36 million.  
            According to the Governor's Budget, the STRF will have an  
            estimated fund balance of $28 million as of June 30, 2015.

          4)Cal Grants. According to CSAC, almost 2,800 of the impacted  
            Heald students were awarded and used their Cal Grants. Because  
            Heald was ineligible to participate in the Cal Grant program  
            for several years, virtually all of these students have used  
            one year or less of their Cal Grant eligibility. Almost  
            two-thirds of these students were awarded a Cal Grant C, 30%  
            were award Cal Grant B, and the remaining 4% were awarded a  
            Cal Grant A. Costs will depend on how many of these students  
            continue their education and what type of institution they  
            attend. One additional award year of eligibility for these  
            students would equate to a General Fund cost of around $10  

          5)Costs for CCC counseling and the BPPE task force should be  
            minor and absorbable.

          COMMENTS:  Purpose of this bill.  According to the author, "this  
          bill will provide economic relief and educational opportunity to  
          the thousands of California students harmed by the closure of  
          CCI.  Current state and federal laws provide some relief to some  
          students affected by the closure; this bill ensures all  
          California students are protected.  Specifically the bill will  
          help these students' access community colleges, allow them to  
          continue to utilize their Cal Grants, and assist them in  
          obtaining forgiveness from Corinthian-associated student loans."


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          Background on CCI and allegations.  CCI institutions offered a  
          range of programs, including 8-12 month certificate programs,  
          with tuition and fees that from $13,100-$21,338, 24-month  
          associate's degree programs with tuition and fees that ranged  
          from $33,120 and $42,820, and bachelor's degree programs that  
          were between $60,096 and $75,384.  According to a 2014 complaint  
          filed by the Consumer Financial Protection Bureau (CFPB), most  
          students attending CCI were low-income, or the first in their  
          families to seek an education beyond high school.  In 2012, CCI  
          reported that 85% of its students had family incomes of less  
          than $45,000 a year.  An estimated 57% of CCI students had  
          household incomes of $19,000 or less, and 35% of CCI students  
          had a household income of less than $10,000.  

          Most students attending CCI received federal financial aid;  
          according to CCIs filing with the Securities and Exchange  
          Commission, CCI received 84.8% of net revenue from federal  
          financial aid (Title IV: Pell Grants and Federal Loans).   
          Federal rules require that institutions receive at least 10% of  
          revenues from non-Title IV sources ("90/10 rule"); however, this  
          can include state aid, veteran's aid, and private loans (among  
          other sources).  According to the allegations in the CFPB  
          complaint, in order to meet the 90/10 rule, CCI increased  
          tuition in order to create "funding gaps" so that students would  
          be required to take out private loans to pay for their  
          education.  CCI offered students their own "Genesis" loans to  
          cover the funding gaps.  According to CFPB, by 2014 the  
          outstanding balance of Genesis loans totaled $560 million.  


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          The aforementioned CFPB complaint sought, among other monetary  
          penalties and student relief, the rescission of all CCI private  
          loans originated since 2011.  In addition to the CFPB complaint,  
          CCI faced a series of legal actions and investigations into  
          unlawful practices, including by 20 state attorneys general,  
          several federal agencies, and the USDE.  These complaints  
          include allegations largely focused on misrepresenting career  
          options (promising lifetime placement services and providing, at  
          best, temporary assistance), falsifying job placements  
          (including counting 1-day employments, paying employers to  
          temporarily hire graduates, and falsifying "self-employment"  
          statistics), and promoting student reliance on CCIs Genesis  
          loans that required students to begin repaying loans while still  
          in programs (staff members were provided bonuses for collecting  
          Genesis loan payments, and were encouraged to publically remove  
          students from class if they were behind on Genesis loan  

          CCI financial troubles.  On June 19, 2014, the USDE announced  
          that it had placed CCI on an increased level of financial  
          oversight.  Financial stability is a requirement of  
          participation in federal financial aid programs under Title IV  
          of the HEA; CCI had failed to provide USDE with required  
          financial disclosures.  In response to the USDE decision to  
          delay financial aid funds for 21-days, CCI, which was already  
          facing a cash flow shortage, announced it would likely close.   
          In the summer of 2014, a CCI bankruptcy would have impacted  
          72,000 students nationwide, with approximately $1 billion in  
          (potentially dischargeable) federal loans.  On June 23, 2014,  
          USDE and CCI signed a memorandum of understanding requiring the  
          company to develop a plan to sell and teach-out programs over  
          the next six months.  As a part of the agreement, CCI was  
          allowed to continue enrolling new students in programs.  


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          CalVet action on Title 38.  On June 26, 2014, CSAAVE suspended  
          CCI institutions participation in Title 38 programs due to the  
          SEC filing indicating CCI was fiscally unstable.  In August of  
          2014, CSAAVE withdrew institutional approval at all institutions  
          owned and operated in California by CCI.  The 23 campuses  
          (Heald, WyoTech and Everest) were prohibited from receiving GI  
          bill benefits.  In order to continue using Title 38 benefits,  
          veteran students were required to transfer/enroll in a CSAAVE  
          eligible school.  

          CCI sale to ECMC.  On November 20, 2014, the ECMC Group, a  
          nonprofit organization that operates a large student-loan  
          guaranty agency, announced it would purchase 56 campuses from  
          CCI.  ECMC created a nonprofit subsidiary, called the Zenith  
          Education Group, to manage the campuses.  In December of 2014,  
          USDE approved the sale, and as part of the agreement, CCI/ECMC  
          discharged private student loans (approximately $480 million  
          dollars; 40% of the private student loans) for students whose  
          campuses were sold.  Earlier in the year, the federal Consumer  
          Financial Protection Bureau (CFPB) had accused CCI of luring  
          students into its "Genesis" loan program in order for the campus  
          to meet the federal "90/10 rule" with false promises about  
          career counseling and misrepresented job placement statistics. 

          A coalition of student, consumer, veterans and civil rights  
          groups opposed the sale of the CCI campuses, noting that ECMC  


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          did not have experience running educational institutions.   
          According to the coalition letter to the USDE, "in the field  
          where ECMC does have experience, its actions have veered more  
          than occasionally into dubious terrain, using ruthless tactics  
          to hound debtors to the point where the company has been  
          sanctioned and reprimanded by judges for abusing the bankruptcy  
          process."  The coalition also noted that the terms of the sale  
          would not give students the choice of having their federal loans  

          California CCI campuses.  California campuses were not included  
          in the sale to ECMC; press reports contributed ECMC's decision  
          largely to a lawsuit that had been filed in October of 2013,  
          (which remains pending) by Attorney General Kamala Harris that  
          contained a range of allegations about deceptive marketing and  
          job-placement claims.  CCI, which is based in Santa Ana,  
          continued to operate and enroll new students at WyoTech (3  
          campuses), Everest (11 campuses), and Heald (10 campuses)  
          campuses throughout California.  On April 14, 2015, the USDE  
          announced a $30 million fine against Heald's Salinas and  
          Stockton campuses for fraudulent placement and other advertising  
          (CCI has appealed this fine).  The decision effectively barred  
          all Heald campuses from receiving federal funds for new  
          enrollments.  On April 16, 2015, CSAC permanently terminated  
          Heald's eligibility for the Cal Grant program (Everest and  
          WyoTech were already not eligible).  On April 17, 2015, the DCA  
                              issued an emergency decision prohibiting Everest and WyoTech  
          campuses from enrolling new students.  CCI closed all campuses  
          on April 26, 2015, and filed bankruptcy on May 4, 2015. 

          Existing protections for CCI students.  Federal and state laws  


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          provide for some protections for some students attending CCI at  
          (or within a specified time prior to) the closure of the  
          institution.  The California Department of Justice (DOJ) has  
          created a website to inform students of their rights and  
          options; the website directs students to resources for  

          1)Federal loan discharge.  Federal law allows students to seek a  
            closed school loan discharge of their federal loans; however,  
            students are only eligible for federal loan discharge if they  
            do not transfer credits to another institution.  CCI students  
            with federal loan debt that were in attendance within 120 days  
            of the CCI closure are eligible for a closed school loan  
            discharge.  The DOJ website directs students to local legal  
            aid organizations to assist with the process; however, legal  
            aid organizations are not provided funding explicitly for this  

          2)STRF.  The STRF, administered by the BPPE, is funded by  
            students enrolled in institutions regulated by the BPPE and  
            provides for reimbursement to students for economic loss due  
            to the closure or illegal activity of a regulated institution.  
             California students enrolled in a California WyoTech and  
            Everest campus are eligible for STRF.  Unlike federal loan  
            forgiveness, STRF provides for partial refunds if students  
            transfer some of their credits to another institution.  

          Industry position.  The California Association of Private  
          Postsecondary Schools (CAPPS) has taken a "support if amended"  
          position on this bill.  CAPPS believes most school closings are  
          carried out with little or no disruption to students.  According  


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          to CAPPS, the sale of California's Corinthian campuses "would  
          have minimized the negative educational and financial impact on  
          students.  According to CAPPS, the sale was "quashed due to the  
          inability of Corinthian and the California Attorney General, to  
          come to an understanding regarding buyer liability. This is a  
          unique situation for our sector in California, and had a  
          resolution been reached there likely would be no need for AB  
          573.  This is important to note to ensure we keep the current  
          situation in context and try not to overreach with a legislative  
          solution."  CAPPS has asked for numerous amendments, which are  
          further outlined below. 

          Provisions of this bill.  As previously noted, this bill  
          contains several provisions intended to assist the students  
          affected by the closure of CCI, including:  

          1)Community college enrollment and fee waiver.  This bill would  
            provide funds to support the CCC I Can Afford College media  
            campaign to inform CCI students of CCC program availability.   
            The bill would also provide, until July 1, 2018, a BOG Fee  
            Waiver to CCI students enrolled at the time, or within 120  
            days, of the closure.  Students will need to meet all other  
            academic progress and performance standards associated with  
            the BOG Fee Waiver program.  For those students still enrolled  
            after July 1, 2018, the vast majority (an estimated 85%) would  
            continue to qualify for a BOG Fee Waiver under the income  
            thresholds.  The author notes that this provision is intended  
            to encourage students to continue their educational  
            aspirations at a CCC; and, will specifically assist those  
            students who forgo transferring units in order to obtain  
            federal loan discharge and must start over at a CCC.          

          2)Cal Grants Restoration.  Everest and WyoTech students were  


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            ineligible for the Cal Grant Program because these  
            institutions did not meet the CDR and GR performance  
            standards.  Heald students were eligible in 2014-15 because  
            the institution reported a compliant CDR and GR.  According to  
            CSAC, 2,772 students utilized some portion (less than a year)  
            of Cal Grant eligibility at a Heald campus in 2014-15.   
            According to CSAC, 116 students used a Cal Grant A, 863  
            students had a Cal Grant B, and 1,793 received a Cal Grant C.   
            Cal Grant rules establish limits (4 years) on the number of  
            awards that a student can receive.  This bill would restore  
            award year eligibility for students for the amount of time  
            used at a Heald campus.

          3)STRF for California Heald and online students.  This bill  
            would provide STRF eligibility for California students  
            enrolled in Heald campuses and California students enrolled in  
            an online program of a CCI institution housed out-of-state.  

            Heald students are not eligible for STRF because Heald was  
            exempt from BPPE oversight due to an exemption provided in  
            California law for WASC-accredited institutions.  Prior to  
            2007, Heald was a non-profit institution that had operated in  
            California since the 1963.  CCI purchased Heald in November of  
            2009.  Of note, Heald was required under federal law to become  
            BPPE-approved by July 1, 2015; had Heald taken action to  
            obtain BPPE-approval prior to closure, Heald students would be  
            eligible for STRF.  Online students may not currently be  
            eligible for STRF because California law does not regulate  
            online programs. 

            CAPPS has expressed concern that Heald was not regulated by  
            the BPPE at the time of closure, and has requested an  
            amendment to remove Heald students from STRF and instead  
            require General Fund be used to pay Heald STRF claims.  


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            While Heald was not regulated by the BPPE at the time of  
            closure, CCI, as the corporate owner of Everest and WyoTech,  
            did provide funds to the BPPE and STRF.  According to BPPE  
            documents, CCI students paid just over $2 million in funds to  
            STRF, and CCI provided just over $1.5 million in  
            administrative fees to BPPE since 2010. 

            CAPPS opposes the provisions of this bill that would increase  
            STRF, arguing that this would place an additional burden on  
            students.  Committee staff understands that the proposal to  
            increase the STRF statutory cap from $25 million to $50  
            million, contained in this legislation, was requested by BPPE  
            prior to the announcement of the CCI closure.  Committee staff  
            also notes that within the last week, according to press  
            reports, two other large for-profit chains announced closing  
            (teaching-out and selling) some campuses. 

            Moving forward, as STRF is assessed, the author may wish to  
            consider whether newly approved institutions, or those with  
            students that have not previously paid into STRF, should be  
            required to assess STRF first.    

          4)Legal assistance for student loan/recovery.  This bill would  
            establish a grant program (through the BPPE Administrative  
            Fund) to provide grants to legal aid organizations that assist  
            students in federal loan discharge and STRF recovery claims.   
            As previously outlined, legal aid organizations are  
            non-profits that operate throughout the country to provide  
            legal assistance to low-income individuals.  The federal legal  
            aid program, under LSC, dates back to the 1960's and current  
            federal statutes and regulations establish an array of  
            requirements on grant fund recipients.  Currently, the DOJ,  
            which is prohibited from assisting individuals with legal  
            claims, is referring CCI students to their local legal aid  
            organization for assistance with completing loan  
            discharge/tuition recovery processes.  Committee staff  


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            understands that, while legal aid organizations are working to  
            assist these students, they are not currently funded  
            sufficiently to support the number of students harmed by the  
            CCI closure.

            CAPPS has requested that this provision of the bill be  
            removed, noting that it is "not only an inappropriate use of  
            institutional fees, but unnecessary given the resources  
            provided by the Attorney General, CA Student Aid Commission,  
            BPPE staff, Department of Education, and others."  Committee  
            staff notes that, with the exception of BPPE, none of the  
            CAPPS mentioned agencies are specifically funded for the  
            purpose of assisting students with student loan/refund related  

            The BPPE administrative fees are provided to the BPPE for the  
            purpose of regulating institutions and protecting  
            students/consumers.  Among its various charges, BPPE is  
            responsible for assisting students in obtaining restitution  
            for institutional violations of law.  Unfortunately, the BPPE  
            has not been historically successful in this role.  In 2000,  
            the California State Auditor had found that the former-Bureau  
            had consistently failed to fulfill oversight responsibilities.  
             In March of 2014, the Auditor found that BPPE had failed to  
            meet responsibilities to protect the public's interest.  Due  
            to ongoing staffing shortages and lack of oversight  
            activities, BPPE has significant operating reserves in its  
            Administrative Fund (over $10 million).  Additionally, BPPE  
            has an outstanding $3 million loan to the GF.  

            Committee staff understands that the author's intent is to  
            establish a BPPE-Legal Aid grant program similar to that  
            created to assist homeowners during the mortgage foreclosure  
            crisis.  In 2013, the DOJ issued approximately $10 million in  
            grants to non-profit organizations to assist consumers by  
            providing or expanding access to free legal assistance and  


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            representation, foreclosure intervention aid, homeowner  
            education and financial literacy clinics, blight remediation  
            services, fraud prevention education, and employment services.  

            This bill would require grant recipients to assist students,  
            including veteran students, for no less than one year  
            following the closure of the institution, with loan discharge  
            and tuition recovery related claims.  Legal aid organizations  
            would be required to be located in the areas of the state  
            affected by the institution's closure.  Legal aid  
            organizations that received grants would be required to report  
            to the BPPE at the end of the grant on the number of students  
            served.  The bill appropriates $1,300,000 from the BPPE  
            Administrative Fund for this purpose.  Committee staff  
            understands this estimate is based on the number of students  
            potentially eligible for a federal loan discharge, assuming a  
            cost of $100 per student.

          5)Closed schools task force.  This bill would establish a  
            standing closed school task force in order to respond to the  
            unanticipated closure of institutions.  The author intends  
            this task force to ensure a prompt and coordinated response to  
            a school closure.  CAPPS and American Career College/West  
            Coast have requested an amendment to add school  
            representatives to the task force.  

            Moving forward, the author may wish to amend this bill to add  
            two financial aid professionals, both representing Cal Grant  
            eligible institutions, one from a CCC and one from a  
            BPPE-approved institution, to the task force. 



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          None on File


          None on File

          Analysis Prepared by:Laura Metune / HIGHER ED. / (916) 319-3960