BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            AB 573          Hearing Date:    June 29,  
          |Author:   |Medina                                                |
          |Version:  |June 2, 2015                                          |
          |Urgency:  |Yes                    |Fiscal:    |Yes              |
          |Consultant|Sarah Mason                                           |
          |:         |                                                      |
              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).  

          Existing law:
          1)Establishes the California Private Postsecondary Education Act  
            (Act) of 2009 until January 1, 2017, and requires the Bureau  
            of Private Postsecondary Education (Bureau) within the  
            Department of Consumer Affairs (DCA) to, among other things,  
            to review, investigate and approve private postsecondary  
            institutions, programs and courses of instruction pursuant to  
            the Act and authorizes the Bureau to take formal actions  
            against an institution/school to ensure compliance with the  
            Act and even seek closure of an institution/school if  
            determined necessary.  The Act also provides for specified  
            disclosures and enrollment agreements for students,  
            requirements for cancellations, withdrawals and refunds, and  
            that the Bureau shall administer the Student Tuition Recovery  
            Fund (STRF) to provide refunds to students affected by the  
            possible closure of an institution/school.   (Education Code  
            (EC)  94800 et seq.)

          2)Exempts an institution that is accredited by the Accrediting  


          AB 573 (Medina)                                         Page 2  
          of ?
            Commission for Senior Colleges and Universities (ACSC),  
            Western Association of Schools and Colleges (WASC), or the  
            Accrediting Commission for Community and Junior Colleges  
            (ACCJC) from the Act and Bureau oversight.  Exempts an  
            institution that is accredited by a regional accrediting  
            agency, recognized by the United States Department of  
            Education (USDE) other than WASC from the Act and Bureau  
            oversight until January 1, 2016, so long as the institution  
            complies with requirements related to student tuition  
            recovery.  Exempts an institution accredited by an accrediting  
            agency recognized by USDE for at least 10 years, and has not  
            been placed on probation or on a greater level than standard  
            monitoring, or sanctioned, by its accrediting agency; is  
            headquartered in California and has operated continuously in  
            this state for at least 25 years; is privately held and prior  
            to its current exemption, was approved to operate by the  
            Bureau or its predecessor agency and has experienced no change  
            of ownership since the institution was last approved; during  
            its existence, the institution has not filed for bankruptcy  
            protection; the institution maintains an equity ratio  
            composite score of at least 1.5 based on the current financial  
            stability test; at least 12.5 percent of the institution's  
            revenues are derived from sources other than financial aid  
            which includes all forms of state or federal student  
            assistance, including, but not limited to, financial aid  
            provided to veterans and financial aid through the Cal Grant  
            Program; the institution's cohort default rate (CDR) does not  
            exceed 13 percent for the most recent three years, as  
            published by USDE; the institution has a graduation rate that  
            exceeds 60 percent, as reported to the Integrated  
            Postsecondary Education Data System; the institution has not  
            been subject to any legal or regulatory actions by a state  
            attorney general for a violation of consumer protection laws  
            that resulted in monetary settlement, fines, or other  
            documented violations; the institution provides a pro rata  
            refund of unearned institutional charges to students who  
            complete 75 percent or less of the period of attendance; the  
            institution provides to all students the right to cancel the  
            enrollment agreement and obtain a refund of charges paid  
            through attendance at the second class session, or the 14th  
            day after enrollment, whichever is later; the institution  
            complies with all other reasonable criteria, necessary to  
            ensure educational quality and protection of veterans,  
            established by the California State Approving Agency for  


          AB 573 (Medina)                                         Page 3  
          of ?
            Veterans Education (CSAAVE).  (EC  94874 (i), 94874.1 and  

          3)Beginning January 1, 2016, requires for-profit institutions  
            receiving Title 38 funds and serving veterans to be approved  
            by the Bureau.  (EC  94874.2)

          4)Authorizes an institution exempt from the Act to apply for  
            Bureau approval and specifies that the institution shall be  
            subject to all of the provisions of the Act and Bureau  
            oversight.  (EC  94878)  

          5)Establishes various fair business practices and prohibits an  
            institution from engaging in certain activities such as false  
            advertising, promising or guaranteeing employment.  (EC   

          6)Requires institutions offering educational programs designed  
            to lead to positions in a profession, occupation, trade or  
            career field requiring licensure to exercise reasonable care  
            to determine if a student will not be able to obtain licensure  
            at the time of his or her graduation and requires an  
            institution to provide a written copy of requirements for  
            licensure.  (EC  94905 (a))   

          7)Requires institutions, prior to enrollment, to provide a  
            prospective student with certain information about the  
            institution and Bureau, including a description's of the  
            student's right and responsibilities with respect to the STRF  
            and a statement describing the purpose and operation of STRF  
            and requirements for filing a STRF claim.  (EC  94909 (a)  

          8)Requires an institution, in making consumer loans to students,  
            to comply with the Federal Truth in Lending Act.  (EC  94918)

          9)Establishes the STRF, administered by the Bureau, 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.  Provides that the  
            STRF shall not exceed $25 million.  Institutions are required  


          AB 573 (Medina)                                         Page 4  
          of ?
            to assess students an amount established in regulation by the  
            Bureau and remit fund to the Bureau 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).  (EC  94923 - 94925)

          10)Requires an institution, at least 30 days prior to closing,  
            to notify the Bureau in writing of its intention to close  
            which shall be accompanied by a closure plan that includes a  
            plan for providing teach-outs of educational programs.   
            Provides that if no teach-out plan is contemplated, or for  
            students who do not wish to participate in a teach-out, the  
            plan shall include arrangements for making refunds within 45  
            days from the date of closure, or for institutions that  
            participate in federal student financial aid programs  
            arrangements for making refunds and returning federal student  
            financial aid program funds.  Requires an institution, if it  
            is a participant in federal student financial aid programs, to  
            provide students information concerning these programs and  
            institutional closures.  Requires the closure plan to include  
            a plan for the disposition of student records.  (EC  94926)

          11)Requires an institution, prior to closing, to provide the  
            Bureau with pertinent student records, including transcripts,  
            as determined by the Bureau.  Provides that if the institution  
            is an accredited institution, the Bureau shall be provided  
            with a plan for the retention of records and transcripts,  
            approved by the institution's accrediting agency, that  
            provides information as to how a student may obtain a  
            transcript or any other information about the student's  
            coursework and degrees completed.  Specifies that these  
            provisions apply to all private postsecondary institutions,  
            including those exempt from the Act.  (EC  94927.5)  

          12)Specifies various disclosure and reporting requirements  
            around completion, placement, licensure and salary of  
            students/graduates and establishes various definitions for  
            this purpose.  Requires that the information used to  
            substantiate the reported job placement, license passage, and  
            completion rates be documented and maintained by the  
            institution for five years from the date of the publication of  
            the rates and authorizes this information to be retained by  


          AB 573 (Medina)                                         Page 5  
          of ?
            the institution in an electronic format.  Requires  
            institutions to submit an annual report to the Bureau that  
            includes specified information.  (EC  94928-94929.9)

          13)Requires fees pursuant to the Act to be deposited in the  
            Private Postsecondary Education Administration Fund (PPE  
            Fund).  Authorizes the Bureau to adjust fees if it determines  
            by regulation that the fees established in the Act are  
            inconsistent with the intent.  Prohibits the PPE Fund from  
            having a reserve balance greater than the amount necessary to  
            fund six months of authorized operating expenses of the Bureau  
            in any fiscal year.  (EC  94930)

          14)Establishes CSAAVE 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.  (EC  67100 et seq.)

          15)Establishes the California Community Colleges (CCC) with  
            oversight and coordination provided by the CCC Board of  
            Governors (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.  (EC  66010.4)

          16)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. (EC  76300) 

          17)Establishes the Cal Grant Program, administered by the  
            California Student Aid Commission (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 15.5percent and a  
            Graduation Rate (GR) of no less than 20 percent (this rate  
            increases to 30 percent in 2016-17).  (EC  69430 et seq.)

          18)Title IV of the Federal Higher Education Act of 1965 (HEA),  
            as amended, establishes the federal student aid program,  
            administered by USDE to provide grants, loans and work-study  


          AB 573 (Medina)                                         Page 6  
          of ?
            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)

          19)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.) 

          This bill:

          1)Provides for the following with regards to CCC:

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

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


          AB 573 (Medina)                                         Page 7  
          of ?
            years of Cal Grant Awards eligibility.  Clarifies that a  
            student shall be eligible for the restoration of award years  
            if the student was enrolled at a CCI campus on April 27, 2015,  
            or had withdrawn from enrollment within 120 days of that date.  
            Requires the Bureau to provide CSAC with confirmation of  
            student enrollment.  Requires an eligible student, before  
            January 1, 2017, to notify CSAC of his or her intent to use  
            the restoration of award years and to enroll in an institution  
            eligible for initial and renewal Cal Grant awards to be  
            eligible for that restoration. 

          3)Provides for the following regarding the STRF:

             a)   Provides that a student enrolled at a California campus  
               of a CCI institution, including an institution exempt from  
               the Act, 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 26, 2015, or withdrew within 120 days of that date  
               (or greater period determined by the Bureau) is eligible  
               for the STRF;

             b)   Increases the maximum allowable fund balance in the STRF  
               from $25 million to $50 million, and requires the Bureau,  
               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).

          4)Requires the Bureau 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 Act.  

             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  


          AB 573 (Medina)                                         Page 8  
          of ?
                 recovery for which the student is eligible;

               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 CSAC, the Department of Justice (DOJ), the  
               Office of the CCC Chancellor, CalVet, one or more legal aid  
               organizations and two financial experts, one representing  
               CCCs and one representing a Bureau-approved institution  
               that meets the performance requirements of the Cal Grant  

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

             a)   Requires the Bureau, 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;

             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)   Requires the Bureau to establish an approval process to  
               ensure each legal aid organization that receives a grant 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 as well as demonstrates  
               expertise in assisting students with, and currently  
               provides direct legal services to students for, student  
               loan matters;


          AB 573 (Medina)                                         Page 9  
          of ?
             d)   Requires a legal aid organization that receives funds  
               pursuant to these provisions to enter into a grant  
               agreement with the Bureau and use funds exclusively for the  
               purposes outlined in this bill.  Provides that any unused  
               funds shall be returned to the Bureau unless a new  
               agreement is entered into authorizing the organization to  
               expend the unused funds.  Authorizes the Bureau to  
               terminate the agreement for material breach and provide  
               written notice of the breach and a reasonable opportunity  
               of less than 30 days to resolve the breach; 

             e)   Provides that a legal aid organization that receives a  
               grant may give priority to low-income students if demand  
               exceeds available grant funds but may otherwise provide  
               assistance regardless of student income level;

             f)   Requires a legal aid organization that receives a grant  
               to report to the Bureau quarterly on the number of students  
               served from the date of the institution's closure;

             g)   Outlines the following methods for distribution of the  
               funds to preapproved legal aid organizations by the Bureau  
               - 50 percent  distributed within 30 days of the date of the  
               institution's unlawful closure, 25 percent upon the  
               submission of the legal aid organization's second quarterly  
               report, 25 percent upon the submission of the legal aid  
               organization's third quarterly report; and

             h)   Appropriates one million three-hundred thousand dollars  
               ($1,300,000) from the Private Postsecondary Education  
               Administration Fund to the Bureau for the aforementioned  
               purposes to assist students affected by the closure of CCI.

          6)Extends the suspension of the requirement that the Private  
            Postsecondary Education Administration 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  
            immediately in order to provide immediate educational and  
            economic relief to the thousands of students harmed by the  
            closure of CCI.



          AB 573 (Medina)                                         Page 10  
          of ?
          EFFECT:  This bill is keyed "fiscal" by Legislative Counsel.   
          According to the Assembly Committee on Appropriations analysis  
          dated May 6, 2015, approximately 16,000 students were impacted  
          by CCI school closures and this bill will result in the  

                 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 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.

                 Legal Assistance Grants. One-time special fund costs to  
               the Bureau of up to a few hundred thousand dollars,  
               assuming legal aid organizations received grants from the  
               Bureau for assisting around 20% of the impacted students.  
                 STRF Payments. The STRF mitigate a student's economic  
               losses, defined as tuition and institutional charges plus  
               the cost of equipment and supplies needed for student's  
               educational program. 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  

                 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  


          AB 573 (Medina)                                         Page 11  
          of ?
               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 million.

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

          1. Purpose.  The  Author  is the  Sponsor  of this measure.   
             According to the Author, this bill provides financial and  
             other assistance to students impacted by recent closing of  
             all Heald, Everest, and WyoTech campuses in California, which  
             were owned by CCI. Current state and federal laws provide  
             some relief to some students affected by the closure and this  
             bill ensures all California students are protected.  The  
             Author notes that the bill will help these students access  
             CCCs, allow them to continue to utilize their Cal Grants, and  
             assist them in obtaining forgiveness from CCI-associated  
             student loans.
             According to the Author, federal loan forgiveness is  
             available to students who qualify, but only if they do not  
             transfer any educational credits to another institution.  The  
             STRF is available to California Everest and WyoTech students  
             but due to an exemption from state oversight, STRF is not  
             available to Heald students and students enrolled in  
             out-of-state online programs.  The Author notes that not only  
             are existing relief programs insufficient to support all  
             California students harmed by the CCI closure, evidence is  
             surfacing that students are being provided inaccurate and  
             inconsistent information regarding their rights and options.   
             For example, a published list of "viable transfer  
             opportunities" released by USDE upon the CCI closure includes  
             more than a dozen other for-profit schools that are also  
             currently under investigation by federal and state  
             authorities.  This bill will ensure that California students  
             harmed by the closure of private, for-profit colleges have  
             access to economic relief and educational opportunity.


          AB 573 (Medina)                                         Page 12  
          of ?
          2. CCI.  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 (SEC), 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.  

             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  


          AB 573 (Medina)                                         Page 13  
          of ?
             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 payments).

             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.  

             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.  

             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, 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  


          AB 573 (Medina)                                         Page 14  
          of ?
             the sale of the CCI campuses, noting that ECMC 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 discharged.  

             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, 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  
             appealed this fine).  This 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. 

          3. The Private Postsecondary Act and Challenges for Students  
             Impacted by the CCI Closure Resulting from Exemptions In the  
             Act.  After numerous legislative attempts to remedy the laws  
             and structure governing regulation of private postsecondary  
             institutions in California, AB 48 (Portantino, Chapter 310,  
             Statutes of 2009), established the Act and created the Bureau  
             within DCA for the purpose of regulating private  
             postsecondary educational institutions that provide  
             educational services in California.  The Act made many  
             substantive changes that both created a new, solid foundation  
             for oversight and responded to the major problems with the  


          AB 573 (Medina)                                         Page 15  
          of ?
             former Act and prior Bureau for Private Postsecondary and  
             Vocational Education.  The Act establishes prohibitions on  
             false advertising and inappropriate recruiting and requires  
             disclosure of critical information to students such as  
             program outlines, graduation and job placement rates, and  
             license examination information, and ensures colleges justify  
             those figures.  The Act also guarantees students can complete  
             their educational objectives if their institution closes its  
             doors while providing the Bureau with enforcement powers  
             necessary to protect consumers.  The Act directs the Bureau  
                       Create a structure that provides an appropriate  
                  level of oversight, including approval of private  
                  postsecondary educational institutions and programs;

                       Establish minimum operating standards for  
                  California private postsecondary educational  
                  institutions to ensure quality education for students;

                       Provide students a meaningful opportunity to have  
                  their complaints resolved;

                       Ensure that private postsecondary educational  
                  institutions offer accurate information to prospective  
                  students on school and student performance, thereby  
                  promoting competition between institutions that rewards  
                  educational quality and employment success; and,

                       Ensure that all stakeholders have a voice and are  
                  heard in the Bureau's operations and rulemaking process.  

             The Bureau is required to actively investigate and combat  
             unlicensed activity, administer the STRF, and conduct  
             outreach and education activities for private postsecondary  
             educational institutions and students within the state.   
             Based on significant and continuous insolvency of the STRF  
             fund under the prior law, AB 48 set the limit of the STRF  
             fund at $25 million to ensure that a robust fund is available  
             to students eligible for claims to relieve or mitigate  
             economic loss suffered by a student enrolled in an  
             educational program.    


          AB 573 (Medina)                                         Page 16  
          of ?
             Under the Act, the Bureau has oversight of all the  
             non-exempt, private postsecondary institutions located in  
             California.  AB 48 contained numerous exemptions to  
             state-level oversight, the most notable of which is an  
             exemption from Bureau authority and regulation under the Act  
             granted to for-profit and nonprofit regionally accredited  
             institutions.  As a result of this broad exemption, students  
             attending Heald College, which was accredited by WASC, the  
             largest number of students enrolled in a California CCI  
             institution (estimates put this student population at around  
             9,000) at the time of the CCI closure are not eligible for  
             STRF.  Other for-profit regionally accredited institutions  
             have voluntarily come under the Bureau, or are in the process  
             of applying to receive Bureau approval for purposes of  
             maintaining Title IV eligibility (by meeting the requirement  
             to be "authorized" by each state in which they operate and  
             have an independent state-level student complaint process),  
             however students of these non-WASC regionally accredited  
             institutions have been required to contribute to STRF,  
             guaranteeing the option of STRF protection regardless of  
             their exemption from the other important provisions in the  
             Act.  One WASC accredited for-profit institution is the  
             source of the exemption outlined above in EC  94947 and has  
             not sought approval by the Bureau to meet the requirements of  
             new Title IV requirements, ensuring that if the school closes  
             abruptly in the same manner as CCI or violated any other  
             important provisions of the Act, those students are not  
             eligible for STRF or any recourse the Act provides.   The  
             appropriateness of exemptions has been the source of a report  
             issued by the Legislative Analyst's Office (LAO) in 2014,  
             multiple conversations during legislative oversight hearings  
             and also the subject of legislation since AB 48 took effect,  
             and particularly in light of the significant impact of CCI on  
             thousands of students who, without the exemption above, would  
             have been eligible for STRF and other important options  
             within the Act.  This topic will likely be the subject of  
             future discussions surrounding the Act.  

          1. Options for CCI Students.  On May 13, the Senate Business,  
             Professions and Economic Development and Senate Education  
             Committees convened a joint hearing, Corinthian College  
             Closures:  What's Next for California Students, to examine  
             options for relief and recourse available to the more than  
             13,000 students impacted by the sudden and abrupt CCI  


          AB 573 (Medina)                                         Page 17  
          of ?
             closure, particularly in light of the confusing choices,  
             multiple application processes to multiple government  
             agencies, pressure from private loan companies to begin  
             paying off loans and the possibility that credits earned at  
             Heald, Everest and WyoTech schools may yield few meaningful  
             future educational opportunities.
             According to a presentation by LAO at that hearing, higher  
             education institutions in the U.S. are overseen by a  
             regulatory triad:  USDE which sets standards for institutions  
             participating in federal student financial aid programs;  
             accreditors responsible for educational quality determination  
             as well as regular review of institutions' financial,  
             administrative and business practices and; states who have a  
             primary role of protecting students from unfair business  
             practices - states are responsible for educational quality as  
             well but often rely on accreditation to certify quality.  

             USDE provides relief for students of closed schools through a  
             loan discharge for students enrolled at the time of closure,  
             or who withdrew within the previous 120 days, who could not  
             complete their programs. However, students are ineligible for  
             loan discharge if they completed their programs, benefitted  
             from a teach-out agreement through another school or  
             transferred credits to a similar program.  USDE can also  
             discharge loans of students defrauded by their schools  
             through a defense against repayment.  This provision also  
             applies to students who were no longer enrolled at the time  
             of their school's closure, including those who completed  
             programs.  Accreditors are supposed to require schools to  
             have closure policies, including teach-out policies, policies  
             related to transcript availability and policies for the  
             transfer of student records, key to assisting students in  
             moving forward on their path to higher education.  

             LAO outlined implications for California CCI students,  
             including the option for STRF reimbursement for Everest and  
             WyoTech students and the option of applying for a federal  
             student loan discharge.  The LAO also highlighted the higher  
             degree of uncertainty for students with private loans, as  
             there are no standard discharge provisions, payments are  
             subject to the requirements of lenders.  STRF may reimburse  
             these students for interest and penalties on loans used to  
             pay tuition and other required educational program charges  


          AB 573 (Medina)                                         Page 18  
          of ?
             but the Bureau, as part of administering STRF, is not  
             guaranteed to assist students navigate through this process.   
             Stemming from amendments to the Act in SB 1247 (Lieu, Chapter  
             840, Statutes of 2014), the Bureau is in the process of  
             drafting STRF regulations to allow for the fund to pay  
             tuition and fees at another school for a student whose  
             charges were paid by a third party (including a financial aid  
             program) and who suffered a loss of educational opportunity  
             as a result of a school closure.  The Bureau estimates that  
             it has received about 130 STRF claims to date from eligible  
             CCI students.

             On June 8, USDE announced steps specifically aimed at helping  
             CCI students.  USDE is expanding eligibility for students to  
             apply for a closed school loan discharge, extending the  
             window of time back to June 20, 2014, to capture students who  
             attended CCI institutions at the time CCI entered into an  
             agreement with the Department to terminate its ownership of  
             schools.  The Department is creating what it calls a more  
             streamlined process for students to claim a defense to  
             repayment  that requires students to assert that a college's  
             actions violated state law and affected their provision of  
             educational services or their federal loans.   According to  
             USDE, it will "rely on evidence established by appropriate  
             authorities in considering whether whole groups of students  
             (for example, an entire academic program at a specific campus  
             during a certain time frame) are eligible for borrower  
             defense relief" which will simplify and expedite the relief  
             process and reduce the burden on borrowers.  In citing these  
             efforts related to defense to repayment, USDE specifically  
             referred to its investigation of Heald College and relevant  
             California law,  determining  that evidence of  
             misrepresentation exists for students enrolled in a large  
             majority of programs offered at Heald College campuses  
             between 2010 and 2015.  USDE also took steps for all former  
             CCI students who apply for borrower defense to have the  
             option of having their federal loans immediately placed into  
             forbearance, which stops their monthly payments to ensure  
             they do not fall behind or default on their loans while the  
             Department works to resolve the claim.  On June 25, USDE  
             appointed a Special Master to oversee borrower defense issues  
             while ensuring the process is simple, streamlined, and fair  
             to students and taxpayers.  


          AB 573 (Medina)                                         Page 19  
          of ?
          2. Arguments in Support.  A coalition of supporters including  
              California Competes: Higher Education for a Strong Economy  ,  
              California Federation of Teachers  ,  Consumer Federation of  
             California  ,  Consumers Union  ,  The Institute for College Access  
             & Success  ,  Public Advocates Inc.  ,  University of San Diego  
             Center for Public Interest Law  ,  University of San Diego  
             Children's Advocacy Institute  ,  University of San Diego  
             Veterans Legal Clinic  and  Young Invincibles  write that this  
             measure is an incredibly important bill that will help make  
             sure that students have meaningful access to consumer  
             protections if their school closes.  Supporters note that  
                                                                                      students who were enrolled at CCI campuses at or near the  
             point of closure have had their dreams dashed, unable to  
             complete the programs they borrowed loans to attend.   
             Supporters state that in many cases, given widespread  
             concerns about the quality of Corinthian-owned institutions,  
             the credits students earned at the closed schools will not  
             transfer to more reputable colleges.  According to  
             supporters, the students at the shuttered Corinthian campuses  
             were taken advantage of by an unscrupulous company.   
             California cannot let these students be victimized again by  
             robbing them of the chance to understand their options and  
             seek and receive needed relief.
              Attorney General Kamala Harris  (AG) writes in support of this  
             bill, noting  that it will equip students with the tools they  
             need to recover their careers from CCI's predatory scheme.   
             According to the AG, the bill would provide much-needed  
             financial assistance by making Heald students eligible for  
             STRF and doubling the fund's current maximum allowable fund  
             balance.  The AG adds that the bill clears the path for those  
             looking to continue their educations by exempting CCI  
             students affected by the closure from Cal Grant time  
             limitations and making those students eligible for CCC  
             waivers.  According to the AG, the common-sense solutions  
             contained in this bill prioritize the protection of  
             vulnerable Californians.

             The  California Teachers Association  believes that students  
             displaced from private colleges should have the opportunity  
             to easily articulate to community colleges which will provide  
             them with a more affordable, quality education and notes that  
             financially exploited students should have an opportunity to  
             receive assistance in order to ensure they are not burdened  


          AB 573 (Medina)                                         Page 20  
          of ?
             by crippling student loan debt after they finish their  

             According to  Charles R. Drew University of Medicine and  
             Science  , CCI students who invested their time, money and Cal  
             Grant eligibility at the colleges have been left to find  
             another institution for enrollment and face loss of the Cal  
             Grant funds expended for an education program that is now  
             unavailable for them to complete.

          3. Other Arguments.  The  California Association of Private  
             Postsecondary Schools  (CAPPS) writes with a support if  
             amended position on this bill.  According to CAPPS, the  
             overriding priority of this bill must be the resolution of  
             student issues that arise from the CCI closure and as such,  
             this bill needs to acknowledge that if the students' first  
             desire is to finish their education, then all possible  
             efforts should be made to ensure that the student can do just  
             that and CAPPS supports the CCC and Cal Grant provisions of  
             the measure.  CAPPS argues that resources to provide relief  
             to Heald students should come from the General Fund and that  
             diverting resources from STRF will result in non-exempt  
             students having to pay higher fees.  CAPPS also believes that  
             there is no justification to double the STRF from $25 million  
             to $50 million.  According to CAPPS, the appropriation of  
             money to legal aid is unnecessary given the resources already  
             provided to students and should be removed from the bill.  

          4. Proposed Amendments.  While this measure proposes important  
             efforts to help CCI students begin to make their lives whole  
             in the face of myriad challenges stemming from their  
             enrollment in CCI institutions, the Committee suggests a  
             number of steps to strengthen the Act, assist students  
             through the coordination of services and provide options for  
             students who were only weeks away from completing an  
             educational program for which they would have been able to  
             seek licensure and employment.  

             a)   STRF should be collected for students enrolled in a  
               distance program that has a physical presence in this state  
               but whose students are not currently protected by the Fund,  
               and institutions should be authorized to pay STRF on their  
               student's behalf.  


          AB 573 (Medina)                                         Page 21  
          of ?
               The impact of the CCI closure on millions of California  
               students working to improve their lives through education  
               is very likely the first in what many anticipate will be a  
               series of closures of large for-profit institutions.   
               Several other large, publicly traded colleges are now under  
               similar regulatory, financial and legal pressure.  Career  
               Education Corporation (CEC), Education Management  
               Corporation (EDMC), and ITT Educational Services Inc. (ITT)  
               are all under investigation by a number of state attorneys  
               general over a variety of matters, including job placement  
               rates as well as marketing and recruiting. The SEC also  
               recently charged ITT which owns ITT Tech, and two of its  
               executives with fraud for allegedly concealing from ITT's  
               investors the poor performance and looming financial impact  
               of two student loan programs that ITT financially  
               guaranteed.  CFPB filed a lawsuit against ITT, accusing it  
               of predatory student lending, alleging that ITT exploited  
               its students and pushed them into high-cost private student  
               loans that were very likely to end in default.   According  
               to that lawsuit, in some cases, students did not even know  
               they had a high-cost private student loan, some with rates  
               as high as 16.25 percent, until they started getting  
               collection calls.  As the LAO noted at the May 13 hearing,  
               tougher federal regulations and efforts to include  
               veterans' education benefits in the 90 percent limit on  
               share of revenues from federal student aid further  
               threatens the viability of many for-profit institutions  
               that are heavily dependent upon these sources of revenue.   
               The Committee suggests the following to address this  
               situation and provide coverage for students in the event of  
               a school closure, to ensure they are eligible for relief:
                     Amend Education Code Section 94858.   
                 "Private postsecondary educational institution" means a  
                 private entity with a physical presence in this state  
                 that offers postsecondary education to the public for an  
                 institutional charge,  including distance education  
                 offered by a private entity that maintains a physical  
                 presence in this state, regardless of whether the  
                 distance education is offered through the institution  
                 located in this state.
                     Amend Education Code Section 94924. 


          AB 573 (Medina)                                         Page 22  
          of ?

                 (a) The bureau shall determine the amount of Student  
                 Tuition Recovery Fund assessments to be collected for  
                 each student.
                 (b)  An institution may submit Student Tuition Recovery  
                 Fund assessments to the bureau on behalf of students  
                 enrolled at that institution.  An institution that  
                 submits Student Tuition Recovery Fund assessments on  
                 behalf of its students is prohibited from advertising or  
                 marketing this as a benefit the institution provides to  
                  (b)  (c) All assessments collected pursuant to this  
                 article shall be credited to the Student Tuition Recovery  
                 Fund, along with any accrued interest, for the purpose of  
                 this article. Notwithstanding Section 13340 of the  
                 Government Code, the moneys in the Student Tuition  
                 Recovery Fund are continuously appropriated to the  
                 bureau, without regard to fiscal year, for the purposes  
                 of this article.
                  (c)  (d)  Except when an institution provides a full  
                 refund pursuant to Section 94919 or Section 94920, the  
                 Student Tuition Recovery Fund assessment is  
                  (e) The bureau shall collect a Student Tuition Recovery  
                 Fund assessment from an institution for all currently  
                 enrolled students, as follows:
                 (1) For institutions not approved as of the operative  
                 date of this subsection, the bureau shall collect an  
                 assessment at the time of the issuance of the approval to  
                 (2) For institutions approved on the operative date of  
                 this subsection, the bureau shall collect an assessment  
                 for all currently enrolled students for which a STRF has  
                 not been assessed, including distance education students  
                 (as outlined in 94858).

             a)   State agencies should be authorized to consider the  
               eligibility of CCI students who were within a certain time  
               frame from completing a program at a CCI institution which  
               was intended to lead to licensure and employment in  
               While many CCI students were at the beginning of their path  


          AB 573 (Medina)                                         Page 23  
          of ?
               to further their education and receive training intended  
               for a job, many, many students who came to class on April  
               27 to find their school shuttered were only weeks away from  
               completing their educational program.  Upon completion,  
               graduates of a number of CCI programs would have been  
               eligible for registration, certification or licensure by a  
               state regulatory body.  Regulatory programs such as those  
               under the DCA are often independently governed entities  
               that establish standards and criteria for successful  
               licensure, at the heart of which are public protection  
               standards measured through proof of completion of a  
               particular training program and satisfactory performance on  
               a written and practical examination.  In order to provide  
               assistance to CCI students who may not want to transfer  
               educational credits to another institution and begin a new  
               program when they were so close to completing one at a CCI  
               institution may actually be better served by being  
               considered for licensure or recognition for which they were  
               trained.  The Committee suggests including language in the  
               bill according to the following: 

                For a period not to exceed two years, state agencies that  
               establish certification, registration or licensure  
               necessary to promote public safety and protection of the  
               public are authorized to provide consideration on a case by  
               case basis to determine the eligibility for certification,  
               registration or licensure by that program to students  
               enrolled in a program offered by Corinthian Colleges, Inc.  
               which provided the individual with education or training  
               designed to lead to certification, registration or  
               licensure by that program.  Consideration of individuals  
               affected by the sudden and abrupt closure of Corinthian  
               Colleges, Inc. shall be at the discretion of the regulatory  
               program, consistent with the program's public protection  
               mandate and according to criteria created by the program to  
               ensure that any consideration of eligibility for  
               certification, registration or licensure is in keeping with  
               requirements outlined as necessary for public health and  

             b)   This bill requires the Bureau to establish a task force  
               comprised of representatives of the agencies outlined above  
               and also requires the Bureau to administer a grant program  


          AB 573 (Medina)                                         Page 24  
          of ?
               for eligible organizations assisting students.  CCI  
               students and consumers impacted by the abrupt closure of  
               their institution or sudden discontinuation of their  
               educational program are best served by having one  
               centralized entity in state government that coordinates  
               state agency efforts, provides students with timely  
               assistance, referrals to the proper agency or organization  
               to best meet their needs, provides accurate, meaningful  
               information to those students through a dedicated website  
               and phone number and monitors ongoing state and federal  
               regulatory developments that will impact students.   
               Additionally, the types of organizations eligible for  
               funding for their work to assist students under this bill  
               should be expanded to include other entities that provide  
               student loan and debt counseling and assistance.  

               There are multiple agencies and organizations that have a  
               role in assisting the students affected by the CCI closure.  
                USDE, as noted above, is responsible for providing options  
               to students related to their federal student loans.  The  
               Bureau administers the STRF and provides options to Everest  
               and WyoTech students whose institutions the Bureau  
               approved.  The Bureau is also the record keeper of last  
               resort for closed schools, thus responsible for maintaining  
               student records, including information key to receiving  
               consideration for STRF payment and loan discharges like  
               enrollment agreements and transcripts.  CalVet approves  
               institutions for purposes of Title 38 veterans financial  
               aid and helped students transfer to other institutions when  
               it withdrew approval for CCI institutions.  CSAC is working  
               with the over 2,000 Heald students who received a Cal Grant  
               award to ensure these students can transfer to eligible  
               institutions and continue to receive Cal Grant payments.   
               The CCCs are working with local CCC representatives to  
               assist CCI students with enrollment and transfer.  

               Businesses in California have a one-stop government  
               resource in state government in the form of GO-Biz which  
               assists in all aspects of establishing a business such as  
               providing information about access to capital, directing  
               businesses to the regulations governing and permits  
               required for their operations as well as monitors the  
               state, federal and international landscape to promote  
               greater opportunities for California businesses.  Many  


          AB 573 (Medina)                                         Page 25  
          of ?
               vulnerable populations in the state are also served by a  
               centralized contact as they navigate through state agency  
               services, in the form of ombudspersons with missions and  
               statutory direction to help individuals as well as to  
               streamline processes for relief.

               The Bureau under DCA is a logical starting point for any  
               discussion about broad, centralized services to students  
               harmed by for-profit institutions, however, the Bureau has  
               faced challenges from its inception to implement the  
               educational program quality standards and consumer  
               protections for Californians attending institutions the  
               Bureau regulates.  The landscape of schools that are now  
               regulated under the Bureau, and that have become central in  
               California's discussion of private, for-profit colleges,  
               has evolved significantly since the Act took effect and the  
               smaller, independent for-profit institutions based in  
               California that may have made up the bulk of the former  
               Bureau's licensee population has shifted so that now, the  
               largest number of students being served by larger  
               for-profit chains with a presence in states throughout the  
               nation.  From staffing, to establishing policies and  
               procedures, to data systems, to timelines, to processing  
               complaints, the Bureau has faced difficulties in  
               implementing a law that exists in a complex regulatory  
               framework of federal law and other state agencies, which is  
               becoming even more complex given the actions by other  
               agencies outlined above.  

               Providing centralized, necessary options to students,  
               coordinating state agency response and administering funds  
               to organizations which are providing meaningful assistance  
               relies on the expertise and understanding of multiple  
               issues related to the whole sector that the DCA and Bureau  
               may not have.  Coupled with these challenges are the  
               Bureau's remaining administrative struggles including  
               staffing shortages, backlogs that will impact the Bureau's  
               ability to meet the requirements outlined in this bill and  
               may not be feasible to provide students what they need as  
               they weigh options for next steps after a school closure.   
               There is precedent for the Bureau to contract directly with  
               other entities to meet its mission, including contracting  
               with the AG or other appropriate state agency to establish  
               a process for the Bureau's staff to be trained to  


          AB 573 (Medina)                                         Page 26  
          of ?
               investigate complaints and contracting with the AG to for  
               investigative and prosecutorial services.  

               Given these issues, it is more appropriate for the task  
               force outlined in this bill to be replaced with a dedicated  
               school closure and student loan assistance point of contact  
               within the Office of the Attorney General (AG) that can  
               also administer a grant funding effort for local  
               organizations assisting students (or contract with an  
               appropriate entity to undertake this work).  The AG's  
               office already has expertise in complex legal situations  
               such as those facing students and currently serves as the  
               centralized point of contact for consumers impacted by the  
               mortgage and foreclosure settlement.  The AG's office, in  
               the wake of the CCI closure, created an online tool for  
               students to receive a personalized resource sheet regarding  
               the types of relief available to students which continues  
               to be updated and which can be expanded to provide key  
               information such as a list of institutions on the USDE  
               watchlist that students should not enroll in.  The majority  
               of CCI students attending programs when operations ceased  
               in April are located in Southern California, where the AG  
               has a presence and office.  It is important to note that  
               the AG has no ability to, or history that it has, provided  
               individual legal assistance or individual legal  
               representation to Californians, however among the involved  
               agencies, it is by far the best situated to continue  
               playing a central, coordinating role in the effort to  
               assist students.  A point of contact within the AG can lead  
               the synchronization of other state agencies with a role in  
               assisting students, will continue to monitor regulatory  
               efforts at the state and federal level as the AG currently  
               does and will be in a position to work with partner  
               agencies to establish key criteria for determining the  
               appropriate steps the state should take to protect  

                It is appropriate for the bill to be amended to strike the  
               task force and instead create, for a period of five years,  
               a centralized point of contact within the Office of the  
               Attorney General to serve students impacted by a school  
               closure and navigating through options, including those  
               made available by USDE and other state agencies.  The point  
               of contact will administer grants, or contract with an  


          AB 573 (Medina)                                         Page 27  
          of ?
               appropriate entity for this purpose, to provide funds to  
               eligible nonprofit organizations, including legal aid and  
               other nonprofit community service organizations offering  
               free services with a focus on consumer credit education,  
               counseling on consumer debt problems, assisting with the  
               arrangement of debt management and settlement plans.  There  
               should be a clear distinction between the role of this  
               point of contact coordinating entity as separate and  
               unrelated to the larger duties of the AG. 

             c)   Technical amendments.  The Committee suggests two  
               technical amendments to correct a typo and make a  
               clarifying change to the Bureau's administration of STRF. 

                     On page 12 in line 22, replace "26" with "27"
                 12  if the student was enrolled as of April  26   27  , 2015,  
                 or withdrew within 

                     On page 13, between lines 20 and 21, insert the  
                  (g) Any representation or agreement by a person not to  
                 collect on a student loan obligation does not reduce a  
                 student's eligibility for a recovery from the Student  
                 Tuition Recovery Fund or reduce the student's economic  
                 loss unless the student loan obligation has been  
                 forgiven, discharged or cancelled in accordance with the  
                 requirements of this section.

          NOTE:  Double-referral to Senate Committee on Education.

          Attorney General Kamala Harris
          California Competes: Higher Education for a Strong Economy
          California Federation of Teachers
          Consumer Federation of California
          California Teachers Association
          Consumers Union
          The Institute for College Access & Success
          Public Advocates Inc.


          AB 573 (Medina)                                         Page 28  
          of ?
          University of San Diego Center for Public Interest Law
          University of San Diego Children's Advocacy Institute
          University of San Diego Veterans Legal Clinic
          Young Invincibles

           Support if Amended  
          California Association of Private Postsecondary Schools (CAPPS)


          None on file as of June 23, 2015.

                                      -- END --