BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Carol Liu, Chair
                                2015 - 2016  Regular 

          Bill No:              AB 573             
          |Author:    |Medina                                               |
          |Version:   |July 9, 2015                                 Hearing |
          |           |Date:       July 15, 2015                            |
          |Urgency:   |Yes                    |Fiscal:      |Yes            |
          |Consultant:|Kathleen Chavira, Olgalilia Ramirez                  |
          |           |                                                     |
          Subject:  Higher education:  campus closures:  Corinthian  

          This bill provides for various forms of assistance to students  
          impacted by the recent closure of the Heald, Everest and Wyotech  
          campuses owned by Corinthian Colleges Inc. (CCI) and operated in  

          Existing law:

          BPPE Oversight
          1)Establishes the California Private Postsecondary Education Act  
            (Act) of 2009 until January 1, 2017, which provides for the  
            approval, regulation, and enforcement of private postsecondary  
            educational institutions by the Bureau for Private  
            Postsecondary Education (BPPE) within the Department of  
            Consumer Affairs (DCA).  (Education Code  94800-94950) 

          2)Provides for specified exemptions from BPPE oversight. These  
            include an exemption for an institution that is accredited by  
            the Accrediting Commission for Senior Colleges and  
            Universities (ACSC), Western Association of Schools and  
            Colleges (WASC), or the Accrediting Commission for Community  
            and Junior Colleges (ACCJC).  An institution accredited by a  
            regional accrediting agency, recognized by the United States  


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            Department of Education (USDE) is also exempt from oversight  
            until January 1, 2016, but is required to comply with  
            requirements related to the Student Tuition Recovery Fund  
            (STRF).  (EC  94874,  94874.1)
          3)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  94874.8)

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

          5)Establishes the Student Tuition Recovery Fund (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.  (EC  94923 - 94925)

          6)Requires institutions to annually report to the Bureau on  
            completion, placement, licensure and salary of  
            students/graduates and establishes various definitions for  
            this purpose and further requires that the information used to  
            substantiate the reported rates and information be documented  
            and maintained by the institution for five years from the date  
            of the publication of the rates and be retained by the  
            institution in an electronic format.  (EC  94928 - 94929.9)

          7)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  
            that the fees established in the Act are inconsistent with the  
            intent, and 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)

          School Closures


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          8)Requires an institution to notify the Bureau in writing of its  
            intention to close at least 30 days prior to closing, and to  
            include in its notice a closure plan that includes a plan for  
            providing teach-outs of educational programs, or, if no  
            teach-out plan is contemplated, or a student does not wish to  
            participate in a teach-out, include arrangements for making  
            refunds within 45 days from the date of closure, or as  
            applicable, arrange for refunds and the return of federal  
            student financial aid program funds. Existing law also  
            requires, as applicable, an institution to provide students  
            information concerning these financial aid programs and  
            institutional closures, and requires the closure plan to  
            include a plan for the disposition of student records.  (EC   

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

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

          2)Requires the Board of Governors (BOG) to charge each student a  
            $46 per unit per semester fee and requires a waiver of these  
            fees for students meeting specified income requirements, among  
            others. (EC  76300) 

          3)Authorizes the Cal Grant program, administered by the  
            California Student Aid Commission (CSAC), to provide grants to  
            financially needy students to attend college.  The program  
            consists of the Cal Grant A, Cal Grant B, and Cal Grant C  
            programs and eligibility is based upon financial need, grade  
            point average, California residency, and other eligibility  
            criteria, as specified.  The program also establishes  
            requirements for institutional participation.  These include   
            a three-year Cohort Default Rate (CDR) of less than 15.5  
            percent and a Graduation Rate (GR) of no less than 20 percent  


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            (this rate increases to 30 percent in 2016-17). (EC  69430,  
            et seq.)

          4)Establishes, under Title IV of the Federal Higher Education  
            Act of 1965, the federal student aid program, administered by  
            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.  1070, et seq.).  Institutional  
            eligibility requirements for Title IV financial aid, include  
            that institutions be "authorized" by each state in which they  
            operate, and have an independent state-level student complaint  
            (34 Code of Federal Regulations  600.9) 

          This bill provides for various forms of assistance to students  
          impacted by the recent closure of the Heald, Everest and Wyotech  
          campuses owned by Corinthian Colleges, Inc. (CCI) and operated  
          in California: It:

          1)Establishes assistance through the California Community  
            Colleges (CCC). Specifically it 

             a)   Declares the Legislature's intent that the CCC utilize  
               available resources to provide matriculation services, as  
               specified, to students previously enrolled at Corinthian  
               Colleges, Inc. (CCI) institutions and harmed by the their  

             b)   Appropriates $100,000 in Prop 98 General Fund monies to  
               the CCC Chancellor, to be allocated to a CCC district to  
               conduct a statewide media campaign to inform these students  
               of educational opportunities available at CCCs.

             c)   Makes a student who was enrolled at a CCI campus on  
               April 27, 2015, or withdrew within 120 days (or a greater  
               period as determined by the BPPE) prior to the CCI closure,  
               and did not complete their educational program, eligible  
               for a Board of Governor's (BOG) Fee Waiver until July 1,  

          2)Establishes assistance through the Cal Grant Program.  It:


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             a)   Requires that a student who enrolled in and received a  
               Cal Grant award in 2013-14 or 2015-16 academic year at a  
               CCI institution and who was unable to complete their  
               educational program due to its closure have Cal Grant  
               eligibility restored for up to 2 award years.  

             b)   Makes eligibility for Cal Grant restoral contingent upon  
               Bureau for Private Postsecondary Education confirmation of  
               the student's enrollment at a CCI campus, as specified.

             c)   Requires that an eligible student notify the California  
               Student Aid Commission (CSAC) by January 1, 2017 of the  
               intent to use the restored award and to enroll in a Cal  
               Grant eligible institution.

          3)Establishes assistance through the state professional  
            licensing process.  It: 

             a)   Authorizes a state agency that provides professional  
               certification, registration or licensure to, on a case by  
               case basis, consider former Corinthian Colleges, Inc. (CCI)  
               students that received applicable education and training  
               for certification, registration or licensure for a period  
               of up to two years from the date of the CCI closure. 

             b)   Requires that the consideration extended in (a) be at  
               the discretion of the state agency and in accordance with  
               its public protection mandate and applicable criteria it  
               has established for consumer safety. 

          4)Establishes the following assistance through the Student  
            Tuition Recovery Fund (STRF) program:

             a)   Expands eligibility for payments from the STRF to  
               include a student enrolled at a California campus of a CCI  
               institution 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 on, or  
               withdrew within 120 days of (or a greater period as  
               determined by the Bureau for Private Postsecondary  
               Education), April 27, 2015, regardless if the institution  
               attended by the student was exempt from the Act. 


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             b)   Requires that a CCI student eligible under the  
               conditions outlined in (a) be eligible for payments from  
               the STRF despite not having paid any STRF assessment. 

             c)   Expands and makes changes the STRF program.  It:

               i)     Clarifies that STRF is available to relieve or  
                 mitigates economic loss suffered by a California resident  
                 student enrolled through a distance education program  
                 offered by an institution with a physical presence in the  
                 state, (including its affiliates), but excepts from this  
                 provision students that attend nonpublic, nonprofit  
                 institutions incorporated in California and accredited by  
                 an agency recognized by the United States Department of  
                 Education (USDE) that is exempt from the Act. 

               ii)    Requires that a student's eligibility for STRF not  
                 be lessened nor the amount of the student's economic loss  
                 reduced unless a student loan has been forgiven,  
                 discharged or cancelled.

               iii)   Authorizes an institution to submit STRF assessments  
                 on behalf of its students but prohibits an institution  
                 from advertising or marketing this as a benefit the  
                 institution provides for its students.

               iv)    Requires, for institutions approved to operate after  
                 the bill's effective date, the Bureau to collect STRF  
                 assessments for all enrolled students from an institution  
                 upon issuance of the institution's approval to operate.

               v)     Requires, for institutions approved to operate prior  
                 to the bill's effective date, the Bureau to collect  
                 Student Tuition Recovery Fund (STRF) assessments from the  
                 institution for its enrolled students for whom an  
                 assessment has not been collected, including assessments  
                 for students enrolled in distance education programs.

               vi)    Increases the maximum allowable fund balance in the  
                 STRF from $25 million to $50 million, and makes other  
                 conforming changes.

          5)Establishes additional assistance under the requirements  
            regarding school closures.  Specifically it:


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             a)   Requires that, until January 1, 2020, a single point of  
               contact (SPOC) be established to respond to the closure of  
               institutions that do not comply with state and federal law  
               and to ensure that students receive accurate and timely  
               information regarding the closure process and their rights  
               and responsibilities under federal and state law, and  
               requires the SPOC's duties to include, but not be limited  

               i)     Coordinating and working in consultation with  
                 federal and state agencies to determine options and  
                 resources available to students and identify criteria  
                 which indicate additional steps are necessary for state  
                 agencies to take to ensure the protection of the public  
                 from school closures.

               ii)    Establishing and maintaining an Internet Web site  

                  (1)       Provide information to students about options  
                    available in the event of a school closure.

                  (2)       Provide information necessary to help a  
                    student make an informed decision about whether to  
                    seek a loan discharge or to transfer credits. 
                  (3)       List the names of institutions that are on the  
                    United States Department of Education's (USDE)  
                    heightened cash monitoring list.

               iii)   Assisting students in obtaining documentation from a  
                 closed institution, including enrollment agreements,  
                 records, transcripts and loan information.

             b)   States that consideration shall be granted to  
               establishing the SPOC within the Attorney General's Office  
               (AG) based on specified Legislative findings regarding the  
               AG's related experience.

             c)   Prohibits these provisions from being construed to  
               authorize the AG to breach its responsibilities or provide  
               individual legal assistance or representation of students  
               impacted by school closure and requires that the  


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               responsibilities of the SPOC be separate and distinct from  
               the AG's other statutory responsibilities. 

          6)Establishes assistance for student loan related purposes for  
            students affected by a school closure.  It:

             a)   Establishes until July 1, 2020, a grant program for  
               eligible local nonprofit community service organizations,  
               as specified, to provide specified services to assist  
               students upon the unlawful closure of an institution.

             b)   Specifies that an eligible local nonprofit community  
               service organization must be a 501(c)(3) tax-exempt  
               organization in good standing with the Internal Revenue  
               Service, in compliance with all applicable laws and  
               requirements, and demonstrate expertise in assisting  
               students with student loan matters, and  include, but not  
               be limited to legal aid organizations, organizations  
               offering free services for counseling on student loan debt  
               problems, organizations assisting with the arrangement of  
               debt management and settlement plans in order to assist the  
               students, including veterans, for no less than one year  
               following the closure of the institution, with loan  
               discharge and other student loan-related requests and  
               tuition recovery related claims.

             c)   Requires that assistance include, but not be limited to,  
               outreach and education, screening requests for assistance,  
               referring students for additional legal assistance through  
               pro bono referral programs, and legal services.

             d)   Provides that the amount of grant funds shall be  
               calculated by multiplying the number of students affected  
               by the institution's closure by one hundred dollars ($100).

             e)   Requires the Bureau to notify the Attorney General (AG)  
               of any unlawful school closure within 15 days, as  
               specified, and requires the AG, within 90 days of the  
               receipt of the notification, to solicit grant applications  
               and select one or more recipient organizations from among  
               any applicants deemed qualified by the AG, and authorizes  
               the AG to enter into an agreement with another qualified  
               entity to perform these duties.


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             f)   Requires a nonprofit community service organization that  
               receives grant funds to use them exclusively for the  
               specified purposes, authorizes extension of priority to  
               low-income students if demand exceeds available grant  
               funds, and requires specified reporting on the number of  
               students served.

             g)   Requires the distribution of grant funds by the AG, or a  
               qualified entity designated by the AG, as specified, based  
               upon the number of students affected by the school closure.  

          7)Appropriates $1.3 million from the Private Postsecondary  
            Education Administration Fund to the Bureau for the purpose of  
            providing the financial grants to be provided to nonprofit  
            community service organizations and suspends the existing  
            prohibition on the fund reserve balance requirements until  
            July 1, 2016.

          8)Declares the Legislature's intent that unencumbered  
            restitution funds awarded to the state from a lawsuit  
            involving Corinthian Colleges, Inc. (CCI) and its affiliate  
            institutions be used to repay any funds provided to students  
            under the bill's provisions.

            STAFF COMMENTS
       1)Need for the bill.  According to the author, while current state  
            and federal laws provide some relief to some students affected  
            by the closure of Corinthian Colleges, Inc. (CCI) campuses,  
            this bill ensures all California students are protected.  The  
            author notes that not only are existing relief programs  
            insufficient to support all California students harmed by the  
            CCI closures, evidence is surfacing that students are being  
            provided inaccurate and inconsistent information regarding  
            their rights and options.  This bill will ensure that  
            California students harmed by the closure of private,  
            for-profit colleges have access to economic relief and  
            educational opportunity. 

       2)What relief is already available?  Existing state and federal law  
            provide some relief to some students.  Students enrolled at  
            the time of closure (or who withdrew within previous 120 days)  


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            who could not complete their programs may be eligible for  
            federal student loan discharge.  However, students are  
            ineligible for loan discharge if they completed their  
            programs, benefitted from a "teach-out" agreement (whereby the  
            student can complete his or her program through another  
            school), or transferred credits to a similar program. Federal  
            law also permits the department to discharge loans of students  
            who were defrauded by their schools under "defense against  
            repayment," provisions, although this authority has rarely  
            been used. Student Tuition Recovery Fund (STRF) payments are  
            available to California Wyotech and Everest students who have  
            suffered economic losses.  However, as a Western Association  
            of Schools and Colleges (WASC) accredited school, Heald  
            Colleges were exempt from Bureau for Private Postsecondary  
            Education (BPPE) oversight, and as such STRF payments are not  
            available to Heald students nor are they available to students  
            enrolled in out-of-state online programs. 

       3)What additional relief does this bill propose?  In summary, this  
            bill would provide these additional sources of relief to  
            students who were enrolled or withdrew from enrollment within  
            120 days of the date of the Corinthian closures.
          a)   Makes these students eligible for a community college Board  
               of Governor's (BOG) fee waiver until July 1, 2018 and  
               provides $100,000 to support a statewide media campaign to  
               support outreach to these students through the existing "I  
               Can Afford College" financial aid awareness campaign.

          b)   Restores Cal Grant eligibility for students who notify  
               California Student Aid Commission (CSAC) that they will  
               enroll in a Cal Grant eligible institution before January  
               1, 2017. 

          c)   Authorizes state agencies, at their discretion, to consider  
               providing these students eligibility for certification,  
               registration or licensure on a case by case basis for up to  
               two years.

          d)   Makes Heald students eligible for STRF payments.

          e)   Establishes, until January 1, 2020, a single point of  
               contact within the Attorney General's (AG) office to  
               coordinate the efforts of state and federal agencies to  


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               assist students with understanding school closures and  
               their options around student loan forgiveness. 

          f)   Establishes, until July 1, 2020, a grant program for  
                                                                        eligible local nonprofit community service organizations to  
               provide debt related services to students.

          g)   Appropriates $1.3 million from fees paid by regulated  
               institutions for purposes of providing the financial grants  
               to the nonprofit community service organizations. 

       4)Corinthian Colleges, Incorporated (CCI) students.  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 at a cost of 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 programs such as Pell Grants and federal loans.   

       5)Board of Governor (BOG) waivers.  This bill requires that a  
            student affected by the CCI closures, as specified, is  
            automatically eligible for a BOG waiver on that basis. It  
            appears that the vast number of these students would already  
            be eligible for a BOG waiver on the basis that they meet  
            existing income standards or demonstrate financial need.    
            Financial aid policy in California has generally been focused  
            upon the provision of need-based financial assistance. This  
            bill would automatically waive fees for former CCI students  
            whether or not they meet income standards or demonstrate  
            financial need. If these students have been reimbursed from  
            the Student Tuition Recovery Fund (STRF), had Cal Grant  


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            eligibility restored, and have no demonstrated financial need,  
            is it reasonable to require waiver of their fees simply on the  
            basis that they attended a CCI? 
            Staff recommends the bill be amended on page 7, line 19 and  
            line 26 to insert "with demonstrated need, as determined by  
            the campus."

       6)Cal Grant Restoration. This bill restores Cal Grant eligibility  
            for Corinthian students who were enrolled and received an  
            award during the specified time period, but were unable to  
            complete their education program due to the closure. For the  
            2014-15 academic year, all ten of Heald college's campuses  
            were eligible for the Cal Grant program. The remaining two  
            Corinthian institutions, Wyotech and Everest, have been  
            ineligible for Cal Grants since the 2011-12 academic year.  As  
            such, only the students enrolled at Heald would be eligible to  
            receive a Cal Grant award under these provisions. According to  
            the California Student Aid Commission (CSAC) in the 2014-15  
            academic year, 7% of these students received a Cal Grant A,  
            34% received a Cal Grant B and 59% received a Cal Grant C.  
            Based on the criteria outlined in the bill, CSAC indicates  
            that approximately 2,000 students would qualify for one year  
            of restoration and roughly 150 for a second year. The CSAC  
            estimates this cost to be approximately $5 million for two  
            years of restoration. 

            Since the criteria for Cal Grant restoration would only be  
            applicable to Heald students, staff recommends the bill be  
            amended to make this clarification. 

       7)California National Guard Education Assistance Award Program  
            (CNGEAAP). Heald students may also have participated in the  
            CNGEAAP, a program intended for active members of the National  
            Guard, the State Military Reserve, or the Naval Militia.  This  
            competitive incentive program is jointly administered by the  
            California Student Aid Commission (CSAC) and the Military  
            Department for the purpose of retaining individuals in the  
            California National Guard.  It is estimated that only a few  
            CNGEAAP recipients attended Heald at the time of the closure.  
            Staff recommends the bill be amended to provide restoration  
            for CNGEAAP recipients who attended a Heald College in the  
            same manner it does for Cal Grant recipients.


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       8)Student Tuition Recovery Fund (STRF).  STRF reimburses "economic  
            loss" for California residents enrolled in eligible  
            institutions at the time of closure. Economic loss includes a  
            student's tuition, cost of required equipment and materials,  
            and interest on student loan debt used to pay those charges.  
            It does not include supplies, living expenses, or damages such  
            as emotional distress.  Although the Act requires the Bureau  
            to establish regulations providing relief for a student whose  
            charges were paid by a third party, (such as an employer or a  
            financial aid program) the Bureau for Private Postsecondary  
            Education (BPPE) has not yet adopted these regulations. 

            The STRF is supported by fees collected from each student at  
            regulated schools.  The amount of this fee was reduced to zero  
            effective January 1, 2015 as the current balance  
            (approximately $28 million) exceeds the statutory cap of $25  
            million.  This bill would increase the cap to $50 million in  
            order to accommodate the increased demand that would be  
            created by the expanded STRF eligibility created by its  
            provisions. The Bureau estimates it has received about 130  
            STRF claims from eligible Corinthian Colleges, Inc. (CCI)  

            As previously noted, this bill extends the right to  
            reimbursement from STRF to students who were enrolled at  
            Heald. As such this group of students would be placed in a  
            unique position of potentially benefiting from both STRF and  
            the Cal Grant program. Arguably restoral of Cal Grants would  
            provide Heald students more immediate relief than that  
            possible under the STRF process. But the committee may wish to  

             a)   Should the state underwrite the restoral of Cal Grants  
               which might otherwise be reimbursed to these students under  
               the "economic losses" relief for charges paid by a third  
             b)   Should the state be the "first payor" of benefits  
               intended to compensate students harmed by the actions of a  
               private, for-profit institution? 
             c)   If Heald students are eligible for STRF, should the bill  
               be amended to require reimbursement to the Cal Grant  
               program for any restoral awards provided to them?  

       1)Private loans.  Federal rules require that institutions receive  


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            at least 10% of revenues from non-Title IV sources ("90/10  
            rule").  These other sources can include state aid, veteran's  
            aid, and private loans, among other sources.  In 2013, the  
            federal Consumer Financial Protection Bureau (CFPB) accused  
            CCI of luring students into its "Genesis" loan program in  
            order to meet the federal "90/10 rule".   According to 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.  Corinthian Colleges, Inc. (CCI) offered students  
            their own "Genesis" loans to cover the funding gaps.   
            According to the Consumer Financial Protection Bureau (CFPB),  
            by 2014 the outstanding balance of Genesis loans totaled $560  
            million.  The complaint sought, among other monetary penalties  
            and student relief, the rescission of all CCI private loans  
            originated since 2011.  Several other legal actions and  
            investigations have been initiated by state attorneys general,  
            federal agencies, and the United States Department of  
            Education (USDE) and these complaints include allegations  
            related to CCIs Genesis loans.  Unlike federal student loans,  
            there are no standard discharge provisions for private loans  
            and payments are subject to lenders' requirements.  

       2)Related informational hearing. On May 13, 2015, the Senate  
            Education and Business, Professions and Economic Development  
            Committees convened a joint hearing, Corinthian College  
            Closures: What's next for California Students? According to  
            information provided by the Legislative Analyst's Office  
            (LAO), CCI institutions included 10 Heald campuses, 11 Everest  
            campuses and 2 Wyotech campuses and enrolled about 10,000  
            California students. The Committees also heard from multiple  
            state agencies including the Attorney General, California  
            Student Aid Commission, and the Bureau and learned that  
            multiple federal and state investigations have revealed that  
            the Corinthian Colleges misrepresented job placement rates to  
            students, unlawfully used official United States military  
            seals, misrepresented the transferability of credits, engaged  
            in unlawful debt collection practices in its private loan  
            program and targeted the most vulnerable of potential students  
            with annual incomes often near the federal poverty line.  As a  
            result of this hearing, the committees and bipartisan  
            leadership of the Senate submitted a letter to the US  
            Department of Education articulating their concern that these  
            students be informed and supported so that they could achieve  


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            their academic goals while minimizing financial burdens  
            directly related to student loan debt and requested that USDE:

          a)   Proactively inform students of their right to a closed  
               school loan discharge.  

          b)   Provide students current, reliable information about loan  
               discharges, streamlined application processes, and extend  
               priority consideration of discharges for students impacted  
               by the CCI closures.

          c)   Make certain borrowers eligible for loan forgiveness under  
               defense to repayment provisions.

          d)   Ensure that students understand how a closed school loan  
               discharge will affect future eligibility for federal  
               student aid programs or their ability to transfer to other  
               colleges or universities through non-biased academic and  
               financial aid counseling resources.

          e)   Refrain from advising students that they can consider  
               transferring to other institutions that may put them at  
               continued risk and that such institutions be removed from  
               the list of transfer options provided to students. 

          f)   Provide students with an "in-person" option for counseling  
               as these students needed more proactive attention than  
               referral to a website.

       3)Related federal actions. On June 8, 2015, the United States  
            Department of Education (USDE) announced steps being  
            undertaken to specifically address the unique circumstances of  
            former Corinthian students. Among these, the USDE reports that  
            it is:  

          a)   Expanding eligibility for students to apply for a closed  
               school loan discharge by extending the window of time back  
               to June 20, 2014.
          b)   Contacting potentially impacted student borrowers to  
               provide clear information about their options, including  
               loan discharge applications, in addition to providing  
               enhanced information on the Department's website.


          AB 573 (Medina)                                         Page 16  
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          c)   Working with organizations and institutions, some  
               specifically in California, to establish an independent  
               volunteer advising corps to help students navigate and  
               determine which loan forgiveness option is best suited to  
               their situation. 

          d)   Relying 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 in order to simplify and expedite the relief  
               process, and reduce the burden on borrowers. 

          e)   Appointing a Special Master to oversee borrower defense  
               issues and offering students seeking such relief the option  
               of immediately placing federal loans into forbearance while  
               it works to resolve students' claims.  

            The Department specifically cites its investigation and  
            analysis of Heald College and relevant California law, where  
            it determined that evidence of misrepresentation exists for  
            students enrolled at Heald College campuses between 2010 and  
            2015 and that these students may have their federal loans  
            forgiven and receive refunds for amounts paid based on a  
            simple attestation.

       4)Corinthian Colleges, Inc. (CCI) related history.  As a part of  
            the informational hearing referenced in staff comment #10 the  
            Legislative Analyst's Office (LAO) provided a timeline of  
            events related to the Corinthian closures. The timeline is  
            attached as part of this analysis. 

       5)Double-referral.  This bill was previously heard by the Senate  
            Business, Professions and Economic Development Committee which  
            has jurisdiction over bills relating to business and  
            professional practices and periodically conducts sunset review  
            of various boards and licensing agencies, including the  
            Bureau. In addition to 
            the provisions specifically affecting Corinthian students, the  
            Committee adopted broader changes to strengthen the Act in  
            anticipation of other potential school closures.  

            Specifically, this bill now authorizes the collection of  
            Student Tuition Recovery Fund (STRF) for students enrolled in  


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            a distance education program that has a physical presence in  
            the State and authorizes institutions to pay the STRF  
            assessment on behalf of their students. It also creates an  
            ongoing dedicated single point of contact within the Attorney  
            General's Office to assist any student harmed by a for-profit  
            institution's closure. The Committee analysis also notes that  
            the appropriateness of exemptions from the Act will likely be  
            the subject of future discussions by the Committee. 

          Board of Governors of the California Community Colleges
          California Community College League
          California Competes
          California Federation of Teachers
          California SEIU
          California Student Aid Commission
          Center for Responsible Lending
          Consumer Federation of California
          Public Advocates
          Public Law Center
          The Institute for College Access and Success
          University of San Diego Center for Public Interest Law
          University of San Diego Children's Advocacy Institute
          University of San Diego Veterans Legal Clinic

           None received. 

                                      -- END --