House File 375 - Introduced HOUSE FILE 375 BY DOLECHECK and WINCKLER A BILL FOR 1 An Act relating to the registration of postsecondary schools 2 with the college student aid commission, and to the 3 postsecondary registration fund under the control of the 4 commission. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 2381YH (3) 89 kh/jh H.F. 375 1 Section 1. Section 261B.8, subsection 3, Code 2021, is 2 amended to read as follows: 3 3. A postsecondary registration fund is created in the state 4 treasury under the control of the commission. Fees collected 5 under this section and any other moneys approved by the 6 commission shall be deposited in the postsecondary registration 7 fund. Moneys in the fund are appropriated to the commission 8 and shall be used by the commission to administer this 9 chapter and chapter 261G for any of the purposes set forth in 10 subsection 4. Notwithstanding section 8.33, moneys in the fund 11 shall not revert to the general fund of the state at the end 12 of a fiscal year. Notwithstanding section 12C.7, interest or 13 earnings on moneys in the fund shall be credited to the fund. 14 Sec. 2. Section 261B.8, Code 2021, is amended by adding the 15 following new subsection: 16 NEW SUBSECTION. 4. Moneys in the fund may be used for any 17 of the following purposes: 18 a. To administer this chapter and chapter 261G. 19 b. To procure, evaluate, and store school records needed to 20 establish the validity of claims against a school for failure 21 to faithfully perform all contracts and agreements. 22 c. To pay institutional charges on behalf of Iowans who 23 enrolled at the school. 24 d. To support an arrangement in which the school provides 25 its current students with the opportunity to complete the 26 students’ courses of study when the school closes, including 27 any activities designed to facilitate the transition of such 28 students to another postsecondary educational institution. 29 e. To pay private educational loan debt incurred by Iowans 30 for attendance at the school. 31 f. To reimburse Iowans who enrolled at the school for other 32 financial loss, as determined by the commission. 33 g. For other purposes prescribed by rule by the commission. 34 Sec. 3. Section 714.18, subsection 1, unnumbered paragraph 35 1, Code 2021, is amended to read as follows: LSB 2381YH (3) 89 -1- kh/jh 1/16 H.F. 375 1 Except as otherwise provided in subsection 2 or 3, every 2 Every person, firm, association, or corporation maintaining 3 or conducting in Iowa any educational course by classroom 4 instruction or by correspondence or by other delivery method, 5 or soliciting in Iowa the sale of such course, shall file with 6 the college student aid commission, in a format prescribed by 7 the commission, all of the following: 8 Sec. 4. Section 714.18, subsection 1, paragraph a, Code 9 2021, is amended to read as follows: 10 a. A continuous corporate surety bond to the state of 11 Iowa in the sum of fifty thousand dollars or ten percent 12 of the total annual tuition determined in accordance with 13 subsection 2, whichever is less, conditioned on the faithful 14 performance of all contracts and agreements with students made 15 by such person, firm, association, or corporation, or their 16 salespersons; but the. The aggregate liability of the surety 17 for all breaches of the conditions of the bond shall not exceed 18 the sum of the bond. The surety on the bond may cancel the bond 19 upon giving thirty days’ written notice to the college student 20 aid commission and thereafter shall be relieved of liability 21 for any breach of condition occurring after the effective date 22 of the cancellation. 23 Sec. 5. Section 714.18, subsections 2, 3, 4, and 5, Code 24 2021, are amended to read as follows: 25 2. A school licensed under the provisions of section 157.8 26 or 158.7 shall file that files with the college student aid 27 commission the following: 28 a. (1) A a continuous corporate surety bond to the state 29 of Iowa in the a sum of less than fifty thousand dollars or ten 30 percent of the total annual tuition collected, whichever is 31 less, conditioned on the faithful performance of all contracts 32 and agreements with students made by such school. A school 33 desiring to file a surety bond based on a percentage of annual 34 tuition shall provide to the college student aid commission, 35 in the form format prescribed by the commission, a notarized LSB 2381YH (3) 89 -2- kh/jh 2/16 H.F. 375 1 statement attesting to the total amount of tuition collected 2 the school charged to students in the immediately preceding 3 twelve-month period fiscal year. The commission shall 4 determine the sufficiency of the statement and the amount of 5 the bond or, as permitted under subsection 3, letter of credit. 6 Tuition information submitted pursuant to this subparagraph 7 subsection shall be kept confidential. 8 (2) If the school has filed a performance bond with an 9 agency of the United States government pursuant to federal 10 law, the college student aid commission shall reduce the bond 11 required by this paragraph “a” by an amount equal to the amount 12 of the federal bond. 13 (3) The aggregate liability of the surety for all breaches 14 of the conditions of the bond shall not exceed the sum of 15 the bond. The surety on the bond may cancel the bond upon 16 giving thirty days’ written notice to the college student aid 17 commission and thereafter shall be relieved of liability for 18 any breach of condition occurring after the effective date of 19 the cancellation. 20 (4) 3. a. The college student aid commission may accept a 21 letter of credit issued by a state or federally chartered bank 22 or credit union in lieu of and for the amount of the corporate 23 surety bond required by subparagraphs (1) through (3), as 24 applicable under subsection 2. 25 b. The statement required in subsection 1, paragraph “b”. 26 For purposes of this chapter and chapter 261B, a letter of 27 credit must meet all of the following conditions: 28 (1) Be payable to the commission. 29 (2) Be valid for a period of at least one year from the 30 date of issuance and subject to renewal as required by the 31 commission. 32 (3) Allow the commission to draw one or multiple 33 installments of the total letter of credit amount upon making 34 the required presentations to the issuer. 35 c. The materials required in subsection 1, paragraph “c” For LSB 2381YH (3) 89 -3- kh/jh 3/16 H.F. 375 1 purposes of this section, “letter of credit” means a financial 2 instrument subject to the provisions of chapter 554, article 5, 3 with irrevocable terms and conditions that cannot be modified 4 or canceled after issuance without the consent of all of the 5 parties. 6 4. If a letter of credit accepted by the college student 7 aid commission under subsection 3 is canceled, revoked, not 8 renewed, or otherwise fails to be of full force and effect, the 9 school shall comply with the provisions of subsection 2. 10 3. 5. This section shall not apply to the provision of 11 an educational course of flight instruction under regulations 12 promulgated by the federal aviation administration for which 13 students do not pay tuition in advance of instruction and 14 which students may cancel at any time with no further monetary 15 obligation. 16 Sec. 6. Section 714.19, subsections 1, 2, 3, 4, and 6, Code 17 2021, are amended to read as follows: 18 1. Colleges or universities authorized by the laws of 19 Iowa or any other state or foreign country to grant degrees 20 A community college established under chapter 260C or an 21 institution of higher learning under the control of the state 22 board of regents. 23 2. Schools of nursing accredited by the board of nursing 24 or an equivalent public board of another state or foreign 25 country A college or university created or authorized by any 26 other state to grant degrees, in which state the college or 27 university maintains its principal domicile and from which the 28 college or university receives public funds to support the 29 operating costs of the college or university. 30 3. Public schools A school district described in chapter 31 274. 32 4. Private and nonprofit elementary or secondary schools 33 recognized by the department of education or a local the board 34 of directors of a school board district for the purpose of 35 complying with chapter 299 and employing certified teachers LSB 2381YH (3) 89 -4- kh/jh 4/16 H.F. 375 1 licensed under chapter 272. 2 6. Schools and educational programs conducted by firms, 3 corporations, or persons for which no fee is charged to any 4 student or any other party who assumes the cost of education 5 on the student’s behalf. 6 Sec. 7. Section 714.19, subsection 8, Code 2021, is amended 7 by striking the subsection. 8 Sec. 8. Section 714.23, Code 2021, is amended to read as 9 follows: 10 714.23 Refund policies —— penalty. 11 1. a. For the purposes of this section and section 714.25, 12 “postsecondary educational program”: 13 a. “Payment period” means the same as set forth in 34 C.F.R. 14 §668.4. 15 b. “Postsecondary educational program” means a series of 16 postsecondary educational courses that lead to a recognized 17 educational credential such as including but not limited to an 18 academic or professional degree, diploma, or license, or other 19 certification or designation, regardless of whether the school 20 awards the credential. 21 b. For the purposes of this section, “school period” 22 c. “Proprietary school” means a person offering a 23 postsecondary educational program, for profit. 24 d. “School period” means the course, term, payment period, 25 postsecondary educational program, or other period for which 26 the school assessed tuition charges to the student. A school 27 that assesses tuition charges to the student at the beginning 28 of each course, term, payment period, or other period that is 29 shorter than the postsecondary educational program’s length 30 shall base its tuition refund on the amount of tuition costs 31 the school charged for the course, term, or other period in 32 which the student terminated. A school shall not base its 33 tuition refund calculation on any portion of a postsecondary 34 educational program that remains after a student terminates 35 unless the student was charged for that remaining portion of LSB 2381YH (3) 89 -5- kh/jh 5/16 H.F. 375 1 the postsecondary educational program before the student’s 2 termination and the student began attendance in the school term 3 or course. 4 2. a. A proprietary school shall refund all tuition charges 5 to a student who withdraws within the first two calendar weeks 6 of instruction. 7 b. A person offering at least one postsecondary educational 8 program, for profit, that is more than four months in length 9 and leads to a recognized educational credential, proprietary 10 school shall make a pro rata refund of tuition charges to an 11 Iowa resident a student who terminates from any of the school’s 12 postsecondary educational programs or courses after the first 13 two calendar weeks in an amount that is not less than ninety 14 ninety-five percent of the amount of tuition charged to the 15 student multiplied by the ratio of the number of calendar days 16 remaining in the school period until the date equivalent to 17 the completion of sixty percent of the calendar days in the 18 school period to the total number of calendar days in the 19 school period until the date equivalent to the completion of 20 sixty percent of the calendar days in the school period. If 21 a terminating student has completed sixty percent or more 22 of a school period, the school offering the postsecondary 23 educational program is not required to refund tuition charges 24 to the student. 25 c. (1) A proprietary school as provided in subparagraph (2) 26 shall provide to a student who terminates after the first two 27 calendar weeks a refund of tuition charges in an amount that 28 is not less than ninety-five percent of the amount of tuition 29 charged to the student multiplied by the ratio of the remaining 30 number of calendar days in the school period to the total 31 number of calendar days in the school period. 32 (2) This paragraph “c” applies to a proprietary school 33 whose cohort default rate for students under the Stafford 34 loan program as reported by the United States department of 35 education for the most recent federal fiscal year is more than LSB 2381YH (3) 89 -6- kh/jh 6/16 H.F. 375 1 one hundred ten percent of the national average cohort default 2 rate of all schools for the same federal fiscal year or six 3 percent, whichever is higher. 4 3. Notwithstanding the provisions of subsection 2, the 5 following tuition refund policy shall apply: 6 a. If a terminating student has completed sixty percent or 7 more of a school period, the person offering the postsecondary 8 educational program is not required to refund tuition charges 9 to the student. However, if, at any time, a student terminates 10 a postsecondary educational program due to the student’s 11 physical incapacity or, for a program that requires classroom 12 instruction, due to the transfer of the student’s spouse’s 13 employment to another city, the terminating student shall 14 receive a refund of tuition charges in an amount that equals 15 the amount of tuition charged to the student multiplied by the 16 ratio of the remaining number of calendar days in the school 17 period to the total number of calendar days in the school 18 period. 19 b. A school shall provide to a terminating student a 20 refund of tuition charges in an amount that is not less than 21 ninety percent of the amount of tuition charged to the student 22 multiplied by the ratio of the remaining number of calendar 23 days in the school period to the total number of calendar 24 days in the school period. This paragraph “b” applies to 25 those persons offering at least one postsecondary educational 26 program of more than four months in length, for profit, 27 whose cohort default rate for students under the Stafford 28 loan program as reported by the United States department of 29 education for the most recent federal fiscal year is more 30 than one hundred ten percent of the national average cohort 31 default rate of all schools for the same federal fiscal year 32 or six percent, whichever is higher. A proprietary school 33 that assesses tuition charges to the student at the beginning 34 of each course, term, payment period, or other period that is 35 shorter than the postsecondary educational program’s length LSB 2381YH (3) 89 -7- kh/jh 7/16 H.F. 375 1 shall base its tuition refund on the amount of tuition costs 2 the school charged for the course, term, or other period in 3 which the student terminated. A school shall not base its 4 tuition refund calculation on any portion of a postsecondary 5 educational program that remains after a student terminates 6 unless the student was charged for that remaining portion of 7 the postsecondary educational program before the student’s 8 termination and the student began attendance in the school term 9 or course. 10 4. Notwithstanding the provisions of subsection 2, 11 paragraphs “b” and “c”, if, at any time, a student terminates 12 a postsecondary educational program after the first two 13 calendar weeks due to the student’s physical incapacity or, 14 for a program that requires classroom instruction, due to the 15 transfer of the student’s spouse’s employment to another city, 16 the terminating student shall receive a refund of the tuition 17 charges in an amount that equals the amount of tuition charged 18 to the student multiplied by the ratio of the remaining number 19 of calendar days in the school period to the total number of 20 calendar days in the school period. 21 5. In the case of a program in which student progress is 22 measured only in clock hours, all occurrences of “calendar 23 days” in subsections 2 and 3 4 shall be replaced with 24 “scheduled clock hours”. 25 5. a. 6. A student who does not receive a tuition refund 26 up to the full refund of tuition charges due to the effect