Bill Summary – FastDemocracy

House File 644 - Enrolled
                                                      House File 644
                                  AN ACT
     RELATING TO THE REGISTRATION OF POSTSECONDARY SCHOOLS WITH THE
        COLLEGE STUDENT AID COMMISSION, AND TO THE POSTSECONDARY
        REGISTRATION FUND UNDER THE CONTROL OF THE COMMISSION.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
    Section 1. Section 261B.8, subsection 3, Code 2021, is
 amended to read as follows:
    3. A postsecondary registration fund is created in the state
 treasury under the control of the commission. Fees collected
 under this section and any other moneys approved by the
 commission shall be deposited in the postsecondary registration
 fund. Moneys in the fund are appropriated to the commission
 and shall be used by the commission to administer this
 chapter and chapter 261G for any of the purposes set forth in
 subsection 4. Notwithstanding section 8.33, moneys in the fund
 shall not revert to the general fund of the state at the end
 of a fiscal year. Notwithstanding section 12C.7, interest or
 earnings on moneys in the fund shall be credited to the fund.
    Sec. 2. Section 261B.8, Code 2021, is amended by adding the
 following new subsection:
    NEW SUBSECTION. 4. Moneys in the fund may be used for any
 of the following purposes:
    a. To administer this chapter and chapter 261G.
    b. To procure, evaluate, and store school records needed to
 establish the validity of claims against a school for failure
 to faithfully perform all contracts and agreements.
                                                House File 644, p. 2
    c. To pay institutional charges on behalf of Iowans who
 enrolled at the school.
    d. To support an arrangement in which the school provides
 its current students with the opportunity to complete the
 students’ courses of study when the school closes, including
 any activities designed to facilitate the transition of such
 students to another postsecondary educational institution.
    e. To pay private educational loan debt incurred by Iowans
 for attendance at the school.
    f. To reimburse Iowans who enrolled at the school for other
 financial loss, as determined by the commission.
    g. For other purposes prescribed by rule by the commission.
    Sec. 3. Section 714.18, subsection 1, unnumbered paragraph
 1, Code 2021, is amended to read as follows:
    Except as otherwise provided in subsection 2 or 3, every
 Every person, firm, association, or corporation maintaining
 or conducting in Iowa any educational course by classroom
 instruction or by correspondence or by other delivery method,
 or soliciting in Iowa the sale of such course, shall file with
 the college student aid commission, in a format prescribed by
 the commission, all of the following:
    Sec. 4. Section 714.18, subsection 1, paragraph a, Code
 2021, is amended to read as follows:
    a. A continuous corporate surety bond to the state of
 Iowa in the sum of fifty thousand dollars or ten percent
 of the total annual tuition determined in accordance with
 subsection 2, whichever is less, conditioned on the faithful
 performance of all contracts and agreements with students made
 by such person, firm, association, or corporation, or their
 salespersons; but the. The aggregate liability of the surety
 for all breaches of the conditions of the bond shall not exceed
 the sum of the bond. The surety on the bond may cancel the bond
 upon giving thirty days’ written notice to the college student
 aid commission and thereafter shall be relieved of liability
 for any breach of condition occurring after the effective date
 of the cancellation.
    Sec. 5. Section 714.18, subsections 2, 3, 4, and 5, Code
 2021, are amended to read as follows:
    2. a. A school licensed under the provisions of section
                                                House File 644, p. 3
 157.8 or 158.7 shall file that files with the college student
 aid commission the following:
    a. (1) A a continuous corporate surety bond to the state
 of Iowa in the a sum of less than fifty thousand dollars or ten
 percent of the total annual tuition collected, whichever is
 less, conditioned on the faithful performance of all contracts
 and agreements with students made by such school. A school
 desiring to file a surety bond based on a percentage of annual
 tuition shall provide to the college student aid commission,
 in the form format prescribed by the commission, a notarized
 statement attesting to the total amount of tuition collected
 the school charged to students in the immediately preceding
 twelve-month period fiscal year. The commission shall
 determine the sufficiency of the statement and the amount of
 the bond or, as permitted under subsection 3, letter of credit.
 Tuition information submitted pursuant to this subparagraph
 subsection shall be kept confidential.
    (2) If the school has filed a performance bond with an
 agency of the United States government pursuant to federal
 law, the college student aid commission shall reduce the bond
 required by this paragraph “a” by an amount equal to the amount
 of the federal bond.
    (3) b. The aggregate liability of the surety for all
 breaches of the conditions of the bond shall not exceed the sum
 of the bond. The surety on the bond may cancel the bond upon
 giving thirty days’ written notice to the college student aid
 commission and thereafter shall be relieved of liability for
 any breach of condition occurring after the effective date of
 the cancellation.
    (4) 3. a. The college student aid commission may accept a
 letter of credit issued by a state or federally chartered bank
 or credit union in lieu of and for the amount of the corporate
 surety bond required by subparagraphs (1) through (3), as
 applicable under subsection 2.
    b. The statement required in subsection 1, paragraph “b”.
 For purposes of this chapter and chapter 261B, a letter of
 credit must meet all of the following conditions:
    (1) Be payable to the commission.
    (2) Be valid for a period of at least one year from the
                                                House File 644, p. 4
 date of issuance and subject to renewal as required by the
 commission.
    (3) Allow the commission to draw one or multiple
 installments of the total letter of credit amount upon making
 the required presentations to the issuer.
    c. The materials required in subsection 1, paragraph “c” For
 purposes of this section, “letter of credit” means a financial
 instrument subject to the provisions of chapter 554, article 5,
 with irrevocable terms and conditions that cannot be modified
 or canceled after issuance without the consent of all of the
 parties.
    4. If a letter of credit accepted by the college student
 aid commission under subsection 3 is canceled, revoked, not
 renewed, or otherwise fails to be of full force and effect, the
 school shall comply with the provisions of subsection 2.
    3. 5. This section shall not apply to the provision of
 an educational course of flight instruction under regulations
 promulgated by the federal aviation administration for which
 students do not pay tuition in advance of instruction and
 which students may cancel at any time with no further monetary
 obligation.
    Sec. 6. Section 714.19, subsections 1, 2, 3, 4, and 6, Code
 2021, are amended to read as follows:
    1. Colleges or universities authorized by the laws of
 Iowa or any other state or foreign country to grant degrees
 A community college established under chapter 260C or an
 institution of higher learning under the control of the state
 board of regents.
    2. Schools of nursing accredited by the board of nursing or
 an equivalent public board of another state or foreign country
 A public college or university created or authorized by the
 laws of any other state to grant degrees, in which state the
 college or university maintains its principal domicile and
 from which the college or university receives public funds to
 support the operating costs of the college or university.
    3. Public schools A school district described in chapter
 274.
    4. Private and nonprofit elementary or secondary schools
 recognized by the department of education or a local the board
                                                House File 644, p. 5
 of directors of a school board district for the purpose of
 complying with chapter 299 and employing certified teachers
 licensed under chapter 272.
    6. Schools and educational programs conducted by firms,
 corporations, or persons for which no fee is charged to any
 student or any other party who assumes the cost of education
 on the student’s behalf.
    Sec. 7. Section 714.19, subsection 8, Code 2021, is amended
 by striking the subsection.
    Sec. 8. Section 714.23, Code 2021, is amended to read as
 follows:
    714.23 Refund policies —— penalty.
    1. a. For the purposes of this section and section 714.25,
 “postsecondary educational program”:
    a. “Payment period” means the same as set forth in 34 C.F.R.
 §668.4.
    b. “Postsecondary educational program” means a series of
 postsecondary educational courses that lead to a recognized
 educational credential such as including but not limited to an
 academic or professional degree, diploma, or license, or other
 certification or designation, regardless of whether the school
 awards the credential.
    b. For the purposes of this section, “school period”
    c. “Proprietary school” means a person offering a
 postsecondary educational program, for profit.
    d. “School period” means the course, term, payment period,
 postsecondary educational program, or other period for which
 the school assessed tuition charges to the student. A school
 that assesses tuition charges to the student at the beginning
 of each course, term, payment period, or other period that is
 shorter than the postsecondary educational program’s length
 shall base its tuition refund on the amount of tuition costs
 the school charged for the course, term, or other period in
 which the student terminated. A school shall not base its
 tuition refund calculation on any portion of a postsecondary
 educational program that remains after a student terminates
 unless the student was charged for that remaining portion of
 the postsecondary educational program before the student’s
 termination and the student began attendance in the school term
                                                House File 644, p. 6
 or course.
    2. a. A proprietary school shall refund all tuition charges
 to a student who withdraws within the first two calendar weeks
 of instruction.
    b. A person offering at least one postsecondary educational
 program, for profit, that is more than four months in length
 and leads to a recognized educational credential, proprietary
 school shall make a pro rata refund of tuition charges to an
 Iowa resident a student who terminates from any of the school’s
 postsecondary educational programs or courses after the first
 two calendar weeks in an amount that is not less than ninety
 ninety-five percent of the amount of tuition charged to the
 student multiplied by the ratio of the number of calendar days
 remaining in the school period until the date equivalent to
 the completion of sixty percent of the calendar days in the
 school period to the total number of calendar days in the
 school period until the date equivalent to the completion of
 sixty percent of the calendar days in the school period. If
 a terminating student has completed sixty percent or more
 of a school period, the school offering the postsecondary
 educational program is not required to refund tuition charges
 to the student.
    c. (1) A proprietary school as provided in subparagraph (2)
 shall provide to a student who terminates after the first two
 calendar weeks a refund of tuition charges in an amount that
 is not less than ninety-five percent of the amount of tuition
 charged to the student multiplied by the ratio of the remaining
 number of calendar days in the school period to the total
 number of calendar days in the school period.
    (2) This paragraph “c” applies to a proprietary school
 whose cohort default rate for students under the Stafford
 loan program as reported by the United States department of
 education for the most recent federal fiscal year is more than
 one hundred ten percent of the national average cohort default
 rate of all schools for the same federal fiscal year or six
 percent, whichever is higher.
    3. Notwithstanding the provisions of subsection 2, the
 following tuition refund policy shall apply:
    a. If a terminating student has completed sixty percent or
                                                House File 644, p. 7
 more of a school period, the person offering the postsecondary
 educational program is not required to refund tuition charges
 to the student. However, if, at any time, a student terminates
 a postsecondary educational program due to the student’s
 physical incapacity or, for a program that requires classroom
 instruction, due to the transfer of the student’s spouse’s
 employment to another city, the terminating student shall
 receive a refund of tuition charges in an amount that equals
 the amount of tuition charged to the student multiplied by the
 ratio of the remaining number of calendar days in the school
 period to the total number of calendar days in the school
 period.
    b. A school shall provide to a terminating student a
 refund of tuition charges in an amount that is not less than
 ninety percent of the amount of tuition charged to the student
 multiplied by the ratio of the remaining number of calendar
 days in the school period to the total number of calendar
 days in the school period. This paragraph “b” applies to
 those persons offering at least one postsecondary educational
 program of more than four months in length, for profit,
 whose cohort default rate for students under the Stafford
 loan program as reported by the United States department of
 education for the most recent federal fiscal year is more
 than one hundred ten percent of the national average cohort
 default rate of all schools for the same federal fiscal year
 or six percent, whichever is higher. A proprietary school
 that assesses tuition charges to the student at the beginning
 of each course, term, payment period, or other period that is
 shorter than the postsecondary educational program’s length
 shall base its tuition refund on the amount of tuition costs
 the school charged for the course, term, or other period in
 which the student terminated. A school shall not base its
 tuition refund calculation on any portion of a postsecondary
 educational program that remains after a student terminates
 unless the student was charged for that remaining portion of
 the postsecondary educational program before the student’s
 termination and the student began attendance in the school term
 or course.
    4. Notwithstanding the provisions of subsection 2,
                                                 House File 644, p. 8
 paragraphs “b” and “c”, if, at any time, a student terminates
 a postsecondary educational program after the first two
 calendar weeks due to the student’s physical incapacity or,
 for a program that requires classroom instruction, due to the
 transfer of the student’s spouse’s employment to another city,
 the terminating student shall receive a refund of the tuition
 charges in an amount that equals the amount of tuition charged
 to the student multiplied by the ratio of the remaining number
 of calendar days in the school period to the total number of
 calendar days in the school period.
    5. In the case of a program in which student progress is
 measured only in clock hours, all occurrences of “calendar
 days” in subsections 2 and 3 4 shall be replaced with
 “scheduled clock hours”.
    5. a. 6. A student who does not receive a tuition refund
 up to the full refund of tuition charges due to the effect
 of an interstate reciprocity agreement under section 261G.4,
 subsection 1, may apply to the attorney general for a refund
 in a sum that represents the difference between any tuition
 refund received from the school and the full refund of tuition
 charges. For purposes of this subsection, “full refund of
 tuition charges” means the monetary sum of the refund for which
 the student would be eligible pursuant to the application of
 this section.
    b. 7. A tuition refund fund is created as a separate fund
 in the office of the treasurer of state under the control
 of the attorney general. Moneys credited to the fund shall
 include amounts appropriated by the general assembly and moneys
 received as a result of a court order, judgment, or settlement
 which specifically directs that moneys be used for the purpose
 of providing student tu