(Sacramento, CA) – Following a series of private for-profit educational institutions closing down, the Assembly Higher Education and Veterans Affairs Committees held a hearing last July to examine ways that California could better protect veterans students, and in particular, students affected by their academic institution closing down. Among other findings, the hearing demonstrated the weakness in the State’s current policies intended to help students recover their economic losses caused by a closure, including tuition, fees, and nontransferable academic credits.
In order to address this lack of protection, Assemblymember Irwin (D-Thousand Oaks) has introduced AB 1916; a bill requiring for-profit schools to post a surety bond in an amount established by the Bureau for Private Postsecondary Education (BPPE). The bond would cover the amount of tuition and fees paid by students for an academic period. In the event of a closure, the BPPE would be authorized to make a demand on the bond and administer refunds to students who paid tuition.
“When for-profit schools are financially unstable, it puts students at risk,” Irwin said. “This bill ensures that these schools are accountable to the students who have already paid for their education in advance, often times making great sacrifices to do so.”
The explosive growth of for-profit campuses in the last decade has created unique challenges for state and federal regulators overseeing these institutions. Many of these for-profit schools provide access where there are gaps in our higher education system, including vocational training and flexibility for non-traditional students. According to the BPPE, there are nearly 1000 private postsecondary institutions operating in California, many of which are relatively small and vulnerable to financial instability. There are 31 BPPE-recognized institutions in Ventura County alone. Many of these institutions are reliant on revenue from public financial aid, and are at risk of closure if this revenue is interrupted, which led to the closure of Corinthian Colleges in 2015.
“When a for-profit school goes under in California, the burden is on students and taxpayers to foot the bill, not the institution itself,” said Assemblymember Irwin. “Our findings show that when left unchecked, many of these for-profit campuses employ aggressive recruitment tactics; targeting veterans and working professionals looking to earn a degree while working full time. These students deserve the financial protection that AB 1916 will provide.”
According to the National Consumer Law Center, 40 states now require for-profit schools to post a surety bond as collateral in the event of a closure. These bonds protect students and serve as a disincentive to close before the end of the academic term. Unlike other states, California’s students pay into the Student Tuition Recovery Fund (STRF), a self-insurance fund that reimburses tuition in the event of a closure. AB 1916 requires that the surety bond posted by the institution reimburses students before the STRF is utilized.
Assemblymember Jacqui Irwin represents California’s 44th Assembly District, which includes the communities of Camarillo, Casa Conejo, Channel Islands Beach, El Rio, Lake Sherwood, Moorpark, Oak Park, Oxnard, Port Hueneme, Santa Rosa Valley, Thousand Oaks, and Westlake Village.