Print Friendly HOUSE BILL NO. 593
– Propietary school/registratn reqmnt
HOUSE BILL NO. 593
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PROPRIETARY SCHOOLS - Repeals, adds to and amends existing law relating to
regulation of proprietary schools to revise general powers and duties of
the State Board of Education; to provide definitions and to revise
definitions; to revise registration requirements of postsecondary
educational institutions; to provide for registration of degree granting
proprietary schools; to revise registration requirements of proprietary
schools; to provide for an agent's certificate of identification; to delete
reference to the word proprietary and to revise the purchase statement; to
revise requirements and conditions for recovery from the Student Tuition
Recovery Account; and to revise assessment mechanisms for the Student
Tuition Recovery Account.
03/04 House intro - 1st rdg - to printing
03/05 Rpt prt - to Educ
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-ninth Legislature Second Regular Session - 2008
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 593
BY EDUCATION COMMITTEE
1 AN ACT
2 RELATING TO REGULATION OF PROPRIETARY SCHOOLS; AMENDING SECTION 33-107, IDAHO
3 CODE, TO REVISE GENERAL POWERS AND DUTIES OF THE STATE BOARD OF EDUCATION;
4 AMENDING SECTION 33-2401, IDAHO CODE, TO PROVIDE DEFINITIONS AND TO REVISE
5 DEFINITIONS; AMENDING SECTION 33-2402, IDAHO CODE, TO REVISE REGISTRATION
6 REQUIREMENTS OF POSTSECONDARY EDUCATIONAL INSTITUTIONS; AMENDING CHAPTER
7 24, TITLE 33, IDAHO CODE, BY THE ADDITION OF A NEW SECTION 33-2403, IDAHO
8 CODE, TO PROVIDE FOR REGISTRATION OF DEGREE GRANTING PROPRIETARY SCHOOLS;
9 AMENDING SECTION 33-2403, IDAHO CODE, TO REDESIGNATE THE SECTION AND TO
10 REVISE REGISTRATION REQUIREMENTS OF PROPRIETARY SCHOOLS; AMENDING SECTION
11 33-2404, IDAHO CODE, TO REDESIGNATE THE SECTION, TO PROVIDE FOR AN AGENT'S
12 CERTIFICATE OF IDENTIFICATION, TO PROVIDE REQUIREMENTS FOR THE CERTIFICATE
13 OF IDENTIFICATION AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION
14 33-2405, IDAHO CODE, TO REDESIGNATE THE SECTION, TO DELETE REFERENCE TO
15 THE WORD "PROPRIETARY" AND TO REVISE THE PURCHASE STATEMENT; REPEALING
16 SECTION 33-2406, IDAHO CODE, RELATING TO A SURETY BOND; AMENDING SECTION
17 33-2407, IDAHO CODE, TO REVISE REQUIREMENTS FOR AND CONDITIONS FOR RECOV-
18 ERY FROM THE STUDENT TUITION RECOVERY ACCOUNT; AND AMENDING SECTION
19 33-2408, IDAHO CODE, TO REVISE ASSESSMENT MECHANISMS FOR THE STUDENT
20 TUITION RECOVERY ACCOUNT.
21 Be It Enacted by the Legislature of the State of Idaho:
22 SECTION 1. That Section 33-107, Idaho Code, be, and the same is hereby
23 amended to read as follows:
24 33-107. GENERAL POWERS AND DUTIES OF THE STATE BOARD. The state board
25 shall have power to:
26 (1) Perform all duties prescribed for it by the school laws of the state;
27 (2) Acquire, hold and dispose of title, rights and interests in real and
28 personal property;
29 (3) Have general supervision, through its executive departments and offi-
30 ces, of all entities of public education supported in whole or in part by
31 state funds;
32 (4) Delegate to its executive secretary, to its executive officer, or to
33 such other administrators as the board may appoint, such powers as said offi-
34 cers require to carry out the policies, orders and directives of the board;
35 (5) Through its executive departments and offices:
36 (a) Enforce the school laws of the state,
37 (b) Study the educational conditions and needs of the state and recommend
38 to the legislature needed changes in existing laws or additional legisla-
40 (6) In addition to the powers conferred by chapter 24, title 33, Idaho
42 (a) Maintain a rRegister of postsecondary educational institutions
43 approved to provide programs and a course or courses of study that lead to
1 a degree or which provide, offer and sell or confer degrees in accordance
2 with the procedures established in chapter 24, title 33, Idaho Code,
3 (b) Determine whether to accept academic credit at public postsecondary
4 educational institutions in Idaho. Academic credit shall not be trans-
5 ferred into any Idaho public postsecondary institution from a post-
6 secondary educational institution or other entity registered as such that
7 is not accredited by an organization recognized by the board,
8 (c) Register degree granting proprietary schools recognized to provide a
9 course or courses of study that lead to a degree, or which provide, offer
10 or confer degrees, in accordance with the procedures established in chap-
11 ter 24, title 33, Idaho Code,
12 (d) Maintain a rRegister of proprietary schools approved to that conduct,
13 provide , or offer or sell a course or courses of study in accordance with
14 the procedures established in chapter 24, title 33, Idaho Code;
15 (7) Prescribe the courses and programs of study to be offered at the pub-
16 lic institutions of higher education, after consultation with the presidents
17 of the affected institutions;
18 (8) Approve new courses and programs of study to be offered at community
19 colleges organized pursuant to chapter 21, title 33, Idaho Code, when the
20 courses or programs of study are academic in nature and the credits derived
21 therefrom are intended to be transferable to other state institutions of
22 higher education for credit toward a baccalaureate degree, and when the
23 courses or programs of study have been authorized by the board of trustees of
24 the community college.
25 SECTION 2. That Section 33-2401, Idaho Code, be, and the same is hereby
26 amended to read as follows:
27 33-2401. DEFINITIONS. For the purposes of chapter 24, title 33, Idaho
28 Code, the following words have the following meanings:
29 (1) "Accredited" means that a postsecondary educational institution has
30 been recognized or approved as meeting the standards established by an accred-
31 iting agency recognized by the board.
32 (2) "Agent" means any individual within the state of Idaho who solicits
33 students for or on behalf of a proprietary school.
34 (3) "Agent's permit" means a nontransferable written document issued to
35 an agent by the board.
36 (2) "Agent's certificate of identification" means a nontransferable writ-
37 ten document issued to an agent by the school that the agent represents.
38 (3) "Approved" means that a postsecondary educational institution or a
39 degree granting proprietary school meets the standards established by an
40 accrediting agency recognized by the board.
41 (4) "Board" means the state board of education.
42 (5) "Course" means instruction imparted in a series of lessons or class
43 meetings to meet an educational objective.
44 (6) "Course or courses of study" means either a single course or a set of
45 related courses for which a student enrolls, either for academic credit or
47 (7) "Degree" means any academic, vocational, professional-technical or
48 honorary title or designation, mark, appellation, series of letters, numbers
49 or words such as, but not limited to, "bachelor's," "master's," "doctorate,"
50 or "fellow," which signifies, purports, or is generally taken to signify sat-
51 isfactory completion of the requirements of an academic, vocational,
52 professional-technical, educational or professional program of study beyond
53 the secondary school level or for a recognized title conferred for meritorious
1 recognition and an associate of arts or associate of science degree awarded by
2 a community college or other public or private postsecondary educational
3 institution or other entity which may be used for any purpose whatsoever.
4 (8) "Degree granting proprietary school" means an individual, or educa-
5 tional, business or other entity that operates for profit, whether legally
6 constituted or otherwise, and which maintains a presence within, or which
7 operates or purports to operate from a location within, the state of Idaho and
8 which provides a course or courses of study that lead to a degree or which
9 provides, offers or confers degrees.
10 (9) "Postsecondary educational institution" means an individual, or edu-
11 cational, business or other entity, whether legally constituted or otherwise a
12 regionally accredited institution or a public or other nonprofit entity, which
13 maintains a presence within, or which operates or purports to operate , from a
14 location within, the state of Idaho , and which provides a course or courses
15 or programs of study that lead to a degree, or which provides, offers or sells
16 confers degrees.
17 ( 910) "Proprietary school" means an individual, or educational, business
18 or other entity that operates for profit, whether legally constituted or
19 otherwise, and which maintains a presence within, or which operates or pur-
20 ports to operate , from a location within, the state of Idaho and which con-
21 ducts, provides , or offers or sells a course or courses of study, but which
22 does not provide , or offer or sell degrees.
23 (11) "Recognized" means that a degree granting proprietary school meets
24 the standards established by an accrediting agency which is recognized by
25 either the United States department of education or the council for higher
26 education accreditation.
27 (12) "Regionally accredited institution" means a postsecondary educational
28 institution that has been accredited by any of the following regional accredi-
29 tation organizations:
30 (a) Middle states association of schools and colleges (MSA), commission
31 on higher education.
32 (b) New england association of schools and colleges, commission on insti-
33 tutions of higher education (NEASC-CIHE).
34 (c) North central association of colleges and schools, the higher learn-
35 ing commission (NCA-HLC).
36 (d) Northwest commission on colleges and universities (NWCCU).
37 (e) Southern association of colleges and schools (SACS), commission on
39 (f) Western association of schools and colleges, accrediting commission
40 for senior colleges and universities (WASC-ACSCU).
41 (13) "School" means either a degree granting proprietary school or a pro-
42 prietary school.
43 SECTION 3. That Section 33-2402, Idaho Code, be, and the same is hereby
44 amended to read as follows:
45 33-2402. REGISTRATION OF POSTSECONDARY EDUCATIONAL INSTITUTIONS. (1)
46 Unless exempted as provided herein, each postsecondary educational institution
47 which maintains a presence within the state of Idaho, or which operates or
48 purports to operate from a location within the state of Idaho, shall register
49 annually with, be approved by, and hold a valid certificate of registration
50 issued by the board. A public postsecondary educational institution or agency
51 supported primarily by taxation from either the state of Idaho or a local
52 source in Idaho shall not be required to register under this section. The
53 board may exempt a nonprofit other postsecondary educational institutions from
1 the registration requirement in accordance with standards and criteria estab-
2 lished in rule by the board. The board may permit a postsecondary educational
3 institution required to register under this section to instead register as a
4 proprietary school under section 33-2403, Idaho Code, in accordance with stan-
5 dards and criteria established in rule by the board.
6 (2) The board shall prescribe by rule the procedure for registration,
7 which shall include, but is not limited to, a description of each degree, and
8 the course or program courses of study, for academic credit or otherwise, that
9 a postsecondary educational institution intends to conduct, provide, offer. or
10 sell. Such rule shall also prescribe the standards and criteria to be utilized
11 by the board for recognition of approved accreditation organizations.
12 (3) The board may deny the registration of a postsecondary educational
13 institution that does not meet accreditation requirements or other standards
14 and criteria established in rule by the board. The administrative procedure
15 act, chapter 52, title 67, Idaho Code, shall apply to any denial of registra-
16 tion under this section.
17 (4) The board shall assess an annual registration fee on each post-
18 secondary educational institution required to be registered under this section
19 based on the respective degrees, courses or programs that each such post-
20 secondary educational institution intends to conduct, provide, offer or sell,
21 not to exceed one hundred dollars ($100) for each degree, course or program as
22 established in rule by the board. Such annual registration fee shall be col-
23 lected by the board and shall be dedicated for use by the board in connection
24 with its responsibilities under this chapter.
25 SECTION 4. That Chapter 24, Title 33, Idaho Code, be, and the same is
26 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
27 ignated as Section 33-2403, Idaho Code, and to read as follows:
28 33-2403. REGISTRATION OF DEGREE GRANTING PROPRIETARY SCHOOLS. (1) Unless
29 exempted as provided herein, each degree granting proprietary school which
30 maintains a presence within the state of Idaho, or which operates or purports
31 to operate from a location within the state of Idaho, shall register annually
32 with, be recognized by, and hold a valid certificate of registration issued by
33 the board or its designee. The board may permit a degree granting proprietary
34 school required to register under this section to instead register as a post-
35 secondary educational institution under section 33-2402, Idaho Code, in accor-
36 dance with the standards and criteria established in rule by the board.
37 (2) The board shall prescribe by rule the same procedure for registra-
38 tion, which shall include, but is not limited to, a description of each
39 degree, and the course or courses of study, for academic credit or otherwise,
40 that a degree granting proprietary school intends to offer. Such rule shall
41 also prescribe the standards and criteria to be utilized by the board in rec-
42 ognizing existing accreditation organizations.
43 (3) The board or its designee may deny the registration of a degree
44 granting proprietary school that does not meet accreditation requirements or
45 other standards and criteria established in rule by the board. The administra-
46 tive procedure act, chapter 52, title 67, Idaho Code, shall apply to any
47 denial of registration under this section.
48 (4) The board shall assess an annual registration fee on each degree
49 granting proprietary school required to be registered under this section based
50 on the gross tuition generated by the school in the previous fiscal year, or
51 the anticipated tuition for a school that is just starting, as established in
52 rule by the board. Such annual registration fee shall be collected by the
53 board or its designee and shall be designated for use by the board or its des-
1 ignee in connection with its responsibilities under this chapter.
2 SECTION 5. That Section 33-2403, Idaho Code, be, and the same is hereby
3 amended to read as follows:
4 33-240 34. REGISTRATION OF PROPRIETARY SCHOOLS. (1) Unless exempted as
5 provided in subsection (4) of this section, each proprietary school which
6 maintains a presence within the state of Idaho, or which operates or purports
7 to operate from a location within the state of Idaho, shall register annually
8 with and hold a valid certificate of registration issued by the board or its
10 (2) The board shall prescribe by rule the procedure for registration,
11 which shall include, but is not limited to, a description of each the course
12 or program, courses of study for academic credit or otherwise, that a propri-
13 etary school intends to conduct, provide , or offer. or sell.
14 (3) The board may deny the registration of a proprietary school that does
15 not meet the standards or criteria established in rule by the board. The
16 administrative procedure act, chapter 52, title 67, Idaho Code, shall apply to
17 any denial of registration under this section.
18 (4) The following individuals or entities are specifically exempt from
19 the registration provisions required by this section:
20 (a) An individual or entity that offers instruction or training solely
21 avocational or recreational in nature, as determined by the board.
22 (b) An individual or entity that offers courses recognized by the board
23 which comply in whole or in part with the compulsory education law.
24 (c) An individual or entity that offers a course or courses of study
25 sponsored by an employer for the training and preparation of its own
26 employees, and for which no tuition fee is charged to the student.
27 (d) An individual or entity which is otherwise regulated, licensed or
28 registered with another state agency pursuant to title 54, Idaho Code.
29 These agencies shall provide a list of regulated, licensed or registered
30 schools to the board annually.
31 (e) Aviation school or instructors approved by and under the supervision
32 of the federal aviation administration.
33 (f) An individual or entity that offers intensive review courses designed
34 to prepare students for certified public accountancy tests, public accoun-
35 tancy tests, law school aptitude tests, bar examinations or medical col-
36 lege admissions tests, or similar instruction for test preparation.
37 (g) An individual or entity offering only workshops or seminars lasting
38 no longer than three (3) calendar days.
39 (h) A parochial or denominational institution providing instruction or
40 training relating solely to religion and for which degrees are not
42 (i) An individual or entity that offers postsecondary credit through a
43 consortium of public and private colleges and universities under the aus-
44 pices of the western governors.
45 (5) The board shall assess an annual registration fee on each proprietary
46 school required to be registered under this section. Such annual registration
47 fee shall be composed of a fixed portion in an amount not to exceed one hun-
48 dred dollars ($100) for each proprietary school, and a variable portion based
49 on the respective course or courses of study that each such proprietary school
50 intends to conduct, provide, offer or sell, not to exceed one hundred dollars
51 ($100) for each course or courses of study based on the gross tuition gener-
52 ated by the school in the previous year, or the anticipated tuition for a
53 school that is just starting, as established in rule by the board. Such annual
1 registration fee shall be collected by the board or its designee, and shall be
2 dedicated for use by the board in connection with its responsibilities under
3 this chapter.
4 SECTION 6. That Section 33-2404, Idaho Code, be, and the same is hereby
5 amended to read as follows:
6 33-240 45. AGENT'S PERMIT CERTIFICATE OF IDENTIFICATION. (1) No individual
7 may act as an agent of a proprietary school required to be registered under
8 the provisions of this chapter unless that individual holds a valid agent's
9 permit certificate of identification issued by the board and maintains at all
10 times a surety bond as described in section 33-2406, Idaho Code school that
11 the agent represents.
12 The application for an agent's permit shall be furnished by the board and
13 shall include the following:
14 (1) A statement signed by the applicant that he or she has read the pro-
15 visions of this chapter and the rules promulgated pursuant thereto.
16 (2) An annual fee for each permit not to exceed fifty dollars ($50.00).
17 The board shall set by rule the amount of such annual agent's permit fee.
18 (2) All agent's permits shall be renewed annually upon reapplication and
19 proper qualifications Each agent's certificate of identification shall be
20 reissued annually by the school that the agent represents on the first day of
21 July. If courses are solicited or sold by more than one (1) agent, a separate
22 permit certificate of identification is required for each agent.
23 (3) The agent's permit certificate of identification shall consist of a
24 pocket card and shall bear:
25 (a) T the name and address of the agent ,;
26 (b) T the name and address of the proprietary school , and that the agent
28 (c) A a statement that the bearer is an authorized agent of the propri-
29 etary school, and may solicit and sell courses students for the propri-
30 etary school.
31 (4) The agent shall surrender the agent's permit certificate of identifi-
32 cation to the proprietary school upon termination of employment.
33 (5) An agent representing more than one (1) proprietary school shall
34 obtain a separate agent's permit certificate of identification for each pro-
35 prietary school represented.
36 (6) No individual shall be issued an agent's permit Prior to issuing the
37 agent a certificate of identification, the school shall complete a criminal
38 history check that includes the state bureau of identification, federal bureau
39 of investigation and statewide sex offender registry and other guidelines
40 established in rule by the board for every agent having direct contact with
41 minors. No agent shall be issued an agent's certificate of identification if
42 he or she has been previously found in any judicial or administrative proceed-
43 ing to have violated this chapter.
44 (7) An agent's permit certificate of identification shall be valid for
45 the state's fiscal year in which it is issued, unless sooner revoked or sus-
46 pended by the board for fraud or misrepresentation in connection with the
47 solicitation for the sale of any course of study, for any violation of the
48 provisions of this chapter or rules promulgated pursuant to this chapter, or
49 for the existence of any condition in respect to the agent or the proprietary
50 school he or she represents, which if in existence at the time the agent's
51 permit was issued, would have been grounds for denial for the agent's permit
53 (8) The agent shall carry the agent's permit certificate of identifica-
1 tion with him or her for identification purposes when engaged in the solicita-
2 tion for the sale and the selling of courses of study of students away from
3 the premises of the proprietary school, and shall produce the agent's permit
4 certificate of identification for inspection upon request.
5 The administrative procedure act, chapter 52, title 67, Idaho Code, shall
6 apply to any denial of an agent's permit or proceeding to revoke or suspend an
7 agent's permit of the board conducted pursuant to this section.
8 (9) The issuance of an agent's permit certificate of identification pur-
9 suant to this section shall not be interpreted as, and it shall be unlawful
10 for any individual holding any agent's permit certificate of identification to
11 expressly or impliedly represent by any means whatever whatsoever, that the
12 board has made any evaluation, recognition, accreditation or endorsement of
13 any proprietary school or of any course of study being offered for sale by the
14 agent of any such proprietary school. Any oral or written statement, adver-
15 tisement or solicitation by any proprietary school or agent which refers to
16 the board shall state:
17 "(Name of school) is registered with the State Board of Education in
18 accordance with Section 33-2403 or 33-2404, Idaho Code."
19 (10) It shall be unlawful for any agent holding an agent's permit certifi-
20 cate of identification under the provisions of this section to expressly or
21 impliedly represent, by any means whatsoever, that the issuance of the agent's
22 permit certificate of identification constitutes an assurance by the board
23 that any course of study being offered for sale by the agent or proprietary
24 school will provide and require of the student a course of education or train-
25 ing necessary to reach a professional, educational, or vocational objective,
26 or will result in employment or personal earning for the student, or that the
27 board has made any evaluation, recognition, accreditation, or endorsement of
28 any course of study being offered for sale by the agent or proprietary school.
29 (11) No agent shall make any untrue or misleading statement or engage in
30 sales, collection, credit, or other practices of any type that are illegal,
31 false, deceptive, misleading or unfair.
32 (12) The board school shall maintain records for five (5) years of each
33 application for an agent's permit, each bond certificate of identification,
34 and each issuance, denial, termination, suspension and revocation of an
35 agent's permit certificate of identification.
36 (13) The school shall provide as part of the annual registration process
37 the names and results of the criminal history check for each agent to whom it
38 has issued a certificate of identification. The criminal history check will be
39 valid for five (5) years.
40 (14) The board or a student may bring an action pursuant to the Idaho
41 rules of civil procedure for an agent's violation of the provisions of this
42 chapter or any rule promulgated pursuant to this chapter, or any fraud or mis-
43 representation. The court shall determine which party is the "prevailing
44 party" and the prevailing party shall be entitled to the recovery of damages,
45 reasonable attorney's fees and costs both at trial and on appeal.
46 (15) Additionally, aAny agent who violates the provisions of this section
47 is also guilty of a misdemeanor punishable by imprisonment in the county jail
48 not exceeding six (6) months, or by a fine not exceeding five thousand dollars
49 ($5,000), or both.
50 SECTION 7. That Section 33-2405, Idaho Code, be, and the same is hereby
51 amended to read as follows:
52 33-240 56. PURCHASE STATEMENT. At the time of depositing any moneys to
53 purchase the product of any proprietary school, the proprietary school shall
1 require the student to execute the following statement on an appropriate form
2 which shall be maintained on record by the proprietary school in the individ-
3 ual student's file:
4 "I understand that (Name of proprietary school) is registered with the
5 State Board of Education in accordance with Section 33-2403 or 33-2404,
6 Idaho Code. I also understand that the State Board of Education has not
7 accredited or endorsed any course of study being offered by (Name of pro-
8 prietary school), and that these courses will may not be accepted for
9 transfer into any Idaho public postsecondary institution."
10 SECTION 8. That Section 33-2406, Idaho Code, be, and the same is hereby
12 SECTION 9. That Section 33-2407, Idaho Code, be, and the same is hereby
13 amended to read as follows:
14 33-2407. STUDENT TUITION RECOVERY ACCOUNT -- CONDITIONS FOR RECOVERY. (1)
15 There is hereby created in the state treasury the student tuition recovery
16 account to be administered by the board or its designee for the purpose of
17 relieving or mitigating pecuniary losses suffered by any student of a propri-
18 etary school registered under the provisions of this chapter and who meets
19 either of the following conditions:
20 (a) The student was enrolled in a proprietary school prior to that
21 school's closure, had prepaid tuition, and suffered loss as a result of:
22 (i) The closure of the proprietary school; or
23 (ii) The proprietary school's breach or anticipatory breach of the
24 agreement for the course or courses of study used for the indemnifi-
25 cation of any student for any loss suffered as a result of the occur-
26 rence, during the period coverage, of any fraud or misrepresentation
27 used in connection with the solicitation for enrollment in a course
28 of study and, if the student was enrolled in a school prior to that
29 school's closure, had prepaid tuition and suffered a loss as a result
31 1. The closure of the school; or
32 2. The school's breach of the agreement for the course or
33 courses of study.
34 For the purpose of this section, "closure" includes closure of a branch or
35 satellite campus, the termination of either the correspondence or residence
36 portion of a home study or correspondence course, and the termination of a
37 course of study for some or all of the students enrolled in the course before
38 the time the students have satisfactorily completed the program, or before a
39 student who has been continuously enrolled in a course of study had been per-
40 mitted to complete all the educational services and classes that comprise the
42 (b) The student obtained a judgment against the proprietary school for
43 any violation of the provisions of this chapter or rules promulgated pur-
44 suant to this chapter, and the student certifies that the judgment cannot
45 be collected after diligent collection efforts.
46 (2) Payments from the account to any student shall be subject to rules
47 and conditions as the board shall prescribe .:
48 (a) The proprietary school shall provide to the board or its designee at
49 the time of the proprietary school's closure the names and addresses of
50 persons who were students of the proprietary school within sixty (60) days
51 prior to its closure, and shall notify these students within thirty (30)
52 days prior to the proprietary school's closure, of their rights under the
1 student tuition recovery account and how to apply for payment. Failure to
2 do so shall result in a civil penalty not exceeding one thousand dollars
3 ($1,000) which may be assessed by the state board and shall be deposited
4 in the general fund.
5 (b) If the proprietary school fails to comply with the provisions of this
6 section, the board or its designee shall attempt to obtain the names and
7 addresses of these students and shall notify them, within ninety (90) days
8 of the proprietary school's closure, of their rights under the student
9 tuition recovery account and how to apply for payment. The board or its
10 designee may require the proprietary school to reimburse the board or its
11 designee for all reasonable costs and expenses incurred in notifying stu-
13 (c) The board or its designee shall develop a form fully explaining a
14 student's rights, which shall be used by the proprietary school or the
15 board or its designee to comply with the notice requirement. The form
16 shall include or be accompanied by a claim application form and an expla-
17 nation of how to complete the application.
18 (d) Students filing for payment from the student tuition recovery account
19 as a result of the closure of a proprietary school must submit the claim
20 within one (1) year from the proprietary school's or board's service of
21 notice on the student or within two (2) years of the closure of the pro-
22 prietary school, whichever is earlier.
23 (3) Students entitled to payment shall file with the board or its desig-
24 nee a verified application including, but not limited to each of the follow-
26 (a) The student's name, address, telephone number and social security
28 (b) If any portion of the tuition was paid from the proceeds of a loan,
29 the name of the lender and any state or federal agency that guaranteed the
31 (c) The amount of the prepaid tuition.
32 (d) The dates the student started and ceased attending the proprietary
34 (e) A description of the reasons the student ceased attending the propri-
35 etary school.
36 (f) If the student ceased attending because of a breach or anticipatory
37 breach, a statement describing in detail the nature of the economic loss
39 (4) Students entitled to payment based on a judgment shall file with the
40 board or its designee a verified application indicating the student's name,
41 address, telephone number and student identification, the amount of the judg-
42 ment obtained against the proprietary school, a statement that the judgment
43 cannot be collected, and a description of the efforts attempted to enforce the
44 judgment. The application shall be accompanied by a certified copy of the
45 judgment and any other documents indicating the student's efforts made to
46 enforce the judgment. The application shall be filed with the board or its
47 designee within two (2) years after the date upon which the judgment became
49 (5) If the board or its designee pays the claim, the amount of the pay-
50 ment shall be the total amount of the student's economic loss, although the
51 amount of the payment shall in no event exceed the amount of the student's
52 tuition and cost of equipment and materials related to the course of study
53 plus interest on all student loans used to pay tuition, equipment and mate-
54 rials. Upon payment of the claim, the board or its designee shall be subro-
55 gated to all of the student's rights against the proprietary school to the
1 extent of the amount of the payment. If the board or its designee receives
2 several claims from students, the payment of which cannot be totally covered
3 by the student tuition recovery account, the claims shall receive a pro rata
4 share of the account.
5 (6) If the board or its designee denies a claim, the board or its desig-
6 nee shall notify the student of the denial and of the student's right to
7 request a hearing within thirty (30) days. The hearing shall be held pursuant
8 to the administrative procedure act, chapter 52, title 67, Idaho Code. If a
9 hearing is not requested the board's or its designee's decision shall be
11 (7) It is the intent of the legislature that, when a student is enrolled
12 in a proprietary school that closes prior to the completion of the student's
13 program, the student shall have the option for a teach-out at another propri-
14 etary school with a comparable course of study. The board or its designee
15 shall seek to promote teach-out opportunities whenever possible, with the stu-
16 dent to be informed by the board or its designee that he or she has the option
17 of either payment from the account or a teach-out which shall be funded from
18 the account.
19 (8) No liability accrues to the state of Idaho from claims made against
20 the student tuition recovery account.
21 SECTION 10. That Section 33-2408, Idaho Code, be, and the same is hereby
22 amended to read as follows:
23 33-2408. ASSESSMENT FOR STUDENT TUITION RECOVERY ACCOUNT. The board or
24 its designee shall assess each registered proprietary school which collects
25 any moneys in advance of rendering services, an amount equal to one-tenth of
26 one percent (.1%) of the total course cost for each student enrolled. The
27 assessment per student shall not be less than one dollar ($1.00), and not more
28 than four dollars ($4.00). In addition, for each student who prepays a propri-
29 etary school an amount in excess of four thousand dollars ($4,000), the board
30 shall assess the proprietary school one-half of one percent (.5%) of the pre-
31 paid amount which exceeds four thousand dollars ($4,000). The board shall pro-
32 mulgate rules regarding collection and administration of the student tuition
34 At any time that the balance is in excess of fifty thousand dollars
35 ($50,000), the board shall suspend collection, except as provided in the event
36 of a newly registered proprietary school or the transfer of ownership of a
37 proprietary school as provided in this section, until such time as the balance
38 is again below fifty thousand dollars ($50,000).
39 Newly registered proprietary schools shall, regardless of the balance in
40 the account, contribute the assessment set forth in this section for two (2)
41 consecutive years.
42 If fifty-one percent (51%) or more of the ownership interest in a propri-
43 etary school is conveyed through sale or other means into different ownership,
44 the new owner shall commence contributions under the provisions applying to a
45 new applicant.
46 No more than ten percent (10%) per fiscal year shall be used for the
47 administration of the tuition recovery program. The interest earned on money
48 in the account shall be credited to the account.
49 In the event of a closure of a proprietary school registered under the
50 provisions of this chapter, any assessments which have been made against those
51 proprietary schools, but have not been paid into the account, shall be recov-
52 ered to the extent feasible, or any payments from the student tuition recovery
53 account made to students on behalf of any proprietary school may be recovered
1 from that proprietary school by appropriate action taken by the board. The
2 moneys so deposited in the student tuition recovery account shall be exempt
3 from execution and shall not be the subject of litigation or liability on the
4 part of creditors of those proprietary schools or students established in rule
5 by the board that utilizes a percentage of the gross tuition for the previous
6 year, or anticipated tuition for a school in its first year of operation. The
7 method of payment shall be in the form of a surety bond which is to be issued
8 by an insurer duly authorized to do business in this state in favor of the
9 state of Idaho for the indemnification of any student for any loss suffered as
10 a result of the occurrence, during the period of coverage, of closure of the
11 school or any fraud or misrepresentation used in connection with the solicita-
12 tion for enrollment in a course of study. The term of the bond shall extend
13 over the period of registration with the board or its designee. The bond shall
14 be supplied by the school. The bond shall provide for liability in the amount
15 established in rule by the board to fund the student tuition recovery account.
16 The board or its designee may submit a demand upon the surety on the bond
17 on behalf of a student or students when it determines that a loss has occurred
18 due to closure of the school or any fraud or misrepresentation used in connec-
19 tion with the solicitation for enrollment in a course of study or as a result
20 of any violation of the provisions of this chapter or the rules promulgated
21 pursuant to this chapter. Neither the principal nor the surety on the bond may
22 terminate the coverage of the bond, except upon giving one hundred twenty
23 (120) days' prior written notice to the board or its designee.
STATEMENT OF PURPOSE
This legislation updates the requirements for post secondary
educational institutions and proprietary schools registration and
oversight. It also provides for a different process for funding a
tuition recovery fund that would be used to protect the
consumer who uses the training provided by the proprietary
schools in Idaho. It provides for personnel to follow-up and
provide the oversight for these processes, since currently there
is virtually no oversight or follow-up with the current process.
This legislation may effect the amount paid for registration by
post secondary educational institutions, degree granting
proprietary schools, and proprietary schools. Administration of
this section of Idaho Code will require an estimated $154,100
from the state General Fund and 2.0 Full Time Employee (FTE)
positions. Not amending this section of Idaho Code will not
reduce the cost estimated for administration
Name: Dr. Mike Rush, State Board of Education
Phone: (2080 334-3216
STATEMENT OF PURPOSE/FISCAL NOTE H 593