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

This bill amends Code provisions relating to the registration of postsecondary schools with the college student aid commission. POSTSECONDARY EDUCATION FUND. Currently, the moneys in the postsecondary education fund must be used by the commission for the purposes of Code chapters 261B (registration of postsecondary schools) and 261G (postsecondary distance education —– interstate reciprocity). The bill adds that moneys in the fund may be used for purposes prescribed by rule by the commission, and to procure, evaluate, and store school records to establish the validity of claims against a school that fails to faithfully perform all contracts and agreements, pay institutional charges, support transitional activities, pay private education loan debt, and reimburse the Iowans who were enrolled and attended such schools. PROOF OF FINANCIAL RESPONSIBILITY. Currently, most persons maintaining or conducting any education course by classroom instruction or by correspondence or other delivery method, or soliciting the sale of such course in Iowa, must file with the commission a continuous corporate surety bond in the amount of $50,000. The bill provides that the bond may be in the amount of $50,000 or in a sum equivalent to percent of the total annual tuition, whichever amount is less. Under current law, the option to file an alternative sum of percent of total annual tuition is available only to barber schools and schools of cosmetology arts and sciences. Provisions relating to the commission’s ability to reduce a school’s performance bond, and limiting the aggregate liability of the surety for breaches of the conditions of a performance bond are stricken. “Letter of credit” is defined as a financial instrument subject to provisions of the uniform commercial code. Letters of credit must be issued by a state or federally chartered bank or credit union, be payable to the commission, be valid for at least one year from the date of issuance and subject to renewal as required by the commission, and allow the commission to draw one or more installments of the total letter of credit amount upon making the required presentations to the issuer. A school that files a continuous corporate surety bond of less than $50,000 must provide to the commission a notarized statement attesting to the total amount of tuition charged to students in the prior fiscal year. If a letter of credit is canceled, revoked, not renewed, or otherwise fails to be of full force and effect, the statutory provisions relating to the continuous corporate surety bond or letter of credit filed must be satisfied. EXEMPTIONS. Currently, a postsecondary school, unless the school meets certain exemptions, must register with the commission if a person compensated by the school conducts any portion of a course of instruction in this state or if the school otherwise has a presence in this state. Such schools must also, unless exempted, comply with provisions relating to advertising and selling of educational courses, evidence of financial responsibility, and contracts. Violation of such a provision is a serious misdemeanor punishable by confinement for no more than one year and a fine of at least $430 but not more than $2,560. Under the bill, colleges and universities authorized by a foreign country, private business schools accredited by the United States department of education or the council for higher education accreditation, and schools of nursing from outside of Iowa are not exempt from such requirements. TUITION REFUND POLICIES AND REQUIREMENTS —— PROPRIETARY POSTSECONDARY SCHOOLS. The definition of “postsecondary educational program” is modified to include but not be limited to other certifications or designations, regardless of whether the proprietary school awards the credential. If a student withdraws within the first two calendar weeks, the school must refund all tuition charges to the student. For a student who terminates from a program or course after the first two weeks, the school must make a pro rata refund of tuition charges for the program or course in an amount that is not less than 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. This is increased from the current pro rata amount of percent of the amount of tuition charged to the student multiplied by the formula set forth in statute. If a terminating student has completed percent or more of a school period, the school is not required to refund tuition charges to the student. The bill requires a proprietary school, including those offering instructional programs or courses under an interstate reciprocity agreement, to apply the refund policy to all students who attend on-campus classes or at instructional sites in Iowa and to all Iowa resident students who attend the school’s distance education programs. Under the bill, the Code section does not apply to personal vehicle driving education schools, postsecondary vocational schools that offer solely discrete continuing education courses, or to a for-profit school that offers solely programs for which the sum of tuition, fees, instructional materials, technology, and other items required for program completion is less than $3,000. Currently, a violation of the Code section is a simple misdemeanor, which is punishable by confinement for no more than days and a fine of at least $105 but not more than $855. DOCUMENTATION OF COMPLIANCE —— PROPRIETARY SCHOOLS. Currently, a proprietary school must submit documentation of compliance only if the commission, at its discretion, requires the school to do so. Under the bill, information relating to a proprietary school’s evidence of financial responsibility, refund policies, and disclosure of certain information, and relating to exemptions for certain schools, are public records. DISCLOSURE REQUIREMENTS —— PROPRIETARY SCHOOLS. The definition of “proprietary school” is amended to strike provisions relating to the amount of time the school offers a postsecondary educational program that leads to a credential. Provisions relating to the boards of barbering and cosmetology arts and sciences are also stricken. Schools under the bill must disclose the current total costs charged for the programs offered, but the requirement that the school provide an estimate of fees charged to a student by others based on the fees required if the student successfully completes the program is stricken. Also under the bill, the school must provide to the commission and, if applicable, to the student, information regarding the method by which the school collected and verified the validity of data, the applicable program name and the normal length of time required to complete the program, the total number of students in the cohort for which data is reported and the year in which the students began the program, and the percentages of students that successfully complete or terminate the program. The information must be provided by the most recent ending date for program completion in each of the school’s programs. However, a school that is initiating operation for the first time is exempt from data reporting until the school’s first biennial renewal application of the school’s evidence of financial responsibility. The Code section, as amended, does not apply to personal vehicle driving education schools, postsecondary vocational schools that offer solely discrete continuing education courses, or to a for-profit school that offers solely programs for which the sum of tuition, fees, instructional materials, technology, and other items required for program completion is less than $3,000.