A-3744

Sponsored by: Assemblyman WAYNE P. DEANGELO District 14 (Mercer and Middlesex)

STATEMENT

This bill establishes a restricted, nonlapsing, revolving the Proprietary Institutions Student Tuition Protection Fund in the Department of Labor and Workforce Development. The purpose of the fund is to provide for a system of equitable refunds in the event of the closure of a private career school.

Under the provisions of the bill, a private career school which conducts business and maintains facilities within the State would be required to register with the Commissioner of Labor and Workforce Development and to receive a certificate of approval. The school would also be required to obtain a performance bond in an amount determined by the commissioner and made payable to the department.

Each school is to pay to the State Treasurer for deposit annually in the fund an amount set by the commissioner for each student enrolled in the school. Once the balance of the fund reaches $2,500,000, and upon notification from the commissioner, contributions to the fund will cease but will resume if the fund is reduced to an amount less than $2,000,000. The bill establishes procedures to be followed for payments from the fund in the event that a private career school ceases operation but also stipulates that approved claims for refunds shall be paid from an institution’s performance bond whenever possible. When the bond is insufficient to pay approved claims, a refund check shall be issued from the fund and the recipient of the refund shall assign all rights to the State of any action against the institution or its owner for tuition amounts reimbursed.

The bill sets the parameters for which a student enrolled in a private career school which ceases to operate, becomes insolvent, or otherwise ceases all instructional activity, to be eligible for a refund of any tuition which the school has not previously refunded to the student.

Furthermore, the bill requires the department, in consultation with the Higher Education Student Assistance Authority, to identify all students who are pursuing a course or instruction who have paid all or part of the tuition with State grant or scholarship funds. Under the bill, any refund to which the student is entitled shall be made directly to the authority, except that any refund amount exceeding the amount of State grant or scholarship funds must be distributed directly to the student.

The bill also requires that a student who receives a refund or on whose behalf a refund is paid, the student must assign all rights to the State of any action against the institution or its owner for tuition amounts reimbursed. Upon the assignment, under the bill, the State may take appropriate action against the school or its owner in order to reimburse the fund for any expenses or claims that are paid from the fund and to reimburse any expenses the State incurs in undertaking the action.