BILL ANALYSIS Ó
AB 2296
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Date of Hearing: April 24, 2012
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 2296 (Block) - As Amended: April 9, 2012
SUBJECT : California Private Postsecondary Education Act of
2009.
SUMMARY : Requires institutions regulated by the Bureau for
Private Postsecondary Education (Bureau) to provide additional
disclosures to prospective students. Specifically, this bill :
1)Requires institutions regulated by the Bureau to disclose in
the school catalogue whether the institution is accredited by
an accrediting agency approved by the United States Department
of Education (USDE), and if an institution is unaccredited and
offering associate, baccalaureate, masters, or doctoral
degrees, requires disclosure of the known limitations of the
degree, including, but not limited to:
a) Whether the degree is recognized for licensure or
certification in California and other states;
b) Whether a graduate of the degree program will be
eligible to sit for the applicable licensure exam in
California and other states;
c) That a degree from an unaccredited institution is not
recognized for some employment positions, including, but
not necessarily limited to, positions with the State of
California; and,
d) That a student attending an unaccredited institution is
not eligible for federal student financial aid programs.
2)Makes various changes to the Student Performance Fact Sheet
(Fact Sheet), required to be disclosed to students prior to
enrollment, as follows:
a) Requires placement rates to be calculated for each
program that is designed to lead to, or the institution
makes a claim related to preparing students for a
recognized career, occupation, vocation, job, or job title;
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b) Requires the disclosure of salary data, regardless of if
the institution makes claims regarding salaries that may be
earned upon graduation;
c) Removes the requirement that institutions disclose
Employment Development Department wage data;
d) Requires each institution to provide the Bureau with
data that sufficiently identifies graduates of each
program, to enable the Bureau, in collaboration with other
agencies, to verify employment and wages for graduates;
and,
e) Requires, if the institution participates in federal
financial aid programs, to disclose the most recent
three-year cohort default rate reported by the USDE and the
percentage of enrolled students receiving federal student
loans.
3)Requires an institution that maintains an Internet Web site to
provide the school catalog, school performance fact sheet,
student brochures, a link to the Bureau's website, the most
recent annual report submitted to the Bureau, and information
concerning where students may access the Bureau's website
anywhere the institution identifies itself as being approved
by the Bureau.
4)Requires an institution to provide to the Bureau, in its
annual report, a list of the occupations for which each of the
institution's programs are intended to train students using
the United States Department of Labor Standard Occupational
Classification codes.
5)Establishes a new definition for "graduates employed in the
field" to mean graduates who are gainfully employed in a
position for at least 13 weeks and working at least 17.5 hours
per week in one of the occupations identified by the
institution. For occupations not requiring passage of a
licensure examination, employment must begin within six months
of graduation. For occupations that require passage of a
licensing examination, employment must begin within six months
after the announcement of the examination results for the
first examination available after a student completes a
program.
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6)Requires that the information used to substantiate Fact Sheet
data be documented and maintained by the institution for five
years and to include specific records of employment, such as
contact information for employers, job descriptions, starting
dates and hours worked, and contact information for graduates.
Requires this information to be made available to the Bureau
upon request.
7)Makes technical and conforming changes.
EXISTING LAW :
1)Establishes the Private Postsecondary Education Act (Act)
which, among its numerous provisions, requires numerous
program performance and student outcome data disclosures and
prohibits certain conduct on the part of private postsecondary
education institutions.
2)Establishes the Bureau within the Department of Consumer
Affairs (DCA) to provide oversight and regulation of private
postsecondary institutions.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author, "California has
a long and arduous history of attempted oversight of the private
postsecondary sector. During the late 1980s regulation of the
industry was carried out by a division within the State
Department of Education. During that time the state developed a
reputation as the 'diploma mill capital of the world.'
Currently, the Bureau is responsible for the oversight of the
approximately 1000 unaccredited schools operating in
California.
"Attending an institution that is unaccredited brings
significant risk to a student that might that, without
transparency, may go unnoticed. Many employers, especially in
the public sector, require degrees to be from an accredited
institution. Additionally, some professional licensing boards
will not accept credit towards licensure from schools without
accreditation.
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"AB 2296 addresses the lack of transparency from unaccredited
schools by mandating that these institutions disclose the known
limitations of their non-accredited degree. These
non-accredited schools must also post fact sheets, a complete
course catalogue, and their most recent report to the Bureau on
the institution web site."
Background . The Act includes numerous provisions that together
establish a regulatory structure for private postsecondary
institutions. Institutions that are covered by the Act are
required to follow an evaluation and approval process, to abide
by numerous "fair business practices" aimed at protecting
students, disclose information to students in enrollment
agreements and catalogs, participate in a Student Tuition
Recovery Fund, and pay fees to the Bureau to support the
oversight structure. The Act also establishes various penalties
for non-compliance: providing the Bureau authority to perform
site visits and investigations, order fines and student refunds,
and suspend or revoke an institution's approval to operate. The
Act requires evaluation and reporting from the Legislative
Analyst's Office and the Bureau of State Audits, and the
provisions of the Act are scheduled to sunset in 2015.
Unaccredited degrees . This bill would require institutions to
disclose to students whether the institution is accredited and
the various limitations of unaccredited degrees. Accreditation
is a voluntary, non-governmental peer review process utilized
for the purpose of determining academic quality of higher
education institutions and programs. Under federal law, USDE is
required to publish a list of recognized accrediting agencies
deemed reliable authorities on the quality of education or
training provided by their accredited institutions. Only those
institutions accredited by a USDE-recognized accrediting
organization are eligible to participate in the federal student
financial assistance programs. Unaccredited degrees can limit a
student's career options. Some career fields and employers
require degrees from accredited colleges; this is especially
true in professions like education and health care, where
certification or licensure is a pre-requisite for employment.
Students attending unaccredited institutions are not eligible to
participate in federal financial aid programs.
Existing law requires institutions offering unaccredited
doctoral degrees to disclose to students that the degree is
unaccredited, along with any known limitations of the degree,
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including whether the degree is recognized for licensure in
California or other states. This bill would expand upon the
current requirement by including associate, bachelor's and
master's level degrees in the disclosure requirement, and would
establish the following specific disclosure requirements:
1)Whether the degree is recognized for licensure or
certification in California and other states and whether a
graduate of the program will be eligible to sit for the
applicable licensure exam in California and other states.
These provisions may be somewhat duplicative for California,
as it appears that all licensure programs require passage of
an examination. However, it is unclear if licensure programs
that require an accredited degree, but not passage of a
licensure examination, exist in other states.
2)That a degree from an unaccredited institution is not
recognized for some employment positions, including positions
with the state of California. It is the policy of the state
to require that, for positions that require a degree, the
degree be from an accredited institution.
3)That a student attending an unaccredited institution is not
eligible for federal financial aid programs. Both federal and
state financial aid programs require eligible institutions to
be accredited by a recognized USDE accreditation agency.
Fact Sheet . Existing law requires institutions to provide
prospective students with a Fact Sheet. The Fact Sheet includes
data on graduation rates, job placement, salary and wage
information, and licensure examination passage rates. The Fact
Sheet is designed to give students the information necessary to
help make informed educational choices. This bill would make
several changes to the Fact Sheet.
1)Job placement . Existing law and regulation requires placement
rates to be calculated for each program that is designed to
lead to, or prepare students for, a specific career or
occupation. To be counted as a placement, students must
self-identify as gainfully employed within six months of
graduation in a position for which the skills obtained through
their education "provided a significant advantage to the
student in obtaining the position." Institutions must report
placements for (1) graduates working less than 34 hours per
week in a single position, and, (2) graduates working more
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than 34 hours per week in a single position. Institutions are
required to make available to students a list of the
employment positions used to calculate the job placement
rates.
This bill would make several changes to the way placement
rates are calculated and reported:
a) Institutions would be required to identify the specific
occupations for which each program is designed to lead,
using the United States Department of Labor's Standard
Occupational Classification codes. Only graduates who
obtain positions in these occupations could be counted in
the educational program placement rates.
b) Institutions would be required to only count placements
for graduates employed in a single position for at least 13
weeks, working at least 17.5 hours per week in one of the
identified occupations.
c) Clarifies that for occupations requiring a licensing
examination, placements must begin employment within six
months after the announcement of the examination results
for the first examination available after graduation.
2)Cohort default rate . This bill would require institutions to
disclose on the Fact Sheet (1) the percentage of students
receiving federal loans and (2) the percentage of student loan
defaults (three-year cohort default rate, as reported by the
USDE). According to the author, federal loan defaults are a
key indicator of institutional quality. This information is
readily available from the USDE.
3)Salary and wage data . Existing law requires salary data to be
disclosed only if an institution makes a claim regarding the
potential salary of a graduate. This bill would require all
institutions to disclose salary and wage data. This bill
would also require salary and wage disclosures to be based in
the actual salary and wage data reported by graduates.
4)Data collection and reporting . This bill would require the
collection and documentation of specific data that justifies
the information contained in the Fact Sheet. Institutions
would be required to provide these records to the Bureau upon
request.
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Website disclosure . Existing law requires the Bureau to post
institutional information such as Fact Sheets and school
catalogs on the Bureau website. However, supporters of this
bill argue that many students look to institutional websites for
information regarding programs and performance data. This bill
would require institutions to post on their websites specific
school and program performance data.
Policy considerations . The failure to extend the sunset date of
the Bureau due to a veto of SB 823 (Perata) of 2008, caused it
to become inoperative July of 2007, and remain so, until early
2010. This failure to extend the sunset date caused a
significant lapse in the regulation of private postsecondary
education and a failure to provide for the protection and
interests of students and institutions.
Recent amendments to this bill require increased disclosures
related to wages, employment and student loan default rates by
institutions. Opponents to this bill maintain that these
changes are in conflict with the negotiations that formed AB 48
(Portantino) ÝChapter 310, Statutes of 2009], the measure
reestablishing the Bureau after it had sunsetted.
Additionally, a majority of oversight and enforcement activities
were left to Bureau discretion and reliant upon the adoption of
implementing regulations. These regulations were recently
promulgated in October 2011, making it difficult to determine if
they are or are not adequate in protecting students and
monitoring institutions.
Support . The Consumer Federation writes in support, "For-profit
colleges often lure students into programs that are costly and
inferior. Far too many of these programs are fraudulently
advertised as the ticket to gainful employment at skilled
occupations. Students graduate without the skills needed for
living wage jobs. Unable to find gainful employment, students
default on their loans at rates greatly exceeding the rates for
students attending public and independent (non-profit) colleges.
The result is a cycle of student bankruptcy, ruined credit
scores, and unemployment or poverty wage jobs.
"?The for-profit college industry rushed to Sacramento to
support legislation (AB 48 Portantino) that re-established a
toothless Bureau in DCA. This state 'authorizer' was put in
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place in time to keep the industry's federal tax dollar
subsidies flowing, but the enabling legislation established no
meaningful rules or enforcement powers against the most flagrant
forms of unfair business practices, consumer fraud or poor
quality of instruction. Worse, by legalizing the most
fallacious claims about job placement success rates for
graduates, AB 48 eliminated redress through general consumer
fraud principles when students are conned into enrolling based
on misstatements about placement rates in the jobs for which
programs were advertised.
"Current law allows a for-profit college to claim as a
successful job placement for a technical or professional job,
such as a computer programmer or registered nurse, a graduate
who worked as little as one hour mopping floors at minimum wage.
AB 2296 begins to close this loophole by requiring the
institutions to disclose actual rates of placement for sustained
periods of time in jobs that resemble the job for which the
student was purportedly trained. Without this performance
information, prospective students are susceptible to aggressive
and deceptive marketing and run a greater risk of attending
low-quality programs or programs that do not match their needs,
increasing the chances they will drop out or default on their
student loans.
"In addition to looking to job placement rates, students
weighing whether to assume potentially life-altering debt for
school also rightly look to the salaries earned by a program's
graduates. Under current law, however, schools are able to
easily skirt the salary disclosure requirements and only report
the salaries generally earned in the occupations for which they
claim to train students, often misleading students into thinking
those salaries are actually being earned by graduates. Under AB
2296, schools will instead disclose to students the salaries of
their graduates so that prospective students can make more
informed choices.
AB 2296 will also ensure that schools provide pieces of
easily-available information that are left out of the currently
required disclosures. The first is the percentage of a school's
graduates who default on their student loans. A high cohort
default rate (CDR) reflects that a school did not prepare its
students for jobs that would allow them to repay their loans.
The USDE and the Cal Grant program use CDRs to measure school
quality and determine eligibility. AB 2296 will make sure that
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this critical information that is used by the government to
assess performance is also available to students. In addition,
AB 2296 ensures that students are informed if their school or
program is not accredited and of the limitation of going to an
unaccredited school or program.
Opposition . The California Association of Private Postsecondary
Schools (CAPPS) writes in opposition, "Recent amendments to AB
2296 make some sweeping changes that will make it very difficult
for schools to comply and we question what benefit, if any, the
student will gain from this proposal.
"For instance?the bill calls for various disclosures for
approved schools offering certain degrees. While CAPPS was
neutral on the previous version of the bill, these amendments go
too far and in the end will be impossible to comply with and
will not benefit the student. Requiring schools to disclose
'all known' limitations of a degree in all 50 states is
unrealistic and will only set up a school for failure and
eventual lawsuits and/or government sanctions. Furthermore,
even if this was possible a schools' disclosure would end up
being hundreds of pages long and do nothing to help the student.
"?The bill changes how all schools regulated by the Bureau would
report salary and wage information. Instead of relying on
existing law and established government data, the bill creates a
vague process that will rely on multiple, undefined government
agencies. We don't understand why this change is necessary and
what it would do to help students.
"AB 2296 also would require federal three year default rates to
be listed under the Fact Sheet, yet this data is not related to
either student performance or institutional performance. Three
year rates are a complex repayment provision relating to student
loans about whether the student has made a payment on their
student loans years after they have graduated from the
institution.
"Finally, AB 2296 would amend the current, negotiated definition
of 'graduates employed in the field.' Introducing a new 13 week
requirement, 17.5 hour requirement and 32 hour requirement, is
excessive, and destroys the existing regulatory plan for no
stated benefit."
Previous legislation . AB 611 (Gordon), Chapter 103, Statutes of
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2011 establishes certain disclosure requirements pertaining to
accreditation status, licensure, and related limitations for
unaccredited doctoral programs.
AB 48 (Portantino), Chapter 310, Statutes of 2009, revises and
recasts the Private Postsecondary and Vocational Education
Reform Act of 1989 into the California Private Postsecondary
Education Act of 2009, provides for the transition to the
Bureau, outlines its responsibilities, provides for the
approval, regulation, and enforcement of private postsecondary
educational institutions, establishes reporting requirements,
and repeals the Act on January 1, 2016.
SB 823 (Perata) of 2008, recasts and revises the provisions of
the Private Postsecondary and Vocational Education Reform Act of
1989 into the Private Postsecondary Education Act of 2008. The
bill was vetoed.
REGISTERED SUPPORT / OPPOSITION :
Support
California Civil Rights Coalition
California Faculty Association
California Psychological Association
Center for Public Interest Law, University of San Diego School
of Law
Children's Advocacy Institute
Consumer Federation of California
Consumers Union of United States, Inc.
Public Advocates Inc.
The Institute for College Access and Success
Opposition
California Association of Private Postsecondary Schools
The California Coalition of Accredited Career Schools
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301