BILL ANALYSIS Ó
AB 573
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
573 (Medina) - As Amended May 4, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
Yes
SUMMARY:
This bill provides financial and other assistance to students
impacted by recent closing of all Heald, Everest, and Wyotech
campuses in California, which were owned by Corinthian Colleges,
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Inc. (CCI). Specifically, this bill:
1)Declares legislative intent that the California Community
Colleges (CCC) provide matriculation services, including
assessment, counseling, and academic planning to students
enrolled at these schools as of the closure date of April 24,
2015 or for a California student enrolled in an online program
at an out-of-state campus of a CCI institution.
2)Provides that students enrolled at a CCI campus and unable to
complete their educational program due to the closure are
exempt from the four-year limitation on receipt of a Cal
Grant.
3)Makes students enrolled in a private postsecondary educational
institution in California that closes, and students who were
enrolled and withdrew within 120 days prior to the closure
date, eligible for a CCC Board of Governors (BOG) fee waiver.
4)Provides that students enrolled at a Heald College campus or a
California student enrolled in an online program of an
out-of-state campus of a CCI institution at the time of
closure or who were enrolled and withdrew within 120 days of
the closure (or a greater period if determined by the Bureau
for Private Postsecondary Education (BPPE)) are eligible for
recovery through the Student Tuition Recovery Fund (STRF).
These students become eligible despite not having paid any
STRF assessment. (Everest and Wyotech students are already
eligible for STRF payments because these schools are under
BPPE oversight.)
5)Increases the maximum allowable fund balance in the STRF from
$25 million to $50 million, and requires the BPPE, if it stops
collecting STRF assessments because the fund has approached
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the new maximum balance, to resume collecting assessments when
the fund balance falls below $45 million (instead of $20
million currently).
6)Requires the BPPE to coordinate a task force, with
representatives of the CCC Chancellor's Office, the California
Student Aid Commission (CSAC), the Department of Justice, the
Department of Veterans Affairs, and legal aid organizations,
to ensure that the impacted students receive accurate and
consistent information regarding the school closure process
and their rights and responsibilities.
7)Requires the BPPE provide grants, not to exceed $100 per
impacted student, to local legal aid organizations for
assisting the students in completing educational loan
discharge requests and tuition recovery claims.
8)Declares legislative intent that any unencumbered funds
received by the Attorney General from an action against CCI
shall be used to fund the provisions of this bill.
FISCAL EFFECT:
It has been estimated that approximately 16,000 students have
been impacted by the school closures, including almost 12,000
from Heald.
1)BOG Fee Waiver. The reduction in CCC fee revenues would depend
on the number of impacted students who enroll at a CCC, how
many CCC units these students take to complete their CCC
educational goals, and how many of these students would not
otherwise qualify for a BOG fee waiver. (About two-thirds of
the entire CCC course load is taken by students currently
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receiving a BOG waiver.) For every 1,000 full-time equivalent
students (FTES) from the impacted schools who would not
otherwise obtain a fee waiver, the revenue loss to the
community colleges would be $1.4 million annually.
2)Legal Assistance Grants. One-time special fund costs to the
BPPE of up to a few hundred thousand dollars, assuming legal
aid organizations received grants from the BPPE for assisting
around 20% of the impacted students. [Private Postsecondary
Education Administration Fund] There is no appropriation in
the bill to cover this potential cost.
3)STRF Payments. The STRF mitigate a student's economic losses,
defined as tuition and institutional charges plus the cost of
equipment and supplies needed for student's educational
program. STRF costs will depend on the number of impacted
Heald students making STRF claims and the amounts of those
claims eligible for reimbursement. If a Heald student
transfers no credits to another educational institution and in
turn receives forgiveness of their federal loans, the state
will incur costs only to the extent that the loan forgiveness
does not cover the student's economic loss. If a student
transfers some or all of their credits to another institution,
their federal loan will not be forgiven, and they may be
eligible for a STRF payment equivalent to the value of the
loan associated with those credits earned at Heald that are
not accepted for transfer.
STRF payments could be in the low tens of millions of dollars.
In the past, STRF payments have averaged around $6,000 per
student. If around one-half of the impacted Heald students
received the average payment, costs would total $36 million.
According to the Governor's Budget, the STRF will have an
estimated fund balance of $28 million as of June 30, 2015.
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4)Cal Grants. According to CSAC, almost 2,800 of the impacted
Heald students were awarded and used their Cal Grants. Because
Heald was ineligible to participate in the Cal Grant program
for several years, virtually all of these students have used
one year or less of their Cal Grant eligibility. Almost
two-thirds of these students were awarded a Cal Grant C, 30%
were award Cal Grant B, and the remaining 4% were awarded a
Cal Grant A. Costs will depend on how many of these students
continue their education and what type of institution they
attend. One additional award year of eligibility for these
students would equate to a General Fund cost of around $10
million.
5)Costs for CCC counseling and the BPPE task force should be
minor and absorbable.
COMMENTS:
Background and Purpose. On April 26, 2015, Corinthian Colleges,
Inc. (CCI) announced that it has "ceased substantially all
operations and discontinued instruction" at all Heald, Everest,
and WyoTech campuses in California, which together had
enrollment totaling an estimated 16,000 students. (CCI filed for
bankruptcy on May 4, 2015.) Existing state and federal law
provides certain relief to some of the students harmed by the
CCI closure: federal loan forgiveness is available to students
who qualify, but only if they do not transfer any educational
credits to another institution; the state's Student Tuition
Recovery Fund (STRF) is available to California Everest and
WyoTech students, as those school are regulated by the state. An
exemption from state oversight for Heald students and students
enrolled in out-of-state online programs makes them ineligible
for relief through the STRF. This bill, as described above, is
intended to ensure that all students harmed by these closures
have access to other educational opportunities.
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Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081