BILL ANALYSIS �
AB 2296
Page 1
Date of Hearing: April 23, 2012
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
AB 2296 (Block) - As Amended: April 9, 2012
SUBJECT : Private Postsecondary Education Act of 2009:
disclosures.
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)Provides for various changes to the Student Performance Fact
Sheet, required to be disclosed to students prior to
enrollment, including:
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.
AB 2296
Page 2
b) Requires the disclosure of salary data, regardless of
whether the institution makes claims as to salaries that
may be earned upon graduation. Removes the requirement
that institutions disclose Employment Development
Department (EDD) wage data.
c) 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.
d) 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 to provide to the Bureau, in the
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.
4)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.
5)Requires that the information used to substantiate Student
Performance 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.
6)Requires an institution that maintains an internet website to
provide the school catalog, school performance fact sheet,
AB 2296
Page 3
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.
EXISTING LAW 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. The Act establishes the Bureau within
the Department of Consumer Affairs (DCA) to provide oversight
and regulation of private postsecondary institutions.
FISCAL EFFECT : Unknown
COMMENTS : This bill has been double-referred to the Business,
Professions and Consumer Protection Committee.
Background . After numerous legislative attempts to remedy the
laws and structure governing regulation of private postsecondary
institutions, AB 48 (Portantino) was enacted in January 1, 2010,
to make many substantive changes that both created a new, solid
foundation for oversight and responded to the major problems
with the Former Act. The Act as created by AB 48 requires all
unaccredited colleges in California to be approved by the new
Bureau and all nationally accredited colleges to comply with
numerous student protections. It also establishes prohibitions
on false advertising and inappropriate recruiting. The Act
requires disclosure of critical information to students such as
program outlines, graduation and job placement rates, and
license examination information, and ensures colleges justify
those figures. The Act also guarantees students can complete
their educational objectives if their institution closes its
doors, and, most importantly, it gives the Bureau an array of
enforcement tools to ensure colleges comply with the law.
Need for this bill . On February 14, 2012, the Assembly Higher
Education Committee and the Senate Business, Professions and
Economic Development Committee held a joint oversight hearing to
evaluate California's regulatory structure for private
postsecondary education, including a discussion of the Act and
the Bureau's implementation of its provisions. According to the
author, this bill is intended to respond to several of the
concerns raised at the oversight hearing, specifically,
AB 2296
Page 4
increasing transparency among private colleges and universities
and ensuring that prospective students have all of the
information necessary to make informed decisions about where to
pursue postsecondary education.
Unaccredited degrees . 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, including whether the degree is
recognized for licensure in California or other states.
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. 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.
Degrees from unaccredited institutions are not recognized for
employment with the State of California. Further, students
attending unaccredited institutions are not eligible to
participate in federal and state financial aid programs.
This bill 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. Committee staff understands
that it is the policy of the state to require that, for
positions that require a degree, the degree be from an
accredited institution.
AB 2296
Page 5
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. The
author may wish to consider an amendment to clarify that
students are ineligible for both state and federal aid.
Student Performance Fact Sheet . Existing law requires
institutions covered by the Act to provide prospective students
with a Student Performance 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 require 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 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. Committee staff
understands this change is in response to concerns that
placement rates that count occupations that are unrelated
to an education program may be misleading to a prospective
student.
AB 2296
Page 6
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. Committee staff understands that
the 13 week requirement is consistent with the recently
enacted federal regulations governing gainful employment
and placement data. The author notes that the 17.5 hour
per week requirement was contained in the former law
governing private postsecondary education. The single
position requirement is consistent with current
regulations.
c) In response to concerns from institutions that delays in
the availability of licensure examinations affects a
student's ability to find employment within six months of
graduation, this bill would clarify 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 used by the federal
government. This information is readily available from the
USDE. This change appears in line with recent Legislative
actions (SB 70, 2011) to link Cal Grant institutional
participation to loan default rates.
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. Supporters of
this bill argue that nearly all schools suggest to prospective
students that they will 'earn a good living' upon graduation,
but few make specific salary representations, yet under
existing law these institutions would not be required to
disclose salary data. This bill would also require salary and
wage disclosures to be based on the actual salary and wage
data reported by graduates.
4)Data collection and reporting . This bill would require the
AB 2296
Page 7
collection and documentation of specific data that justifies
the information contained in the Student Performance Fact
Sheet. Institutions would be required to provide these
records to the Bureau upon request. These provisions appear
consistent with regulations recently adopted by the Bureau.
Website disclosure . Existing law requires the Bureau to post
institutional information such as School Performance 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.
Arguments in support . Public Advocates states that this bill
will help close loopholes in the current law and provide
students who attend institutions covered by the Bureau with more
accurate consumer information. Doing so will benefit students
and schools as well as taxpayers who are investing in many of
these schools through the Cal Grant program. In particular, AB
2296 will correct the currently misleading job placement
definition and salary disclosure requirement. Unfortunately,
the current California statutory definition of job placement
departs from the definitions used by the USDE and does not
accurately measure whether a student will likely find the kind
of job the program advertises.
Arguments in opposition . The California Association of Private
Postsecondary Schools (CAPPS) argues that this bill makes
sweeping changes to AB 48 (which created the Act), which was
carefully written and recently implemented through the
regulatory process. CAPPS states that it is unrealistic to
require schools to disclose "all known" limitations of a degree
in all 50 states, setting up a school for failure and
litigation. CAPPS states that the three-year cohort default rate
is not related to either student performance or institutional
performance. Finally, CAPPS opposes the changes to "graduates
employed in the field" stating, "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."
Prior legislation . AB 2393 (Ammiano, 2010), which was vetoed by
Governor Schwarzenegger, would have requires institutions
regulated by the Bureau to comply with various placement rate
AB 2296
Page 8
calculations for specified programs.
REGISTERED SUPPORT / OPPOSITION :
Support
California Faculty Association
California Psychological Association
Children's Advocacy Institute
Consumer Federation of California
Consumers Union
Public Advocates
The Institute for College Access and Success
University of San Diego, School of Law, Center for Public
Interest Law
Opposition
California Association of Private Postsecondary Schools
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960