BILL ANALYSIS �
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|Hearing Date:June 23, 2014 |Bill No:AB |
| |330 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 330Author:Chau
As Amended:June 17, 2014 Fiscal: Yes
SUBJECT: Student financial aid: Information.
SUMMARY: Requires the California Student Aid Commission (CSAC) and
Bureau for Private Postsecondary Education (BPPE) to post additional
links on their Internet websites to provide information such as net
cost, financial aid, and student loan debt that can be used by
students and families to evaluate their college choices.
NOTE : This bill was referred to the Senate Education Committee, first,
and was passed out of that Committee by a vote of 6 to 0 on June 4,
2014.
Existing law:
1) Establishes the Cal Grant Program under the administration of CSAC,
and establishes eligibility requirements for awards under the
program for participating students attending qualifying
institutions. As a condition for participation in the program,
existing law requires each Cal Grant participating institution to
annually report specified information to CSAC, which CSAC is
required to provide on its Internet Website in a searchable
database. Current law also requires the CSAC to provide other
information and links useful to students and parents who are in the
process of selecting a college or university. (Education Code (EC)
� 69433.2)
2) Requires, as a condition of participation in the Cal Grant Program,
that a "qualifying institution" provide information (on an
enrollment or centralized admission website, or on enrollment
applications or other information distributed to students) on where
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to access California license exam passage rates for the most recent
available year for undergraduate programs that lead to employment
in a field that requires licensing. (EC � 69433.7)
3) Establishes the California Private Postsecondary Education Act
(Act) of 2009 until January 1, 2015, which provides for the
approval, regulation, and enforcement of private postsecondary
educational institutions by the Bureau for Private Postsecondary
Education (BPPE) within the Department of Consumer Affairs (DCA).
(EC � 94800-94950)
4) Requires a regulated institution to provide a prospective student
with a School Performance Fact Sheet (Fact Sheet) containing
information on completion rates, placement rates, license
examination passage rates, salary or wage information, the most
recent three-year cohort default rate and the percentage of
enrolled students receiving federal student loans (if the
institution participates in federal financial programs) and other
specified information.
(EC � 94910)
This bill:
1) Requires CSAC and BPPE to clearly post, in a conspicuous location
on its Internet Website links to the following:
a) The College Affordability and Transparency Center of the
United States Department of Education (USDE) or any successor
entity.
b) The National Center for Higher Education Management Systems or
any successor entity.
c) Any entity CSAC deems may provide accurate and useful
information relating to institutional net cost, financial aid, or
student loan debt that can be used by students and families to
evaluate postsecondary educational options.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by Legislative
Counsel and the prior version of this bill, according to the Assembly
Committee on Appropriations analysis dated January 23, 2014, would
have resulted in estimated on-time General Fund costs of $110,000 and
ongoing costs of $25,000 for CSU to implement data gathering not
currently performed for non-state supported, continuing education
programs as well as costs to the California Community Colleges (CCC)
for gathering and tracking data. The analysis noted that any costs to
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UC, CSAC and BPPE would be minor and absorbable.
COMMENTS:
1. Purpose. The Author is the Sponsor of this bill. According to the
Author, "comprehensive and meaningful consumer information for
students and their families is not readily available to make the
best financial and educational decisions about which post-secondary
education institution to attend." The Author intends for this bill
to "centralize information about student debt within the CSAC
and/or the BPPE to provide families with information that is easy
to use, compare, and understand, as a way to decide between
educational institutions."
2. Background on the Bureau for Private Postsecondary Education. BPPE
is responsible for oversight of private postsecondary educational
institutions operating with a physical presence in California.
Established by Assembly Bill 48 (Portantino, Chapter 310, Statutes
of 2009), after numerous legislative attempts to remedy the laws
and structure governing regulation of private postsecondary
institutions, the bill took effect January 1, 2010, to make many
substantive changes that created a new, solid foundation for
oversight and gave the new BPPE an array of enforcement tools to
ensure schools comply with the law.
AB 48 established BPPE with the authority to regulate private
postsecondary institutions and enforce the provisions of the new
California Private Postsecondary Education Act (Act) and responded
to the major problems with the former laws governing the industry
in California. The Act requires all unaccredited colleges in
California to be approved by BPPE, 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 while providing BPPE with enforcement powers necessary to
protect consumers. The Act directs BPPE to:
Create a structure that provides an appropriate level of
oversight, including approval of private postsecondary
educational institutions and programs;
Establish minimum operating standards for California
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private postsecondary educational institutions to ensure
quality education for students;
Provide students a meaningful opportunity to have their
complaints resolved;
Ensure that private postsecondary educational
institutions offer accurate information to prospective
students on school and student performance, thereby promoting
competition between institutions that rewards educational
quality and employment success; and,
Ensure that all stakeholders have a voice and are heard
in the operations and rulemaking process of BPPE.
BPPE also actively investigates and combats unlicensed activity,
administers the Student Tuition Recovery Fund (STRF), and conducts
outreach and education activities for private postsecondary
educational institutions and students within the state.
In March 2014, the California State Auditor released an audit
report, as required by AB 48, which reviewed the effectiveness and
efficiency of BPPE operations. The report found that BPPE has
consistently failed to meet responsibilities to protect the
public's interest. Specifically, the report notes that BPPE failed
to conduct compliance inspections, failed to identify and sanction
unlicensed institutions, failed to appropriately respond to
complaints against institutions, and failed to ensure students were
provided with accurate disclosures prior to enrollment.
BPPE maintains an Internet Website that it regularly updates with
pertinent information, including: Bureau Advisory Committee meeting
agendas and meeting minutes; a list of approved institutions; and,
institutions' annual reports which include specific data on
programs, completion and job placement rates, as well as other
important data aimed at helping potential students make informed
decisions about enrollment in an institution. The BPPE website
also features results from compliance inspections, formal
disciplinary actions and citations.
This Committee is currently in the process of conducting "Sunset
Review" of BPPE; a top-to-bottom review of the Act and Bureau's
operations.
1. Student Debt. As the number of students served by private
postsecondary institutions has increased, so has the focus on
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fraudulent practices and low academic standards. There have been
numerous high-profile federal investigations into the practices of
for-profit institutions in recent years. Among the most notable
are the United States Government Accountability Office (GAO) series
of investigations raising concerns regarding the amount of federal
student aid dollars directed to for-profit institutions, the
misleading and deceptive recruitment practices at certain
institutions, and substandard academic performance expectations in
some for-profit programs.
Federal data also raises important questions about program cost and
student outcomes within the sector. Students from for-profit
institutions have higher default rates on federal student loans
than in other sectors, accounting for nearly half of all defaults.
According to data from the National Bureau of Economic Research
(NBER), for-profit student defaults are 8.7 percent higher than
four-year public institutions and nonprofits and 5.7 percent higher
than for community colleges. Student satisfaction information
shows for-profit students are less likely to believe their
education was worth the price paid. While NEBR data, which
attempts to adjust for student population differences, indicates
for-profit students have higher probability of staying with a
program through the first year and are somewhat more likely than
community college students to obtain an AA degree, they are less
likely to continue to higher-level college courses and to gain a BA
degree. Further, NEBR indicates that for-profit students are more
likely to be idle (not working and no longer enrolled in school)
six years after starting college, and are more likely to have
experienced substantial unemployment since leaving school.
According to a recent report, Student Debt and the Class of 2012,
issued by the Institute for College Access and Success (TICAS),
nationally, 71 percent of college seniors who graduated last year
had student loan debt, with an average debt of $29,400 per
borrower. The report highlighted high debt and low debt states,
and California was noted as being among the low debt states. Among
its recommendations, TICAS advised that students and their families
need clear, timely, and comparable information on costs, financial
aid and typical outcomes and for that reason supported the
improvement and promotion of federal tools and processes that
provide more and better consumer information throughout the college
process. The report specifically noted tools such as the College
Scorecard, the Net Price Calculator, and the Shopping Sheet,
discussed below.
2. Accessing Information about Higher Education Institutions. Many
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schools regulated by the Bureau are subject to multiple
requirements for disclosures from multiple entities. Schools might
be approved by BPPE, overseen by USDE related to the acceptance of
Title IV money and overseen by CSAC related to the acceptance of
Cal Grant student loans and required to provide information to each
as a condition of participation and approval.
The Act requires a number of disclosures aimed at providing
students with the information and tools to make an informed
decision about their education. Job placement numbers, license
exam passage rates, salary information and cohort default rates
(CDR) are some of the items institutions are required to provide to
students as they evaluate whether or not to attend a particular
school. (CDR is the percentage of a school's borrowers who enter
repayment on federal loans during a particular fiscal year and
default or meet other specified conditions prior to the end of the
next fiscal year and provided to USDE in draft form, offering
schools two appeals before the information becomes "official".
CDRs are seen as important indicators of college quality because
they indicate the ability of students to put their education to
work and repay their loans.) The Act also requires a series of
disclosures about unaccredited programs offering degrees, such as
whether the degree is issued in a field that requires licensure in
California, whether or not a graduate of the degree program will be
eligible to sit for the applicable licensure exam in California and
other states, information acknowledging that a degree from an
unaccredited institution is not recognized for some employment
positions, and a statement that students attending an unaccredited
institution are ineligible for federal financial aid programs.
The Act also specifies requirements regarding enrollment agreements
and requirements that students be provided a school catalog and a
School Performance Fact Sheet (Fact Sheet), including minimum
requirements and disclosures required in these documents such as
information about program completion, placement, licensure and
salary of students/graduates. Under the Act, institutions are also
required to submit an annual report to BPPE that includes specified
information, including the most recent three-year CDR reported by
the USDE for the institution and the percentage of enrolled
students receiving federal student loans. The Bureau is also
authorized ensure that information is useful to students, useful to
policymakers, based on the most credible and verifiable data
available but also does not impose undue compliance burdens on an
institution.
Legislation enacted in 2011 ( SB 70 , Budget and Fiscal Review
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Committee) established, as a condition for voluntary participation
in the Cal Grant program, that each institution with more than 40
percent of its undergraduate enrollment borrowing federal student
loans must have a three-year 2008 CDR less than 24.6% to be
eligible for new and renewal Cal Grant awards in the 2011-12
academic year, and less than 30% for each subsequent year.
Institutions are also required to annually report to CSAC
enrollment, persistence and graduation data for all undergraduate
students, including aggregate information on Cal Grant recipients,
and the job placement rate and salary and wage information for
programs that are designed or advertised to lead to a particular
type of job or are advertised with any claim regarding placement.
In the 2014-15 academic year, 122 institutions (primarily
for-profit colleges) are ineligible to participate in the Cal Grant
Program; students at ineligible institutions are required to
transfer to an eligible institution in order to receive their Cal
Grant award.
The Integrated Postsecondary Education Data System (IPEDS) is a
system of interrelated surveys conducted annually by the USDE's
National Center for Higher Education Management Statistics used to
collect and analyze data related to education in the U.S. IPEDS
gathers information from every college, university, and technical
and vocational institution that participates in Title IV, including
data reported by programs on enrollments, program completions,
graduation rates, faculty and staff, finances, institutional
prices, and student financial aid. Information is then made
available to students and parents through the College Navigator
college search Web site and stored at the IPEDS Data Center,
providing comprehensive information to compare colleges on criteria
that includes costs, majors offered, the size of the school, campus
safety, and graduation rates.
In February 2013, the USDE College Affordability and Transparency
Center released an interactive College Scorecard , intended to
provide information on a college's affordability and value to
enable parents and prospective students to make informed decisions
about which college to attend. According to the USDE, the
Scorecard highlights key indicators about the cost and value of
institutions across the country to help students choose a school
that is well-suited to meet their needs, priced affordably, and is
consistent with their educational and career goals. Each Scorecard
includes five key pieces of data about a college: costs, graduation
rate, loan default rate, average amount borrowed, and employment.
USDE reports that these data will be updated periodically, and that
they plan to publish information on average earnings in the coming
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year.
In 2012, the USDE partnered with the Consumer Financial Protection
Bureau to develop the Financial Aid Shopping Sheet to promote
transparency in student financial disclosures. The Shopping Sheet
is designed to help students better understand the amount of grants
and scholarships they would receive from a given institution, and
the amount of loans an institution recommends a student take out to
cover out-of-pocket costs. The Shopping Sheet is not mandatory,
but the federal government did ask institutions to voluntarily
adopt the Shopping Sheet beginning with the 2013-14 academic year.
About 1800 institutions nationally have agreed to use the Shopping
Sheet template, and the CSU reports that all its campuses began
using it in 2013-14 for all newly admitted prospective
undergraduate and graduate students.
The 2010 Title IV regulations included a new definition for the
means by which eligible schools would have to report "gainful
employment" to students. The definition continues to be negotiated
at the federal level and the current regulation would evaluate
programs for Title IV eligibility based on debt-to-income ratios
and CDRs. CDRs would be judged for any program with more than 30
students enrolled and debt-to-income ratios would be judged for any
program with more than 10 students. Programs whose graduates' loan
payments comprise more than 30 percent of their discretionary
income, or 12 percent of their total income, would no longer be
eligible to receive Title IV monies. Programs with a CDR of more
than 30 percent for 3 consecutive years would also no longer be
eligible to receive Title IV monies.
Federal law requires any college that participates in Title IV
financial aid programs to post on-line " net price calculators " to
help parents and students determine the potential cost of different
colleges before they apply. This calculator allows students to
calculate an estimated net price of attendance at an institution
(defined as cost of attendance minus grant and scholarship aid)
based on what similar students paid in a previous year. The net
price calculator is required for all Title IV institutions that
enroll full-time, first-time degree- or certificate-seeking
undergraduate students. The USDE College Affordability and
Transparency Center provides a link to the net-price calculator for
individual colleges nationally.
In California, the Salary Surfer allows students and the public to
see salaries associated with degrees or certificates in specific
disciplines. Salary Surfer provides wage data for California
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Community College (CCC) students who earned an associate's degree
or a credit certificate by using the aggregated earnings of
graduates from a five year period. Wage information comes from an
agreement between the CCC Chancellor's Office and the California
Employment Development Department (EDD). The system is a useful
tool for students to estimate their potential earnings after
receiving a certificate or degree in certain areas.
SUPPORT AND OPPOSITION:
Support: None on file as of June 18, 2014.
Opposition: None on file as of June 18, 2014.
Consultant:Sarah Mason