BILL ANALYSIS �
AB 423
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 423 (Brown)
As Amended August 22, 2013
Majority vote
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|ASSEMBLY: | |(May 16, 2013) |SENATE: |35-0 |(August 27, |
| | | | | |2014) |
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(vote not relevant)
Original Committee Reference: PUB. S.
SUMMARY : Provides that a student who uses a Cal Grant, Pell
Grant, or both, to pay tuition at a qualifying institution is
not thereby made ineligible to apply for payment from the
Student Tuition Recovery Fund (STRF).
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Provides that a student who uses a Cal Grant, Pell Grant, or
both, to pay tuition at a qualifying institution is not
thereby made ineligible to apply for payment from the STRF,
administered by the Bureau for Private Postsecondary Education
(Bureau); and,
2)Requires that when the application of a student who uses a Cal
Grant to pay tuition at a qualifying institution for payment
from the STRF is granted, the Bureau shall pay that amount to
the Student Aid Commission (CSAC).
EXISTING LAW establishes the STRF and requires the Bureau to
adopt regulations governing the administration and maintenance
of the STRF, including requirements relating to assessments on
students and student claims (Education Code (EDC) Section
94923); and, limits the amount in the STRF to no more than 25
million at any time (EDC Section 94925).
Regulations adopted by the Bureau provide that STRF exists to
relieve or mitigate economic losses suffered by a student in an
educational program at a qualifying institution. Students are
required to, among other requirements, have paid a STRF
assessment, prepaid tuition, enrolled in the institution, and
suffered a qualifying economic loss. Students whose total
AB 423
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charges were paid by a third-party payer, including Pell Grants
and Cal Grants, are not eligible to make a STRF claim. Students
are only eligible for STRF payments up to the amount of the
student's economic loss (5 California Code of Regulations
Sections 76000 to 76215).
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, on January 24, 2014, Career
Colleges of America (CCA), a for-profit college, abruptly closed
its campuses. About 800 students in San Bernardino, South Gate,
and mid-city Los Angeles, who had spent time and money at CCA
for their programs, were forced to start over. According to the
author, because the Bureau's current regulations prohibit STRF
relief for student costs paid by thirds parties, including Pell
and Cal Grants, many CCA students were unable to benefit from
this important consumer protection. This bill aims to ensure
these students can benefit from the STRF.
As written, it does not appear that the author's intent is
accomplished in this legislation. The author may wish to
consider the following issues:
1)Qualifying student: This bill provides only that a student
would not automatically be made ineligible because their
tuition was paid by a Pell or Cal Grant; however, this bill
does not in itself make the student eligible. Bureau
regulations establish various additional requirements on
students in order to be eligible for STRF, including having
prepaid tuition and paid a STRF assessment. Students that did
not prepay tuition (because it was paid by a Pell or Cal
Grant) or did not pay a STRF assessment (because 100% of their
charges were paid by the third-party) would not automatically
be made eligible for STRF based on the language in this bill.
If the author's intent is to make students eligible in those
situations, amendments to this bill are necessary.
2)Economic Loss: Bureau regulations define economic loss to
include monetary losses suffered by the student. A student
who received a Pell or Cal Grant to fund their tuition at an
institution that closed abruptly, arguably, faces an
educational opportunity loss, but not a personal monetary
loss. If the author's intent is for STRF to provide monetary
reimbursement for educational opportunity losses, amendments
to this bill are necessary. As currently drafted, this bill
does not appear to provide any additional relief to Pell or
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Cal Grant recipients under STRF.
3)Repayment to CSAC: This bill requires the Bureau to pay CSAC
when a student's STRF claim is approved by the Bureau.
According to the author, the intent is that CSAC use the funds
to grant additional award year(s) to the specific student.
However, this bill does not specify that intent. Arguably,
CSAC could use the funds for any purpose. Further, should CSAC
choose to use the funds to provide a Cal Grant award to the
specific student, CSAC could face its own statutory barriers
that prohibit Cal Grant awards from exceeding 4 years. If the
author's intent is to require CSAC to use STRF repayments to
fund additional award years for the student affected by the
school closure, amendments to this bill are necessary.
SB 1247 (Lieu) of the current legislative session, was approved
by the Assembly on August 27, 2014. SB 1247 extends the sunset
date for the Bureau until January 1, 2017, and makes a variety
of additional changes to the law, including, requiring the
Bureau to adopt regulations that would allow a student whose
tuition charges were paid by a third-party to be eligible for
educational credits under STRF for educational opportunity
losses suffered by the student. It appears that the problem
identified in this bill would be addressed by SB 1247.
This bill was substantially amended in the Senate and the
Assembly-approved version of this bill was deleted. This bill,
as amended in the Senate, is inconsistent with Assembly actions
and the provisions of this bill, as amended in the Senate, have
not been heard in an Assembly policy committee.
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960
FN: 0005540