BILL ANALYSIS �
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THIRD READING
Bill No: SB 1069
Author: Torres (D)
Amended: 4/29/14
Vote: 21
SENATE EDUCATION COMMITTEE : 8-0, 4/24/14
AYES: Liu, Wyland, Block, Galgiani, Hancock, Hueso, Huff,
Monning
NO VOTE RECORDED: Correa
SENATE BUSINESS, PROFESSIONS & ECON DEVELOP COM : 9-0, 4/28/14
AYES: Lieu, Wyland, Berryhill, Block, Corbett, Galgiani,
Hernandez, Hill, Padilla
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/14
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SUBJECT : Student Tuition Recovery Fund
SOURCE : Author
DIGEST : This bill: (1) requires the Bureau for Private
Postsecondary Education (BPPE) to adopt regulations to make
students who uses a Cal Grant, a Pell Grant, or both, eligible
to apply for payment from the Student Tuition Recovery Fund
(STRF); (2) requires the BPPE to pay the California Student Aid
Commission (CSAC), if a student uses a Cal Grant to pay tuition
from the STRF; and, 3) is contingent upon the amendment or
continuation of the California Private Postsecondary Education
Act of 2009 (Act).
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ANALYSIS : Existing law, until January 1, 2015, establishes
the Act, which provides for the approval, regulation, and
enforcement of private postsecondary educational institutions by
the BBPE within the Department of Consumer Affairs.
Among other things, the Act requires the BPPE to adopt
regulations and procedures governing the administration and
maintenance of the STRF, including requirements relating to
assessments on students and student claims against the STRF.
The STRF exists to relieve or mitigate economic losses suffered
by a student in an educational program at a qualifying
institution if the student was a California resident (or was
enrolled in a residency program).
Existing law:
1.Limits the amount in the STRF to no more than $25,000,000 at
any time.
2.Authorizes the Cal Grant Program, administered by the CSAC, to
provide grants to financially needy students to attend
college. The program consists of the Cal Grant A, Cal Grant
B, and Cal Grant C programs, and eligibility is based upon
financial need, grade point average, California residency, and
other eligibility criteria, as specified.
This bill:
1.Requires the BPPE to adopt regulations regarding the
administration and maintenance of the STRF to make students
who uses a Cal Grant, Pell Grant, or both, eligible to apply
for payment from the fund.
2.Requires the BPPE to pay CSAC if a student uses a Cal Grant to
pay tuition from the STRF.
3.Makes its provisions operative only if the Act is amended or
repealed to delay or eliminate the January 1, 2015 repeal date
of the Act.
Comments
According to the Senate Education Committee analysis, this bill
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is prompted by the January 2014 closure of Career Colleges of
America due to financial problems which resulted in its loss of
accreditation. Unable to negotiate a "teach-out" plan prior to
closure, credits earned by enrolled students were not
transferred to another institution, forcing students who paid
substantial amounts for their programs to start over.
While some students do have recourse to recoup economic loss
suffered as the result of a school closure by applying for
reimbursement from the STRF administered by the BPPE, current
eligibility regulations do not allow students to seek relief for
costs paid by third parties, including costs covered through
Pell and Cal Grants.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
STRF: Potentially significant costs (Special Fund) to
reimburse claims by third party payers. Costs will depend
on how many BPPE-regulated institutions close in the future,
and how many students seeking STRF reimbursement also
received grants that will be eligible for repayment.
Cal Grant: Potentially significant General Fund savings,
to the extent that the state is reimbursed for Cal Grants
awarded to students who become eligible to receive
reimbursement from the STRF because their institutions close
or lose accreditation.
Administration: Potentially significant workload, likely
necessitating at least one additional PY, at a cost of
$75,000, to process new claims (Special Fund).
SUPPORT : (Verified 5/22/14)
Legal Aid Foundation of Los Angeles
PQ:nl 5/25/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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