Bill Text: NJ S3731 | 2024-2025 | Regular Session | Amended

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Bill Title: Establishes Student Tuition Recovery Fund in Office of the Secretary of Higher Education to compensate students impacted by failing or fraudulent proprietary institutions.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-10-10 - Referred to Senate Budget and Appropriations Committee [S3731 Detail]

Download: New_Jersey-2024-S3731-Amended.html

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[First Reprint]

SENATE, No. 3731

STATE OF NEW JERSEY

221st LEGISLATURE

 

INTRODUCED SEPTEMBER 30, 2024

 

 

Sponsored by:

Senator  JOSEPH P. CRYAN

District 20 (Union)

 

 

 

 

SYNOPSIS

     Establishes Student Tuition Recovery Fund in Office of the Secretary of Higher Education to compensate students impacted by failing or fraudulent proprietary institutions. 

 

CURRENT VERSION OF TEXT

     As reported by the Senate Higher Education Committee on October 10, 2024, with amendments.

  

An Act concerning the closure of certain proprietary institutions and amending and supplementing P.L.2021, c.27.

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1. Section 8 of P.L.2021, c.27 (C.18A:3B-92) is amended to read as follows:

     8. a. This section shall apply to a proprietary institution licensed to offer academic degrees that operates in this State.

     b.    A proprietary institution licensed to offer academic degrees shall provide the secretary a teach-out plan that addresses a potential closure of the institution.  The teach-out plan shall be updated as required by the secretary.

     c.     A teach-out plan shall include any information required by the secretary and shall state that:

     (1)   the institution shall make all reasonable efforts to ensure that any closure of the institution complies with the requirements of sections 9 through 12 of P.L.2021, c.27 (C.18A:3B-93 through C.18A:3B-96);

     (2)   the chief executive officer and the members of the governing body of the institution were not in an executive position or a member of a governing body of an institution in which a disorderly closure occurred; and

     (3)   any institutional financial aid agreement offered to a student shall contain language stating that, in the event of a disorderly closure, the institutional debt shall be void and shall not be recovered, collected, or enforced.

     d.    The Office of the Attorney General shall seek an injunction or other judicial remedy against a proprietary institution licensed to offer academic degrees that fails to comply with the requirements of this section, including requiring the institution to refund all tuition and fees paid by any student and initiating a claim, on behalf of a student, for payment from the Student Tuition Recovery Fund established pursuant to section 3 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill).

(cf: P.L.2021, c.27, s.8)

 

     2.  (New section) a.  As used in sections 2 through 6 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill):

     "Assessment" means the amount a proprietary institution licensed to offer academic degrees is required to collect from its enrolled students and remit to the Student Tuition Recovery Fund established pursuant to section 3 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill);

     "Economic loss" means the pecuniary loss that is equivalent to the cost of tuition and fees, excluding all forms of State and federal need-based grants and merit scholarships; 

     "Fund" means the Student Tuition Recovery Fund established pursuant to section 3 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill); and

     "Person injured" means a student enrolled in a proprietary institution licensed to offer academic degrees who suffered an economic loss as a result of the closure, or other failure, of the institution.   

 

     3.  (New section) There is created a special fund in the Office of the Secretary of Higher Education, which shall be designated the "Student Tuition Recovery Fund." The fund shall be maintained in a separate account and administered by the secretary to carry out the provisions of this act. The fund shall consist of:

     a.  any monies received by the State for the purposes of the fund pursuant to section 4 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill); and

     b.  all interest and investment earnings received on monies in the fund. 

     The fund shall be used to relieve or mitigate the economic loss caused to a student enrolled in a proprietary institution licensed to offer academic degrees as a result of the closure or other failure of the institution. 

 

     4.  (New section)  a.  A proprietary institution licensed to offer academic degrees shall remit an initial deposit of $2,500 to the Student Tuition Recovery Fund established pursuant to section 3 of P.L.    , c.     (C.        ) (pending before the Legislature as this bill). 

     b.  The institution shall remit for each academic semester or term a fee to be determined by the Secretary of Higher Education sufficient to ensure the solvency of the fund, but which shall be no less than $1 per each $1,000 in institutional charges, inclusive of tuition and all fees.     

 

     5.  (New section) The Secretary of Higher Education shall establish a process for students to apply for reimbursement of prepaid tuition and fees through the Student Tuition Recovery Fund.  The application shall require that, at a minimum, the person injured provides:

     a. proof of residency in the State at the time of separation from the proprietary institution;

     b. proof of payment to the proprietary institution of tuition and fees; and

     c. explanation of the nature of the claim, which may include:

     (1) the student was enrolled, or on an approved leave, at the time of the closure of the institution, or discontinuation of the academic program, and the student did not complete the program of study though a teach-out plan or by transferring all earned academic credits to another institution;

     (2)  the student withdrew from an academic program of the institution within a 120-day period before the institution closed or the program discontinued, due to a decline in the quality of education offered during that time period, except that the secretary may approve, as needed, a longer time period;

     (3) the institution failed to pay or reimburse loan proceeds under a federal student loan program as required by law, or failed to pay or reimburse proceeds received by the institution in excess of tuition and fees;

     (4) the student was awarded restitution, a refund, or other monetary award by an arbitrator or court, based on a violation by the institution, but has been unable to collect the award from the institution;

     (5) the institution enrolled the student in an academic program for which the student failed to meet the minimum academic requirements; or

     (6) the institution failed to fulfill its contractual obligations, failed to comply with licensing and accreditation requirements, or otherwise engaged in unfair or deceptive practices.     

 

     6. (New section)  a. The secretary shall, upon completed application and to the extent that funds are available, reimburse a person injured by a proprietary school licensed to offer academic degrees.  The person injured may recover from the fund an amount not to exceed the actual economic loss sustained. 

     b. In administering the fund, the secretary shall, ¹as appropriate,¹ for a person injured who holds outstanding student loan obligations for education at a proprietary institution that closed or otherwise failed:

     (1)  pursue a lender, holder, guarantee agency, or the United States Department of Education for the full or partial cancellation or discharge of student loan obligations to relieve students of economic loss and reduce the liability of the fund;

     (2) after notifying the student, pay a student's claim directly to the lender, holder, guarantee agency, or the United States Department of Education under a federally guaranteed student loan program; provided, however, that the payment shall satisfy all or a commensurate part of the student's loan obligations related to attendance at the institution for which the claim was filed; ¹[or] and¹

     (3) delay the payment of a claim pending the resolution of its attempt to obtain a cancellation or discharge of the claimant's student loan obligation; provided, however, the secretary shall not delay payment of the claim if the secretary receives notice of any adverse action that is not stayed against the claimant, including the commencement of a civil or administration action, tax offset, the enforcement of a judgement, or the denial of any government benefit. 

     c. A person injured by a proprietary school licensed to offer academic degrees shall be eligible to submit a claim against the fund for a period of six years after the date upon which the person injured formally separated from the institution. 

 

     7.    The Office of the Secretary of Higher Education shall adopt in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations as may be necessary to implement the provisions of this act. 

 

     8. This act shall take effect immediately and shall first apply to the first full academic year following the date of enactment.