Bill would offer tuition refunds when private career schools close

The Labor Department would approve tuition refunds or payments to another private career school where eligible students finish their training. Students must have paid for instruction they cannot finish because the school closed or became unable to pay its debts, or have been enrolled within 90 days of that event and be owed a tuition refund. Payments would use the school's bond first, then available money in the shared fund. Transfer payments would need the Labor Commissioner's approval. Other refunds would reflect instruction received and options for finishing elsewhere, and could not exceed tuition paid.

Private career schools would obtain a bond, a financial guarantee, and pay into the fund for each enrolled student. The Labor Commissioner would set the bond amount and payment per student. The payment would not count as tuition. After notice from the Labor Commissioner, contributions would stop at $2.5 million and restart if closures reduce the balance below $2 million, continuing until it reaches $2.5 million again. Schools first approved after the law takes effect would contribute for four years regardless of those balance rules. Schools would pay for students enrolled when the law takes effect within 90 days of that date, then pay quarterly for newly enrolled students.

The Labor Department would return state-funded tuition refunds to the state student aid agency, and recipients would transfer certain legal claims to the state. These rules would cover students receiving payments through the program, including payments made on their behalf. Only the portion exceeding state grants or scholarships would go directly to the student. Recipients would give the state their rights to seek repayment from the school or its owner for tuition already reimbursed. Payments for minors would go to a parent or legal guardian, who would transfer those rights.