H.B. No. 2806




AN ACT
relating to the regulation of career schools and colleges. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: SECTION 1. Section 132.001, Education Code, is amended by amending Subdivisions (8) and (9) and adding Subdivisions (1-a), (1-b), and (14) to read as follows: (1-a) "Class" or "course" means an identifiable unit of instruction that is part of a program of instruction. (1-b) "Course time" means a course or class period as follows: (A) a 50-minute to 60-minute lecture, recitation, or class, including a laboratory class or shop training, in a 60-minute period; (B) a 50-minute to 60-minute internship in a 60-minute period; or (C) 60 minutes of preparation in asynchronous distance education. (8) "Person" means any individual, firm, partnership, association, corporation, limited liability company, or other private entity or combination. (9) "Unearned tuition" means total tuition and fees subject to refund under Section 132.061[, total tuition and fees collected from students currently enrolled, and total tuition and fees collected from prospective students]. (14) "Program" or "program of instruction" means a postsecondary program of organized instruction or study that may lead to an academic, professional, or vocational degree, certificate, or other recognized educational credential. SECTION 2. Section 132.004, Education Code, is amended to read as follows: Sec. 132.004. EXCLUSIVE OFFERING OF EXEMPTED COURSES OR PROGRAMS BY BUSINESS ENTERPRISE. A business enterprise that offers exclusively courses or programs of instruction that are exempt under Section 132.002 or 132.003 is exempt from this chapter. SECTION 3. Section 132.051, Education Code, is amended to read as follows: Sec. 132.051. CERTIFICATE OF APPROVAL. (a) A career school or college may not maintain, advertise, solicit for, or conduct any program [course] of instruction in this state until [before the later of: [(1) the 30th day after the date the school or college applies for a certificate of approval under this chapter; or [(2) the date] the career school or college receives a certificate of approval from the commission. (b) Any contract entered into with any person for a program [course] of instruction by or on behalf of any person operating any career school or college to which a certificate of approval has not been issued pursuant to this chapter is unenforceable in any action brought thereon. Any note, other instrument of indebtedness, or contract relating to payment for educational services obtained from a career school or college that does not hold a certificate of approval issued under this chapter is unenforceable in any action brought on the note, instrument, or contract. SECTION 4. Section 132.055, Education Code, is amended to read as follows: Sec. 132.055. CRITERIA. (a) The commission may approve the application of a [such] career school or college when the school or college is found, upon investigation at the premises of the school or college, to have met the [following] criteria specified by Subsection (b).[:] (b)(1) [(a)] The programs [courses], curriculum, and instruction are of such quality, content, and length as may reasonably and adequately achieve the stated objective for which the programs [courses], curriculum, or instruction is offered. Before a career school or college conducts a program [course] of instruction in court reporting, the school or college must produce evidence that the school or college has obtained approval for the curriculum from the Court Reporters Certification Board. (2) [(b)] There is in the school or college adequate space, equipment, instructional material, and instructor personnel to provide training of good quality. (3) [(c)] Educational and experience qualifications of directors, administrators, and instructors are adequate. (4) [(d)] The school or college maintains a written record of the previous education and training of the applicant student that [and] clearly indicates that appropriate credit has been given by the school or college for previous education and training, with the new training period shortened where warranted through use of appropriate skills or achievement tests and the student so notified. (5) The school or college provides a copy of each of the following to each student before enrollment: [(e) A copy of] the applicable program [course] outline; the schedule of tuition, fees, [refund policy,] and other charges and of refunds; regulations pertaining to [absence,] grading [policy], including incomplete grades; [and] rules of operation and conduct; [regulations pertaining to incomplete grades;] the name, mailing address, and telephone number of the commission for the purpose of directing complaints to the agency; and the current rates of job placement and employment of students issued a certificate of completion [; and notification of the availability of the cost comparison information prepared under Section 132.021(b) through the commission will be furnished the student prior to enrollment]. (6) [(f)] Except as provided by Section 132.062, on completion of training, the student is given a certificate by the school or college indicating the program [course] and that training was satisfactorily completed. (7) [(g)] Adequate records as prescribed by the commission are kept to show [attendance and] progress or grades, and satisfactory standards relating to [attendance,] progress [,] and conduct are enforced. (8) [(h)] The school or college complies with all local, city, county, municipal, state, and federal rules and regulations, such as fire, building, and sanitation codes. The commission may require such evidence of compliance as is deemed necessary. (9) [(i)] The school or college is financially sound and capable of fulfilling its commitments for training. (10) [(j)] The school's or college's administrators, directors, owners, and instructors are of good reputation and character. (11) [(k)] The school or college has, maintains, and publishes in its catalogue and enrollment contract the proper policy for the refund of the unused portion of tuition, fees, and other charges in the event the student enrolled by the school or college in a program of instruction fails to take the program [course] or withdraws or is discontinued from the program [therefrom] at any time prior to completion. (12) [(l)] The school or college does not utilize erroneous or misleading advertising, either by actual statement, omission, or intimation as determined by the commission. (13) The school or college meets [(m) Such] additional criteria as may be required by the commission. (14) [(n)] The school or college does not use a name like or similar to an existing school or college unless the commission approves the school's or college's use of the name. (15) [(o)] The school or college furnishes to the commission the current rates of students who receive a certificate of completion and of job placement and employment of students issued a certificate of completion. (16) [(p)] The school or college furnishes to the commission for approval or disapproval student admission requirements for each [course or] program offered by the school or college. (17) [(q)] The school or college furnishes to the commission for approval or disapproval the course times [hour lengths] and curriculum content for each program [course] offered by the school or college. (18) [(r)] The school or college does not owe a penalty under Section 132.152, 132.155, or 132.157. SECTION 5. Sections 132.056(a) and (c), Education Code, are amended to read as follows: (a) The commission, upon review of an application for a certificate of approval duly submitted in accordance with Section 132.052 and meeting the requirements of Section 132.055, shall issue a certificate of approval to the applicant career school or college. The certificate of approval shall be in a form prescribed by the commission and shall state in a clear and conspicuous manner at least the following information: (1) date of issuance, effective date, and term of approval; and (2) correct name and address of the school or college[; [(3) authority for approval and conditions of approval, if any, referring specifically to the approved catalogue or bulletin published by the school or college; [(4) signature of the agency administrator; and [(5) any other fair and reasonable representations that are consistent with this chapter and deemed necessary by the commission]. (c) The certificate of approval shall be issued to the owner of the applicant career school or college and is nontransferable. In the event of a change in ownership of the school or college, a new owner must, at least 30 days prior to the change in ownership, apply, in the manner prescribed by the commission, for a new certificate of approval. SECTION 6. Section 132.061, Education Code, is amended by amending Subsections (b), (c), (d), (g), and (h) and adding Subsection (j) to read as follows: (b) Except as provided by Subsection (g), as a condition for granting certification each career school or college must maintain a policy for the refund of the unused portion of tuition, fees, and other charges in the event the student, after expiration of the 72-hour cancellation privilege, fails to enter a program in which the student is enrolled or [the course,] withdraws[,] or is discontinued from the program [therefrom] at any time prior to completion, and such policy must provide: (1) refunds for resident programs [courses] and synchronous distance education courses will be based on the period of enrollment computed on the basis of course time [expressed in clock hours]; (2) the effective date of [the] termination for refund purposes in residence career schools or colleges will be the earliest of the following: (A) the last date of attendance, if the student is terminated by the school or college; (B) the date of receipt of written notice from the student; or (C) 10 school days following the last date of attendance; (3) if tuition and fees are collected in advance of entrance, and if, after expiration of the 72-hour cancellation privilege, the student does not enter the residence career school or college, not more than $100 shall be retained by the school or college; (4) for the student who enters a residence program or a synchronous distance education course of not more than 12 months in length, terminates, or withdraws, the school or college may retain $100 of tuition and fees and the minimum refund of the remaining tuition and fees will be: (A) during the first week or one-tenth of the program or course, whichever is less, 90 percent of the remaining tuition and fees; (B) after the first week or one-tenth of the program or course, whichever is less, but within the first three weeks or one-fifth of the program or course, whichever is less, 80 percent of the remaining tuition and fees; (C) after the first three weeks or one-fifth of the program or course, whichever is less, but within the first quarter of the program or course, 75 percent of the remaining tuition and fees; (D) during the second quarter of the program or course, 50 percent of the remaining tuition and fees; (E) during the third quarter of the program or course, 10 percent of the remaining tuition and fees; or (F) during the last quarter of the program or course, the student may be considered obligated for the full tuition and fees; (5) for residence programs or synchronous distance education courses more than 12 months in length, the refund shall be applied to each 12-month period paid, or part thereof separately, and the student is entitled to a refund as provided by Subdivision (4); (6) refunds of items of extra expense to the student, such as instructional supplies, books, student activities, laboratory fees, service charges, rentals, deposits, and all other such ancillary miscellaneous charges, where these items are separately stated and shown in the data furnished the student before enrollment, will be made in a reasonable manner acceptable to the commission; (7) refunds based on enrollment in residence and synchronous distance education schools or colleges will be totally consummated within 60 days after the effective date of termination; (8) refunds for asynchronous distance education courses will be computed on the basis of the number of lessons in the course; (9) the effective date of [the] termination for refund purposes in asynchronous distance education courses will be the earliest of the following: (A) the date of notification to the student if the student is terminated; (B) the date of receipt of written notice from the student; or (C) the end of the third calendar month following the month in which the student's last lesson assignment was received unless notification has been received from the student that the student wishes to remain enrolled; (10) if tuition and fees are collected before any lessons for a program have been completed, and if, after expiration of the 72-hour cancellation privilege, the student fails to begin the program [course], not more than $50 shall be retained by the school or college; (11) in cases of termination or withdrawal after the student has begun the asynchronous distance education course, the school or college may retain $50 of tuition and fees, and the minimum refund policy must provide that the student will be refunded the pro rata portion of the remaining tuition, fees, and other charges that the number of lessons completed and serviced by the school or college bears to the total number of lessons in the course; and (12) refunds based on enrollment in asynchronous distance education schools or colleges will be totally consummated within 60 days after the effective date of termination. (c) In lieu of the refund policy herein set forth, for programs of instruction not regularly offered to the public, the commission may, for good cause shown, amend, modify, or substitute the terms of a career school's or college's policy due to the specialized nature and objective of the school's or college's program [course] of instruction. (d) If a program [course] of instruction is discontinued by the career school or college and this prevents the student from completing the program [course], all tuition and fees paid are then due and refundable. (g) A program that is 40 hours or less of course [class] time, or a seminar or workshop, is exempt from the 72-hour rule provided by Subsection (a). The career school or college shall maintain a policy for the refund of the unused portion of tuition, fees, and other charges in the event the student fails to enter the program or [course,] withdraws [from the course,] or is discontinued from the program [class] at any time before completion of the program [course] as provided by this section. The policy must provide that: (1) refunds are based on the period of enrollment computed on the basis of course time [expressed in clock hours]; (2) the effective date of [the] termination for refund purposes is the earlier of: (A) the last date of attendance; or (B) the date the school or college receives written notice from the student that the student is withdrawing from the class; and (3) the student will be refunded the pro rata portion of tuition, fees, and other charges that the number of [class] hours of course time remaining in the student's program [course] after the effective date of [the] termination bears to the total number of [class] hours of course time in the program [course]. (h) A closing career school or college shall, subject to Section 132.242, make a full refund to each student of the school or college who is owed a refund under this section. (j) The commission may adopt rules governing records necessary to make refunds authorized by this chapter. SECTION 7. Subchapter C, Chapter 132, Education Code, is amended by adding Section 132.065 to read as follows: Sec. 132.065. SCHOOLS NOT REQUIRED TO TAKE ATTENDANCE. (a) A career school or college that is eligible to participate in student financial aid programs under Title IV, Higher Education Act of 1965 (20 U.S.C. Section 1070 et seq.), is not required to take attendance. (b) Before a student begins a program offered by a career school or college to which Subsection (a) applies, the school or college shall provide to the student written notice of all policies related to program interruption occurring before the student's completion of the program. The career school or college shall also notify each student in writing that if the student withdraws from the program, it is the student's responsibility to inform the school or college of the student's withdrawal. (c) A student attending a program offered by a career school or college to which Subsection (a) applies may not be required to pay tuition to the school or college during the first week of the program. Except as otherwise provided by this subsection, the career school or college shall verify the student's enrollment in the program by documenting the student's participation in an academically related activity of the program at the end of the first week of each semester or other academic term of the program, at the end of the first month of each semester or other academic term of the program, at the midpoint of each semester or other academic term of the program, and at the end of each semester or other academic term of the program. If the career school or college is unable to verify the student's enrollment in the program at any of those times, the student is considered to have withdrawn from the program. The date on which the career school or college was first unable to verify the student's enrollment in the program is the date of the student's withdrawal for refund purposes, and the school or college is not required to verify the student's enrollment in the program after that date. SECTION 8. Section 132.151, Education Code, is amended to read as follows: Sec. 132.151. PROHIBITIONS. A person may not: (1) operate a career school or college without a certificate of approval issued by the commission; (2) solicit prospective students for or on behalf of a career school or college without being registered as a representative of the career school or college as required by this chapter; (3) accept contracts or enrollment applications from a representative who is not bonded as required by this chapter; (4) utilize advertising designed to mislead or deceive prospective students; (5) fail to notify the commission of the discontinuance of the operation of any career school or college within 72 hours of cessation of classes and make available accurate records as required by this chapter; (6) [fail to secure and file within 30 days an increased bond as required by this chapter; [(7)] negotiate any promissory instrument received as payment of tuition or other charge prior to completion of 75 percent of the applicable program [course], provided that prior to such time, the instrument may be transferred by assignment to a purchaser who shall be subject to all the defenses available against the career school or college named as payee; or (7) [(8)] violate any provision of this chapter. SECTION 9. Sections 132.201(a) and (d), Education Code, are amended to read as follows: (a) Certificate and registration fees, except those charged pursuant to Subsection (d), shall be collected by the commission. Each fee shall be in an amount set by the commission in an amount not to exceed 150 percent of each fee in the following schedule: (1) the initial fee for a career school or college: (A) for a certificate of approval is $2,000; or (B) for a small career school or college certificate of approval is $1,000; (2) the first renewal fee and each subsequent renewal fee for a career school or college is the greater of: (A) an amount that is determined by applying a percentage, not to exceed 0.3 percent, to the gross tuition and fees, excluding refunds as provided by Section 132.061, of the school or college; or (B) $500; (3) the initial registration fee for a representative is $60; (4) the annual renewal fee for a representative is $30; (5) the fee for a change of a name of a career school or college or owner is $100; (6) the fee for a change of an address of a career school or college is $180; (7) the fee for a change in the name or address of a representative or a change in the name or address of a career school or college that causes the reissuance of a representative permit is $10; (8) the application fee for an additional program [course] is $150, except for seminars [seminar] and workshops [workshop courses], for which the fee is $25; (9) the application fee for a director, administrative staff member, or instructor is $15; (10) the application fee for the authority to grant degrees is $2,000; (11) the application fee for an additional degree program [course] is $250; and (12) the fee for an inspection required by commission rule of classroom facilities that are separate from the main campus is $250. (d) In connection with the regulation of any career school or college or program [course] through a memorandum of understanding pursuant to Section 132.002(c), the commission shall set an application and annual renewal fee, not to exceed $2,000. The fee shall be an amount reasonably calculated to cover the administrative costs associated with assuming the additional regulation. SECTION 10. Section 132.2415(d), Education Code, is amended to read as follows: (d) From money in the career school or college tuition trust account, the commission shall attempt to provide a full refund to each student of a closed career school or college of the amount owed to the student as determined under Section 132.061. The commission may provide a partial refund to a student only if the commission determines that the amount in the trust account is insufficient to provide a full refund to the student. The commission shall consider the following factors in determining the amount of a partial refund to be paid to a student: (1) the amount of money in the trust account; (2) the cost and number of claims against the trust account resulting from closure of the school or college; (3) the average cost of a claim paid from the trust account in the past; and (4) the availability of other [licensed career] schools or colleges, regardless of whether the school or college is a career school or college, at which the student may complete the student's training. SECTION 11. Sections 132.242(a), (b), (c), (d), and (f), Education Code, are amended to read as follows: (a) If a career school or college closes, the commission shall attempt to arrange for students of the closed school or college to attend another [career] school or college, regardless of whether the school or college is a career school or college. (b) The expense incurred by a school or college, regardless of whether the school or college is a career school or college, in providing a teachout that is directly related to educating a student placed in the school or college under this section, including the applicable tuition for the period for which the student has paid tuition, shall be paid from the career school or college tuition trust account. (c) If the student cannot be placed in another school or college, regardless of whether the school or college is a career school or college, the student's tuition and fees shall be refunded under Section 132.061(d). (d) If a student does not accept a place that is available and reasonable in another school or college, regardless of whether the school or college is a career school or college, the student's tuition and fees shall be refunded under the refund policy maintained by the closing career school or college under Section 132.061. (f) If another school or college, regardless of whether the school or college is a career school or college, assumes responsibility for the closed career school's or college's students with no significant changes in the quality of training, the student is not entitled to a refund under Subsection (c) or (d). SECTION 12. Sections 132.021(b) and 132.056(e), Education Code, are repealed. SECTION 13. (a) The change in law made by this Act to Section 132.051(a), Education Code, applies to the date on which a career school or college may begin maintaining, advertising, soliciting for, or conducting a program only if the school or college submits a certificate of approval application on or after the date this Act takes effect. If the career school or college submits a certificate of approval application before the date this Act takes effect, the date on which a career school or college may begin maintaining, advertising, soliciting for, or conducting a program is governed by the law in effect on the date the certificate of approval application was submitted, and the former law is continued in effect for that purpose. (b) The change in law made by this Act to Section 132.051(b), Education Code, applies only to a contract entered into on or after the date this Act takes effect. A contract entered into before the date this Act takes effect is governed by the law in effect on the date the contract was entered into, and the former law is continued in effect for that purpose. SECTION 14. The change in law made by this Act to Section 132.055, Education Code, applies only to a certificate of approval application submitted to the Texas Workforce Commission on or after the date this Act takes effect. A certificate of approval application submitted before the date this Act takes effect is governed by the law in effect on the date the application was submitted, and the former law is continued in effect for that purpose. SECTION 15. The change in law made by this Act to Section 132.056, Education Code, applies only to a certificate of approval issued on or after the date this Act takes effect. A certificate of approval issued before the date this Act takes effect is governed by the law in effect on the date the certificate of approval was issued, and the former law is continued in effect for that purpose. SECTION 16. The change in law made by this Act to Section 132.061, Education Code, applies only to the refund policy of a career school or college to which a certificate of approval is granted or for which a certificate of approval is renewed by the Texas Workforce Commission on or after the date this Act takes effect. The refund policy of a career school or college to which a certificate of approval is granted or for which a certificate of approval is renewed by the Texas Workforce Commission before the date this Act takes effect is governed by the law in effect on the date the certificate of approval was granted or renewed, and the former law is continued in effect for that purpose. SECTION 17. The change in law made by this Act to Section 132.242, Education Code, applies only to a refund that becomes due on or after the date this Act takes effect. A refund that becomes due before the date this Act takes effect is governed by the law in effect on the date the refund becomes due, and the former law is continued in effect for that purpose. SECTION 18. This Act takes effect September 1, 2005. ______________________________ ______________________________ President of the Senate Speaker of the House I certify that H.B. No. 2806 was passed by the House on April 29, 2005, by a non-record vote; and that the House concurred in Senate amendments to H.B. No. 2806 on May 26, 2005, by a non-record vote. ______________________________ Chief Clerk of the House I certify that H.B. No. 2806 was passed by the Senate, with amendments, on May 24, 2005, by the following vote: Yeas 30, Nays 1. ______________________________ Secretary of the Senate APPROVED: __________________ Date __________________ Governor