Current through Register Vol. 63, No. 9, September 1, 2024
(1) There shall
be a fund known as the Private Career School Tuition Protection Fund (as
described in ORS 345.110). The Tuition Protection
Fund is hereby established in the custody of the State Treasurer. The Executive
Director of the Higher Education Coordinating Commission shall deposit in the
fund all monies received under this rule. Monies from the fund shall be spent
only for the purposes under this rule. Disbursements from the fund shall be on
authorization from the commission and no appropriation is required for such
disbursements. All earnings on investments of the fund shall be credited to the
fund. To be and remain licensed, each private career school authorized in
accordance with the provisions of ORS Chapter 345 shall pay to the state an
initial capitalization deposit and 14 semiannual payments. The fund shall be
initially capitalized at a minimum of $200,000 and shall achieve and maintain
an operating balance of at least $1 million. Said fund is intended to be a fund
of last resort.
(2) Purpose of the
fund:
(a) Students attending schools licensed
by the State of Oregon, other than students covered by another state's tuition
protection, may apply to the commission, when a school ceases to provide
educational services, for a refund of tuition from the fund established
pursuant to this rule to the extent that such fund exists or has reached the
level necessary to pay outstanding approved claims. The liability of the fund
for claims against the school shall not exceed the total amount of the
liability limit assigned to the school under subsection (3)(a) of this rule.
Such limitation on each school's liability remains unchanged by single or
cumulative disbursements made on behalf of the school. If the commission's
executive director finds that a student is entitled to a refund of tuition, the
executive director shall determine the amount of refund based on criteria
established by the commission;
(b)
The commission shall direct the State Treasurer to pay the refund on behalf of
the student to the student and/or the student's financial sponsor(s). If the
student is a minor, payment shall be made to the student's financial
sponsor(s). Each recipient of a tuition refund shall, as a condition for
receiving the claim, assign all rights to the commission of any action against
the school or its owner(s) for tuition amounts reimbursed pursuant to this
section;
(c) Upon such assignment,
the executive director shall take appropriate action against the school or its
owner(s) in order to reimburse the Tuition Protection Fund for any expenses or
claims that are paid from the fund and to reimburse the commission for the
reasonable and necessary expenses in undertaking such action;
(d) The executive director shall attempt to
recover from the school all funds disbursed from the Tuition Protection Fund
and other costs of recovery;
(e)
The Tuition Protection Fund shall not be used to reimburse private party
attorney fees;
(f) Under no
circumstances will any party, person or entity, other than the commission, be
allowed to access funds from the Tuition Protection Fund; and
(g) No liability accrues to the State of
Oregon from claims made against the fund.
(3) Establishment of fund liability limits:
(a) The amount of liability that can be
satisfied by this fund, on behalf of each individual school licensed under this
rule, shall be based on the gross tuition income reported on the last license
renewal application: [Table not included. See ED. NOTE, Table 1]
(b) The calculation of gross annual tuition
for a school located outside the State of Oregon shall include only that income
derived from residents of this state during the school's preceding year of
operation, as evidenced in the financial statement required by OAR
715-045-0032;
(c) Institutions not
yet in operation or otherwise lacking a full year's financial data prior to
initial licensing, shall have a liability limit calculated on the basis of an
estimation of gross annual tuition;
(d) Each school subject to this rule shall
submit to the commission in cash, check, money order, or electronic payment as
allowed by law, the following nonrefundable* amounts for its initial
capitalization deposit into the Tuition Protection Fund: [Table not included.
See ED. NOTE, Table 1]
(e)
Notwithstanding subsection (d) of this section, each school subject to the
exception listed in Section 1(b) of OAR 715-045-0032 shall submit to the
commission in cash, check, money order, or electronic payment as allowed by
law, the following nonrefundable amounts as a substitute for the general
liability insurance requirement listed in OAR 715-045-0032: [Table not
included. See ED. NOTE, Table 2]
(f) After the date of its nonrefundable
initial capitalization deposit, as a condition to remaining licensed, each
school shall remit to the commission for deposit into the Tuition Protection
Fund semiannual payments (on January 31 and July 31) in cash, check, money
order, or electronic payment as allowed by law, in accordance with the schedule
in subsection (3)(d), or subsection 3(e) of this rule, if applicable. If the
semiannual payment is not postmarked (or date stamped if hand delivered to the
Department) before or on the due date, the commission may impose a civil
penalty as allowed under ORS
345.995 and OAR 715-045-0190.
Failure of a school to make payment within 30 days of due date shall be grounds
for suspension or revocation of the school's license; and
(g) The executive director shall prepare and
mail to each licensee semiannual notices of the due dates and amounts of
deposits required under subsection (3) of this rule. Each notice shall include
therein at least once each year:
(A) A
notation showing the licensee's aggregate prior deposits into the
fund;
(B) A notation showing the
licensee's balance of remaining payments based on the most recent deposit
received;
(C) A notation showing
the cumulated balance existing in the fund at the most recent half-year
accounting; and
(D) A summary
showing all disbursements made from the fund to satisfy claims in the period
since the last such similar summary was disseminated.
(4) After disbursements made to
settle claims reduce the operating balance below $500,000, and recovery of such
funds has not been ensured by the affected school within 30 days, the
commission shall assess each licensee a pro rata share of the amount required
to restore the balance in the fund to $500,000. When calculating each share,
the commission shall employ a pro rata percentage of liability. If the amount
of any single such assessment equals or is less than the semiannual amount of
deposit established for the licensee, the assessment shall be paid within 30
days of notice. If any single assessment exceeds the amount of its semiannual
deposit, the school may apply to the commission for a schedule of deferred
payments. The commission shall grant such deferrals on application, but in no
case shall the time extended exceed one year beyond the date of an
assessment.
(5) The executive
director shall determine, based on annual financial data supplied by the
school, whether the semiannual deposit assigned to the school on the matrix
established under subsection (3) has changed. If an increase or decrease has
occurred, a corresponding change in the semiannual deposit shall be made before
the date of its next scheduled deposit into the fund.
(6) When any ownership interest in a school
is conveyed through sale or other means that results in the transferee (buyer)
owning more than 50 percent of the school, the contribution schedule of the
prior owner is canceled. All contributions made up to the date of the transfer
accrue to the fund. The new owner commences contributions under provisions
applying to a new applicant. Exception shall be granted to any transferee
(buyer) who held more than 50 percent of the ownership interest prior to the
transfer and to any transferee who owned any interest in the school for more
than four years prior to the transfer. In such instances the transferee (buyer)
shall provide the executive director with legal evidence to validate the
percent and time period of ownership.
(7) When deposits in the Tuition Protection
Fund equal or exceed $1,000,000, the Commission may transfer the amount in
excess of $1,000,000 as necessary to support the critical operational needs as
determined by the Commission, of the unit of the Commission responsible for
licensing and regulating private career schools.
(a) Transfers for this purpose shall not
exceed $200,000 in a single biennium.
(b) The Executive Director shall authorize
any transfers made under this provision.
(c) The Commission shall notify any
preexisting committees convened to advise the Director of Private Postsecondary
Education on private career school matters that a transfer has been made no
later than the first meeting of such committee after the transfer has been
authorized.
(8) When
deposits in the Tuition Protection Fund equal or exceed $3,000,000, and the
history of disbursements so warrants, the commission may reduce the schedule of
deposits whether as to time, amount, or both. When such level is achieved, the
commission may return any excess funds to currently licensed schools that have
completed their required contributions to the fund.
(9) Additional procedures established to deal
with a school that ceases to provide educational services:
(a) A school ceases to provide educational
services when the school or a division of the school ceases to provide classes
or instruction;
(b) The executive
director shall attempt to notify all potential claimants within 60 days of the
date the executive director determines a school has ceased to provide
educational services. The absence of records and other circumstances may make
it impossible or unreasonable for the executive director to ascertain the name
and address of each potential claimant, but the executive director shall make
reasonable inquiries to secure that information from all likely sources
including but not limited to public notification. The notification to students
shall inform them of the opportunity and the deadline for submitting claims
against the Tuition Protection Fund;
(c) Claims against the Tuition Protection
Fund may be made only by students who were enrolled at the time a school ceases
to provide educational services;
(d) All claims must be filed with the
commission by the deadline established in the executive director's
notification. Each student filing a claim must specify and verify any and all
sources and amounts of tuition that were paid on the student's behalf. The
commission may refuse to pay any claim that does not contain sufficient
verification or other information required by the executive director;
(e) The executive director shall not consider
any claims filed after the deadline established in the executive director's
notification. Failure of a student to receive notification shall not be a basis
for the commission to consider any claims filed after the deadline;
(f) The executive director shall seek to
recover such disbursed funds from the assets of the defaulted school, including
but not limited to asserting claims as a creditor in bankruptcy proceedings;
and
(g) A school shall have no
vested right, claim or interest in any deposit to the Tuition Protection Fund
and all payments shall accrue to the fund.
(10) In the event of a potential and actual
school closure a school shall inform its students in writing of their rights
under the provisions governing the Tuition Protection Fund.
(11) If a school closure is in violation of
OAR 715-045-0067, the commission may allocate monies from the Tuition
Protection Fund, as a fund of last resort, to teach-out arrangements for
displaced students. The liability level for teach-out costs shall be the same
as that established in subsection (3) of this rule. Students signing a written
agreement as a result of this option would not be entitled to a refund from the
school or the Tuition Protection Fund.
(12)
(a) In
the event the Governor issues a declaration of emergency or executive orders
that order or directly lead to the temporary cessation of educational activity
by a school required to make payments for the Tuition Protection Fund, the
Commission, at its discretion, may provide for such payments to be deferred
without interest or penalty. Payments may be deferred under this provision for
three months, renewable for a period not to exceed one year.
(b) Should the Governor, through repeal or
further executive action, cancel any applicable declaration of emergency or
executive orders, any deferrals issued under this subsection shall be extended
or reduced as required to expire 90 days from such cancellation.
To view attachments referenced in rule text,
click here to view
rule.
Statutory/Other Authority: ORS
345.110 & ORS
345.995
Statutes/Other Implemented: ORS
345.110
