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