HB 1439 — Regulating the institutions of higher education, including for-profit institutions and private vocational schools, to protect students from unfair business practices.

H-2081.2SECONDH-0898.2HOUSE SUBSTITUTE HOUSE BILL 1439State of Washington65th Legislature2017 Regular SessionBy House Appropriations (originally sponsored by Representatives Pollet, Haler, Tarleton, Fey, Sells, Orwall, Ryu, Stanford, and Dolan)READDolanRead FIRSTfirst TIMEtime 02/24/17.AN01/19/17. ACT Relating to regulating the institutions of higher education, including for-profit institutions and private vocational schools, to protect students from unfair business practices;

Referred to Committee on Higher Education.AN ACT Relating to regulating the institutions of higher education, including for-profit institutions and private vocational schools, to protect students from unfair business practices;

creating a new sections;section;

and prescribing penalties.BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:NEW SECTION.  Sec. 1.  The legislature findsintends that therestudents areenrolled manyin private for-profit higher education institutions and nonprofitprivate careervocational collegesschools andshould degree-grantingbe institutionsprotected providingfrom Washingtondocumented statepractices residentsthat withhave importantjeopardized postsecondarystudents' andinvestments careerin opportunitiesobtaining thathigher contributeeducation toor thevocational economictraining, securityincluding marketing of Washingtonloans residentsat andextraordinarily aidhigh ininterest meetingrates theby needsinstitutions ofwith oura state'sfinancial growinginterest economy.in the students' debt;

Theinflation legislatureof alsodata recognizesregarding thatpostgraduation thereemployment have been high profile closures of, or federalearning andlevels otherto stateinduce determinationsstudents regarding,to someenroll; for-profit or formerly for-profit institutions that have damaged the reputation of the sector and impacted the expectations and financial stability of some students.

Itexaggeration isof the legislature'slikelihood intentof tostudent's provideability a framework to ensureobtain a level playing field exists for the many institutions that provide disclosures to prospective students based on verifiable metrics, which allow prospective students to be able to make the best decisions on school and career choices and on financial aid andor low-interest loans tofor financetuition; their educational goals.

Theand legislatureoverstatement alsoabout intendsthe ability of graduates to ensurerepay loans.The legislature finds that it is necessary to protect (1) students who are providedenrolled thein informationfor-profit theyhigher neededucation toinstitutions makeor private vocational schools, and (2) the beststate's interest in the integrity of its grant and aid programs, from private decisions forto theirclose educationalschools futureor programs under circumstances that may prevent students from obtaining the degree or certificate and careerscareer inservices eventthat the students expected upon enrollment.NEW SECTION.  Sec. 2.  A new section is added to chapter 28B.85 RCW to read as follows:(1) There is created the office of closurethe orombuds potentialserving closurestudents of anfor-profit institution.degree granting institutions and private vocational schools.

InThe addition,office is created within the legislaturecouncil intendsto provide assistance to protectstudents theof state'sfor-profit interestpostsecondary institutions and private vocational schools.(2) The council, in coordination with the workforce training and education coordinating board, must appoint an ombuds, who must be a person of recognized judgment, independence, objectivity, and integrity and must be qualified by training and experience in the area of itshigher granteducation.(3)(a) The office of the ombuds must assist past, currently enrolled, and aidprospective programs,students fromon privateunderstanding decisionstheir rights with respect to closefor-profit postsecondary institutions and private vocational schools, including the disclosures required of the institutions and schools and the student's rights if the institution or school terminates programs underor circumstancescloses.(b) thatThe mayoffice preventof the ombuds must offer mediation between students fromand obtainingfor-profit degree granting institutions regulated by the degreecouncil or certificateprivate vocational schools regulated by the workforce training and careereducation servicescoordinating thatboard or the studentsdepartment expectedof uponlicensing.(4) enrollment.NEWThe SECTION.  Sec. 2.  (1)office Subjectof the ombuds must track the number of student inquiries it receives and the types of questions and concerns raised by the students.(5) To ensure independence, the ombuds, or the office of the ombuds' director, if there is a director, shall report to the availabilitydirector of amountsthe appropriatedcouncil forand thismay specificnot purpose,be removed or replaced from office by the studentdirector achievementof the council mustwithout continuethe administeringcouncil's director first notifying the two-partfull studycouncil and being advised by the full council.(6) The office of for-profitthe degree-grantingombuds institutionsmust be created no later than September 1, 2018.Sec. 3.  RCW 28B.85.020 and private2013 vocationalc schools218 thats was3 authorizedare undereach sectionamended 609,to read as follows:(1) The council:(a) Shall adopt by rule, in accordance with chapter 36,34.05 LawsRCW, minimum standards for degree-granting institutions concerning granting of 2016degrees, sp.quality of education, unfair business practices, financial stability, and other necessary measures to protect citizens of this state against substandard, fraudulent, or deceptive practices.

sess..(2) As part of the second part of the process, the study must contain findings and recommendations regarding the creation of an ombuds to serve students of degree-granting institutions and private vocational schools, including a recommendation on which state agency should house the position, and if there are other ombuds positions created by the legislature that can serve these students.(3) The student achievement council and the workforce training and education coordinating board must provide a report on the study to the legislature by December 31, 2017.Sec. 3.  RCW 28B.85.020 and 2013 c 218 s 3 are each amended to read as follows:(1) The council:(a) Shall adopt by rule, in accordance with chapter 34.05 RCW, minimum standards for degree-granting institutions concerning granting of degrees, quality of education, unfair business practices, financial stability, and other necessary measures to protect citizens of this state against substandard, fraudulent, or deceptive practices.

or(iv) Have been granted an exemption by the council from the requirements of this subsection (1)(a);(b) Shall require that a degree-granting institution authorizedthat tooperates operateon undera thisfor-profit chapterbasis and any agent of the institution, shall not engage in any practice regarding the sale of, or inducing of students to obtain, specific consumer student loan products to fund education that financially benefits any person or entity that has an ownership interest in the institution, unless the institution can demonstrate to the council that the student has exhausted all federal aid options and has been denied noninstitutional private commercial loan products.

The prohibition in this subsection (1)(b) applies to any degree-granting institution authorizedthat tooperates operateon undera thisfor-profit chapter,basis, and any agent of the institution, that has at least one hundred fifty students or more enrolled in the state in any given year or that has been operating in the state for less than two consecutive years.

If the council prevails, the degree-granting institution shall pay the costs of the administrative hearing.(3) If, after the hearing, the council finds that the institution or its agent engaged in or is engaging in any unfair business practice, the council shall issue and cause to be served upon the violator an order requiring the violator to cease and desist from the act or practice and may impose the penalties under RCW 28B.85.10028B.85.100. and section 6 of this act.

The penalties authorized pursuant to subsection (1) of this section do not preclude remedies available under the provisions of the consumer protection act.NEW SECTION.  Sec. 6.  A new section is added to chapter 28B.85 RCW to read as follows:(1) The council may deny, revoke, or suspend the authorization of any degree-granting institution authorized to operate under this chapter that is found to behave engaged in violationa ofsubstantial thisnumber chapterof including,unfair butbusiness notpractices limitedor to,that havinghas engaged in a significant number of unfair business practices.(2) It is a violation of this chapter for a degree-granting institution authorizedthat tooperates operateon undera thisfor-profit chapterbasis or an agent employed by such a degree-granting institution to:(a)to: Provide prospective students with any testimonial, endorsement, or other information that a reasonable person would find was likely to mislead or deceive prospective students or the public regarding current practices of the school, current conditions for employment opportunities, postgraduation employment by industry, or probable earnings in the occupation for which the education was designed, the likelihood of obtaining financial aid or low-interest loans for tuition, or the ability of graduates to repay loans;(b) Fail to continue job placement services promised to enrollees or graduates in the event the institution is sold or reduces any programs or services;(c) Place a current student or exiter of a program in a short-term job:(i) That is not relevant to the student's training, in order to meet reporting requirements under state law;

or(ii)(a) WhereProvide prospective students with any testimonial, endorsement, or other information that a reasonable person would find was likely to mislead or deceive prospective students or the public regarding current practices of the school, current conditions for employment opportunities, postgraduation career placement isrates doneor probable earnings in the occupation for which the purposeeducation was designed, the likelihood of reportingobtaining financial aid or low-interest loans for tuition, or the ability of graduates to repay loans;(b) Fail to continue job placement services promised to enrollees or graduates in the event the institution is sold or reduces any programs or services;(c) Place a current student or an exiter of a program as employed, in ordera toshort-term meetjob:(i) reportingThat requirementsis undernot staterelevant law;(d)to Usethe anystudent's officialtraining, Unitedin Statesorder militaryto logomeet inreporting advertisingrequirements orunder promotionalstate materials;law;

or(e)or(ii) ViolateWhere the provisionplacement ofis RCWdone 28B.85.020(1)(b)for regarding the salepurpose of, or inducing of studentsreporting tothe obtain,current specific consumer student loanor products.(3)an Forexiter the purposes of implementinga thisprogram section,as theemployed, council shall establish in ruleorder definitions for the terms "short-term job," "part-time employment," "self-employment," and "underreported earnings." The definitions established must be consistent with how those terms are defined by the workforce training and education coordinating board pursuant to sectionmeet 10reporting ofrequirements this act.NEW SECTION.  Sec. 7.  A new section is added to chapter 28B.85 RCW to read as follows:If a degree-granting institution authorized to operate under thisstate chapterlaw; presents data about its completion rates, employment rates, loan or indebtedness metrics, or its graduates' median hourly and annual earnings, the posted data must be consistent with the data posted on the workforce training and education coordinating board's career bridge web site or the data posted by the United States department of education, if the board or the department of education has posted such data.NEW SECTION.  Sec. 8.  A new section is added to chapter 28B.85 RCW to read as follows:

(1)or(d) AUse degree-grantingany institutionofficial authorizedUnited toStates operatemilitary underlogo in advertising or promotional materials.(3) It is a violation of this chapter mustfor providea noticedegree-granting institution that operates on a for-profit basis or an agent of the institution to engage in any practice regarding student'sstudent rightsloan underproducts thisto chapter,fund education that benefits any applicableperson federalor law,entity andhaving an ownership interest in the complaintinstitution, proceduresor in RCWany 28B.85.090:(a)practice Infrom writingwhich tothe currentinstitution studentsbenefits andfinancially exiterson the sale of, or enrollment of astudents program;in, loan products to fund education.

The prohibition in this subsection (3) applies to any degree-granting institution that operates on a for-profit basis, and any agent of the institution, that has at least one hundred fifty students or more enrolled in the state in any given year or that has been operating in the state for less than two consecutive years.NEW SECTION.  Sec. 7.  A new section is added to chapter 28B.85 RCW to read as follows:If a degree-granting institution operating on a for-profit basis presents data about its completion rates, employment rates, loan or indebtedness metrics, or its graduates' median hourly and annual earnings, the presentation of that data must be consistent with the methodology and procedures used by schools presenting data on the workforce training and education coordinating board's career bridge web site, as determined by the council.NEW SECTION.  Sec. 8.  A new section is added to chapter 28B.85 RCW to read as follows:

(1) A degree-granting institution that operates on a for-profit basis must provide notice regarding student's rights under this chapter, any applicable federal law, and the complaint procedures in RCW 28B.85.090:(a) In writing to current students and exiters of a program;

The notice must inform students that claims may be pursued by filing a complaint with the council or by filing a complaint pursuant to theRCW consumer19.86.020 protection act and of the availability of anythe office of the ombuds thatserving maystudents beof establishedfor-profit bydegree thegranting councilinstitutions and private vocational schools to assist students in resolving concerns.(3) The council may direct institutions to post the notice in a conspicuous location within the institution and on any web site maintained by the institution and to send the notices by mail to students.Sec. 9.  RCW 28C.10.050 and 2014 c 11 s 2 are each amended to read as follows:(1) The agency shall adopt by rule minimum standards for entities operating private vocational schools.

To the extent that these web sites or materials present any data on the completion rates, employment rates, loan or indebtedness metrics, and its graduates' median hourly and annual earnings for any of the private vocational schools or its programs, thethis postedinformation data must be consistent with the datasame postedtypes on the agency's career bridge web site or the data posted by the United States department of education,information ifas thecurrently agencypresented oron the departmentagency's ofcareer educationbridge hasweb postedsite. such data.

NothingIn inthose thiscases subsectionwhere requires the agency todoes makenot changeshave toinformation calculated for the career bridge web site on a school or addprogram, newthe elementsagency orshall featuresestablish toprocedures theand careermethodology bridgeand webrequired site;(d)accompanying descriptive material for any alternative data posted;(d) Use an enrollment contract or agreement that includes:

((and))(j) Comply with the requirements related to qualifications of administrators and instructors.(3) A private vocational school that has at least one hundred fifty students or more in the state during any given year, or that has been operating in the state for less than two consecutive years, or that has not hadbeen at least one of its programs recognized by the agency as an eligible training provider for at least two consecutive years, may not engage in any practice regarding the sale of, or inducing of students to obtain, specific consumer student loan products to fund education that financially benefits any person or entity that has an ownership interest in the institution, unless the institution can demonstrate to the agency that the student has exhausted all federal aid options and has been denied noninstitutional private commercial loan products.

information regarding rates of completion or postgraduation employment byprograms, industry, or itspostgraduation graduates' median hourly or annual earnings, that isare not consistent with either the presentationdata ofposted by the agency on its career bridge web site or alternative data asthe establishedagency underhas RCWrequired 28C.10.050(2)(c);in cases where the agency does not have information calculated for the career bridge web site;

postgraduation employmentcareer byplacement industryrates or probable earnings in the occupation for which the education was designed;

Recruiting does not include leaving materials at or near an office for a person to pick up of his or her own accord, or handing a brochure or leaflet to a person provided that no attempt is made to obtain a name, address, telephone number, or other data, or to otherwise actively pursue the enrollment of the individual;(m) ViolateEngage RCWin 28C.10.050(3)any practice regarding the sale of, or inducing of students to obtain, specific consumer student loan products;(n)products to fund education that financially benefits any person or entity that has an ownership interest in the institution, unless the institution can demonstrate to the agency that the student has exhausted all federal aid options and has been denied noninstitutional private commercial loan products, if the prohibition under RCW 28C.10.050(3) applies;(n) Place a current student or exiter of a program in a short-term job:(i) That is not relevant to the student's training in order to meet reporting requirements under state or federal law;

or(o) Use any official United States military logos in advertising or promotional materials.(3)materials.Sec. 11.  RCW For the purposes of implementing this section, the agency shall establish in rule definitions for the terms "short-term job," "part-time employment," "self-employment," and "underreported earnings." The definitions established must be consistent with how those terms are defined by the student achievement council pursuant to section 6 of this act.Sec. 11.  RCW 28C.10.130 and 1986 c 299 s 13 are each amended to read as follows:(1) Any private vocational school or agent violating RCW 28C.10.060, 28C.10.090, or 28C.10.110 or the applicable agency rules is subject to a civil penalty of not more than one hundred dollars for each separate violation.

(1) Private vocational schools shall provide notices regarding students' rights under this chapter, any applicable federal law, and the complaint procedures in RCW 28C.10.120:(a)28B.85.090:(a) In writing to current students and exiters of a program;

The notice must inform students how to contact the office of the ombuds for advice and mediation regarding concerns, and inform students that claims may be pursued by filing a complaint with the agency or by filing a complaint pursuant to RCW 19.86.020.(3) The agency may direct institutions to post the notices in a conspicuous location within the institution and on its web sites and to send the notices by mail to students.NEW SECTION.  Sec. 13.  A new section is added to chapter 28B.85 RCW to read as follows:(1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.(a) "Educational"Education institution" means a degree-granting institution authorized to operate under this chapter.(b) "Student education loan" means any loan solelyprimarily for personal use to finance postsecondary education andor costsother ofschool-related attendanceexpenses atthat anthe educationalinstitution has certified.(b) "Institution" means a for-profit degree-granting institution.(2) An educational institution mustthat providereceives toeducation loan information for an enrolled student whomust hasprovide appliedto forthat student financial aid a notification including the following information about the student education loans the educational institution has certified:(a) An estimate, based on information available at the time the notification is provided, of the:(i) Total amount of student education loans taken out by the student;(ii) Potential total payoff amount of the student education loans incurred or a range of the total payoff amount,amount;(iii) includingMonthly principalrepayment andamounts interest;(iii)that Thea monthlysimilarly repaymentsituated amountborrower thatmay theincur, studentincluding mayprincipal incurand interest, for the amount of student education loans the student has taken out, based on the federal loan repayment plan borrowers are automatically enrolled in if they do not select an alternative repayment plan;

and(iv) Percentage of the aggregate federal direct loan borrowing limit applicable to the student's program of study the student has reachedreached; at the time the information is sent to the student;

and(b) ConsumerInformation information about the differences between private student loans and federal student loans, including the availability of income-based repayment plans and loan forgiveness programs for federal loans.(3) The notification provided under subsection (2) of this section must include a statement that the estimates and ranges provided are general in nature and not meant as a guarantee or promise of the actual projected amount.

It must also include a statement that a variety of repayment plans are available for federal student loans that may limit the monthly repayment amount based on income.(4) The notification must include information about how to access resources for student education loan borrowers provided by federal or state agencies, such as a student education loan debt hotline and web site or student education loan ombuds, federal student loan repayment calculator, or other available resources.(5) An educational institution must provide the notification required in subsection (2) of this section via email.email or in writing.(6) An institution does not incur liability for any good faith representations made under subsection (2) of this section.(7) Institutions must begin providing the notification required under subsection (2) of this section by January 1, 2018, each time a new financial aid package including loans is offered to the student.(8) The student achievement council under chapter 28B.77 RCW, the workforce training and education coordinating board as defined in RCW 28C.18.020, or the department of licensing under chapter 46.01 RCW, must develop a form for reporting compliance by January 1, 2018.

InInstitutions addition,must report compliance with the educationalagency, institutionas mayapplicable, provideat least annually beginning January 1, 2019.(9) Beginning December 1, 2019, and biannually thereafter until December 25, 2025, the notificationagencies inidentified writing,under insubsection an(8) electronicof format,this orsection must submit a report in person.(6)compliance Anwith educationalRCW institution43.01.036 doesto notthe incurlegislature liability,that includingdetails forhow actionsthe underinstitutions are in compliance with this section.NEW SECTION.  Sec. 14.  A new section is added to chapter 19.8628C.10 RCW byto read as follows:(1) The definitions in this subsection apply throughout this section unless the attorneycontext general,clearly forrequires otherwise.(a) "Education loan" means any goodloan faithprimarily representationsfor madepersonal underuse subsectionto (2)finance ofeducation thisor section.(7)other Educationalschool-related institutionsexpenses that the institution has certified.(b) "Institution" means a private vocational school.(2) An institution that receives education loan information for an enrolled student must beginprovide providingto that student a notification including the following information about the loans the institution has certified:(a) An estimate, based on information available at the time the notification requiredis underprovided, subsectionof (2)the:(i) Total amount of thiseducation sectionloans taken out by Julythe 1,student;(ii) 2018,Potential eachtotal timepayoff amount of the education loans incurred or a financialrange aidof packagethe thattotal includespayoff amount;(iii) Monthly repayment amounts that a newsimilarly orsituated revisedborrower studentmay educationincur, loanincluding isprincipal offeredand tointerest, for the student.(8)amount Theof councilloans mustthe developstudent ahas formtaken forout, based on the educationalfederal institutionsloan torepayment useplan toborrowers reportare complianceautomatically byenrolled Julyin 1,if 2018.they do not select an alternative repayment plan;

Educationaland(iv) institutionsPercentage mustof report compliance with the studentfederal achievementdirect council at least annually beginning January 1, 2019.(9) Beginning December 1, 2019, and biannually thereafter until December 25, 2025, the council must submit a report in compliance with RCW 43.01.036 to the legislature that details how the educational institutions are in compliance with this section.NEW SECTION.  Sec. 14.  A new section is added to chapter 28C.10 RCW to read as follows:(1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.(a) "Educational institution" means a private vocational school operating under this chapter.(b) "Student education loan" means any loan solelyborrowing forlimit personal use to finance postsecondary education and costs of attendance at an educational institution.(2) An educational institution must provide to an enrolled student who has applied for student financial aid a notification including the following information about the student education loans the educational institution has certified:(a)reached; An estimate, based on information available at the time the notification is provided, of the:(i) Total amount of student education loans taken out by the student;(ii) Potential total payoff amount of the student education loans incurred or a range of the total payoff amount, including principal and interest;(iii) The monthly repayment amount that the student may incur for the amount of student education loans the student has taken out, based on the federal loan repayment plan borrowers are automatically enrolled in if they do not select an alternative repayment plan;

and(iv)and(b) PercentageInformation ofabout the aggregatedifferences federalbetween directprivate loanstudent borrowingloans limitand applicablefederal tostudent loans, including the student'savailability programof income-based repayment plans for federal loans.(3) The notification provided under subsection (2) of studythis thesection studentmust hasinclude reacheda atstatement that the timeestimates theand informationranges isprovided sentare togeneral in nature and not meant as a guarantee or promise of the student;actual projected amount.

and(b)It Consumermust also include a statement that a variety of repayment plans are available for federal student loans that may limit the monthly repayment amount based on income.(4) The notification must include information about thehow differencesto betweenaccess privateresources for student loansloan borrowers provided by federal or state agencies, such as a student loan debt hotline and web site or student education loan ombuds, federal student loans,loan includingrepayment calculator, or other available resources.(5) An institution must provide the availabilitynotification required in subsection (2) of income-basedthis repaymentsection plansvia andemail loanor forgivenessin programswriting.(6) An institution does not incur liability for federalany loans.(3)good Thefaith representations made under subsection (2) of this section.(7) Institutions must begin providing the notification providedrequired under subsection (2) of this section mustby includeJanuary 1, 2018, each time a statementnew thatfinancial aid package including loans is offered to the estimatesstudent.(8) andThe rangesstudent providedachievement arecouncil generalunder inchapter nature28B.77 RCW, the workforce training and noteducation meantcoordinating board as adefined guaranteein RCW 28C.18.020, or promisethe department of thelicensing actualunder projectedchapter amount.46.01 RCW, must develop a form for reporting compliance by January 1, 2018.

ItInstitutions must alsoreport includecompliance awith statementthe thatagency, aas varietyapplicable, ofat repaymentleast plansannually arebeginning availableJanuary for1, federal2019.(9) studentBeginning loansDecember that1, may2019, limitand thebiannually monthlythereafter repaymentuntil amountDecember based25, on2025, income.(4)the Theagencies notificationidentified mustunder includesubsection information(8) aboutof howthis tosection accessmust resourcessubmit for student education loan borrowers provided by federal or state agencies, such as a studentreport educationin loancompliance debtwith hotlineRCW and43.01.036 webto sitethe orlegislature studentthat educationdetails loanhow ombuds, federal student loan repayment calculator, or other available resources.(5) An educational institution must provide the notificationinstitutions requiredare in subsectioncompliance (2)with of this sectionsection.--- viaEND email.---

In addition, the educational institution may provide the notification in writing, in an electronic format, or in person.(6) An educational institution does not incur liability, including for actions under chapter 19.86 RCW by the attorney general, for any good faith representations made under subsection (2) of this section.(7) Educational institutions must begin providing the notification required under subsection (2) of this section by July 1, 2018, each time a financial aid package that includes a new or revised student education loan is offered to the student.(8) The agency must develop a form for the educational institutions to use to report compliance by July 1, 2018.

Educational institutions must report compliance with the agency at least annually beginning January 1, 2019.(9) Beginning December 1, 2019, and biannually thereafter until December 25, 2025, the agency must submit a report in compliance with RCW 43.01.036 to the legislature that details how the educational institutions are in compliance with this section.NEW SECTION.  Sec. 15.  If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2017, in the omnibus appropriations act, this act is null and void.--- END ---