Senate Bill 1433 (SB 1433) revises various obligations under the California Private Postsecondary Education Act of 2009 (the Act), which provides for student protections and regulatory oversight of private postsecondary educational institutions that operate in the state, and is enforced by the Bureau for Private Postsecondary Education within the Department of Consumer Affairs (Bureau). A state private postsecondary educational institution means a private entity with a physical presence in California that offers postsecondary education to the public for an institutional charge.
Some of the key changes SB 1433 makes to the Act include the following:
- Exempts a higher education institution that does not award degrees, solely provides educational programs for total charges of $2,500 or less and does not accept payment from state or federal student financial aid programs from certain requirements of the Act, including providing the Bureau with certain information required for initial registration. A “higher education institution” is an entity that grants undergraduate degrees, graduate degrees, or both, is formed as a nonprofit corporation and is accredited by an agency recognized by the United States Department of Education.
- Authorizes the Bureau to establish regulations that set thresholds of California-based activity that constitute a limited physical presence, and regulations that establish differing registration requirements for those entities with minimal levels of California-based activity.
- Expands the definition of “to operate” to include enrolling California residents in postsecondary educational programs in an institution based outside of California via distance education, which now brings these entities under the Act’s authority. Previously, “to operate” was defined more narrowly to only include entities that establish, keep, or maintain a facility or location in California where, from which, or through which, postsecondary educational programs are provided.
- Authorizes the Bureau to deny an application for approval to operate institutions that would be owned by, have persons in control of, or employ institution managers that had knowledge of, should have known, or knowingly participated in any conduct that was the cause for revocation or unmitigated discipline at another institution, and requires prior Bureau authorization for a change of the person in control.
- Prohibits an institution from having a prospective, current, or former student or employee from signing a nondisclosure agreement pertaining to their relationship to, or experience with, the institution, and makes any such nondisclosure agreement void and unenforceable; nondisclosure agreements that protect the institution’s intellectual property and trade secrets are permitted.
- Terminates automatically an institution’s approval to offer an educational program in a profession, occupation, trade, or career field if it loses approval from the licensing agency that issues such profession, occupation, trade, or career field license.
- Authorizes the Bureau to order an institution to compensate students for harm that resulted or may have resulted from an institution’s violations of the Act.
- Clarifies that the fine of up to $100,000 for operating an institution without proper approval is separate from and does not include fines for other violations or refunds ordered.
- Extends the Student Tuition Recovery Fund, which provides reimbursement of tuition to students who prepaid tuition and suffered economic losses as a result of an institution closure, until January 1, 2027.
(SB 1433 amends Sections 94801.5, 94869, 94885, 94887, 94894, 94897, 94899, 94909, 94917, 94933, 94934.5, 94935, 94936, 94944, and 94950 of, and adds Sections 94801.7, 94885.7, 94918.5, 94926.5, and 94949.8 to, the Education Code.)
