1Amending the act of December 15, 1986 (P.L.1585, No.174),
2entitled "An act defining and providing for the licensing and
3regulation of private schools; establishing the State Board
4of Private Licensed Schools; imposing penalties; and making
5repeals," further providing for definitions and for
6application for license; and providing for Student Tuition
7Recovery Fund.

8The General Assembly of the Commonwealth of Pennsylvania
9hereby enacts as follows:

10Section 1.  Section 2 of the act of December 15, 1986
11(P.L.1585, No.174), known as the Private Licensed Schools Act,
12is amended by adding definitions to read:

13Section 2.  Definitions.

14The following words and phrases when used in this act shall
15have the meanings given to them in this section unless the
16context clearly indicates otherwise:

17* * *

18"Assessment."  The amount a private postsecondary education
19institution is required to pay to the Student Tuition Recovery

1Fund.

2* * *

3"Ceasing operations."  A private postsecondary education
4institution that has stopped offering educational courses or
5programs to the public for any reason.

6* * *

7"Fund."  The Student Tuition Recovery Fund established in
8section 7.1.

9* * *

10"Newly enrolled student."  A student enrolling with a private
11postsecondary education institution for the first time or
12reenrolling after an absence from the institution for one or
13more years.

14"Person injured."  A student of a private postsecondary
15education institution, which charges prepaid tuition to a
16student, who is damaged monetarily by the institution's ceasing
17operations before fulfilling its contractual obligations or
18fully providing the services which were paid for in advance. The
19term does not include a nonresident student who is eligible to
20claim for recovery under a student tuition recovery fund or
21similar fund in the student's state of residence or a
22nonresident of this Commonwealth enrolled in distance learning
23instruction.

24"Prepaid tuition."  Money advanced to an education
25institution before it provides its service.

26* * *

27"Total course cost."  The tuition and other fees charged by
28the private postsecondary education institution for each course
29offered.

30Section 2.  Section 7(b) of the act is amended to read:

1Section 7.  Application for license.

2* * *

3(b)  [Financial responsibility.--Each private licensed or
4registered school shall demonstrate to the board that it has
5adequate resources or forms of surety available for the purpose
6of reimbursing unearned tuition due students whenever the
7licensed or registered school ceases to operate. The form of
8financial responsibility or surety established by the private
9licensed or registered school shall be subject to approval by
10the board. The board shall promulgate regulations under this act
11establishing the levels and forms of financial responsibility or
12surety that the private licensed or registered school is
13permitted to establish. Until such regulations take effect, the
14surety requirements in existence on the effective date of this
15act shall continue to be enforced] (Reserved).

16* * *

17Section 3.  The act is amended by adding a section to read:

18Section 7.1.  Student Tuition Recovery Fund.

19(a)  Establishment.--The Student Tuition Recovery Fund is
20established and shall be administered by the board. A person
21injured by a private postsecondary education institution ceasing
22operations may recover from the fund an amount not to exceed the
23actual damages sustained. The board shall adopt rules necessary
24to administer this fund.

25(b)  Assessment.--Each private postsecondary education
26institution which collects prepaid tuition shall annually pay an
27assessment to the board for each newly enrolled student in an
28amount consistent with the following:

29(1)  In the first year of enactment, the assessment shall
30be in an amount equal to the sum of two-tenths of one percent

1of gross tuition revenue.

2(2)  If on June 30 of a fiscal year the fund balance is
3less than $5,000,000, the assessment for the following fiscal
4year shall be in an amount equal to the sum of two-tenths of
5one percent of gross tuition revenue.

6(3)  If on June 30 of a fiscal year the fund balance
7exceeds $5,000,000 but is less than $10,000,000, the
8assessment for the following fiscal year shall be in an
9amount equal to the sum of one-tenth of one percent of gross
10tuition revenue.

11(4)  If on June 30 of a fiscal year the fund balance
12exceeds $10,000,000, the assessment for the following fiscal
13year shall be in an amount equal to the sum of one-tenth of
14one percent of gross tuition revenue and shall apply only to
15newly licensed schools.

16(c)  Use of funds.--

17(1)  A person injured by a private postsecondary
18education institution ceasing operations is eligible to
19submit a claim against the fund.

20(2)  A claim against the fund shall not be commenced
21later than one year after the private postsecondary education
22institution has ceased operations. The person injured shall
23submit a complaint to the board outlining the circumstances
24surrounding the claim. The board shall promptly investigate
25the complaint. If the complaint and claim are valid, the
26board shall pay the claim in the amount it considers
27reasonable.

28(3)  The money deposited in the fund is continuously
29appropriated to the board to carry out the purposes of the
30fund.

1(4)  The board may use up to three percent of the fund
2per year to administer the fund.

3(5)  Unexpended and unencumbered money in the fund at the
4close of a fiscal year shall not revert to the General Fund.

5(d)  Exemption.--A private postsecondary institution shall
6not be required to pay assessments for newly enrolled students
7who are not residents of this Commonwealth for whom the
8institution has paid a student tuition recovery fund assessment
9or an assessment to a similar fund in the student's state of
10residence. A private postsecondary institution shall not be
11required to pay assessments for students who are not residents
12of this Commonwealth and who are enrolled in distance learning
13instruction.

14Section 4.  This act shall take effect in 60 days.