N.Y. Education Law § 5007: Tuition reimbursement account

§ 5007. Tuition reimbursement account. 1. Except as otherwise provided

in subdivision six of this section, the portion of the annual assessment

of schools licensed pursuant to section five thousand one of this

article as prescribed in subdivision nine of such section and all fines,

penalties and settlements received pursuant to this article shall be

transferred upon receipt into the tuition reimbursement account.

3. a. The commissioner shall develop a complaint form and provide such

form to students. In order to claim a refund, a student shall apply to

the fund with a complaint form pursuant to the requirements of section

five thousand three of this article. Except as otherwise provided in

this article, the commissioner shall compute the refund, if any, using

the refund formula established by subdivision three of section five

thousand two of this article.

b. Claimants who had been enrolled in schools which have not closed or

ceased operation shall be required to show in a manner determined by the

commissioner that:

(1) the student is eligible for a refund;

(2) the student has made a request to the school for a refund; and

(3) the school has failed to make the refund within the time period

required by this article.

c. The commissioner shall act on each refund request within thirty

business days of such request.

4. Students may be eligible for refunds under this section as follows:

a. A student who is offered a teachout plan for the curriculum in

which the student was enrolled at the time the school closed or ceased

operation, which has been approved by the department, may elect to

continue instruction pursuant to the teachout plan or may decline to

continue instruction and may instead apply for a full refund under this

section. The option to apply for a refund shall extend to the end of the

first week of instruction at the teachout school.

b. A student who was enrolled in a school which has not closed or

ceased operation is entitled to a refund computed in accordance with the

refund policy established by subdivision three of section five thousand

two of this article.

c. A student who was enrolled in a school at the time the school

closes or ceases operation is entitled to a refund of the full amount of

prepaid tuition. In addition, commencing September first, nineteen

hundred ninety-three, a student who drops out of a school, where such

school closes within thirty days of the student's termination and prior

to completion of such student's program as specified in the enrollment

agreement, shall be entitled to a full refund of all tuition, fees and

book charges paid for by or on behalf of the student in cash or in

loans, excluding funding provided by any government agencies.

d. A student who was enrolled in a school which has not closed or

ceased operation, and who has dropped out, is entitled to a full refund

of all tuition, fees and other required costs paid by the student if the

student has submitted a complaint form to the commissioner and the

commissioner has determined that a violation of this article has

occurred which warrants a refund. The commissioner shall promulgate

regulations identifying those violations that warrant a refund.

e. Commencing September first, nineteen hundred ninety-three, a

student who drops out of a school, which subsequently closes, and who is

owed a refund for the failure of such school to follow the provisions

enumerated in subdivision three of section five thousand two of this

article shall be eligible for a refund from the tuition reimbursement

fund according to the provisions of subdivision three of section five

thousand two of this article.

f. Commencing September first, nineteen hundred ninety-three, any

student enrolled in a school based upon an ability to benefit

examination shall be eligible for a full refund, regardless of whether

the student is currently enrolled, graduated or dropped out, if the

school enrolled the student contrary to the provisions of the approved

entrance requirements and the student complies with the requirements of

subdivision one of section five thousand three of this article.

5. a. For a student who had been enrolled in a school that has not

closed or ceased operation, the refund shall be paid as follows:

(1) guaranteed student loans, if any, in which case the commissioner

shall notify the student of such payment and shall be paid directly to

the lender or guarantee agency where appropriate;

(2) actual personal tuition expenditures, if any; and

(3) tuition assistance program awards and other governmental aid.

b. For schools that have closed or ceased operation, the commissioner

shall refund actual personal tuition, fees and book expenditures to the

student. The repayment of any loans incurred by the student as part of

the actual personal tuition, fees and book expenditures shall be paid

directly to the lender or the guarantee agency where appropriate.

6. a. Where a claim is paid to a student of an operating school, the

commissioner shall immediately notify the school.

b. Within ten days of the receipt of the notice, the school shall

either request a hearing to challenge the commissioner's determination

that a refund was owed to the student or reimburse the fund the amount

paid to the claimant plus a penalty up to two times such amount. This

payment shall also incur interest for each day it remains unpaid at an

annual interest rate of one percent above the prime rate. The

commissioner may promulgate streamlined procedures for conducting

hearings pursuant to this paragraph. Any penalty assessed under this

paragraph shall be in addition to any other penalties assessed pursuant

to this article. Notwithstanding any other provision of law, penalties

and interest paid pursuant to this paragraph shall accrue to the credit

of the proprietary vocational school supervision account to support the

costs associated with the hearings authorized in this subdivision.

7. Notwithstanding the notice procedures described in subdivision

three of this section, in the event of a school closing, the

commissioner on his or her own initiative may take appropriate action in

accordance with this section to process refund claims on behalf of all

of the students of the closed school.

8. Assignment of rights. Persons and entities receiving refunds under

this section shall be deemed to have assigned or subrogated their

tuition reimbursement rights to the commissioner on behalf of the

tuition reimbursement fund only for the amount refunded by the tuition

reimbursement fund. Within ninety days of any refund made pursuant to

this section, the commissioner or the attorney general shall take

appropriate action to recover the total amount of the refunds made, plus

administrative costs, from the school.

9. a. A student whose loan liability is exempted pursuant to former

section six hundred eighty-three of this chapter and is entitled to or

owed a refund shall transfer to the higher education services

corporation the right to claim the refund owed and due from the tuition

reimbursement fund. In such event, the corporation shall be entitled to

receive a refund for that portion of the claim not paid to the

corporation by the United States Secretary of Education pursuant to the

federal guaranteed loan program.

b. Any amounts remaining in the tuition reimbursement fund as of June

first, nineteen hundred ninety-three and on every March thirty-first

thereafter, shall be made available to the higher education services

corporation for payment of student loans on which collection activity

has ceased pursuant to the provisions of subdivision six of former

section six hundred eighty-three of this chapter. No amounts shall be

paid to the higher education services corporation for loans on which

collection activity has ceased because of the operation of section 437

of the Higher Education Act of 1965, as amended.

10. Management of the tuition reimbursement account. a. As used in

this subdivision, net balance is defined as the actual cash balance of

the account as determined by the commissioner on June thirtieth,

nineteen hundred ninety-three and every three months thereafter. For the

purpose of calculating the net balance, the commissioner shall not take

into consideration any refunds made from the account pursuant to

paragraphs d and f of subdivision four of this section for the year

immediately preceding the date on which the calculation is made.

b. In the event that the account has accumulated a net balance in

excess of one million eight hundred thousand dollars, the commissioner

shall, with the approval of the director of the budget, waive an amount

not to exceed the amount due for the next quarterly assessment pursuant

to this section and subdivision nine of section five thousand one of

this article for schools which have paid sixteen quarters or more of

assessments only. In such event, payment of future quarterly assessments

shall be suspended for schools which have paid sixteen quarters or more

of assessments until the net balance of the account falls below one

million three hundred thousand dollars.

c. In the event the net balance of the account falls below one million

three hundred thousand dollars, if the quarterly assessment has been

suspended for schools which have paid sixteen quarters or more of

assessments pursuant to paragraph b of this subdivision, it shall be

reinstated for the next quarterly assessment and all subsequent

quarterly assessments until the account has accumulated a net balance in

excess of one million eight hundred thousand dollars.

d. Notwithstanding the provisions of paragraph b of this subdivision,

in the event that the balance of the account is in excess of one million

three hundred thousand dollars, all schools licensed after June

thirtieth, nineteen hundred ninety-nine shall be required to pay into

the account the equivalence of three years of annual assessments over a

five year period.

e. Notwithstanding the provisions of paragraph b of this subdivision

all schools licensed after June thirtieth, nineteen hundred ninety-three

and before July first, nineteen hundred ninety-nine will be required to

pay into the account the equivalence of three years of annual

assessments within four years of the effective date of this paragraph.

This amount to be assessed shall be determined based upon the school's

gross tuition in its first three years of licensure.

g. In the event that the balance of the tuition reimbursement account

is equal to or in excess of two million dollars, the amounts assessed

the schools in accordance with the provisions of paragraphs d and e of

this subdivision shall be deposited directly to the proprietary

vocational school supervision account.

h. The commissioner may annually apportion from the account an amount

up to two hundred thousand dollars for the purpose of securing, scanning

and otherwise making student records from closed schools available to

students who attended such schools. Provided, however, that in no case

shall such apportionment cause the account to fall below the balance set

forth in paragraph c of this subdivision, nor shall such apportionment

cause schools whose quarterly assessments have been suspended to pay

additional quarterly assessments.

11. Fund audit. The state comptroller shall audit or cause to be

audited the tuition reimbursement fund once every two years and produce

an audited financial statement according to generally accepted

accounting principles.

12. New schools. Within the first year that a school begins licensed

operation, the commissioner shall assess such school an amount to be

deposited into the fund in an amount to be determined by the

commissioner.