SECTION 83.40. Barbering and Cosmetology School Tuition Protection Account

(a) Pursuant to Subchapter H-1 of the Act, the Barbering and Cosmetology School Tuition Protection Account is created to:

(1) refund tuition and fees to a student if a private school closes and the school fails to pay the refund as required by the Act; and

(2) pay the tuition costs and expenses incurred by a private school in providing training directly related to educating a student from a closed school.

(b) In each year in which the balance of the Barbering and Cosmetology School Tuition Protection Account is less than $225,000 the department will determine a fee that must be paid by all private schools to the account.

(c) The necessity for assessing the fee will be determined by the department when it conducts its annual account balance review prior to December 31st. The fee that is assessed by the department will be in effect for a period of 12 months.

(d) The fee must be paid by each private school, upon annual renewal of the license during the 12-month period and must be paid in addition to the renewal fee. The renewal notice sent by the department will reflect the fee due to the account.

(e) In addition to any other fees, all new schools applying for a private school license must pay the prescribed fee to the account as determined under subsection (b) before a license will be issued.

(f) In the event a student from a closed school cannot be placed or does not accept a place in another school, a refund, calculated under the closed school's refund policy, may be paid from the Barbering and Cosmetology School Tuition Protection Account and the total payment of a claim may not exceed $35,000. The total amount of claims paid against a single closed school may not exceed $100,000.

(g) The executive director may authorize payment to a student from the Barbering and Cosmetology School Tuition Protection Account if:

(1) the student makes a claim for payment on a form approved by the executive director;

(2) a closed private school has failed to pay a refund to the student within 30 days after the date the student became eligible for the refund, and the student has not been placed or accepted a place in another school with appropriate credit given to the student for tuition and fees paid to the closed school;

(3) the executive director determines after investigation that the student is owed the refund; and

(4) the student assigns to the department all rights of the student against the closed school to the extent of the amount paid to the student from the account.

(h) The executive director may authorize payment to a private school from the Barbering and Cosmetology School Tuition Protection Account if:

(1) the school makes a claim for payment on a form approved by the executive director;

(2) the school has incurred expenses in providing training directly related to educating a student from a closed private school, including the applicable tuition for the period for which the student paid tuition;

(3) the executive director determines after investigation that the school is entitled to payment from the account; and

(4) the school assigns to the department all rights of the school against the closed school to the extent of the amount paid from the account.

(i) The department will pay claims on a pro rata basis from appropriated money available in the account if:

(1) the account contains insufficient assets to pay all claims;

(2) insufficient money has been appropriated to the department from the account to pay all claims; or

(3) the total amount of claims against a single closed school exceeds the amount specified in Subsection (f).

(j) The department will notify a closed private school of any claim made against the closed school under this section. Before the executive director may authorize any payment from the account, the school must have 20 days from the date of notice of the claim to dispute the claim and present evidence to the executive director in opposition to the claim.

(k) If payment is made from the Barbering and Cosmetology School Tuition Protection Account on a claim against a closed private school:

(1) the school must reimburse the account immediately or agree in writing to reimburse the account, on a schedule to be determined by the executive director;

(2) the school must immediately pay the student any additional amount due to the student under the Act or agree in writing to pay the student on a schedule to be determined by the executive director;

(3) payments made by a school to the account under this subsection include interest accruing at the rate of eight percent a year beginning on the date the executive director pays the claim;

(4) the department must be subrogated to all rights of the claimant against the school to the extent of the amount paid to the claimant; and

(5) the department may assess administrative penalties or sanctions against the school and may deny an application for a license, certificate, or permit or an application for renewal of a license, certificate, or permit filed by the holder of the private school license.

Source Note: The provisions of this §83.40 adopted to be effective December 8, 2005, 30 TexReg 8082; amended to be effective March 1, 2006, 31 TexReg 1280; amended to be effective August 1, 2006, 31 TexReg 5952; amended to be effective October 11, 2007, 32 TexReg 7050; amended to be effective January 15, 2018, 43 TexReg 81; amended to be effective January 1, 2023, 47 TexReg 8640