SECTION 7.16. Financial Protections for Student Tuition and Fees

The Board is required to ensure Certificate of Authorization and Certificate of Authority institutions maintain reserves, lines of credit, or surety instruments sufficient to allow the institution or person to fulfill its educational obligations of the current term to its enrolled students if the institution or person violates any minimum standard which results in loss of prepaid tuition or fees, or is unable to continue to provide instruction to its enrolled students.

(1) Sufficient Financial Resources Documentation.

(A) Sufficient financial resources may be demonstrated by proof of an adequate reserve, line of credit, or surety instrument. A surety instrument includes but is not limited to, a surety bond, an assignment of a savings or escrow account, certificate of deposit, irrevocable letter of credit, or a properly executed participation contract with a private association, partnership, corporation, or other entity whose membership is comprised of postsecondary institutions.

(B) The documented reserves, lines of credit, or surety instruments must be:

(i) In a form and amount acceptable to the Board;

(ii) In an amount equal to or greater than the cost of providing a refund, including administrative costs associated with processing claims, for the maximum unearned tuition and fees of the institution for a period or term during the applicable academic year for which programs of instruction are offered, including, but not limited to, on a semester, quarter, monthly, or class basis; except that the period or term of greatest duration and expense shall be utilized for this computation where an institution's year consists of one or more such periods or terms. Unearned tuition and fees are tuition or fees billed to a student for the current term. No tuition or fee billed for the current term may be considered earned by the institution until the current term has been completed and students have received grades for courses taken during the term;

(iii) Conditioned to provide indemnification to any student or enrollee of the school or his/her parent or guardian determined by the Board to have suffered loss of unearned tuition or any fees as a result of violation of any minimum standard or as a result of the institution ceasing operation, provide evidence satisfactory to the Board of its financial ability to provide such indemnification, and list the amount of surety liability the guaranteeing entity will assume; and

(iv) Held in Travis County, Texas, and conditioned to allow only the Board to withdraw funds for the benefit of persons identified in clause (iii) of this subparagraph.

(C) The institution shall include a letter signed by an authorized representative of the institution showing in detail the calculations made pursuant to this section and explaining the method used for computing the amount of the reserves, lines of credit or surety instrument.

(D) Falsifying surety calculation or surety instrument will be reported to the Attorney General per §7.5(m) of this title (relating to Degree Granting Colleges and Universities Other Than Texas Public Institutions).

(2) Tuition and Fee Recovery.

(A) A Qualifying Event, when used in this subchapter, shall mean an event in which a student or enrollee of the school or his/her parent or guardian is determined by the Board to have suffered loss of tuition or any fees as a result of violation of any minimum standard or as a result of the institution or location ceasing operation.

(B) The Board may withdraw the total amount of reserves, lines of credit, or surety instrument designated for tuition and fee recovery at the time the Board deems the institution or person has violated any minimum standard which results in loss of prepaid tuition or fees, or upon notice that an institution is unable to continue to provide instruction to its enrolled students.

(C) A student, enrollee, parent or guardian is required to apply for an unearned tuition and fee claim in order to be eligible for reimbursement.

(i) Board staff will make available an application claim form. Claim forms must include original signatures to be considered valid.

(ii) Board staff will determine supporting documentation required for each claim and notify the claimant. Supporting documentation may include an enrollment agreement, transcript, report card, loan agreement, cancelled checks, or other documentation which provides information on tuition and fee amounts paid during the current term and the institution's failure to meet minimum standards or continue operations.

(iii) Claims must be initiated by the claimant with a completed application claim form within 12 months of a Qualifying Event. The Board will publish the Qualifying Event date which will begin the 12 months claim period.

(iv) Board staff will review all student tuition and fee recovery claims within 30 days after the claim period ends. Refunds will be made in a timely manner either upon determination all possible valid claims have been filed before the end of the claim period or at the end of the 12 months claim period.

(I) Payments will be made based on verified tuition and fee amounts claimed.

(II) If the amount of institutional reserves, lines of credit, or surety instrument able to be withdrawn by the Board at the time of the Qualifying Event does not allow full payment of tuition and fees to all claimants, Board staff will apportion refunds according to verified tuition and fees claimed as a percentage of total amount claimed versus total amount withdrawn.

(III) If the amount of institutional reserves, lines of credit, or surety instrument withdrawn by the Board at the time of the Qualifying Event is greater than the total claims made during the 12 month claim period, the Coordinating Board reserves the right to retain a portion of the excess funds in order to maintain any student academic records deposited in the Coordinating Board's student academic record repository as a result of the Qualifying Event. Any excess funds withdrawn but not paid in claims or used for student academic record repository maintenance will be returned to the institution, receiver, bankruptcy trustee, or other entity holding institutional funds at the time funds may be returned.

Source Note: The provisions of this §7.16 adopted to be effective March 2, 2020, 45 TexReg 1395