SENATE HIGHER EDUCATION COMMITTEE

STATEMENT TO

SENATE, No. 3731

with committee amendments

STATE OF NEW JERSEY

DATED:  OCTOBER 10, 2024

      The Senate Higher Education Committee reports favorably and with committee amendments Senate Bill No. 3731.

     This amended bill establishes a Student Tuition Recovery Fund in the Office of the Secretary of Higher Education to compensate students impacted by failing or fraudulent proprietary institutions. 

      This amended bill creates a special fund in the Office of the Secretary of Higher Education, to be designated the "Student Tuition Recovery Fund." The fund shall be used to relieve or mitigate the economic loss caused to a student enrolled in a proprietary institution licensed to offer academic degrees as a result of the closure or other failure of the institution. 

      Under the amended bill, a proprietary institution licensed to offer academic degrees is to remit an initial deposit of $2,500 to the Student Tuition Recovery Fund.  The institution is also required to remit for each academic semester or term a fee to be determined by the Secretary of Higher Education sufficient to ensure the solvency of the fund, but which is to be no less than $1 per each $1,000 in institutional charges, inclusive of tuition and all fees

      The amended bill directs the Secretary of Higher Education to establish a process for students to apply for reimbursement of prepaid tuition and fees through the Student Tuition Recovery Fund.  The student’s application, at a minimum, is to include:

· proof of residency in the State at the time of separation from the proprietary institution;

· proof of payment to the proprietary institution of tuition and fees; and

· explanation of the nature of the claim.   

      The amended bill requires the secretary, upon completed application and to the extent that funds are available, to reimburse a person injured.  The person injured may recover from the fund an amount not to exceed the actual economic loss sustained.  In administering the fund, the secretary is to, for a person injured who holds outstanding student loan obligations for education at a proprietary institution that closed or otherwise failed and as appropriate:

· pursue a lender, holder, guarantee agency, or the United States Department of Education for the full or partial cancellation or discharge of student loan obligations to relieve students of economic loss and reduce the liability of the fund;

· after notifying the student, pay a student’s claim directly to the lender, holder, guarantee agency, or the United States Department of Education under a federally guaranteed student loan program; and

· delay the payment of a claim pending the resolution of its attempt to obtain a cancellation or discharge of the claimant’s student loan obligation; with certain exceptions. 

      Under the amended bill, a claim against the fund may be made for a period of six years after the date upon which the person injured formally separated from the institution. 

      The amended bill permits the Office of the Attorney General to initiate a claim, on behalf of a student, for payment from the Student Tuition Recovery Fund.

COMMITTEE AMENDMENTS:

      The committee amended the bill to clarify that the secretary is to take all appropriate actions for a person injured who holds outstanding student loan obligations, including: pursuing the cancellation or discharge of student loans; paying the student’s claim directly to the lender, holder, guarantee agency, or the United States Department of Education; and delaying payment of claims under certain conditions.