OLR Bill Analysis

sSB 801

AN ACT CONCERNING THE FINANCIAL STATUS OF A SCHOOL APPLYING FOR RENEWAL OF AUTHORIZATION TO OPERATE AS A PRIVATE OCCUPATIONAL SCHOOL.

SUMMARY:

This bill requires a private occupational school, when renewing its certificate of authorization with the Department of Higher Education (DHE), to submit documentation that it has a passing score on the financial ratio test the U. S. Department of Education uses for institutions participating in federal student aid programs. The bill conforms the law to the department's current practice.

The law already requires schools to submit reports or audits concerning their fiscal condition and continuing eligibility in federal student aid programs.

EFFECTIVE DATE: July 1, 2009

BACKGROUND

Financial Ratio Scoring System

The U. S. Department of Education uses a financial ratio scoring system as a measure of an institution's financial responsibility in determining its eligibility for participation in federal student aid programs. The system uses composite scoring, based on an institution's primary reserve, equity, and net income ratios, to measure its viability, profitability, liquidity, ability to borrow, and capital resources.

Related Bills

The Higher Education and Employment Advancement Committee reported several other bills related to private occupational schools:

SB 766 increases the letter of credit a new private occupational school must file with the DHE commissioner, requires it be issued by a bank with an office in the state, and extends the period for which the school must maintain it.

sSB 767 prohibits Student Protection Account funds from being used to refund federal student loans if a private occupational school becomes insolvent or ceases operating.

SB 796 prohibits the commissioner from issuing a certificate of authorization if the school does not have a director located at its main campus and each branch.

SB 797 revises the process for a private occupational school to appeal the commissioner's decision to deny or revoke its authorization or assess an administrative penalty.

SB 812 conforms to current practice the annual fee, change of ownership fee, and other fees a private occupational school must pay in applying for or renewing its certificate of authorization.

HB 6291 requires a private occupational school, when renewing its certificate of authorization, to submit financial reports or audits as the commissioner, or his designee, prescribes.

COMMITTEE ACTION

Higher Education and Employment Advancement Committee

Joint Favorable Substitute