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Chapter 6. Student Tuition Recovery Fund. Payments from the Fund. Claims Amount, Payment and Denial.   

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(a) The Bureau may negotiate with a lender, holder, guarantee agency, or the U.S. Department of Education for the full compromise or write-off of student loan obligations to relieve students of economic loss and, if possible, to reduce the liability of the Fund for the payment of claims.

(b) The Bureau may pay a student's claim directly to the lender, holder, guarantee agency, or U.S. Department of Education.

(c) If the Bureau grants the claim, the amount of the payment is measured by the total amount of the student's economic loss, as defined in Section 76000, less the amount of any refund, reimbursement, indemnification, restitution, compensatory damages, settlement, debt forgiveness, discharge, cancellation, compromise or any other benefit received by, or on behalf of, the student that was related to the economic loss. The amount of the payment is not dependent on, or necessarily limited to, the amount of refund the student would have received from the institution if the student had voluntarily withdrawn. The Bureau cannot pay any claim to a student without a social security number or a taxpayer identification number.

(d) In addition to the reductions in (c) above, the Bureau may reduce the amount of the payment by the value of the benefit, if any, of the education obtained by the student before the closure of the institution.

(e) If a student participated in a teach-out, the following conditions also apply:

(1) If the student withdraws from the teach-out institution within the first two weeks of enrollment, the student's economic losses are calculated as though the student never received the teach-out.

(2) If the student withdraws from the teach-out institution after the first two weeks of enrollment, the student's economic loss includes only a pro rata portion of charges for the hours of the education service paid for, but not received from, either institution.

(3) If the teach-out institution provides all of the remaining instruction that the closed institution had represented it would provide, the student's economic loss shall not include any amount the student paid to the closed institution specifically for instruction.

(4) Regardless of participation in a teach-out, a student may recover economic losses other than those specifically related to the instruction.

(f) Upon payment of the claim, all of the student's rights against the institution for that amount of payment shall be deemed assigned to the Bureau.

(g) If the Bureau denies the claim, or reduces the amount of the claim, the Bureau may informally consider a written appeal and modify its decision.

(h) If a written appeal is not received by the Bureau within 30 calendar days from the date of the decision, the Bureau's decision shall be final.

Authority cited:

Education Code 94803

Education Code 94877

Education Code 94923


Education Code 94923

(Amended by Register 2011, No. 15.)