(1) A private college or university is exempt from the provisions of this section if: (a) The private college or university is a party to a performance contract with the commission pursuant to section 23-18-201 (2); or (b) The private college or university: (I) Has been accredited for at least twenty years by an accrediting agency that is recognized by the United States department of education; (II) Has operated continuously in this state for at least twenty years; and (III) Has not at any time filed for bankruptcy protection pursuant to title 11 of the United States code. (2) (a) If a private college or university is not exempt from the requirements of this section pursuant to subsection (1) of this section, the commission shall determine the financial integrity of the private college or university by confirming that the institution meets or does not meet the criteria specified in paragraph (b) or (c) of this subsection (2). The private college or university shall present as part of the application for authorization verifiable evidence that the institution meets the criteria specified in paragraph (b) or (c) of this subsection (2). (b) (I) A private college or university may demonstrate financial integrity by meeting the following criteria: (A) The institution has been accredited for at least ten years by an accrediting body that is recognized by the United States department of education or, if applicable, the Council for Higher Education Accreditation; (B) The institution has operated continuously in this state for at least ten years; (C) During its existence, the institution has not filed for bankruptcy protection pursuant to title 11 of the United States code; (D) The institution maintains a composite score of at least 1.5 on its equity, primary reserve, and net income ratios, as required in 34 CFR 668.172; and (E) The institution meets or exceeds the pro rata refund policies required by the federal department of education in 34 CFR 668 or, if the institution does not participate in federal financial aid programs, the institution's refund and termination procedures comply with the requirements of the institution's accrediting body. (II) Notwithstanding any provision of subparagraph (I) of this paragraph (b) to the contrary, a private college or university is not required to meet the criteria specified in sub- subparagraphs (A) and (B) of subparagraph (I) of this paragraph (b) if the institution is part of a group of private colleges and universities that are owned and operated by a common owner, so long as all of the other institutions in the group meet the criteria specified in sub-subparagraphs (A) and (B) of subparagraph (I) of this paragraph (b). (c) A private college or university may demonstrate financial integrity by meeting the following criteria: (I) The institution has received and maintains full accreditation without sanction from an accrediting body that is recognized by the United States department of education or, if applicable, the Council for Higher Education Accreditation, which accrediting body requires the institution to maintain surety or an escrow account or has affirmatively waived or otherwise removed the requirement for the institution; (II) The institution has been continuously authorized by the commission for at least five years; (III) The institution owns and operates a permanent instructional facility in the state; (IV) The institution annually provides to the commission audited financial statements for the most recent fiscal year that demonstrate that the institution maintains positive equity and profitability; (V) The institution maintains a composite score of at least 1.5 on its equity, primary reserve, and net income ratios, as required in 34 CFR 668.172; and (VI) The institution meets or exceeds the pro rata refund policies required by the federal department of education in 34 CFR 668 or, if the institution does not participate in federal financial aid programs, the institution's refund and termination procedures comply with the requirements of the institution's accrediting body. (3) (a) Each private college or university that is not exempt from the requirements of this section pursuant to subsection (1) of this section and cannot demonstrate financial integrity as provided in subsection (2) of this section, as determined by the commission, shall file evidence of surety in the amount calculated pursuant to subsection (5) of this section prior to receiving authorization to operate in Colorado. The surety may be in the form of a savings account, deposit, or certificate of deposit that meets the requirements of section 11-35-101, C.R.S., or an alternative method approved by the commission, or one bond as set forth in this section covering the applying institution. The commission may disapprove an institution's surety if the commission finds the surety is not sufficient to provide students with the indemnification and alternative enrollment required by this section. (b) If a private college or university files a bond, the bond shall be executed by the institution as principal and by a surety company authorized to do business in this state. The bond shall be continuous unless the surety is released as set forth in this section. (4) The surety shall be conditioned to provide indemnification to any student or enrollee, or to any parent or legal guardian of a student or enrollee, that the commission finds to have suffered loss of tuition or any fees as a result of any act or practice that is a violation of this article 2; to provide alternate enrollment as provided in subsection (7) of this section for students enrolled in an institution that ceases operation; and to reimburse the department for any actual administrative costs associated with an institution ceasing operation. (5) The amount of the surety that a private college or university submits pursuant to subsection (3) of this section is the greater of five thousand dollars or an amount equal to a reasonable estimate of the maximum prepaid, unearned tuition and fees of the institution for the period or term during the applicable academic year for which programs of instruction are offered including, but not limited to, programs offered on a semester, quarter, monthly, or class basis; except that the institution shall use the period or term of greatest duration and expense in determining this amount if the institution's academic year consists of one or more periods or terms. Following the initial filing of the surety with the department, the private college or university shall recalculate the amount of the surety annually based on a reasonable estimate of the maximum prepaid, unearned tuition and fees received by the institution for the applicable period or term. (6) (a) A student or enrollee, or a parent or guardian of the student or enrollee, who claims loss of tuition or fees may file a claim with the commission if the claim results from an act or practice that violates a provision of this article. The claims that are filed with the commission are public records and are subject to the provisions of article 72 of title 24, C.R.S.; except that the department shall not make the claims records public if the release would violate a federal privacy law. (b) Notwithstanding the provisions of paragraph (a) of this subsection (6), the commission shall not consider a claim that is filed more than two years after the date the student discontinues his or her enrollment with the institution. (7) (a) If a private college or university ceases operation, the commission may make demand on the surety of the institution upon the demand for a refund by a student or for the implementation of alternate enrollment for the students enrolled in the institution and may make demand on the surety to reimburse the department for actual administrative costs associated with the institution ceasing operation. In such case, the holder of the surety or, if the surety is a bond, the principal on the bond shall pay the claim due in a timely manner. To the extent practicable, the commission shall use the amount of the surety to provide alternate enrollment for students of the institution that ceases operation through a contract with another authorized private college or university, a community college, an area technical college, or any other arrangement that is acceptable to the department. The alternate enrollment provided to a student replaces the original enrollment agreement, if any, between the student and the private college or university; except that the student shall make the tuition and fee payments as required by the original enrollment agreement, if any. (b) A student who is enrolled in a private college or university that ceases operation and who declines the alternate enrollment required to be offered pursuant to paragraph (a) of this subsection (7) may file a claim with the commission for the student's prorated share of the prepaid, unearned tuition and fees that the student paid, subject to the limitations of paragraph (c) of this subsection (7). The commission shall not make a subsequent payment to a student unless the student submits proof of satisfaction of any prior debt to a financial institution in accordance with the commission's rules concerning the administration of this section. (c) If the amount of the surety is less than the total prepaid, unearned tuition and fees that have been paid by students at the time the private college or university ceases operation, the department shall prorate the amount of the surety among the students. (c.5) Any amount of the surety that is greater than the amount necessary to satisfy costs to provide alternate enrollment for the student pursuant to subsection (7)(a) of this section, and any demand for a refund by a student pursuant to subsection (7)(b) of this section, may be retained by the department as reimbursement up to the amount of any actual administrative costs incurred by the department that are associated with the school closure. (d) The provisions of this subsection (7) are applicable only to those students enrolled in the private college or university at the time it ceases operation, and, once an institution ceases operation, no new students shall be enrolled therein. (e) The commission is the trustee for all prepaid, unearned tuition and fees, student loans, Pell grants, and other student financial aid assistance if an authorized private college or university ceases operation. (f) The commission shall determine whether offering alternate enrollment for students enrolled in an authorized private college or university that ceases operation is practicable without federal government designation of the commission as trustee for student loans, Pell grants, and other student financial aid assistance pursuant to paragraph (e) of this subsection (7). (8) For claims made pursuant to this section that do not involve a private college or university that ceases operation, the commission shall conduct a hearing to determine whether there is loss of tuition or fees, and, if the commission finds that a claim is valid and due the claimant, the commission shall make demand upon the surety. If the holder of the surety or, if the surety is a bond, the principal on the bond fails or refuses to pay the claim due, the commission shall commence an action on the surety in a court of competent jurisdiction; except that the commission shall not file an action more than six years after the date of the violation that gives rise to the right to file a claim pursuant to this section. (9) The authorization for a private college or university is suspended by operation of law when the institution is no longer covered by surety as required by this section. The department shall give written notice to the institution at the last-known address, at least forty-five days before the release of the surety, to the effect that the institution's authorization is suspended by operation of law until the institution files evidence of surety in like amount as the surety being released. (10) The principal on a bond filed under the provisions of this section is released from the bond after the principal serves written notice thereof to the commission at least sixty days before the release. The release does not discharge or otherwise affect a claim filed by a student or enrollee or his or her parent or legal guardian for loss of tuition or fees that occurred while the bond was in effect or that occurred under any note or contract executed during any period of time when the bond was in effect, except when another bond is filed in a like amount and provides indemnification for any such loss. (11) Each private college or university that files a surety pursuant to subsection (3) of this section shall provide annual verification of continued coverage by surety as required by this section in a report to the commission due by January 1 of each year. The commission may disapprove a surety if it finds that the surety is not adequate to provide students with the indemnification and alternate enrollment required by this section. (12) If a private college or university that is exempt from the provisions of this section or that demonstrates financial integrity pursuant to subsection (2) of this section ceases to operate in this state, the state attorney general may file a claim against the institution on behalf of students enrolled in the institution at the time it ceases operation to recover any amount of unearned, prepaid tuition that may be owed to the students. (13) A seminary or religious training institution is not subject to the requirements of this section.
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