Chapter 06. Additional Requirements for For-Profit Institutions of Higher Education
Regulation .01 Purpose.LinkCopy Citation
The purpose of this chapter is to:
A.
Provide for the assessment of fees on for-profit institutions of higher education under Education Article, §11-203, Annotated Code of Maryland;
B.
Provide for the filing of certain financial guarantees by for-profit institutions of higher education under Education Article, §11-203, Annotated Code of Maryland;
C.
Provide for the creation and administration of the Maryland Guaranty Student Tuition Fund for For-Profit Institutions of Higher Education;
D.
Set forth standards and procedures for processing claims filed by students of for-profit institutions of higher education under Education Article, §11-203, Annotated Code of Maryland; and
E.
Set forth reporting requirements for for-profit institutions of higher education operating in Maryland.
Regulation .02 Definitions.LinkCopy Citation
A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Adjusted gross tuition and fees” means all revenues received on a cash or accrual accounting basis, less any refunds paid to students, for tuition and fees for all instructional programs or courses enrolled in by students, except for charges for materials, supplies, and books that have been purchased by, and are the property of, a student.
(2)
“Assessment year” means a 12-month period from July 1 through June 30 in which the Secretary may levy assessments on for-profit institutions of higher education as provided in this chapter.
(3)
“Commission” means the Maryland Higher Education Commission.
(4)
Discharge.
(a)
“Discharge” means the release of a borrower from the obligation to repay his or her loan for any reason.
(b)
“Discharge” includes, but is not limited to:
(i)
Loan forgiveness;
(ii)
A discharge through the Closed School Discharge program or the Borrower Defense to Repayment program of the USED; and
(iii)
Loan forgiveness or discharge through the federal Department of Veterans Affairs, federal Department of Defense, or any other federal agency.
(5)
“Financial guarantee” means a performance bond, or irrevocable letter of credit, in the form and amount the Secretary requires.
(6)
“For-profit institution of higher education” has the meaning stated in Education Article, §10-101, Annotated Code of Maryland.
(7)
“Fund” means the Maryland Guaranty Student Tuition Fund for For-profit Institutions of Higher Education.
(8)
Lender.
(a)
“Lender” means an entity, institution, or government that lends funds to a student, or on behalf of a student, to pay for charges for tuition or fees.
(b)
“Lender” includes:
(i)
A bank, mutual savings bank, savings and loan association, or credit union that is subject to examination and supervision in its capacity as a lender by an agency of the United States or of the state in which its principal place of operation is located;
(ii)
A pension fund that is subject to examination and supervision by an agency of the United States or a state;
(iii)
An insurance company that is subject to examination and supervision by an agency of the United States or a state;
(iv)
In any state, a single agency of the state or a single private nonprofit agency designated by the state to lend funds to a student or manage student loan debt;
(v)
For purposes of purchasing and holding loans made by other lenders, a student loan marketing association or an agency of any state or the federal government functioning as a secondary market; or
(vi)
The USED, federal Department of Veterans Affairs, federal Department of Defense, and any other federal agency.
(9)
“Loan servicer” means an entity that collects payments, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a student loan on behalf of a lender.
(10)
“Non-Title IV adjusted gross tuition and fees” means a school’s adjusted gross tuition and fees minus the amount of Title IV federal financial aid received by the school on behalf of its students.
(11)
“School” means a for-profit institution of higher education that has received a certificate of approval from the Commission.
(12)
“Secretary” means the Maryland Secretary of Higher Education.
(13)
“Student” means an individual who resided in Maryland at the time the individual was enrolled in a school.
(14)
“Student records” means:
(a)
A student’s academic record;
(b)
A student’s account ledger;
(c)
Evidence of compliance with the school’s admissions requirements;
(d)
Credit granted for previous academic work;
(e)
Date of admission, start dates, and withdrawal or completion dates;
(f)
Reasons for withdrawals, when known;
(g)
Student transcripts indicating achievements;
(h)
Tuition and financial aid records, when applicable; and
(i)
Any other information usually required by institutions of postsecondary education when considering a student for transfer, acceptance of credit, or advanced study.
(15)
Tuition and Fees
(a)
“Tuition and fees” means all funds paid by or on behalf of a student for charges assessed by a school for providing an instructional program or course.
(b)
“Tuition and fees” includes charges assessed for the use of equipment, materials, or supplies that are assessed against all students in the same course or program.
(c)
“Tuition and fees” does not include charges for materials, supplies, or books that have been purchased by, and are the property of, the student.
(16)
“USED” means the United States Department of Education.
Regulation .03 Fund Established.LinkCopy Citation
There is a Maryland Guaranty Student Tuition Fund for For-Profit Institutions of Higher Education.
Regulation .04 Uses of the Fund.LinkCopy Citation
A.
The Fund shall be used:
(1)
In the event of a school closure, to provide a full refund of tuition and fees incurred by a student that have not been reimbursed or discharged;
(2)
Subject to §B of this regulation, to provide a refund, as determined by the Secretary, of tuition and fees incurred by a student that have not been reimbursed or discharged, if the school fails to:
(a)
Faithfully comply with all agreements and contracts that it makes with a student; or
(b)
Comply with any provision of Education Article, Annotated Code of Maryland; and
(3)
For any other reason directly related to the original purpose of the Fund deemed appropriate by the Secretary.
B.
Prior to making a claim under §A(2) of this regulation, a student shall follow the complaint process of the school. If the school does not respond within 30 days after its receipt of a complaint, the student may file a claim under Regulation .08 of this chapter.
Regulation .05 Financial Guarantee and Potential Guaranty Fund Assessment.LinkCopy Citation
A.
Each school shall:
(1)
As prescribed by Regulation .06 of this chapter, provide a financial guarantee to the Commission; and
(2)
As prescribed by Regulation .07 of this chapter, pay an assessment, if one is levied by the Secretary, into the Fund.
B.
The Secretary may not issue a certificate of approval to, and may revoke any certificate of approval previously issued to, a school that fails to comply with the requirements of §A of this regulation.
Regulation .06 Requirements for the Financial Guarantee.LinkCopy Citation
A.
Subject to §E of this regulation, each school annually shall provide the financial guarantee described in §§B and C of this regulation.
B.
A financial guarantee:
(1)
Shall be in the form and amount the Secretary requires, which shall be no less than the amount described in §C of this regulation, and may be greater than the amount described in §C of this regulation;
(2)
Shall be between the Commission and the surety;
(3)
Shall be made payable to the Secretary on behalf of the Commission; and
(4)
Shall be made under the terms and conditions determined by the Secretary, including the conditions that the institution will:
(a)
Faithfully comply with all agreements and contracts that it makes with a student; and
(b)
Comply with Education Article, Annotated Code of Maryland.
C.
Amount of Guarantee.
(1)
By each December 1, a school shall provide to the Commission a financial guarantee in an amount equal to the school’s non-Title IV adjusted gross tuition and fees for the prior July 1 through June 30.
(2)
The Secretary may require a school to increase the amount of the school's financial guarantee pursuant to Education Article, §11-203, Annotated Code of Maryland.
Regulation .07 Fund Accounting, Annual Assessment, and Special Assessment.LinkCopy Citation
A.
The Secretary may make an accounting of the Fund as appropriate.
B.
Notwithstanding any other provision of this chapter, the Secretary may issue an annual assessment to each school. An annual assessment shall be based on a percentage of a school’s tuition and fees, for a school year determined by the Secretary, and shall be paid to the Commission by the date determined by the Secretary.
C.
If the monies in the Fund are insufficient to pay pending claims, the Secretary may issue a special assessment, in addition to any annual assessment, and each school shall pay the special assessment amount as determined by the Secretary.
Regulation .08 Filing Claims.LinkCopy Citation
A.
A student shall file a claim within 3 years of the date the student knew, or reasonably should have known, of facts that might entitle the student to an award under Regulation .04A of this chapter. Claims filed after that date may not be considered, unless the Secretary determines that there are extenuating circumstances that justify or excuse the late filing. In the event of a school closure, claims shall be filed within 3 years of the date of the school’s closure, unless the Secretary determines that there are extenuating circumstances that justify or excuse a late filing.
B.
A student making a claim against the Fund shall submit a First Report of Claim Form, prepared by the Secretary and published on the Commission’s website, which shall require the student to submit, at a minimum, the following information:
(1)
The student’s:
(a)
Complete name at the time of enrollment and, if different, the student’s current name;
(b)
Date of birth;
(c)
Current home address;
(d)
Current mailing address;
(e)
Telephone number or numbers;
(f)
Current email address;
(g)
Social Security number;
(h)
Program of study;
(i)
Degree, certificate, or other award obtained or sought; and
(j)
Dates of enrollment at the school;
(2)
The name and campus location of the school against which the claim is made;
(3)
The basis for the claim, specifying if the claim is based on the:
(a)
School’s closure;
(b)
School’s failure to faithfully comply with all agreements and contracts that it makes with the student; or
(c)
School’s failure to comply with a provision of Education Article, Annotated Code of Maryland;
(4)
A statement detailing the student’s effort to resolve the claim with the school, including any relevant documentation;
(5)
A statement of the remedy requested; and
(6)
A signed statement, compliant with State and federal privacy laws, that the student authorizes representatives of the school, lenders, the USED, and loan servicers to release any and all records, including educational and financial records, to the Secretary in the course of the Secretary’s investigation of the claim.
C.
A student who has submitted a claim shall update the Secretary of any change in name, mailing address, email address, or phone number.
D.
Loan Discharge Request.
(1)
A student shall request that the USED and, if applicable, its loan servicer, discharge all or part of the student’s loan if:
(a)
The student’s claim is based on a school’s closure; and
(b)
The student is indebted to the USED for monies used to pay tuition and fees to the school.
(2)
A student’s claim against the Fund for tuition and fees that are subject to discharge may not be processed until the student provides the Secretary with evidence from the USED or loan servicer, as applicable, of a final decision on the student’s loan discharge request.
(3)
The Secretary may require that a student request a loan discharge in other circumstances prior to adjudicating the claim.
E.
The Secretary may seek information needed to process a claim directly from a school, lender, loan servicer, or the USED.
F.
Notwithstanding any other provision, a student’s failure to comply with this regulation or to supply any information requested by the Secretary during an investigation or adjudication of a claim may result in a partial or complete denial of a claim.
G.
The Secretary may require that a student submit information in addition to the First Report of Claim Form, including but not limited to:
(1)
Facts and documents that support the claim;
(2)
An explanation of how the school’s actions injured or damaged the student;
(3)
The student’s complete transcript, reflecting any degrees, certificates, or other awards received;
(4)
The student’s financial statement of account with the school, or other documents that indicate charges and payments for tuition and fees;
(5)
A copy of the student’s request that the USED or loan servicer discharge all or a portion of the student’s loans; and
(6)
The names of all lenders or loan servicer to whom the Student is indebted for tuition assistance, and the account and current contact information for each.
Regulation .09 Claim Adjudication.LinkCopy Citation
A.
The Secretary may determine the scope of investigation necessary to adjudicate a claim.
B.
The Secretary may request information and records from the student, school, lenders, loan servicers, the USED, and others as needed in the Secretary’s judgment.
C.
The Secretary shall determine whether to approve or deny a claim.
D.
If a claim is approved, the Secretary shall determine the:
(1)
Amount to be awarded;
(2)
Time, place, and manner of payment;
(3)
Conditions upon which payment shall be made; and
(4)
Order in which payments shall be made.
E.
In determining whether to grant or deny a claim and the amount to be awarded for an approved claim, the Secretary may consider the:
(1)
Basis of the claim;
(2)
Evidence obtained in the investigation;
(3)
Damages or injuries sustained by the student as a result of the school’s actions;
(4)
Student’s participation in a transfer program or teach-out;
(5)
Student’s progress toward or receipt of a degree, certificate, or other terminal award;
(6)
Length of any break in the student’s attendance and the reason;
(7)
School’s efforts to resolve the claim;
(8)
Amount available and likely to become available to the Fund for payments of claims;
(9)
Size and number of claims filed or likely to be filed against the school; and
(10)
Past decisions on similar claims.
F.
Claim Based on School Closure.
(1)
If a claim is based on a school’s closure, the student shall be presumed to have incurred no damages or injuries for tuition and fees if the:
(a)
Student was awarded the degree, certificate, or other award that the student sought;
(b)
Student participates in a teach-out or transfer program as approved by the Secretary;
(c)
Student’s loan is discharged or eligible for discharge; or
(d)
Claim is for tuition and fees applicable to a semester or term other than the one in which the school closed.
(2)
A student may overcome the presumption in §F(1) of this regulation by providing proof of damages or injuries notwithstanding the receipt of an award, successful participation in a teach-out or transfer program, or loan discharge.
G.
Notwithstanding any other provision of this chapter, a student may not receive an award for loan amounts that have been or are eligible for discharge.
H.
Payment Due to School Closure.
(1)
If the Secretary awards payment to a student because of a school closure, the payment shall first be made to a lender or loan servicer, as applicable, as repayment of the student’s debt to the lender for that portion of the indebtedness that pertains to tuition and fees.
(2)
As a condition of payment, the lender or loan servicer shall update the student’s credit reports to reflect full or partial satisfaction of the debt, as applicable, and forward confirmation of the update to the Secretary.
(3)
Upon the request and written authorization of the student, the Secretary may attempt to have the lender or loan servicer discharge all or a portion of the student’s debt.
I.
The Secretary’s decision on a claim shall be in writing and mailed to the student and school and shall become final 30 days after the date of the Secretary’s determination unless the student, within the 30-day period, files with the Secretary a written request for reconsideration. The written request shall contain evidence that supports a request for reconsideration. The Secretary’s decision on reconsideration is final.
J.
A claimant or other person does not have any right in the Fund as beneficiary or otherwise.
Regulation .10 Administration of the Fund.LinkCopy Citation
A.
The Secretary shall administer the Fund as follows:
(1)
Monetary payments into the Fund shall be made in the form of a check made payable to the Maryland Guaranty Student Tuition Fund for For-profit Institutions of Higher Education;
(2)
Monetary payments into the Fund shall be maintained by the State Comptroller, who shall deposit and invest the assets of the Fund. All interest or other return on the Fund shall be credited to the Fund;
(3)
A penalty assessed against a school shall be deposited into the Fund;
(4)
The assets of the Fund may not be expended for any purpose other than those specified under Regulation .04A of this chapter; and
(5)
The Fund shall be a continuing, nonlapsing fund. Any unspent portion of the Fund may not be transferred or revert to the General Fund of the State, but shall remain in the Fund to be used for the purposes specified in Regulation .04A of this chapter.
B.
The Commission is subrogated to and may enforce the claim of any student to the extent of any actual or authorized reimbursement from the Fund.
C.
When a claim is approved, the Secretary, as agent for the Fund, shall be subrogated in writing to the amount of the claim. The Secretary is authorized to take all steps necessary to perfect the subrogation rights before the claim is paid. If payment of a school’s obligation is made from the Fund, the Secretary may seek repayment of the sums from the school or another responsible person or entity. This provision is enforced through the Office of the Attorney General.
D.
The Secretary may appoint an advisory council to whom the Secretary may refer matters pertaining to the Fund.
Regulation .11 Reporting.LinkCopy Citation
A.
Each school shall file with the Secretary by November 1 of each year:
(1)
A copy of the school's most recent audited financial statement;
(2)
A copy of the school's most recent pro-forma statement; and
(3)
A Financial Reporting Form, as prescribed by the Secretary, that requires, at a minimum, the following information for the most recent year beginning July 1 and ending June 30:
(a)
The total number of students enrolled in the school;
(b)
The total amount of adjusted tuition and fees;
(c)
The total amount of non-Title IV adjusted gross tuition and fees;
(d)
If applicable under Regulation .14 of this chapter, the percentages of revenue from federal and non-federal funds most recently reported to the U.S. Department of Education under 34 CFR §668.28; and
(e)
A declaration signed and dated by the chief executive officer of the school under penalty of perjury that the information in the Financial Reporting Form and any attachments are true and correct.
B.
The timely filing of the reports in §A of this regulation is a condition of a school's continued approval to operate.
Regulation .12 Notice to Students.LinkCopy Citation
Each school shall include the following statement in its student contract, enrollment agreement, and course catalog: “A student may be entitled to make a claim against the Maryland Guaranty Student Tuition Fund for For-profit Institutions of Higher Education (“Student Tuition Fund”) in the case of certain events, including a school closure. The Student Tuition Fund is administered by the Maryland Higher Education Commission. Information about the Student Tuition Fund and instructions for filing a claim may found in Regulations 13B.02.06.01 through .13 of the Code of Maryland Regulations or by contacting the Maryland Higher Education Commission.”
Regulation .13 Orderly Closure and Teach-Outs.LinkCopy Citation
A.
Financial Guarantee.
(1)
In addition to the requirements of Regulation .05 of this chapter, a school shall provide to the Commission a financial guarantee in the amount of $100,000 as security for its performance of duties and responsibilities under this regulation.
(2)
The Secretary may not issue a certificate of approval, and may revoke any certificate of approval previously issued, to a school that fails to provide a financial guarantee as required in this regulation.
(3)
If a school does not comply with the provisions of this regulation, the Secretary may utilize the school’s financial guarantee to defray the costs and expenses incurred as a result.
(4)
If a school fully and timely complies with the provisions of this regulation, as determined solely by the Secretary, the Secretary shall return the financial guarantee in full.
B.
A school that decides to close shall immediately, and in any event within 3 business days of its decision to close, notify the Commission in writing of its intention to close and provide an initial closure plan. The initial closure plan shall include:
(1)
The exact date the school will close and reason for the closure;
(2)
The last date of instruction for each educational service or program;
(3)
Notice of whether branch campuses of the institution will close or remain open;
(4)
If known, notice of whether the school will provide teach-out arrangements; and
(5)
A list of all students who were enrolled at any time during the 120 days prior to the date of the decision to close.
C.
A school that decides to close shall, within 10 business days of its decision to close, provide to the Commission a final closure plan that includes:
(1)
A timeline for the transfer of all student records to the Commission;
(2)
A list of all students who were enrolled at any time during the 120 days prior to the date of the decision to close that includes:
(a)
The student’s full name at the time of enrollment and any name changes submitted by the student;
(b)
The student’s current enrollment status; and
(c)
The student’s last known mailing address, email address, and phone numbers;
(3)
An explanation of how and when the school will notify all students of their rights and options under federal student financial aid programs and this regulation; and
(4)
For any student who will not be provided a complete educational program:
(a)
A plan for providing teach-outs or transfers, including details and documentation of any agreements with other institutions; or
(b)
If no teach-out is contemplated, or for students who do not wish to participate in a teach-out, a plan for making applicable refunds to students within 45 days from the date of closure.
D.
If a school closes, prior to the date of closure it shall deliver to the Secretary electronic copies, if available, of the student records for all current and former students. If electronic copies do not exist, the school shall deliver the originals or paper copies of the records.
Regulation .14 Revenue Requirements for Certain Institutions.LinkCopy Citation
A.
In this regulation, “year” means July 1 through the following June 30.
B.
This regulation applies to schools that:
(1)
Are approved to operate in Maryland under COMAR 13B.02.01 or COMAR 13B.02.02;
(2)
Are for-profit institutions;
(3)
Participate in and receive funds through Title IV of the federal Higher Education Act of 1965; and
(4)
Are approved by the Commission, in its role as State Approving Agency, to enroll students who receive financial assistance for education under the federal Post-9/11 Veterans Educational Assistance Act of 2008.
C.
A school described under §B of this regulation may not enroll new Maryland residents unless the percentage of annual revenue from non-federal funds that has been or will be reported to the U.S. Department of Education under 34 CFR §668.28 in 2 of the 3 immediately preceding years is at least 10 percent.
D.
Institutional Responsibility.
(1)
Annually and as part of an institution’s report submitted under Regulation .11 of this chapter, an institution described in §B of this regulation shall:
(a)
Provide to the Secretary, in the form and manner requested by the Secretary, the percentages of revenue from federal and non-federal funds most recently reported to the U.S. Department of Education under 34 CFR §668.28; and
(b)
Review the percentages provided under §D(1)(a) of this regulation and the percentages reported in the 2 preceding years to determine if the institution has met the revenue requirements in §C of this regulation.
(2)
An institution that determines that it has not met the revenue requirements in §C of this regulation shall:
(a)
Immediately cease enrollment of new Maryland residents;
(b)
Immediately notify the Secretary; and
(c)
No more than 30 days after notifying the Secretary, submit a plan to the Secretary outlining the steps the institution will take to come into compliance with the revenue requirements in §C of this regulation by the date the institution’s next report to the U.S. Department of Education under 34 CFR §668.28 is due.
E.
Enforcement by Secretary.
(1)
The Secretary annually shall review an institution’s three most recent revenue percentages provided under §D of this regulation to determine if an institution has complied with this regulation and Education Article, §11-210, Annotated Code of Maryland.
(2)
The Secretary may issue an order to any institution in violation of this regulation or Education Article, §11-210, Annotated Code of Maryland, to cease and desist enrollment and may impose a fine of up to $5,000.
(3)
The Secretary is not prohibited from employing any other enforcement mechanism permitted by this chapter or Education Article, Title 11, Annotated Code of Maryland.
F.
Subsequent Compliance.
(1)
An institution in violation of this regulation may, upon submission of its next revenue percentage under §D of this chapter, submit a written request to the Secretary to determine if the institution has come into compliance.
(2)
The Secretary shall make a determination within 15 days of any request made under §F(1) of this regulation.
(3)
An institution in violation of this regulation may not enroll new Maryland residents until the Secretary has notified the institution, in writing, that it is in compliance with this section.
Chapter annotations
Authority: Education Article, §§11-105(u), 11-203, and 11-210, Annotated Code of Maryland
History: Effective date: January 15, 2018 (45:1 Md. R. 14)
History: Regulation .05 amended effective November 19, 2018 (45:23 Md. R. 1071)
History: Regulation .06 amended effective November 19, 2018 (45:23 Md. R. 1071)
History: Chapter revised effective August 21, 2023 (50:16 Md. R. 727)