The Board is required to ensure Certificate of Authorization
and Certificate of Authority institutions maintain reserves, lines
of credit, or surety instruments sufficient to allow the institution
or person to fulfill its educational obligations of the current term
to its enrolled students if the institution or person violates any
minimum standard which results in loss of prepaid tuition or fees,
or is unable to continue to provide instruction to its enrolled students.
(1) Sufficient Financial Resources Documentation.
(A) Sufficient financial resources may be demonstrated
by proof of an adequate reserve, line of credit, or surety instrument.
A surety instrument includes but is not limited to, a surety bond,
an assignment of a savings or escrow account, certificate of deposit,
irrevocable letter of credit, or a properly executed participation
contract with a private association, partnership, corporation, or
other entity whose membership is comprised of postsecondary institutions.
(B) The documented reserves, lines of credit, or surety
instruments must be:
(i) In a form and amount acceptable to the Board;
(ii) In an amount equal to or greater than the cost
of providing a refund, including administrative costs associated with
processing claims, for the maximum unearned tuition and fees of the
institution for a period or term during the applicable academic year
for which programs of instruction are offered, including, but not
limited to, on a semester, quarter, monthly, or class basis; except
that the period or term of greatest duration and expense shall be
utilized for this computation where an institution's year consists
of one or more such periods or terms. Unearned tuition and fees are
tuition or fees billed to a student for the current term. No tuition
or fee billed for the current term may be considered earned by the
institution until the current term has been completed and students
have received grades for courses taken during the term;
(iii) Conditioned to provide indemnification to any
student or enrollee of the school or his/her parent or guardian determined
by the Board to have suffered loss of unearned tuition or any fees
as a result of violation of any minimum standard or as a result of
the institution ceasing operation, provide evidence satisfactory to
the Board of its financial ability to provide such indemnification,
and list the amount of surety liability the guaranteeing entity will
(iv) Held in Travis County, Texas, and conditioned
to allow only the Board to withdraw funds for the benefit of persons
identified in clause (iii) of this subparagraph.
(C) The institution shall include a letter signed by
an authorized representative of the institution showing in detail
the calculations made pursuant to this section and explaining the
method used for computing the amount of the reserves, lines of credit
or surety instrument.
(D) Falsifying surety calculation or surety instrument
will be reported to the Attorney General per §7.5(m) of this
title (relating to Degree Granting Colleges and Universities Other
Than Texas Public Institutions).
(2) Tuition and Fee Recovery.
(A) A Qualifying Event, when used in this subchapter,
shall mean an event in which a student or enrollee of the school or
his/her parent or guardian is determined by the Board to have suffered
loss of tuition or any fees as a result of violation of any minimum
standard or as a result of the institution or location ceasing operation.
(B) The Board may withdraw the total amount of reserves,
lines of credit, or surety instrument designated for tuition and fee
recovery at the time the Board deems the institution or person has
violated any minimum standard which results in loss of prepaid tuition
or fees, or upon notice that an institution is unable to continue
to provide instruction to its enrolled students.
(C) A student, enrollee, parent or guardian is required
to apply for an unearned tuition and fee claim in order to be eligible
(i) Board staff will make available an application
claim form. Claim forms must include original signatures to be considered
(ii) Board staff will determine supporting documentation
required for each claim and notify the claimant. Supporting documentation
may include an enrollment agreement, transcript, report card, loan
agreement, cancelled checks, or other documentation which provides
information on tuition and fee amounts paid during the current term
and the institution's failure to meet minimum standards or continue
(iii) Claims must be initiated by the claimant with
a completed application claim form within 12 months of a Qualifying
Event. The Board will publish the Qualifying Event date which will
begin the 12 months claim period.
(iv) Board staff will review all student tuition and
fee recovery claims within 30 days after the claim period ends. Refunds
will be made in a timely manner either upon determination all possible
valid claims have been filed before the end of the claim period or
at the end of the 12 months claim period.
(I) Payments will be made based on verified tuition
and fee amounts claimed.
(II) If the amount of institutional reserves, lines
of credit, or surety instrument able to be withdrawn by the Board
at the time of the Qualifying Event does not allow full payment of
tuition and fees to all claimants, Board staff will apportion refunds
according to verified tuition and fees claimed as a percentage of
total amount claimed versus total amount withdrawn.
(III) If the amount of institutional reserves, lines
of credit, or surety instrument withdrawn by the Board at the time
of the Qualifying Event is greater than the total claims made during
the 12 month claim period, the Coordinating Board reserves the right
to retain a portion of the excess funds in order to maintain any student
academic records deposited in the Coordinating Board's student academic
record repository as a result of the Qualifying Event. Any excess
funds withdrawn but not paid in claims or used for student academic
record repository maintenance will be returned to the institution,
receiver, bankruptcy trustee, or other entity holding institutional
funds at the time funds may be returned.