§ 115D-95.1. (Effective July 1, 2010) Student Protection Fund. - North Carolina Statutes

§ 115D‑95.1.  (EffectiveJuly 1, 2010) Student Protection Fund.

(a)        Definitions. – Asused in this section:

(1)        "Catastrophicloss amount" means the amount of funds required to protect prepaid studenttuition in case of a large‑scale event that would draw against theStudent Protection Fund. The amount is one million dollars ($1,000,000).

(2)        "Fund capamount" means the catastrophic loss amount plus a reserve amount. Theamount is one million five hundred thousand dollars ($1,500,000).

(b)        Student ProtectionFund. – The Student Protection Fund is established in the Department of StateTreasurer as a statewide fee‑supported fund. Interest accruing to theFund is credited to the Fund. The State Board of Community Colleges administersthe Fund. The purpose of the Fund is to compensate students enrolled in aproprietary school licensed under this Article who have suffered a loss oftuition, fees, or any other instructional‑related expenses paid to theschool by reason of the failure of the school to offer or complete studentinstruction, academic services, or other goods and services related to courseenrollment if the school ceases to operate for any reason, including thesuspension, revocation, or nonrenewal of a school's license, bankruptcy, orforeclosure.

(c)        Student ProtectionFund Advisory Committee. – The President of the North Carolina CommunityCollege System shall appoint a Student Protection Fund Advisory Committee.Members of the Committee shall be appointed for terms of three years. TheCommittee shall advise the State Board of Community Colleges on matters relatedto the Fund, including, but not limited to, the adjustment of the catastrophicloss amount and Fund cap amount.

The Committee shall consist ofseven members as follows:

(1)        Three professionalstaff members of the Community Colleges System Office.

(2)        An owner/director ofa proprietary school with less than 100 students, or the owner/director'sdesignee.

(3)        An owner/director ofa proprietary school with between 100 and 750 students, or the owner/director'sdesignee.

(4)        An owner/director ofa proprietary school or group of proprietary schools with more than 750students, or the owner/director's designee.

(5)        An owner/director ofa proprietary school appointed at large, or the owner/director's designee.

(d)        Initial Payment. – Priorto its first year of operation in the State, each proprietary school shall payan initial amount of one thousand two hundred fifty dollars ($1,250) into theFund.

(e)        Annual RevenuePayment. – Each proprietary school operating in the State shall pay annuallyinto the Fund an amount based on its annual gross tuition revenue generated inthe State as follows:

Annual Gross Tuition Revenue                              Amountof Assessment

$1.00 – $25,000                                                   $200.00

$25,001 – $50,000                                               $250.00

$50,001 – $100,000                                             $300.00

$100,001 – $200,000                                           $400.00

$200,001 – $300,000                                           $500.00

$300,001 – $400,000                                           $600.00

$400,001 – $500,000                                           $700.00

$500,001 – $750,000                                        $1,000

$750,001 – $1,000,000                                     $1,250

$1,000,001 – $1,500,000                                  $1,500

$1,500,001 – $2,000,000                                  $2,000

Greater than $2,000,000                                        $2,000plus one‑twentieth of one percent (.05%) of annual gross tuition revenueover $2,000,000.

(f)         Suspension ofPayments. – If the Student Protection Fund balance is equal to or exceeds theFund cap amount, the State Board of Community Colleges shall suspend paymentsinto the Fund for schools that have been continuously licensed in the State formore than eight years. The State Board shall require schools to resume paymentsinto the Fund if the balance of the Fund is less than the catastrophic lossamount.

(g)        CatastrophicAssessments. – If claims against the Student Protection Fund exceed thecatastrophic loss amount, the State Board of Community Colleges may assessadditional fees to the extent necessary to compensate students qualified for repaymentunder the Fund. The amount of the catastrophic assessment shall not exceed one‑halfof the amount of the annual revenue payment required by subsection (e) of thissection. If the amount of the catastrophic assessment will be insufficient tocover qualified claims, the State Board shall develop a method of allocatingfunds among claims.

(h)        Payment Requiredfor Proprietary School Licensure. – The full and timely payment into the Fundpursuant to this section is a condition of licensure.

(i)         PaymentsNonrefundable. – No payment to the Student Protection Fund shall be refunded inthe event that a school's license application is rejected or a school's licenseis suspended or revoked.

(j)         Student Repayment.– A student, or the student's parent or guardian, who has suffered a loss oftuition, fees, or any other instructional‑related expenses paid to aproprietary school licensed under this Article by reason of the school ceasingto operate for any reason, including the suspension, revocation, or nonrenewalof a school's license, bankruptcy, or foreclosure, may qualify for repaymentsunder the Student Protection Fund. The State Board of Community Colleges firstmust issue repayment from the bonds issued under G.S. 115D‑95. If theStudent Protection Fund is insufficient to cover the qualified claims, theState Board must develop a method of allocating funds among claims.

(k)        Rules. – The StateBoard of Community Colleges shall adopt rules for the implementation of thissection.  (2009‑562,s. 4.)