§ 116-15. Licensing of certain nonpublic post-secondary educational institutions. - North Carolina Statutes

§ 116‑15. Licensing of certain nonpublic post‑secondary educational institutions.

(a1)      The General Assembly of North Carolina in recognition of theimportance of higher education and of the particular significance attached tothe personal credentials accessible through higher education and in consonancewith statutory law of this State making unlawful any "unfair or deceptiveacts or practices in the conduct of any trade or commerce," herebydeclares it the policy of this State that all institutions conducting post‑secondarydegree activity in this State that are not subject to Chapter 115 or 115D ofthe General Statutes, nor some other section of Chapter 116 of the GeneralStatutes shall be subject to licensure under this section except as theinstitution or a particular activity of the institution may be exempt fromlicensure by one or another provision of this section.

(a2)      Definitions. – As used in this section the following termsare defined as set forth in this subsection:

(1)        "Post‑secondary degree". – A credentialconferring on the recipient thereof the title of "Associate","Bachelor", "Master", or "Doctor", or anequivalent title, signifying educational attainment based on (i) study, (ii) asubstitute for study in the form of equivalent experience or achievementtesting, or (iii) a combination of the foregoing; provided, that "post‑secondarydegree" shall not include any honorary degree or other so‑called"unearned" degree.

(2)        "Institution". – Any sole proprietorship, group,partnership, venture, society, company, corporation, school, college, oruniversity that engages in, purports to engage in, or intends to engage in anytype of post‑secondary degree activity.

(3)        "Post‑secondary degree activity". – Any ofthe following is "post‑secondary degree activity":

a.         Awarding a post‑secondary degree.

b.         Conducting or offering study, experience, or testing for anindividual or certifying prior successful completion by an individual of study,experience, or testing, under the representation that the individualsuccessfully completing the study, experience, or testing will be awardedtherefor, at least in part, a post‑secondary degree.

(4)        "Publicly registered name". – The name of any soleproprietorship, group, partnership, venture, society, company, corporation,school, college, or institution that appears as the subject of any Articles ofIncorporation, Articles of Amendment, or Certificate of Authority to TransactBusiness or to Conduct Affairs, properly filed with the Secretary of State ofNorth Carolina and currently in force.

(5)        "Board". – The Board of Governors of TheUniversity of North Carolina.

(b)        Required License. – No institution subject to this sectionshall undertake post‑secondary degree activity in this State, whetherthrough itself or through an agent, unless the institution is licensed asprovided in this section to conduct post‑secondary degree activity or isexempt from licensure under this section as hereinafter provided.

(c)        Exemption from Licensure. – Any institution that has beencontinuously conducting post‑secondary degree activity in this Stateunder the same publicly registered name or series of publicly registered namessince July 1, 1972, shall be exempt from the provisions for licensure underthis section upon presentation to the Board of information acceptable to theBoard to substantiate such post‑secondary degree activity and publicregistration of the institution's names. Any institution that, pursuant to apredecessor statute to this subsection, had presented to the Board proof ofactivity and registration such that the Board granted exemption from licensure,shall continue to enjoy such exemption without further action by the Board.

(d)        Exemption of Institutions Relative to Religious Education. –Notwithstanding any other provision of this section, no institution shall besubject to licensure under this section with respect to post‑secondarydegree activity based upon a program of study, equivalent experience, orachievement testing the institutionally planned objective of which is theattainment of a degree in theology, divinity, or religious education or in anyother program of study, equivalent experience, or achievement testing that isdesigned by the institution primarily for career preparation in a religiousvocation. This exemption shall be extended to any institution with respect toeach program of study, equivalent experience, and achievement test that theinstitution demonstrates to the satisfaction of the Board should be exemptunder this subsection.

(e)        Post‑secondary Degree Activity within the Military. –To the extent that an institution undertakes post‑secondary degreeactivity on the premises of military posts or reservations located in thisState for military personnel stationed on active duty there, or their dependents,the institution shall be exempt from the licensure requirements of thissection.

(f)         Standards for Licensure. – To receive a license to conductpost‑secondary degree activity in this State, an institution shallsatisfy the Board that the institution has met the following standards:

(1)        That the institution is State‑chartered. If charteredby a state or sovereignty other than North Carolina, the institution shall alsoobtain a Certificate of Authority to Transact Business or to Conduct Affairs inNorth Carolina issued by the Secretary of State of North Carolina;

(2)        That the institution has been conducting post‑secondarydegree activity in a state or sovereignty other than North Carolina duringconsecutive, regular‑term, academic semesters, exclusive of summersessions, for at least the two years immediately prior to submitting anapplication for licensure under this section, or has been conducting withenrolled students, for a like period in this State or some other state orsovereignty, post‑secondary educational activity not related to a post‑secondarydegree; provided, that an institution may be temporarily relieved of thisstandard under the conditions set forth in subsection (i), below;

(3)        That the substance of each course or program of study, equivalentexperience, or achievement test is such as may reasonably and adequatelyachieve the stated objective for which the study, experience, or test isoffered or to be certified as successfully completed;

(4)        That the institution has adequate space, equipment,instructional materials, and personnel available to it to provide education ofgood quality;

(5)        That the education, experience, and other qualifications ofdirectors, administrators, supervisors, and instructors are such as mayreasonably insure that the students will receive, or will be reliably certifiedto have received, education consistent with the stated objectives of any courseor program of study, equivalent experience, or achievement test offered by theinstitution;

(6)        That the institution provides students and other interestedpersons with a catalog or brochure containing information describing thesubstance, objectives, and duration of the study, equivalent experience, andachievement testing offered, a schedule of related tuition, fees, and all othernecessary charges and expenses, cancellation and refund policies, and suchother material facts concerning the institution and the program or course ofstudy, equivalent experience, and achievement testing as are reasonably likelyto affect the decision of the student to enroll therein, together with anyother disclosures that may be specified by the Board; and that such informationis provided to prospective students prior to enrollment;

(7)        That upon satisfactory completion of study, equivalentexperience, or achievement test, the student is given appropriate educationalcredentials by the institution, indicating that the relevant study, equivalentexperience, or achievement testing has been satisfactorily completed by thestudents;

(8)        That records are maintained by the institution adequate toreflect the application of relevant performance or grading standards to eachenrolled student;

(9)        That the institution is maintained and operated incompliance with all pertinent ordinances and laws, including rules andregulations adopted pursuant thereto, relative to the safety and health of allpersons upon the premises of the institution;

(10)      That the institution is financially sound and capable offulfilling its commitments to students and that the institution has provided abond as provided in subsection (f1) of this section;

(11)      That the institution, through itself or those with whom itmay contract, does not engage in promotion, sales, collection, credit, or otherpractices of any type which are false, deceptive, misleading, or unfair;

(12)      That the chief executive officer, trustees, directors,owners, administrators, supervisors, staff, instructors, and employees of theinstitution have no record of unprofessional conduct or incompetence that wouldreasonably call into question the overall quality of the institution;

(13)      That the student housing owned, maintained, or approved bythe institution, if any, is appropriate, safe, and adequate;

(14)      That the institution has a fair and equitable cancellationand refund policy; and

(15)      That no person or agency with whom the institution contractshas a record of unprofessional conduct or incompetence that would reasonablycall into question the overall quality of the institution.

(f1)       (1)        A guaranty bond is required foreach institution that is licensed. The Board may revoke the license of aninstitution that fails to maintain a bond pursuant to this subsection.

                  If the institution has provided a bond pursuant toG.S. 115D‑95, the Board may waive the bond requirement under thissubsection. The Board may not waive the bond requirement under this subsectionif the applicant has provided an alternative to a guaranty bond under G.S. 115D‑95(c).

(2)        When application is made for a license or license renewal,the applicant shall file a guaranty bond with the clerk of the superior courtof the county in which the institution will be located. The bond shall be infavor of the students. The bond shall be executed by the applicant as principaland by a bonding company authorized to do business in this State. The bondshall be conditioned to provide indemnification to any student, or his parentor guardian, who has suffered a loss of tuition or any fees by reason of thefailure of the institution to offer or complete student instruction, academicservices, or other goods and services related to course enrollment for anyreason, including the suspension, revocation, or nonrenewal of an institution'slicense, bankruptcy, foreclosure, or the institution ceasing to operate.

                  The bond shall be in an amount determined by theBoard to be adequate to provide indemnification to any student, or his parentor guardian, under the terms of the bond. The bond amount for an institutionshall be at least equal to the maximum amount of prepaid tuition held at anytime during the last fiscal year by the institution. The bond amount shall alsobe at least ten thousand dollars ($10,000).

                  Each application for a license shall include a lettersigned by an authorized representative of the institution showing in detail thecalculations made and the method of computing the amount of the bond, pursuantto this subdivision and the rules of the Board. If the Board finds that thecalculations made and the method of computing the amount of the bond areinaccurate or that the amount of the bond is otherwise inadequate to provideindemnification under the terms of the bond, the Board may require theapplicant to provide an additional bond.

                  The bond shall remain in force and effect untilcancelled by the guarantor. The guarantor may cancel the bond upon 30 daysnotice to the Board. Cancellation of the bond shall not affect any liabilityincurred or accrued prior to the termination of the notice period.

(g)        Review of Licensure. – Any institution that acquireslicensure under this section shall be subject to review by the Board todetermine that the institution continues to meet the standard for licensure ofsubsection (f), above. Review of such licensure by the Board shall always occurif the institution is legally reconstituted, or if ownership of a preponderanceof all the assets of the institution changes pursuant to a single transactionor agreement or a recognizable sequence of transactions or agreements, or iftwo years has elapsed since licensure of the institution was granted by theBoard.

Notwithstanding the foregoing paragraph, if an institution hascontinued to be licensed under this section and continuously conducted post‑secondarydegree activity in this State under the same publicly registered name or seriesof publicly registered names since July 1, 1979, or for six consecutive years,whichever is the shorter period, and is accredited by an accrediting commissionrecognized by the Council on Post‑Secondary Accreditation, suchinstitution shall be subject to licensure review by the Board every six yearsto determine that the institution continues to meet the standard for licensureof subsection (f), above. However, should such an institution cease to maintainthe specified accreditation, become legally reconstituted, have ownership of apreponderance of all its assets transferred pursuant to a single transaction oragreement or a recognizable sequence of transactions or agreements to a personor organization not licensed under this section, or fail to meet the standardfor licensure of subsection (f), above, then the institution shall be subjectto licensure review by the Board every two years until a license to conductpost‑secondary degree activity and the requisite accreditation have beenrestored for six consecutive years.

(h)        Denial and Revocation of Licensure. – Any institutionseeking licensure under the provisions of this section that fails to meet thelicensure requirements of this section shall be denied a license to conductpost‑secondary degree activity in this State. Any institution holding alicense to conduct post‑secondary degree activity in this State that isfound by the Board of Governors not to satisfy the licensure requirements ofthis section shall have its license to conduct post‑secondary degreeactivity in this State revoked by the Board; provided, that the Board ofGovernors may continue in force the license of an institution deemed by theBoard to be making substantial and expeditious progress toward remedying itslicensure deficiencies.

(i)         Regulatory Authority in the Board. – The Board shall haveauthority to establish such rules, regulations, and procedures as it may deemnecessary or appropriate to effect the provisions of this section. Such rules,regulations, and procedures may include provision for the granting of aninterim permit to conduct post‑secondary degree activity in this State toan institution seeking licensure but lacking the two‑year period ofactivity prescribed by subsection (f)(2), above.

(j)         Enforcement Authority in the Attorney General. – The Boardshall call to the attention of the Attorney General, for such action as he maydeem appropriate, any institution failing to comply with the requirements ofthis section.

(k)        Severability. – The provisions of this section areseverable, and, if any provision of this section is declared unconstitutionalor invalid by the courts, such declaration shall not affect the validity of thesection as a whole or any provision other than the provision so declared to beunconstitutional or invalid. (1971, c. 1244, s. 1; 1973, c. 1331, s. 3; 1975, c. 268; 1977, c. 563,ss. 1‑4; 1979, c. 896, s. 13; 1979, 2nd Sess., c. 1130, s. 1; 1983 (Reg.Sess., 1984), c. 1006; 1989 (Reg. Sess., 1990), c. 824, s. 2; 1997‑456,s. 27.)