Fair Business Practices - Private Postsecondary Institutions - CA Education

Section § 94897

This law outlines several prohibited actions for educational institutions. They can't use the Great Seal of California on diplomas or guarantee jobs upon graduation. Ads must be truthful about job opportunities and course details. They must clearly state if their courses are online and can't claim accreditation if not accredited. Schools can't use deceptive advertising or pay students to recruit others. Institutions must not mislead about affiliations or claim to grant degrees they don't offer. Misleading statements about student records or financial info are prohibited. Compensation methods in recruitment or admissions must follow specific rules. Schools can't force prospective students to give contact info for required program details online. Offering degrees from unaccredited programs without disclosing specific limitations is disallowed. Fraud against students, unauthorized charges, violations of nondisclosure agreements, and not adhering to policies are also banned.

An institution shall not do any of the following:

(a) Use, or allow the use of, any reproduction or facsimile of the Great Seal of the State of California on a diploma.

(b) Promise or guarantee employment, or otherwise overstate the availability of jobs upon graduation.

(c) Advertise concerning job availability, degree of skill, or length of time required to learn a trade or skill unless the information is accurate and not misleading.

(d) Advertise, or indicate in promotional material, without including the fact that the educational programs are delivered by means of distance education if the educational programs are so delivered.

(e) Advertise, or indicate in promotional material, that the institution is accredited, unless the institution has been accredited by an accrediting agency.

(f) Solicit students for enrollment by causing an advertisement to be published in “help wanted” columns in a magazine, newspaper, or publication, or use “blind” advertising that fails to identify the institution.

(g) Offer to compensate a student to act as an agent of the institution with regard to the solicitation, referral, or recruitment of any person for enrollment in the institution, except that an institution may award a token gift to a student for referring an individual, provided that the gift is not in the form of money, no more than one gift is provided annually to a student, and the gift’s cost is not more than one hundred dollars ($100).

(h) Pay any consideration to a person to induce that person to sign an enrollment agreement for an educational program.

(i) Use a name in any manner improperly implying any of the following:

(1) The institution is affiliated with any government agency, public or private corporation, agency, or association if it is not, in fact, thus affiliated.

(2) The institution is a public institution.

(3) The institution grants degrees, if the institution does not grant degrees.

(j) In any manner make an untrue or misleading change in, or untrue or misleading statement related to: a test score, grade or record of grades, attendance record, record indicating student completion, placement, employment, salaries, or financial information; a financial report filed with the bureau; information or records relating to the student’s eligibility for student financial aid at the institution; or any other record or document required by this chapter or by the bureau.

(k) Willfully falsify, destroy, or conceal any document of record while that document of record is required to be maintained by this chapter.

(l) Use the terms “approval,” “approved,” “approval to operate,” or “approved to operate” without stating clearly and conspicuously that approval to operate means compliance with state standards as set forth in this chapter. An institution may not state or imply either of the following:

(1) The institution or its educational programs are endorsed or recommended by the state or by the bureau.

(2) The approval to operate indicates that the institution exceeds minimum state standards as set forth in this chapter.

(m) Direct any individual to perform an act that violates this chapter, to refrain from reporting unlawful conduct to the bureau or another government agency, or to engage in any unfair act to persuade a student not to complain to the bureau or another government agency.

(n) Compensate an employee involved in recruitment, enrollment, admissions, student attendance, or sales of educational materials to students on the basis of a commission, commission draw, bonus, quota, or other similar method related to the recruitment, enrollment, admissions, student attendance, or sales of educational materials to students, except as provided in paragraph (1) or (2):

(1) If the educational program is scheduled to be completed in 90 days or less, the institution shall pay compensation related to a particular student only if that student completes the educational program.

(2) For institutions participating in the federal student financial aid programs, this subdivision shall not prevent the payment of compensation to those involved in recruitment, admissions, or the award of financial aid if those payments are in conformity with federal regulations governing an institution’s participation in the federal student financial aid programs.

(o) Require a prospective student to provide personal contact information in order to obtain, from the institution’s internet website, educational program information that is required to be contained in the school catalog or any information required pursuant to the consumer information requirements of Title IV of the federal Higher Education Act of 1965, and any amendments thereto.

(p) Offer an associate, baccalaureate, master’s, or doctoral degree without disclosing to prospective students before enrollment whether the institution or the degree program is unaccredited and any known limitation of the degree, including, but not limited to, all of the following:

(1) Whether a graduate of the degree program will be eligible to sit for the applicable licensure exam in California and other states.

(2) A statement that reads: “A degree program that is unaccredited or a degree from an unaccredited institution is not recognized for some employment positions, including, but not limited to, positions with the State of California.”

(3) That a student enrolled in an unaccredited institution is not eligible for federal financial aid programs.

(q) In any manner commit fraud against, or make a material untrue or misleading statement to, a student or prospective student under the institution’s authority or the pretense or appearance of the institution’s authority.

(r) Charge or collect any payment for institutional charges that are not authorized by an executed enrollment agreement.

(s) Violate Section 1788.93 of the Civil Code.

(t) Require a prospective, current, or former student or employee to sign a nondisclosure agreement pertaining to their relationship to, or experience with, the institution, except that an institution may use a nondisclosure agreement to protect the institution’s intellectual property and trade secrets. Any nondisclosure agreement in violation of this section is void and not enforceable at law or in equity.

(u) Fail to maintain policies related to compliance with this chapter or adhere to the institution’s stated policies.

educational institutions Great Seal misuse job guarantee truthful advertising distance education accreditation claims deceptive advertising student recruitment misleading affiliations untrue statements recruitment compensation contact information requirement unaccredited degrees nondisclosure agreements compliance policies

(Amended by Stats. 2024, Ch. 497, Sec. 83. (SB 1526) Effective January 1, 2025. Repealed as of January 1, 2027, pursuant to Section 94950.)

Section § 94898

This law sets rules for educational institutions regarding how they handle class scheduling and instruction locations. Schools can't merge classes unless all students have received the same level of instruction, but they can place students from different programs in the same class if the content suits all programs and it doesn't hurt the learning experience. Once a student enrolls, the institution can't suddenly stop classes or change class times significantly unless most students agree and others can get refunds. If a class was originally promised at a specific location, the school can't switch to online teaching without prior notice unless it was part of the original plan. Class location changes over 25 miles require written notice before enrollment or regulatory approval, or they must offer refunds if students don't agree. Changes are acceptable for situations beyond the school's control.

(a) An institution shall not merge classes unless all of the students have received the same amount of instruction. This subdivision does not prevent the placement of students, who are enrolled in different educational programs, in the same class if that class is part of each of the educational programs and the placement in a merged class will not impair the students’ learning of the subject matter of the class.

(b) After a student has enrolled in an educational program, the institution shall not do either of the following:

(1) Make any unscheduled suspension of any class unless caused by circumstances beyond the institution’s control.

(2) Change the day or time during the period of attendance in which any class is offered to a day when the student is not scheduled to attend the institution or to a time that is outside of the range of time that the student is scheduled to attend the institution on the day for which the change is proposed unless at least 90 percent of the students who are enrolled consent to the change and the institution offers full refunds to the students who do not consent to the change. For the purpose of this paragraph, “range of time” means the period beginning with the time at which the student’s first scheduled class session for the day is set to start and ending with the time the student’s last scheduled class session for that day is set to finish.

(c) If an institution enrolls a student in an educational program that is conducted at a specific site at the time of enrollment, the institution shall not convert the educational program to another method of delivery, such as by means of distance education. This subdivision does not apply to an educational program that also includes a distance education component, if the student is notified during the enrollment process, in writing, that the program contains a distance education component.

(d) An institution shall not move the location of class instruction more than 25 miles from the location of instruction at the time of enrollment unless any of the following occur:

(1) The institution discloses in writing to each student before enrollment in the educational program that the location of instruction will change after the educational program begins and the address of the new location.

(2) The institution applies for, and the bureau grants, approval to change the location. The bureau shall grant the application within 60 days if the bureau, after notice to affected students and an opportunity for them to be heard as prescribed by the bureau, concludes that the change in location would not be unfair or unduly burdensome to students. The bureau may grant approval to change the location subject to reasonable conditions, such as requiring the institution to provide transportation, transportation costs, or refunds to adversely affected students.

(3) The institution offers a full refund to students enrolled in the educational program who do not voluntarily consent to the change.

(4) An unforeseeable and unavoidable circumstance outside of the control of the institution requires the change in the location of instruction.

class merge rules class suspension restrictions unscheduled class suspension class time changes student consent for class changes distance education restriction instruction location change moving class locations site-specific enrollment transportation provision by institution full refund policy distance education component unforeseeable circumstances location change approval notification of change

(Added by Stats. 2009, Ch. 310, Sec. 6. (AB 48) Effective January 1, 2010. Repealed as of January 1, 2027, pursuant to Section 94950.)

Section § 94899

If a school offers a program in a field that needs a state license, the school must have approval from the right state agency so that students can take the licensing exam. If a school loses this approval, their permission to run the program is automatically suspended, and they must inform the bureau within 10 days and stop offering the program within 30 days, or sooner if required. The school can get approval back by proving they meet all requirements again.

(a) If an institution offers an educational program in a profession, occupation, trade, or career field that requires licensure in this state, the institution shall have an educational program approval from the appropriate state licensing agency to conduct that educational program in order that a student who completes the educational program, except as provided in Section 94905, is eligible to sit for any required licensure examination.

(b) An institution offering an educational program requiring approval from another licensing agency in this state that subsequently loses that approval shall have their approval to operate the program automatically suspended by the bureau by operation of law. The institution shall notify the bureau within 10 days of its loss of approval to offer the educational program, and shall cease offering the program within 30 days of the loss of the approval to offer the educational program, or by an earlier date as required by the other state licensing agency. Reinstatement of the approval to operate may be made at any time following the suspension by providing proof satisfactory to the bureau that the license is properly approved and in compliance with all bureau requirements.

educational program approval state licensing agency licensure examination eligibility program suspension approval reinstatement licensure requirements student eligibility bureau notification loss of approval suspended by law cease program offering proof of compliance state licensure fields program reinstatement process automatic suspension

(Amended by Stats. 2022, Ch. 544, Sec. 9. (SB 1433) Effective January 1, 2023. Repealed as of January 1, 2027, pursuant to Section 94950.)

Section § 94899.5

This law outlines how educational institutions in California can handle tuition and fees. If a program is short-term, lasting one term or up to four months, full payment can be required on the first day of classes. For longer programs, institutions can't ask for more than four months of tuition in advance; however, once half of the program is completed, they can require full payment. Federal and state financial aid programs aren't restricted by these limitations. Institutions offering private loans to students must make sure the student doesn't owe more than what is due for that period's tuition. Students have the option to pay in full after they've been accepted, enrolled, and informed of the class start date.

(a) Institutions that offer short-term programs designed to be completed in one term or four months, whichever is less, may require payment of all tuition and fees on the first day of instruction.

(b) For those programs designed to be greater than four months, an institution shall not require more than one term or four months of advance payment of tuition at a time. When 50 percent of the program has been offered, the institution may require full payment.

(c) The limitations in this section shall not apply to any funds received by an institution through federal and state student financial aid grant and loan programs, or through any other federal or state programs.

(d) An institution that provides private institutional loan funding to a student shall ensure that the student is not obligated for indebtedness that exceeds the total charges for the current period of attendance.

(e) At the student’s option, an institution may accept payment in full for tuition and fees, including any funds received through institutional loans, after the student has been accepted and enrolled and the date of the first class session is disclosed on the enrollment agreement.

short-term programs tuition payment four-month tuition limit advance payment restrictions federal financial aid state financial aid private institutional loans student indebtedness tuition charges enrollment agreement program length payment plan financial aid exceptions educational institutions payment options

(Amended by Stats. 2024, Ch. 497, Sec. 84. (SB 1526) Effective January 1, 2025. Repealed as of January 1, 2027, pursuant to Section 94950.)