HB389 SD1

SECTION 1. The legislature finds that a number of for-profit post-secondary educational institutions have engaged in unfair or deceptive trade practices, including misrepresentations involving accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans' benefits, and licensure requirements, causing the federal government to take action to mitigate the impact of their behavior. Ninety per cent of all students in these types of institutions take out loans to pay for their education and have a twenty-five per cent chance of defaulting on their loans in the first few years of their education. Due to a previous presidential administration's tightening of rules on for-profit institutions, a large number of for-profit institutions, including some of the largest and most popular ones, have been charged with false advertising by the Securities and Exchange Commission.

The legislature also finds that the inappropriate actions of for-profit post-secondary educational institutions disproportionally affect lower income and vulnerable students and their families. Indeed, many of these for-profit institutions purposefully targeted persons of low income, minorities, and struggling citizens. The legislature believes that consumers have a right to know that for-profit institutions, first and foremost, are concerned with earning a profit, and not with supporting education as a means to achieving a student's goal of gainful employment. The legislature further believes that the status of these institutions as for-profit entities should be reflected in their advertisements to prevent potential students from being misled.

The purpose of this Act is to require all accredited and non-accredited post-secondary educational institutions that are for-profit entities authorized to award degrees and operate in the State to disclose on the degree-awarding institution's official website, all promotional digital and print media created on or after the enactment of this Act, and contracts for instruction, that they are for-profit businesses, thereby enabling potential students to be fully aware of the degree-awarding institution's for-profit status when considering enrollment.

SECTION 2. Chapter 305J, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§305J- Disclosures. (a) Any for-profit private college or university, seminary, religious institution, or any other institution authorized to award degrees and operate in the State pursuant to sections 305J-7 and 305J-8 shall disclose on the institution's official website, all promotional digital and print media created on or after , 2021, and contracts for instruction, the fact that the institution is a for-profit business. The disclosure shall be made in a type size as large or larger than any other text on the institution's official website, promotional digital and print media, and contract for instruction, excluding the name of the institution, and shall be presented in a manner reasonably calculated to draw the attention of the reader. The disclosure shall read as follows:

(Name of Degree-Granting Institution) IS A FOR-PROFIT BUSINESS IN THE STATE OF HAWAII

(b) Where promotional digital and print media for any for-profit private college or university, seminary, religious institution, or any other institution authorized to award degrees and operate in the State pursuant to sections 305J-7 and 305J-8 consists of an advertisement in a periodical published on or after , 2021, by a person or entity that is not affiliated with the institution, the disclosure required in subsection (a) may be abbreviated to state as follows:

A FOR-PROFIT BUSINESS IN THE STATE OF HAWAII.

The disclosure required under this subsection shall be made in a type size as large or larger than any other text in the advertisement."

SECTION 3. Section 446E-2, Hawaii Revised Statutes, is amended to read as follows:

"§446E-2 Disclosures. (a) Any unaccredited institution shall disclose in all catalogs, promotional materials, and contracts for instruction, the fact that the institution is not accredited by any nationally recognized accrediting agency listed by the United States Secretary of Education[.]; provided that beginning on , 2021, the same disclosure shall be made on the institution's official website and all new promotional digital and print media. The disclosure shall be made in a type size as large or larger than any other text in the catalog, promotional material, [or] contract for instruction, official website, or promotional digital and print media, excluding the name of the unaccredited institution, and shall be presented in a manner reasonably calculated to draw the attention of the reader. If the unaccredited institution includes in its catalogs, promotional materials, [or] contracts for instruction, official website, or promotional digital and print media, any other information relating in any manner to accreditation, or to accreditation by an agency not nationally recognized by the United States Secretary of Education, the disclosure required by this subsection shall be repeated on every page on which the information appears. Where the information is presented electronically, the disclosure shall be made directly preceding or following the information. The disclosure shall read as follows:

(Name of Degree Granting Institution) IS NOT ACCREDITED

BY AN ACCREDITING AGENCY

RECOGNIZED BY THE UNITED STATES

SECRETARY OF EDUCATION.

Note: In the United States, many licensing authorities require accredited degrees as the basis for eligibility for licensing. In some cases, accredited colleges may not accept for transfer courses and degrees completed at unaccredited colleges, and some employers may require an accredited degree as a basis for eligibility for employment.

(b) Where promotional material or promotional digital and print media for an unaccredited institution consists of an advertisement in a periodical published by a person or entity that is not affiliated with the unaccredited institution, the disclosure required in subsection (a) may be abbreviated to state as follows:

NOT ACCREDITED BY AN AGENCY

RECOGNIZED BY THE U.S. SECRETARY OF EDUCATION.

The disclosure required under this subsection shall be made in a type size as large or larger than any other text in the advertisement.

(c) Beginning on , 2021, if the unaccredited institution is also registered in the State as a for-profit entity, the institution shall also disclose on the institution's contract for instruction, official website, or promotional digital and print media, the fact that the institution is a for-profit business. The disclosure shall be made in a type size as large or larger than any other text in the contract for instruction, official website, or promotional digital and print media, excluding the name of the unaccredited institution, and shall be presented in a manner reasonably calculated to draw the attention of the reader. The disclosure shall read as follows:

(Name of Degree Granting Institution) IS A FOR-PROFIT BUSINESS IN THE STATE OF HAWAII

(d) Where promotional digital and print media for an unaccredited for-profit institution consists of an advertisement in a periodical published by a person or entity that is not affiliated with the unaccredited for-profit institution, the disclosure required in subsection (c) may be abbreviated to state as follows:

A FOR-PROFIT BUSINESS IN THE STATE OF HAWAII.

The disclosure required under this subsection shall be made in a type size as large or larger than any other text in the advertisement.

[~~(c)~~] (e) Every unaccredited institution subject to this chapter shall keep true and accurate records of student enrollment, courses, fees, and matriculation rates. These records shall be retained for five years. Upon demand, these records, and any other information requested or subpoenaed by the director, shall be made available to the director."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2060.

HOUSE OF REPRESENTATIVES	H.B. NO.	389
THIRTY-FIRST LEGISLATURE, 2021		H.D. 1
STATE OF HAWAII		S.D. 1