California Poised to Increase Oversight of Former For-Profits

September 3, 2020

A bill aiming to prevent for-profit colleges from evading oversight by posing as nonprofit colleges was passed by the California State Assembly this week. If approved by Governor Gavin Newsom by Sept. 30, the changes will come into effect on Jan. 1, 2022.

The bill would limit the ability of the Bureau for Private Postsecondary Education to exempt a former for-profit institution that claims nonprofit status from BPPE oversight unless the attorney general determines that the institution has met specific criteria to become a nonprofit.

The bill, known as AB70, amends the California Private Postsecondary Education Act of 2009 to introduce new definitions for “nonprofit corporation” and “public institution of higher education.”

“Although somewhat limited in scope, if signed into law, this bill could impact any institution that has converted from for-profit to nonprofit status in the last decade, or institution seeking to make that change in the future,” wrote Kate Lee Carey, special counsel at CooleyED, in a recent blog post on the bill. “The ability to qualify for exemption from BPPE oversight whether as a California-based institution or an out-of-state institution is impacted by this measure.”

The bill was originally conceived of as part of a legislative package of seven bills that aimed to create a stricter regulatory landscape for for-profit colleges operating in California. Three of those bills were signed into law, but four stalled.

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