§305J-15 Claims against a private college or university; cessation of operation; alternative enrollment. (a) A student or enrollee, or a parent or legal guardian of the student or enrollee, who claims loss of tuition or fees as a result of cessation of operations may file a claim with the department if the claim results from an act or practice that violates a provision of this chapter. Claims that are filed with the department shall be public records and subject to the provisions of chapter 92F; provided that the department shall not make the records public if the release would violate a federal privacy law.

(b) If a private college or university ceases operation, the director may make demand on the surety bond upon the demand for a refund by a student or the parent or legal guardian of a student or the implementation of alternative enrollment for the students enrolled in the institution, and the principal on the surety bond filed pursuant to section 305J-14(d) shall pay the claim due in a timely manner. To the extent practicable, the director shall use the amount of the surety bond to provide alternative enrollment for students of the institution that ceases operation through a contract with another authorized private college or university, the University of Hawaii system, an area vocational school, or any other arrangement that is acceptable to the department. The alternative enrollment provided to a student shall replace the original enrollment agreement, if any, between the student and the private college or university; provided that the student shall make tuition and fee payments as required by the original enrollment agreement, if any.

(c) A student who is enrolled in a private college or university that ceases operation and who declines the alternative enrollment required to be offered pursuant to subsection (b) may file a claim with the department for the student's prorated share of the prepaid, unearned tuition and fees that the student paid, subject to the limitations of subsection (d). The department shall not make a subsequent payment to a student, unless the student submits proof of satisfaction of any prior debt to a financial institution in accordance with rules adopted by the director.

(d) If the amount of the surety bond filed under section 305J-14(d) is less than the total prepaid, unearned tuition and fees that have been paid by students at the time that the private college or university ceases operation, the department shall prorate the amount of the surety bond among the students.

(e) This section shall apply only to those students enrolled in the private college or university at the time it ceases operation, and once a private college or university ceases operation, no new students shall be enrolled therein.

(f) The director shall determine whether offering alternative enrollment for students enrolled in an authorized private college or university that ceases operation is practicable without the federal government's designation of the department as trustee for student loans, Pell grants, and other student financial aid assistance.

(g) If a private college or university ceases to operate in the State, the department of the attorney general may file a claim against the private college or university to recover restitution for the enrolled students of the private college or university.

(h) A seminary or religious training institution shall not be subject to the requirements of this section. [L 2013, c 180, pt of §2]