RELATES TO: KRS 165A.450
STATUTORY AUTHORITY: KRS 13A.100, 165A.340(3), 165A.450
NECESSITY, FUNCTION, AND CONFORMITY: KRS 165A.450 requires each school licensed by the Board for Proprietary Education to contribute to a student protection fund in an amount equal to its licensing fee. The statute mandates that the fund shall be used to pay off debts incurred due to the closing of a school, and this administrative regulation sets forth standards for distribution of the funds.
Section 1. Definitions. (1) "Board" means the State Board for Proprietary Education.
(2) "Schools" means all schools, resident and nonresident, licensed by the board.
(3) "Sponsor" means the original source of funds, whether student or entity, used to pay student charges for tuition, books, and fees.
(4) "Student enrolled" means a student currently enrolled and attending classes on a regular basis.
Section 2. Standards for Fund Distribution. (1) The board is to manage the student protection fund ("the fund"). The fund shall be used solely to provide restitution to each student enrolled who has suffered pecuniary loss, when:
(a) A school closes, either voluntarily or involuntarily;
(b) The student can no longer continue his education at the school; and
(c) No viable alternative for full restitution is available, as determined by the board.
(2) Each fund distribution for restitution shall be made payable to the appropriate sponsor, as determined by the board. The amount to be refunded shall equal the actual amount of loans and cash that have been applied to tuition, books, and fees on behalf of the student's attendance at the school. If the claims resulting from a school closing exceed the balance in the fund, the board shall provide for a pro rata distribution of the fund balance.
(3) Whenever restitution is paid by the fund, the fund shall be subrogated to the amount of the restitution. (18 Ky.R. 232; Am. 621; eff. 10-6-91; Recodified from 783 KAR 1:030, 11-7-02.)