Massachusetts Enacts “College Closure” Law, Increasing Financial Monitoring of Higher Education Institutions
On November 14, 2019, Massachusetts Governor Charlie Baker signed An Act to Support Improved Financial Stability in Higher Education into law, enhancing the authority of the Massachusetts Board of Higher Education (“Board”) to monitor the financial stability of colleges and universities in Massachusetts. The law was passed in the face of widespread criticism over the abrupt closure of Mount Ida College in 2018, which left over 1,500 students with little direction on how to continue their college education.
The new legislation seeks to protect students from sudden college closures and to increase transparency of institutions’ financial strength and stability. It requires independent institutions of higher education in the Commonwealth to annually post a financial report on their website as well as a summary of the report in a format understandable to the general public.
The law also requires institutions to immediately notify the Board of any financial liabilities or risks that are reasonably likely to result in the imminent closure of the institution. To maintain confidentiality and promote disclosures, information submitted to the Board is not considered a public record and is accordingly exempt from disclosure under Massachusetts public records laws.
In addition, the law requires the Board to establish a process to annually assess whether an institution is at risk of imminent closure. In the event that the Board determines that an institution may be at risk of imminent closure, the new law requires the institution to prepare a contingency plan for closure that addresses the continued maintenance and retention of records, students’ ability to complete their programs of study, the rights and responsibilities of student loan borrowers, among other things.
The Board issued proposed regulations addressing the Board’s annual screening process of the financial health of institutions of higher education. After soliciting and reviewing public comment, on January 10, 2020, the Board approved a set of regulations.
Other states are expected to closely watch the implementation of the new legislation and regulations in Massachusetts, as higher education enrollment numbers continue to decrease across the country.
Saul Ewing Arnstein & Lehr will keep you updated as this financial monitoring program is implemented in Massachusetts and as other states consider similar legislation.