How to Successfully Close an Institution

Ideally, institutions should close only after all enrolled students have finished their programs, so no one is affected. If that is not possible, a teach-out agreement can be established by the institution so that students can complete their programs elsewhere.

A teach-out is an arrangement an institution makes for its students to complete their educational programs at another institution when the institution ceases to operate. For accredited institutions, teach-out agreements are generally reviewed and approved by accrediting agencies.

Establishing a teach-out agreement with another institution that allows students to complete their programs at no additional cost supports students' success and minimizes financial liabilities for the closing institution.

Students who paid for programs they can't complete due to an institution's closure may be entitled to refunds from the institution. Whether students are offered a way to finish their program at no extra cost is a key factor.

If the Bureau determines the institution has made arrangements for students to complete a comparable educational program at another institution at no additional charge, institutional charges may be refunded on a pro rata basis, based on how much of the program was completed.

If no such arrangements are provided, the institution must refund all charges paid, which may include several years of tuition.

California has a Student Tuition Recovery Fund (STRF) that can help students impacted by school closure. However, the existence of STRF does not replace the institution's duty to issue refunds. If the Bureau pays STRF claims because an institution failed to refund students, it may seek to recover those funds from the institution.

California law requires institutions to maintain transcripts permanently and other student records for at least five years. Institutions must cover the cost of storing these records and make them available to students and other agencies upon request.

The Custodian of Records is the main contact for student records. The Bureau keeps this information on file for all approved institutions, but plans can change when an institution closes. Institutions must plan how they will meet record-keeping requirements after closure and update the Bureau with any changes, even years later. The Bureau uses this information to help students to request their records in the future.

Institutions must notify students in writing about the closure and clearly explain their rights and options. This notice may be sent by mail or email. Timely and detailed notification ensures students understand how to obtain records, seek refunds, and continuing with their education. The notice must include:

• A statement that the school is closing, with expected closure date.
• Details about any teach-out plans and the students right to decline participation.
• Instructions for accessing transcripts or other records.
• Information about financial rights, including refunds, the Student Tuition Recovery Fund (STRF), and information about federal student financial aid programs and closures (if the institution participates in these programs).
• Contact information for the Bureau's Office of Student Assistance and Relief (OSAR), which helps students impacted by closure.

You can find samples of student notifications at the end of this guide for reference. Be sure your notice reflects the institution's closure and plans for teach-outs, refunds, and records. Review all applicable laws and regulations to ensure compliance.

Institutions may also include additional information in their notice, if desired, such as additional timelines, points of contact, or other details related to navigating the closure.

After sending the notice to students, a copy of the notice must also be sent to the Bureau's Closed Schools Unit.

Institutions must notify the Bureau at least 30 days before closing. The required information is outlined in the Bureau's School Closure Form, which reflects requirements in law and regulation. Filling out the form completely helps ensure the institution closes in compliance with California law.

Institutions must provide the Bureau with a list of students who were enrolled at any time during the 120 days before closure. A template for providing required information is available at the end of this guide.

Failure to comply with closure requirements may result in enforcement action, including fines of up to $5,000 per violation, and impact your ability to own, control, or manage private postsecondary educational institutions in the future.

If you have questions or need assistance, you can contact the Bureau Closed Schools Unit using our contact form or by phone at (888) 370-7589 and press 8 when prompted.

Staff from the Bureau's Office of Student Assistance and Relief (OSAR) are available to meet with you and students on-site to answer questions about the impact of the closure. To request assistance, contact OSAR at least 48 hours in advance.