Honolulu, Hawaii



RE:††† H.B. No. 389

†††††† H.D. 1

†††††† S.D. 1




Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii




†††† Your Committee on Higher Education, to which was referred H.B. No. 389, H.D. 1, entitled:




begs leave to report as follows:


†††† The purpose and intent of this measure is to require accredited and non-accredited for-profit post-secondary educational institutions that are authorized to award degrees and operate in the State to disclose that they are for-profit businesses on their catalogs, promotional materials, electronic media, signages, and contracts for instruction.


†††† Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs' Office of Consumer Protection and Hawaii Post-Secondary Education Authorization Program.Your Committee received testimony in opposition to this measure from Hawaii Medical College, International Quantum University for Integrative Medicine Inc. dba Quantum University, University of Phoenix, and one individual.Your Committee received comments on this measure from the Chamber of Commerce of Hawaii.


†††† Your Committee finds that for-profit educational institutions are significantly different from non-profit educational institutions, in that for-profit educational institutions are a business, and many of them are traded on major stock exchanges or owned by private equity firms. As with all owners and shareholder of businesses, the owners and shareholders of for-profit educational institutions expect the institutions to turn a profit, and as with most business entities, programs that do not generate profit will be eliminated.Your Committee further finds that in recent years, numerous for-profit educational institutions have engaged in unfair or deceptive trade practices, including misrepresentations involving accreditation, selectivity, graduation rates, placement rates, transferability of credit, financial aid, veterans' benefits, and licensure requirements. In response, many states, including Hawaii, have initiated enforcement actions to protect students.


†††† Your Committee notes the testimony of the Department of Commerce and Consumer Affairs' (DCCA) Hawaii Post-Secondary Education Authorization Program (HPEAP) stating that it does not receive complaints or otherwise become aware of serious problems associated with degree-granting institutions in Hawaii until it is too late and the institution is in the process of closing.The HPEAP receives complaints pertaining to both accredited and un-accredited institutions, and since HPEAP does not have jurisdiction over non-accredited institutions, it forwards the latter to the DCCA's Office of Consumer Protection.Based on its experience, HPEAP believes that any kind of extra precaution will be helpful to the students. Given the myriad problems associated with for-profit educational institutions, your Committee believes there is a justifiable basis to require them to disclose their for-profit status to prospective students. This measure will enable potential students to be fully aware of a degree-granting institution's for-profit status when pursuing higher education opportunities.Your Committee also notes testimony raising concern that this measure will require the institutions to discard, re-create, and re-print all of their existing printed materials and signage.


†††† Your Committee has amended this measure by:


†††† (1)Requiring the disclosures to be made on the for-profit degree-granting institutionís official website, promotional digital and print media created on or after the enactment of this measure, and contracts for instruction; and


†††† (2)Making technical, nonsubstantive amendments for the purposes of clarity and consistency.


†††† As affirmed by the record of votes of the members of your Committee on Higher Education that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 389, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 389, H.D. 1, S.D. 1, and be referred to your Committees on Commerce and Consumer Protection and Ways and Means.


Respectfully submitted on behalf of the members of the Committee on Higher Education,