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Senate education committee hears bill to raise student indemnification account cap from $250,000 to $750,000
Summary
Assembly Bill 164 would raise the cap on Nevada''s Account for Student Indemnification from $250,000 to $750,000 while keeping the statutory $5 one-time enrollment fee; the bill was presented to the Senate Committee on Education with testimony that rising tuition and recent institutional closures make a larger reserve necessary.
Assembly Bill 164, introduced by Assemblyman PK O'Neil, would raise the statutory cap on Nevada''s Account for Student Indemnification from $250,000 to $750,000 and continue the current $5 one-time enrollment fee that funds the account. The bill was presented at a public hearing of the Nevada Senate Committee on Education and drew testimony from the bill sponsor and representatives of postsecondary trade groups and policy organizations.
The bill's sponsor, Assemblyman PK O'Neil, told the committee the account "was created in 1995 and is administered by the Commission on Postsecondary Education." He said the account compensates students harmed when a licensed postsecondary institution unexpectedly closes and that each student at a covered institution pays a one-time $5 fee at initial enrollment. O'Neil said the proposal raises the balance limit because tuition has increased since 1995 and a larger fund is needed to respond to closures such as the Career College of Northern Nevada in February 2024.
Why it matters: Supporters said the account acts like an insurance backstop for students who invest in private, proprietary, and vocational postsecondary programs. Jimmy Lau of Ferrari-Reader Public Affairs, representing the Nevada Association of Career Colleges, told the committee that collections stopped once the statutory cap was reached and that claims related to recent closures strained the account. "I believe the actual balance of the account was about $400,000 when the claims started to come in," Lau said, arguing that the proposed cap increase would better align the fund with current tuition levels.
Key technical points and committee questions: Committee members pressed on who pays the $5 fee, how often it is collected, and whether the fee could be made voluntary or instead charged to institutions. Committee discussion clarified these points: the $5 fee is collected by covered (non-NSHE) institutions at initial enrollment and remitted quarterly to the Commission on Postsecondary Education; the fee is statutorily fixed at $5 and does not automatically increase under AB 164. Several senators asked whether the fee effectively mandates insurance for adult students and whether institutions that close should face stronger oversight or consequences. Assemblyman O'Neil said the bill does not change the $5 amount and that a separate policy discussion could examine making the fee voluntary or altering institutional oversight.
Other clarifications offered in the hearing: senators and witnesses confirmed that the fee does not apply to institutions in the Nevada System of Higher Education (NSHE) (public universities and community colleges are excluded), that the fee is collected only while the fund balance remains below the statutory cap, and that once the cap is reached the Commission notifies institutions to stop collecting the fee. Committee members also asked whether reporting is by fiscal quarter even though many Nevada institutions operate on semesters; O'Neil said institutions remit on a quarterly schedule used for administrative reporting.
Public testimony: Support for the bill came from the Nevada Association of Career Colleges (Jimmy Lau) and Nevada Policy (research assistant Anahit Baghshetsyan), who said an increased cap would protect students and the state's workforce pipeline that relies on career and technical training. No opposition or neutral testimony was recorded during the hearing.
Outcome at hearing: No vote was taken; the item was presented as a public hearing and received questions and testimony. The committee did not adopt any amendments on the record.
Ending note: Sponsors and supporters framed AB 164 as a targeted statutory change to maintain a functioning indemnification account for students enrolled in licensed private and proprietary postsecondary programs; committee members signaled additional interest in examining institutional oversight and whether the fee'collection model remains the best approach for protecting students.
