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Wisconsin Legislature: AB638: Bill Text
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AB638: Bill Text
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2025 - 2026 LEGISLATURE
LRB-3531/1
ARG:cjs
2025 ASSEMBLY BILL 638
November 7, 2025 - Introduced by Representatives
Tenorio
,
Clancy
,
DeSmidt
,
Arney
,
Bare
,
Fitzgerald
,
Hong
,
Kirsch
,
Madison
,
McCarville
,
Miresse
,
Moore Omokunde
,
Rivera-Wagner
,
Sheehan
,
Stroud
,
Stubbs
,
Johnson
and
Taylor
, cosponsored by Senators
Larson
,
Carpenter
,
Hesselbein
and
Wirch
. Referred to Committee on Colleges and Universities.
AB638,1,3
1
An Act
to amend
440.52 (10) (c) 4. and 440.52 (10) (cm);
to create
440.52 (10)
2
(bm) of the statutes;
relating to:
student financial protection at certain
3
private postsecondary schools.
Analysis by the Legislative Reference Bureau
This bill increases a student protection fee imposed on private for-profit colleges and requires these colleges to maintain a reserve account for students who suffer loss or damage in certain circumstances, including fraud or school closure.
Under current law, before a private for-profit postsecondary institution (proprietary school) may operate in this state, it must obtain approval from the Department of Safety and Professional Services. The approval must be renewed annually. DSPS establishes fees for approving proprietary schools, including a “student protection fee” in an amount set by rule. DSPS must discontinue annually collecting student protection fees while the balance in the fund holding the fees exceeds $1,000,000. DSPS may expend the revenue from student protection fees to indemnify students, parents, or sponsors for losses resulting from a school closure and for preserving student records of schools that discontinue operations.
The bill sets the student protection fee at a rate of $3 per $1,000 of adjusted gross annual school revenue and increases, from $1,000,000 to $5,000,000, the fund balance threshold at which DSPS must stop annually collecting student protection fees.
The bill also prohibits DSPS from approving a proprietary school, whether upon initial application or renewal, unless the school maintains a reserve account to provide indemnification to any student who suffers loss or damage as a result of 1) fraud or any false representation by the school or a person acting on behalf of the school or 2) the school’s failure to perform its contractual obligations to the student, including the school’s closure. With an exception for a new school, the balance of the reserve account may not be less than 25 percent of the amount of the school’s highest annual revenue in the preceding five-year period.
For further information see the state fiscal estimate, which will be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
AB638,1
1
Section
1
.
440.52 (10) (bm) of the statutes is created to read:
AB638,2,5
2
440.52
(10)
(bm)
Reserve account.
1. The department may not approve a
3
school under this subsection, whether upon initial application or renewal, unless
4
the school maintains a reserve account to provide indemnification to any student
5
who suffers loss or damage as a result of any of the following:
AB638,2,7
6
a. Fraud or any false representation by the school or a person acting on behalf
7
of the school.
AB638,2,9
8
b. The school’s failure to perform its contractual obligations to the student,
9
including the school’s closure.
AB638,2,14
10
2. The balance of the reserve account under this paragraph may not be less
11
than 25 percent of the amount of the school’s highest annual revenue in the
12
preceding 5-year period, except that, with respect to an application for an initial
13
approval, the reserve account shall be established at 25 percent of the school’s
14
projected revenue in its first year of operation.
AB638,2
15
Section
2
.
440.52 (10) (c) 4. of the statutes is amended to read:
AB638,2,17
16
440.52
(10)
(c) 4.
Specify
Include
a student protection fee
at a rate of $3 per
17
$1,000 of adjusted gross annual school revenue as reported to the department
.
AB638,3
1
Section
3
.
440.52 (10) (cm) of the statutes is amended to read:
AB638,3,5
2
440.52
(10)
(cm)
Limit on student protection fee.
The department shall
3
discontinue collecting annual student protection fees under par. (c) 4. during the
4
period that the balance in the fund created by those fees exceeds
$1,000,000
5
$5,000,000
.
AB638,4
6
Section
4
. Initial applicability.
AB638,3,8
7
(
1
) This act first applies to initial and renewal applications for school approval
8
received on the effective date of this subsection.
AB638,5
9
Section
5
. Effective date.
AB638,3,11
10
(
1
) This act takes effect on the first day of the 3rd month beginning after
11
publication.
AB638,3,12
12
(end)
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proposaltext
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proposaltext/2025/REG/AB638
proposaltext/2025/REG/AB638
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