By Katelyn Berg

On August 29, 2025, SB 790 (Cabaldon) was held in the Assembly Appropriations Committee. The bill, as amended July 9, 2025, would allow the Governor to authorize interstate reciprocity agreements for postsecondary distance learning. Private postsecondary institutions are currently governed by the California Private Postsecondary Education Act of 2009, which is enforced by the Bureau for Private Postsecondary Education (BPPE). Under the act, out-of-state private postsecondary educational institutions must register, comply with BPPE requirements, and pay a fee. The act currently exempts accredited, degree-granting, nonprofit higher education institutions from its requirements. This bill, beginning January 1, 2028, would have exempted an interstate institution that is either a U.S. Department of Education recognized nonprofit corporation or a public institution when the Governor enters into an interstate reciprocity agreement. Thus, institutions not participating in a reciprocity agreement with California would still have been governed by the act and must register with BPPE.

Under an interstate reciprocity agreement, such as the State Authorization Reciprocity Agreement (SARA), accredited, degree-granting institutions that are approved by a member state may offer distance education in other member states. Supporters of SB 790 claim that California’s participation in agreements, such as SARA, would reduce administrative burdens, high costs for institutions, and excessive regulation by streamlining the process by which California institutions offer distance learning to out-of-state students. Additionally, supporters appreciate that SB 790 conditions California’s participation in interstate reciprocity agreements on the state’s ability to enforce certain consumer protection laws against out-of-state institutions.

However, opponents of the bill emphasized that California would not be able to enforce all consumer protection laws, but rather only general-purpose laws, which do not afford students sufficient protection. Ultimately, critics found that the additional administrative and regulatory burdens imposed by California’s conditional participation in reciprocity agreements would have negated the intent and benefits of the agreements while still leaving gaps in safeguards for students. Opponents also argued that the bill would have given the Governor excess power to approve or deny agreements with out-of-state institutions in a potentially arbitrary and discriminatory manner.

One notable consequence of exempting institutions engaged in reciprocity agreements from the California Private Postsecondary Education Act and from BPPE registration is that students enrolled in such institutions are not eligible for the Student Tuition Recovery Fund (STRF). BPPE administers the STRF, which provides monetary relief to students who suffer economic loss due to an institution’s closure or failure to pay students what they are owed. Critics of SB 790 claimed that, in addition to out-of-state students, California students would also have been harmed by the lack of STRF eligibility because fewer institutions would have been required to pay into the fund from which California students receive relief.

Additionally, SB 790 would have required the designation of a “portal” entity to administer the reciprocity agreements. The portal entity would have been granted an estimated $1 million to $2 million to fulfill its duties. However, the bill would also have assigned $1 million from the Ongoing Private Postsecondary Education Administration Fund to support BPPE in carrying out additional administrative functions. BPPE has previously noted the fund’s insufficiency and instability. Approval of SB 790 could significantly burden BPPE’s capacity and funds, as nearly 600 institutions could be required to register with the Bureau if they are denied or withdrawn from a reciprocity agreement. Registration fees from these institutions are unlikely to cover all BPPE’s enforcement-related expenses, which may limit the Bureau’s ability to penalize minor infractions and defend decisions on appeal.

In addition to authorizing interstate reciprocity agreements, the bill would also have modified requirements for institutions that are still required to register with BPPE. Specifically, out-of-state schools registered with BPPE would have had to provide notice to the Bureau when investigations are settled by agreement. Additionally, the bill would have modified BPPE’s protocol for suspending student enrollment when an institution is under investigation by reducing administrative barriers that hinder the Bureau’s ability to pause student enrollment as needed.

SB 790, as amended, may be heard in the Assembly Appropriations Committee next year, in the second year of this two-year legislative session, making it a two-year bill.