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H.R. 7112 - Protections and Regulation for Our Students Act

Sponsor: Mark Takano (D)
Introduced: 2018-10-30
Bill Status: Referred to the House Committee on Education and the Workforce.
 
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Full Text


115th CONGRESS
2d Session
H. R. 7112


    To improve the Higher Education Act of 1965, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES

October 30, 2018

    Mr. Takano (for himself, Mr. Garamendi, and Mr. Aguilar) introduced the following bill; which was referred to the Committee on Education and the Workforce


A BILL

    To improve the Higher Education Act of 1965, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title; table of contents.

(a) Short title.—This Act may be cited as the “Protections and Regulation for Our Students Act” or “PRO Students Act”.

(b) Table of contents.—The table of contents for this Act is as follows:

SEC. 2. 85–15 revenue source requirement for proprietary institutions.

(a) Change from 90–10 to 85–15.—Section 487(a)(24) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)(24)) is amended by striking “ten percent” and inserting “15 percent”.

(b) Revisions to accounting.—Section 487(d)(1) of the Higher Education Act of 1965 (20 U.S.C. 1094(d)(1)) is amended—

(1) in subparagraph (A), by striking “accounting,” and all that follows and inserting “accounting;”;

(2) in subparagraph (B), by striking clause (iii) and inserting the following new clause:

“(iii) a contractual arrangement with a Federal agency for the purpose of providing job training to low-income individuals who are in need of such training;”;

(3) in subparagraph (C)—

(A) by striking clauses (i) through (iii) and inserting the following new clause:

“(i) grant funds provided by a source that has no affiliation with the institution and shares no employees with the institution;”; and

(B) by redesignating clause (iv) as clause (ii); and

(4) by striking subparagraphs (D) and (E) and inserting the following new subparagraphs:

“(D) include no loans made by an institution of higher education as revenue to the school, except for payments made by students on such loans;

“(E) include a scholarship provided by the institution—

“(i) only if the scholarship is in the form of monetary aid based upon the academic achievements or financial need of students, disbursed to qualified student recipients during each fiscal year from an established restricted account; and

“(ii) only to the extent that funds in that account represent designated funds, or income earned on such funds, from a source that has no affiliation with the institution and shares no employees with the institution; and”.

SEC. 3. Definitions.

(a) In general.—Section 103 of the Higher Education Act of 1965 (20 U.S.C. 1003) is amended—

(1) by redesignating paragraphs (4) through (9), (10) through (14), and (15) through (24), as paragraphs (5) through (10), (12) through (16), and (18) through (26), respectively;

(2) by inserting after paragraph (3) the following new paragraph:

“(4) DEFAULT MANIPULATION.—The term ‘default manipulation’ means engaging in a device or practice, including branching, consolidation of campuses, consolidation or manipulation of the identification codes used by the Office of Postsecondary Education to designate campuses and institutions, change of ownership or control, serial forbearance, or any similar device or practice (as determined by the Secretary) when, but for the device or practice, one or more campuses of an institution of higher education would be at risk of cohort default rate sanctions under section 435 or student default risk sanctions under section 489A.”;

(3) by inserting after paragraph (10), as redesignated by paragraph (1) of this section, the following new paragraph:

“(11) FEDERAL EDUCATIONAL ASSISTANCE FUNDS.—The term ‘Federal educational assistance funds’ means funds provided directly to an institution or to a student attending such institution under any of the following provisions of law:

“(A) Title IV.

“(B) Section 477 of the Social Security Act.

“(C) Chapter 30, 31, 32, 33, 34, or 35 of title 38, United States Code.

“(D) Chapter 101, 105, 106A, 1606, 1607, or 1608 of title 10, United States Code.

“(E) Section 1784a, 2005, or 2007 of title 10, United States Code.

“(F) Title I of the Workforce Innovation and Opportunity Act (29 U.S.C. 3101 et seq.).

“(G) The Adult Education and Family Literacy Act (29 U.S.C. 3101 et seq.).”; and

(4) by inserting after paragraph (16), as redesignated by paragraph (1) of this section, the following new paragraph:

“(17) RECRUITING AND MARKETING ACTIVITY.—

“(A) IN GENERAL.—Except as provided in subparagraph (B), the term ‘recruiting and marketing activity’ means an activity that consists of any of the following:

“(i) Any advertising or promotion activity, including a paid announcement in newspapers, magazines, radio, television, billboards, electronic media, naming rights, or any other public medium of communication, including paying for a display or promotion at a job fair, military installation, or postsecondary education recruiting event.

“(ii) Any effort to identify and attract prospective students, directly or through a contractor or other third party, including any contact concerning a prospective student’s potential enrollment or application for grant, loan, or work assistance under title IV or participation in preadmission or advising activities, including—

“(I) paying employees responsible for overseeing enrollment and for contacting potential students in person, by phone, by email, by internet communications, or by other means, regarding enrollment;

“(II) compensating a person to provide to an institution of higher education contact information regarding prospective students, including information obtained through websites established for such purpose; and

“(III) providing funds to a third party to create or maintain a website for the purpose of obtaining contact information regarding prospective students.

“(iii) Any other activity as the Secretary may determine.

“(B) EXCEPTION.—An activity that is required as a condition of receipt of funds by an institution under title IV, or under another applicable Federal law, shall not be considered to be a recruiting and marketing activity under subparagraph (A).”.

(b) Title IV programs.—Section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088) is amended by adding at the end the following new subsection:

“(g) Student default risk.—In this title, the term ‘student default risk’ means the percentage that is calculated by taking an institution’s cohort default rate (as defined in section 435(m)) for the most recent fiscal year available, and multiplying it by the percentage of students enrolled at such institution receiving a loan made, insured, or guaranteed under this title during the previous academic year.”.

SEC. 4. Restriction on marketing with Federal educational assistance funds.

(a) Repeal of existing provision.—The Higher Education Opportunity Act is amended by striking section 119 (20 U.S.C. 1011m).

(b) Insertion in Higher Education Act of 1965 and amendments.—Part B of title I of the Higher Education Act of 1965 (20 U.S.C. 1011 et seq.) is amended by adding at the end the following new section:

“SEC. 124. Certification regarding the use of certain Federal funds and Restrictions on Sources of Funds for Recruiting and Marketing Activities.

“(a) Prohibition.—No Federal funds received under this Act by an institution of higher education or other postsecondary educational institution may be used to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any Federal action described in subsection (b).

“(b) Applicability.—The prohibition in subsection (a) applies with respect to the following Federal actions:

“(1) The awarding of any Federal contract.

“(2) The making of any Federal grant.

“(3) The making of any Federal loan.

“(4) The entering into of any Federal cooperative agreement.

“(5) The extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement.

“(c) Lobbying and earmarks.—No Federal student aid funding under this Act may be used to hire a registered lobbyist or pay any person or entity for securing an earmark.

“(d) Restrictions on sources of funds for recruiting and marketing activities.—

“(1) IN GENERAL.—An institution of higher education, or other postsecondary educational institution, may not use revenues derived from Federal educational assistance funds for recruiting or marketing activities.

“(2) RULE OF CONSTRUCTION.—Nothing in this section shall be construed as a limitation on the use by an institution of revenues derived from sources other than Federal educational assistance funds.

“(3) REPORTS.—Each institution of higher education, or other postsecondary educational institution, that derives 65 percent or more of revenues from Federal educational assistance funds shall report annually to the Secretary and to Congress and shall include in such report—

“(A) a statement of the institution’s expenditures on advertising, marketing, and recruiting; and

“(B) a verification from an independent auditor that the institution is in compliance with the requirements of this subsection.

“(e) Certification.—Each institution of higher education or other postsecondary educational institution receiving Federal funding under this Act, as a condition for receiving such funding, shall annually certify to the Secretary of Education that the requirements of subsections (a) through (d) have been met.

“(f) Actions To implement and enforce.—The Secretary shall take such actions as are necessary to ensure that the provisions of this section are implemented and enforced.”.

SEC. 5. Whistleblower protections for persons associated with institutions of higher education.

(a) Whistleblower Protection Program.—Title I of the Higher Education Act of 1965 is amended by inserting after section 123 (20 U.S.C. 1011l) the following new section:

“SEC. 124. Protection from retaliation for disclosure of certain information by persons associated with institutions of higher education.

“(a) Prohibition of retaliation.—

“(1) IN GENERAL.—An institution of higher education participating in programs under title IV (in this section referred to as an ‘institution’) may not discharge, demote, or otherwise discriminate against any person as retaliation for—

“(A) such person disclosing to an individual or entity described in paragraph (2) information such person reasonably believes evidences a violation of any law, rule, or regulation by the institution; or

“(B) assisting a person disclosing such information or providing information or documents for use in disclosing such information.

“(2) INDIVIDUALS AND ENTITIES COVERED.—The individuals and entities described in this paragraph are:

“(A) A Member of Congress or a representative of a committee of Congress.

“(B) An Executive agency (as defined in section 105 of title 5, United States Code).

“(C) The Government Accountability Office.

“(D) A law enforcement agency.

“(E) A court or grand jury.

“(F) A management official or other employee of an institution who has the responsibility to investigate, discover, or address misconduct.

“(b) Investigation of complaints.—

“(1) SUBMISSION OF COMPLAINT.—A person who believes that they have been subjected to a retaliation prohibited by subsection (a) may submit a complaint to the Inspector General of the Department of Education (in this section referred to as the ‘Inspector General’). Unless the Inspector General determines that the complaint is frivolous, fails to allege a violation of subsection (a), or has previously been addressed in another Federal or State judicial or administrative proceeding initiated by the complainant, the Inspector General shall investigate the complaint and, upon completion of such investigation, submit a report of the findings of the investigation to the complainant, the institution concerned, and the Secretary.

“(2) INSPECTOR GENERAL ACTION.—

“(A) DETERMINATION OR SUBMISSION OF REPORT ON FINDINGS.—Except as provided under subparagraph (B), the Inspector General shall make a determination that a complaint is frivolous, fails to allege a violation of subsection (a), or has previously been addressed in another Federal or State judicial or administrative proceeding initiated by the complainant or submit a report under paragraph (1) not later than 180 days after receiving the complaint.

“(B) EXTENSION OF TIME.—If the Inspector General is unable to complete an investigation in time to submit a report within the 180-day period specified in subparagraph (A) and the complainant agrees to an extension of time, the Inspector General shall submit a report under paragraph (1) within such additional period of time, up to 180 days, as shall be agreed upon between the Inspector General and the complainant.

“(3) PROHIBITION ON DISCLOSURE.—The Inspector General may not respond to any inquiry or disclose any information from or about any person alleging retaliation, except to the extent that such response or disclosure is—

“(A) made with the consent of the person alleging the retaliation;

“(B) made in accordance with the provisions of section 552a of title 5, United States Code, or as required by any other applicable Federal law; or

“(C) necessary to conduct an investigation of the alleged retaliation.

“(4) TIME LIMITATION.—A complaint may not be brought under this subsection more than three years after the date on which the alleged retaliation took place.

“(c) Remedy and enforcement authority.—

“(1) IN GENERAL.—Not later than 30 days after receiving an Inspector General report pursuant to subsection (b), the Secretary shall determine whether there is sufficient basis to conclude that the institution has violated subsection (a) and shall either issue an order denying relief or shall take one or more of the following actions:

“(A) Order the institution to take action to abate the retaliation.

“(B) Order the institution to reinstate the complainant to the position that the complainant held before the retaliation, together with compensatory damages (including back pay) and any other benefits, terms, or conditions that would apply to the complainant in that position if the retaliation had not occurred.

“(C) Order the institution to pay the complainant an amount equal to the aggregate amount of all costs and expenses (including attorneys’ fees and expert witness fees) that were reasonably incurred by the complainant for, or in connection with, bringing the complaint regarding the retaliation, as determined by the Secretary.

“(2) EXHAUSTION OF REMEDIES.—If the Secretary issues an order denying relief under paragraph (1) or has not issued an order within 210 days after the submission of a complaint under subsection (b), or in the case of an extension of time under subsection (b)(2)(B), not later than 30 days after the expiration of the extension of time, and there is no showing that such delay is due to the bad faith of the complainant, the complainant shall be deemed to have exhausted all administrative remedies with respect to the complaint, and the complainant may bring a de novo action at law or equity against the institution to seek compensatory damages and other relief available under this section in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy. Such an action shall, at the request of either party to the action, be tried by the court with a jury. An action under this paragraph may not be brought more than two years after the date on which remedies are deemed to have been exhausted.

“(3) ADMISSIBILITY OF EVIDENCE.—The Inspector General determination and order of the Secretary denying relief under paragraph (2) shall be admissible in evidence in any de novo action at law or equity brought pursuant to this subsection.

“(4) ENFORCEMENT OF ORDERS.—Whenever a person fails to comply with an order issued under paragraph (1), the Secretary shall file an action for enforcement of such order in the United States district court for a district in which the retaliation was found to have occurred. In any action brought under this paragraph, the court may grant appropriate relief, including injunctive relief, compensatory and exemplary damages, and attorneys’ fees and costs. The person upon whose behalf an order was issued may also file such an action or join in an action filed by the Secretary.

“(5) JUDICIAL REVIEW.—Any person adversely affected or aggrieved by an order issued under paragraph (1) may obtain review of the order’s conformance with this subsection, and any regulations issued to carry out this section, in the United States court of appeals for a circuit in which the retaliation is alleged in the order to have occurred. No petition seeking such review may be filed more than 60 days after issuance of the order by the head of the executive agency. Such review shall conform to chapter 7 of title 5, United States Code. Filing such an appeal shall not act to stay the enforcement of the order of the Secretary, unless a stay is specifically entered by the court.

“(6) BURDENS OF PROOF.—The legal burdens of proof specified in section 1221(e) of title 5, United States Code, shall be controlling for the purposes of any investigation conducted by the Inspector General, decision by the Secretary, or judicial or administrative proceeding to determine whether discrimination prohibited under this section has occurred.

“(7) RIGHTS AND REMEDIES NOT WAIVABLE.—The rights and remedies provided for in this section may not be waived by any agreement, policy, form, or condition of employment.

“(d) Notification of persons associated with institution.—The Secretary shall ensure that each institution informs the employees, students, and contractors of the institution in writing of the rights and remedies provided under this section.

“(e) Construction.—Nothing in this section may be construed to authorize the discharge of, demotion of, or discrimination against a person for a disclosure other than a disclosure protected by subsection (a) or to modify or derogate from a right or remedy otherwise available such person.”.

(b) Prohibition of Retaliation.—Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)) is amended by adding at the end the following new paragraph:

“(30) The institution will comply with the requirements of section 124.”.

SEC. 6. Establishment of complaint resolution and tracking system.

Title I of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended by adding at the end the following new part:

“PART FComplaint Tracking System

“SEC. 161. Complaint tracking system.

“(a) Establishment of complaint tracking system.—

“(1) ESTABLISHMENT OF COMPLAINT TRACKING SYSTEM.—Not later than 1 year after the enactment of the PRO Students Act, the Secretary shall complete the establishment of a complaint tracking system that includes a single, toll-free telephone number and a website to facilitate the centralized collection of, monitoring of, and response to complaints or inquiries regarding the educational practices and services, and recruiting and marketing practices, of all postsecondary educational institutions.

“(2) ESTABLISHMENT OF COMPLAINT TRACKING OFFICE.—The Secretary shall establish within the Department an office whose functions shall include establishing, administering, and disseminating widely information about the complaint tracking system established under paragraph (1). The Secretary shall—

“(A) to the extent necessary, combine and consolidate the other offices and functions of the Department to ensure that the office established under this paragraph is the single point of contact for students and borrowers with complaints; and

“(B) to the extent practicable, ensure that the office established in this paragraph will work with the Student Loan Ombudsman appointed in accordance with section 141(f) to assist borrowers that have complaints regarding the educational practices and services, and recruiting and marketing practices, of postsecondary educational institutions.

“(b) Handling of complaints.—

“(1) TIMELY RESPONSE TO COMPLAINTS.—The Secretary shall establish, in consultation with the heads of appropriate agencies, reasonable procedures to provide a timely response to complainants, in writing where appropriate, to complaints against, or inquiries concerning, an institution of higher education that receives funds under this Act. Each response shall include a description of—

“(A) the steps that have been taken by the Secretary in response to the complaint or inquiry;

“(B) any responses received by the Secretary from the institution of higher education; and

“(C) any additional actions that the Secretary has taken, or plans to take, in response to the complaint or inquiry.

“(2) TIMELY RESPONSE TO SECRETARY BY INSTITUTION OF HIGHER EDUCATION.—The Secretary shall notify each institution of higher education that receives funds under this Act and that is the subject of a complaint or inquiry under this section regarding the complaint or inquiry. Not later than 60 days after receiving such notice, such institution shall provide a response to the Secretary concerning the complaint or inquiry, including—

“(A) the steps that have been taken by the institution to respond to the complaint or inquiry;

“(B) all responses received by the institution from the complainant; and

“(C) any additional actions that the institution has taken, or plans to take, in response to the complaint or inquiry.

“(3) FURTHER INVESTIGATION.—The Secretary may, in the event that the complaint is not adequately resolved or addressed by the responses of the institution of higher education receiving funds under this Act under paragraph (2), ask additional questions of such institution or seek additional information from or action by the institution.

“(4) PROVISION OF INFORMATION.—

“(A) IN GENERAL.—An institution of higher education that receives funds under this Act shall, in a timely manner, comply with a request by the Secretary for information in the control or possession of such institution concerning a complaint or inquiry received by the Secretary under subsection (a), including supporting written documentation, subject to subparagraph (B).

“(B) EXCEPTIONS.—An institution of higher education that receives funds under this Act shall not be required to make available under this subsection—

“(i) any nonpublic or confidential information, including any confidential commercial information;

“(ii) any information collected by the institution for the purpose of preventing fraud or detecting or making any report regarding other unlawful or potentially unlawful conduct; or

“(iii) any information required to be kept confidential by any other provision of law.

“(5) COMPLIANCE.—An institution of higher education that receives funds under this Act shall comply with the requirements to provide responses and information, in accordance with this subsection, as a condition of receiving such funds.

“(c) Transparency.—

“(1) SHARING INFORMATION WITH FEDERAL AND STATE AGENCIES.—As appropriate and in accordance with section 444 of the General Education Provisions Act (20 U.S.C. 1232g) (commonly referred to as the “Family Educational Rights and Privacy Act of 1974”) and other laws, the Secretary shall coordinate with the heads of relevant Federal and State agencies to—

“(A) collect complaints related to the complaint tracking system described in subsection (b) from such agencies; and

“(B) when appropriate, route such complaints to the Department of Education, the Department of Justice, the Department of Defense, the Department of Veterans Affairs, the Federal Trade Commission, the Consumer Financial Protection Bureau, or any equivalent State agency.

“(2) INTERACTION WITH EXISTING COMPLAINT SYSTEMS.—To the extent practicable, all procedures established under this section, and all coordination carried out under paragraph (1), shall be done in accordance with the complaint tracking systems established under Executive Order 13607 (77 Fed. Reg. 25861; relating to establishing principles of excellence for educational institutions serving servicemembers, veterans, spouses, and other family members).

“(3) PUBLIC INFORMATION.—

“(A) IN GENERAL.—The Secretary shall regularly publish on the website of the Department information on the complaints and inquiries received for each postsecondary educational institution under this section, including—

“(i) the number of complaints and inquiries received;

“(ii) the types of complaints and inquiries received; and

“(iii) where applicable, information about the resolution of the complaints and inquiries.

“(B) DATA PRIVACY.—In carrying out subparagraph (A), the Secretary shall—

“(i) comply with applicable data privacy laws and regulations; and

“(ii) ensure that personally identifiable information is not shared.

“(4) REPORTS.—Each year, the Secretary shall prepare and submit to the authorizing committees a report describing—

“(A) the types and nature of complaints the Secretary has received under this section;

“(B) the extent to which complainants are receiving relief pursuant to this section;

“(C) whether particular types of complaints are more common in a given sector of postsecondary educational institutions;

“(D) any legislative recommendations that the Secretary determines are necessary to better assist students and families; and

“(E) the schools with the highest volume of complaints, as determined by the Secretary.

“(d) Complainant defined.—In this section, the term ‘complainant’ means a person with a complaint against, or inquiry concerning, an institution of higher education that receives funds under this Act who is—

“(1) a student of a postsecondary educational institution;

“(2) a family member of a student of a postsecondary educational institution;

“(3) a third party acting on behalf of a student of a postsecondary educational institution; or

“(4) a staff member or employee of a postsecondary educational institution.”.

SEC. 7. Improved determination of cohort default rates; publication of default prevention plan.

Section 435 of the Higher Education Act of 1965 (20 U.S.C. 1085) is amended—

(1) in subsection (a)—

(A) in paragraph (2), by adding at the end the following new subparagraph:

“(D) In any case where the Secretary has determined that the institution has engaged in default manipulation, the Secretary—

“(i) shall recalculate the cohort default rate for the institution under this section using corrected data and information, for all fiscal years for which the default manipulation has occurred; and

“(ii) using the recalculated cohort default rate, shall redetermine under subsection (a)(2) whether the institution is ineligible to participate in a program under this title.”; and

(B) in paragraph (7)(A), by adding at the end the following new clause:

“(iii) SUMMARY OF DEFAULT PREVENTION PLAN.—Upon receiving technical assistance from the Secretary under clause (ii), each institution subject to this subparagraph shall—

“(I) prepare a summary of the plan described under clause (i) that is directed to a student audience;

“(II) make the summary publicly available; and

“(III) provide the summary to students at the institution.”; and

(2) in subsection (m)(3), by striking “through the use of” and all that follows through the period at the end and inserting “through default manipulation”.

SEC. 8. Amendments to terms and conditions of borrower defenses.

Section 455(h) of the Higher Education Act of 1965 (20 U.S.C. 1087e(h)) is amended to read as follows:

“(h) Borrower Defenses.—

“(1) IN GENERAL.—Notwithstanding any other provision of State or Federal law, a defense to repayment of a loan under this title includes—

“(A) a substantial misrepresentation under section 487(c)(3);

“(B) an act or omission that would give rise to a cause of action against the school under applicable State law; or

“(C) such further acts or omissions that the Secretary determines appropriate.

“(2) PROCEDURES.—

“(A) IN GENERAL.—The Secretary shall, with respect to a borrower defense under this subsection—

“(i) determine the entitlement of a borrower to relief based on all evidence available to the Department; and

“(ii) provide an expeditious and fair process to consider applications provided by individuals, groups, and representatives on behalf of groups.

“(B) INDEPENDENT DETERMINATION.—A determination under subparagraph (A)(i) shall be independent of any action that the Department may take to recoup from the school related to the borrower defense.

“(C) CANCELLATION OF DEBT.—If the Secretary determines under subparagraph (A)(i) that a borrower is entitled to relief, the Secretary shall cancel all outstanding debt, and return any payments made on the loans of such borrower.

“(3) REGULATIONS.—The Secretary shall specify in regulations which acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of a loan made under this part, except that in no event may a borrower recover from the Secretary, in any action arising from or relating to a loan made under this part, an amount in excess of the amount such borrower has repaid on such loan.”.

SEC. 9. Improved student loan servicing and debt collection practices.

Section 456 of the Higher Education Act of 1965 (20 U.S.C. 1087f) is amended by adding at the end the following new subsection:

“(c) No predispute arbitration clauses.—A contract entered into under this section for the servicing of loans made or purchased under this part shall include a provision that any rights and remedies available to borrowers against the servicer may not be waived by any agreement, policy, or form, including by a predispute arbitration agreement.”.

SEC. 10. Improved disclosures, counseling, and financial assistance information for students.

Section 485(l) of the Higher Education Act of 1965 (20 U.S.C. 1092(l)) is amended—

(1) by striking paragraph (1) and inserting the following new paragraph:

“(1) DISCLOSURE REQUIRED PRIOR TO SIGNING MASTER PROMISSORY NOTE.—Each eligible institution shall, prior to obtaining or arranging execution of a master promissory note for a loan under part D (other than a Federal Direct Consolidation Loan) by a first-time borrower at such institution, ensure that the borrower receives comprehensive information on the terms and conditions of the loan and of the responsibilities the borrower has with respect to such loan in accordance with paragraph (2). Such information—

“(A) shall be provided through the use of interactive programs that include mechanisms to check the borrower's comprehension of the terms and conditions of the borrower’s loans under part D, using simple and understandable language and clear formatting; and

“(B) shall be provided—

“(i) during an entrance counseling session conducted in person; or

“(ii) online.”; and

(2) in paragraph (2), by adding at the end the following new subparagraph:

“(L) Information relating to the institution's cohort default rate, including—

“(i) the cohort default rate, as defined in section 435(m), of the institution;

“(ii) an easy to understand explanation of the cohort default rate;

“(iii) the percentage of students at the institution of higher education who borrow Federal student loans under this title;

“(iv) the national average cohort default rate (as determined by the Secretary in accordance with section 435(m));

“(v) in the case of an institution with a cohort default rate that is greater than the national average cohort default rate (as described in clause (iv)), a disclosure to the student that the institution's cohort default rate is above the national average; and

“(vi) in the case of an institution with a cohort default rate that is greater than 30 percent, a disclosure to the students that if the cohort default rate remains greater than 30 percent for the 3 consecutive years—

“(I) the institution will lose institutional eligibility for the purposes of programs authorized under this title; and

“(II) the student will no longer be able to receive Federal financial aid at that institution.”.

SEC. 11. Program participation agreements.

(a) Sense of Congress regarding incentive compensation.—It is the sense of Congress that—

(1) incentive compensation is an inappropriate mechanism in the delivery of higher education for institutions of higher education wishing to participate in programs under title IV of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.); and

(2) the ban on incentive compensation under section 487(a)(20) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)(20)), as amended by subsection (b), is intended to preclude its use by institutions wishing to participate in such programs, at any point in the recruitment, enrollment, education, or employment placement of students.

(b) Amendments.—Section 487 of the Higher Education Act of 1965 (20 U.S.C. 1094) is amended—

(1) in subsection (a)—

(A) in paragraph (19), by inserting “housing facilities,” after “libraries,”;

(B) by striking paragraph (20) and inserting the following:

“(20)(A) The institution or any third party acting on the institution’s behalf, including an institution affiliate or service provider to the institution, will not provide any commission, bonus, or other incentive payment to any person or entity at any phase of the academic process based directly or indirectly on success in—

“(i) securing enrollments or securing or awarding financial aid;

“(ii) performance in educational coursework;

“(iii) graduation;

“(iv) job placement; or

“(v) any other academic facet of a student’s enrollment in an institution of higher education.

“(B) The requirements of subparagraph (A) shall not apply to the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance.”; and

(C) by adding at the end the following new paragraphs:

“(30)(A) The institution—

“(i) shall not include a predispute arbitration agreement in any contract with a student or prospective student for enrollment at the institution; and

“(ii) shall agree that, in any case where a contract for enrollment at the institution entered into by a student before the date of enactment of the Protections and Regulation for Our Students Act included a predispute arbitration agreement, such agreement shall be invalid and unenforceable by the institution.

“(B) In this paragraph, the term ‘predispute arbitration agreement’ means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.

“(31)(A) If the institution has a student default risk for a fiscal year, as calculated by the Secretary, of 0.1 or greater, the institution will, for such year—

“(i) provide an individual accepted for enrollment at the institution with a waiting period, beginning on the date that the individual receives notification of the acceptance and lasting for not less than 2 weeks, before the individual is required to enroll in the institution, pay tuition charges, or sign a master promissory note for a loan under this title, in order to give the individual time to consider, and compare among postsecondary options, program costs at the institution and employment prospects upon completion of a program of study;

“(ii) ensure that the receipt of financial aid, incentives, or other benefits is not made contingent on an individual confirming enrollment before the end of the individual's waiting period;

“(iii) inform the individual, in writing and in a manner determined by the Secretary at the time of the acceptance notification, of—

“(I) the individual's right to the 2-week waiting period under clause (i) beginning on the date that the individual receives notification of the acceptance; and

“(II) the reason why the institution is required to provide such waiting period;

“(iv) notify an individual accepted for enrollment at the institution of all financial aid determinations by not less than 1 week before the enrollment confirmation deadline, if all requested application forms are received from the individual on time; and

“(v) disclose to an individual accepted for enrollment, in a manner determined by the Secretary, that the individual may file a complaint through the complaint tracking system established under section 161 if the individual believes that the institution has violated any provision of this paragraph.

“(B) If an institution described in subparagraph (A) fails to meet the requirements of this paragraph, the institution shall be subject to a civil penalty in accordance with section 489A.

“(C) Notwithstanding subparagraph (A), the Secretary may, after providing notice and an opportunity to comment, elect to replace the use of the student default risk percentage threshold established under subparagraph (A) with a loan repayment rate threshold calculated in accordance with section 483D(b).”; and

(2) in subsection (c)(1)(A)(i), by striking “available” and inserting “made publicly available and provided”.

SEC. 12. Improved disclosures for clinical training programs.

Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is amended by adding at the end the following new subsection:

“(n) Reports relating to clinical training programs.—

“(1) REPORT ON CLINICAL TRAINING PROGRAM AGREEMENTS.—

“(A) IN GENERAL.—Beginning in the year in which the Protections and Regulation for Our Students Act is enacted, an eligible institution that participates in any program under this title shall prepare and submit a report to the Secretary containing the information described in subparagraph (C), for every year in which the eligible institution has an agreement with a hospital or health facility, through which—

“(i) the eligible institution agrees to provide funding or other benefits to the hospital or health facility; and

“(ii) that hospital or health facility provides opportunities for students at the institution to participate in a clinical training program.

“(B) TIMING.—Following the year in which the Protections and Regulation for Our Students Act is enacted, the report described in this paragraph shall be submitted not more than 30 days after the end of any year for which a report is required to comply with subparagraph (A).

“(C) CONTENTS OF REPORT.—The report described in this paragraph shall include the following:

“(i) The amount of any payments from the institution of higher education to a hospital or health facility during the period covered by the report, and the precise terms of any agreement under which such amounts are determined.

“(ii) Any conditions associated with the transfer of money or the provision of clinical training program opportunities that are part of the agreement described in subparagraph (A).

“(iii) Any memorandum of understanding between the institution of higher education, or an alumni association or foundation affiliated with or related to such institution, and a hospital or health facility, that directly or indirectly relates to any aspect of any agreement referred to in subparagraph (A) or controls or directs any obligations or distribution of benefits between or among any such entities.

“(iv) For each hospital or health facility that has an agreement described in subparagraph (A) with the institution, the number of clinical training positions at the hospital or health facility that are reserved for students at that institution.

“(2) REPORT ON CHARITABLE DONATIONS.—

“(A) IN GENERAL.—Beginning in the year in which the Protections and Regulation for Our Students Act is enacted, and annually thereafter, an eligible institution shall prepare and submit to the Secretary a report containing the information described in subparagraph (C) if—

“(i) the eligible institution made a charitable donation to a hospital or health facility in any of the previous 3 years; and

“(ii) the number of students from the eligible institution who participate in any clinical training program at the hospital or health facility where such a donation was made increases by more than 5 students or 10 percent, whichever is less, as compared to the number of such students who participated in a clinical training program at that hospital or health facility during the first year in the previous 3-year period.

“(B) TIMING.—Following the year in which the Protections and Regulation for Our Students Act is enacted, the report described in subparagraph (A) shall be submitted not more than 30 days after the end of any year for which a report is required to comply with subparagraph (A).

“(C) CONTENTS OF REPORT.—The report described in this paragraph shall include the following:

“(i) The amount of each charitable donation that was made in the previous 3-year period by the eligible institution to a hospital or health facility.

“(ii) The number of students from the eligible institution who participate in any clinical training program at the hospital or health facility where each such donation was made—

“(I) during the year in which the report is submitted; and

“(II) during the first year in the previous 3-year period covered by the report.

“(3) AGGREGATION BY INSTITUTION.—The information required to be reported in this subsection shall include, and shall be aggregated with respect to, each institution of higher education and each alumni association or foundation affiliated with or related to such institution. For any year in which an institution is required to submit a report described under paragraph (1) and a report described under paragraph (2), the institution may submit a single report for that year containing all of the information required under paragraphs (1) and (2).

“(4) REPORT TO CONGRESS.—The Secretary, in conjunction with the Secretary of Health and Human Services, shall submit to Congress, and make available to the public, an annual report that lists the reports submitted to the Secretary by each institution of higher education in accordance with this subsection.

“(5) PUBLIC DISCLOSURE.—Each eligible institution described in paragraph (1) or (2) of this subsection shall make readily available the reports described in such paragraph (as applicable), through appropriate publications, mailings, and electronic media to the general public.

“(6) DEFINITIONS.—In this subsection:

“(A) CLINICAL TRAINING PROGRAM.—The term ‘clinical training program’ means any program at, or associated or affiliated with, a hospital or health facility (or any of a hospital’s affiliates or health facility's affiliates), the completion of which fulfills a requirement that is necessary to receive a license, certificate, specialized accreditation, or other academically related pre-condition necessary under Federal or State law for a health profession.

“(B) HEALTH FACILITY.—The term ‘health facility’ has the meaning given that term in section 804(d).

“(C) HOSPITAL.—The term ‘hospital’ has the meaning given that term in section 1861 of the Social Security Act (42 U.S.C. 1395x).”.

SEC. 13. Civil penalties.

Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is amended by inserting after section 489 the following new section:

“SEC. 489A. Civil penalties and other remedies.

“(a) Sanctions for substantial misrepresentations or serious violations.—

“(1) CIVIL PENALTIES.—The Secretary may impose a civil penalty upon an eligible institution upon making a determination, after reasonable notice and opportunity for a hearing, that an eligible institution has engaged in a substantial misrepresentation or other serious violation.

“(2) AMOUNT OF CIVIL PENALTIES.—A civil penalty imposed for a violation under subparagraph (A) shall be not less than $100,000 or—

“(A) in the case of a first violation, an amount equal to the product of $1,000,000 multiplied by the institution’s student default risk, whichever is larger;

“(B) in the case of a second violation, an amount equal to the product of $2,000,000 multiplied by the institution’s student default risk, whichever is larger; and

“(C) in the case of a third or subsequent violation, an amount equal to the product of $3,000,000 multiplied by the institution’s student default risk, whichever is larger.

“(3) TREATMENT OF MULTIPLE INSTITUTIONS.—For the purpose of determining the number of violations for subparagraph (B), any violation by a particular institution will accrue against all identification codes used by the Office of Postsecondary Education to designate campuses and institutions affiliated with the institution, and within the period of participation for the institution, as defined in section 668.13(b) of title 34, Code of Federal Regulations, or any successor regulation.

“(b) Sanctions for other violations of this title.—Upon determination, after reasonable notice and opportunity for a hearing, that an eligible institution has engaged in a violation of any other provision of this title, including the failure to carry out any provision of this title, that is not a significant misrepresentation or other serious violation, the Secretary may impose a civil penalty upon such institution of not more than $100,000 (subject to such adjustments for inflation as the Secretary may prescribe by regulation) for each such violation.

“(c) Civil penalties and sanctions for officers of institutions.—Upon determination, after reasonable notice and an opportunity for a hearing on the record, that an officer of an institution of higher education that participates in a program under this title has knowingly and willfully, or with gross negligence, violated a provision of this title, the Secretary may sanction the officer. Such sanctions may include the following:

“(1) Prohibiting the institution of higher education that has employed the officer of an institution of higher education and that participates in a program under this title, or any other institution of higher education that participates in a program under this title, from employing the officer, except that any such prohibition under this subsection shall not be for a period of more than 5 years from the date of the determination of the violation.

“(2) Assessing a civil penalty against an officer of an institution of higher education who has knowingly and willfully, or with gross negligence, violated a provision of this title, except that any such civil penalty under this subsection shall not be greater than the amount of the officer’s compensation for each year for which the violations are determined to have occurred. For purposes of this subparagraph, an officer's compensation shall include proceeds of any sales of stock and any incentive-based compensation (including stock options awarded as compensation) based on information required to be reported to the Secretary or any other Federal agency during the period in which the violations are determined to have occurred.

“(d) Limitation, suspension, or termination of eligibility status.—

“(1) IN GENERAL.—Upon determination, after reasonable notice and opportunity for a hearing, that an eligible institution has engaged in a violation of any provision of this title (including the failure to carry out any provision of this title or any regulation prescribed under such provision) or a violation of any applicable special arrangement, agreement, or limitation, the Secretary may limit, suspend, or terminate the participation in any program under this title of an eligible institution, subject to the requirements of paragraph (2).

“(2) SUSPENSION PROCEDURES.—No period of suspension under this section shall exceed 60 days unless the institution and the Secretary agree to an extension or unless limitation or termination proceedings are initiated by the Secretary within that period of time.

“(e) Emergency action.—

“(1) IN GENERAL.—The Secretary may take an emergency action against an institution, under which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to the institution (by registered mail, return receipt requested), withhold funds from the institution or its students and withdraw the institution's authority to obligate funds under any program under this title, if the Secretary—

“(A) receives information, determined by the Secretary to be reliable, that the institution is violating any provision of this title, any regulation prescribed under this title, or any applicable special arrangement, agreement, or limitation;

“(B) determines that immediate action is necessary to prevent misuse of Federal funds; and

“(C) determines that the likelihood of loss outweighs the importance of the procedures prescribed in subsection (e) for limitation, suspension, or termination.

“(2) TIME LIMITATION.—An emergency action described in paragraph (1) shall not exceed 30 days unless limitation, suspension, or termination proceedings are initiated by the Secretary against the institution within that period of time.

“(3) OPPORTUNITY TO SHOW CAUSE.—The Secretary shall provide an institution that is the subject of an emergency action under this subsection an opportunity to show cause, if the institution so requests, that the emergency action is unwarranted and should be lifted.

“(f) Lifting of sanctions.—Notwithstanding any other provision of this title, an institution of higher education that has been sanctioned by the Secretary under this section or any other provision of this title may not have such sanctions lifted until the Secretary has conducted a subsequent program review under section 498A and has found the institution to be in compliance with this title.

“(g) Single course of conduct; compromise authority and collection of penalty.—

“(1) SAME COURSE OF CONDUCT.—For purposes of this section, acts and omissions relating to a single course of conduct shall be treated as a single violation.

“(2) COMPROMISE AUTHORITY.—Any civil penalty under this section may be compromised (but not eliminated) by the Secretary. In determining the amount of such penalty, or the amount agreed upon in compromise, the Secretary shall consider—

“(A) the appropriateness of the penalty to the size of the institution of higher education subject to the determination; and

“(B) the gravity of the violation, failure, or misrepresentation.

“(h) Collection of penalty.—The amount of any penalty under this section may be deducted from any sums owing by the United States to the institution charged.

“(i) Disposition of amounts recovered.—

“(1) IN GENERAL.—Amounts collected under this section shall be transferred to the Secretary, who shall determine the distribution of collected amounts, in accordance with paragraphs (2) and (3).

“(2) USE FOR PROGRAM INTEGRITY EFFORTS AND PROGRAM REVIEWS.—

“(A) IN GENERAL.—For each fiscal year, an amount equal to not more than 50 percent of the amounts recovered or collected under this section—

“(i) shall be available to the Secretary to carry out program reviews under section 498A and other efforts by the Secretary related to program integrity under part H; and

“(ii) may be credited, if applicable, for that purpose by the Secretary to any appropriations and funds that are available to the Secretary for obligation at the time of collection.

“(B) SUPPLEMENT NOT SUPPLANT.—Amounts made available under subparagraph (A) shall be used to supplement and not supplant any other amounts available to the Secretary for the purpose described in such subparagraph.

“(C) AVAILABILITY FOR FUNDS.—Any amounts collected under this section that are made available under paragraph (2) shall remain available until expended.

“(3) USE FOR STUDENT RELIEF FUND.—For each fiscal year, an amount equal to not less than 50 percent of the amounts recovered or collected under this section shall be deposited into the Student Relief Fund established under subsection (k).

“(4) REPORT.—The Secretary shall regularly publish, on the website of the Department, a detailed description that includes—

“(A) the amount of funds that were distributed for the purposes described in paragraph (2) and the amount used for the Student Relief Fund under paragraph (3); and

“(B) how funds were distributed among the purposes described in paragraph (2)(A)(i).

“(j) Student relief fund.—

“(1) ESTABLISHMENT.—The Secretary shall establish a Student Relief Fund (referred to in this subsection as the ‘Fund’) that shall be used, subject to the availability of funds, to provide financial relief to any student enrolled in an institution of higher education that—

“(A) has failed to comply with an eligibility requirement under section 101 or 102 or an obligation incurred under the terms of the program participation agreement under section 487; or

“(B) has been sanctioned under subsection (b) or (c).

“(2) DETERMINATION OF RELIEF.—The Secretary, in consultation with Director of the Bureau of Consumer Financial Protection—

“(A) shall determine the manner of relief to be provided under paragraph (1), which may include tuition reimbursement, full or partial loan forgiveness, or loan reinstatement; and

“(B) may issue regulations regarding how the amounts in the Fund will be distributed among students eligible for the funds.

“(3) TREATMENT AND AVAILABILITY OF FUNDS.—

“(A) FUNDS THAT ARE NOT GOVERNMENT FUNDS.—Funds obtained by or transferred to the Fund shall not be construed to be Government funds or appropriated monies.

“(B) AMOUNTS NOT SUBJECT TO APPORTIONMENT.—Notwithstanding any other provision of law, amounts in the Fund shall not be subject to apportionment for purposes of chapter 15 of title 31, United States Code, or under any other authority.

“(C) NO FISCAL YEAR LIMITATION.—Sums deposited in the Fund shall remain in the Fund and be available for expenditure under this chapter without fiscal year limitation.

“(4) INVESTMENTS.—

“(A) AMOUNTS IN FUND MAY BE INVESTED.—The Secretary of Education may request the Secretary of the Treasury to invest the portion of the Fund that is not, in the discretion of the Secretary of Education, required to meet the current needs of the Fund.

“(B) ELIGIBLE INVESTMENTS.—Investments shall be made by the Secretary of the Treasury in obligations of the United States or obligations that are guaranteed as to principal and interest by the United States, with maturities suitable to the needs of the Fund as determined by the Secretary on the record.

“(C) INTEREST AND PROCEEDS CREDITED.—The interest on, and the proceeds from the sale or redemption of, any obligations held in the Fund shall be credited to the Fund.

“(5) REGULATIONS.—The Secretary shall prescribe regulations to implement the requirements of this section within 1 year after the date of enactment of the PRO Students Act.

“(6) AUTHORIZATION OF APPROPRIATIONS.—In addition to funds derived from financial penalties assessed pursuant to subsection (j), there are authorized to be appropriated such sums as may be necessary to carry out this subsection.

“(k) State enforcement.—

“(1) IN GENERAL.—Any violation of subsection (b), including the regulations promulgated under such subsection, shall be a cause of action enforceable by the State, through the attorney general (or the equivalent thereof) of the State, in any district court of the United States in that State or in a State court that is located in that State and that has jurisdiction over the defendant. The State may seek any relief provided under paragraph (4)(B) for such violation, or any remedies otherwise provided under law.

“(2) NOTICE REQUIRED.—

“(A) IN GENERAL.—Before initiating any action in a court or other administrative or regulatory proceeding against any institution of higher education as authorized by paragraph (1) to enforce any provision of this subsection, including any regulation promulgated by the Secretary under this subsection, a State attorney general shall timely provide a copy of the complete complaint to be filed and written notice describing such action or proceeding to the Secretary, except as provided in subparagraph (B).

“(B) EMERGENCY ACTION.—If prior notice of the initiation of an action or administrative or regulatory proceeding required under subparagraph (A) is not practicable, the State attorney general shall provide a copy of the complete complaint and the notice to the Secretary immediately upon instituting the action or proceeding.

“(C) CONTENTS OF NOTICE.—The notification required under this subparagraph shall include—

“(i) the identity of the parties;

“(ii) the alleged facts underlying the proceeding; and

“(iii) whether there may be a need to coordinate the prosecution of the proceeding so as not to interfere with any action, including any rulemaking, undertaken by the Secretary or another Federal agency.

“(3) REGULATIONS.—The Secretary shall prescribe regulations to implement the requirements of this subsection and periodically provide guidance to further coordinate actions with the State attorneys general.

“(4) PRESERVATION OF STATE AUTHORITY.—

“(A) STATE CLAIMS.—Nothing in this subsection shall be construed as altering, limiting, or affecting the authority of a State attorney general or any other regulatory or enforcement agency or authority to bring an action or other regulatory proceeding arising solely under the law in effect in that State.

“(B) RELIEF.—

“(i) IN GENERAL.—Relief under this subsection may include, without limitation—

“(I) rescission or reformation of contracts;

“(II) refund of moneys or return of real property;

“(III) restitution;

“(IV) disgorgement or compensation for unjust enrichment;

“(V) payment of damages or other monetary relief pursuant to the requirements of paragraph (2);

“(VI) public notification regarding the violation, including the costs of notification; and

“(VII) limits on the activities or functions of the person.

“(ii) EXCLUSION.—Relief under this subsection shall not include the ability to suspend or terminate the eligibility status of an institution of higher education for programs under this title.

“(l) Definitions.—In this section:

“(1) OFFICER OF AN INSTITUTION OF HIGHER EDUCATION.—The term ‘officer of an institution of higher education’ includes the president, chief executive officer, and chief financial officer of an institution of higher education or their equivalents.

“(2) SUBSTANTIAL MISREPRESENTATION OR OTHER SERIOUS VIOLATION.—The term ‘substantial misrepresentation or other serious violation’ means any of the following:

“(A) A substantial misrepresentation regarding—

“(i) the nature of the educational program of an institution of higher education;

“(ii) the financial charges of the institution;

“(iii) the space availability in a program of the institution for which a student is considering enrollment;

“(iv) the admission requirements of the institution;

“(v) the transferability of credits from the institution;

“(vi) whether a program of the institution meets the necessary standards to qualify students to sit for licensing examinations, or obtain certification required as a precondition for employment, in the State in which the students reside;

“(vii) the passage rates of students at the institution in obtaining certification requirements;

“(viii) the passage rates of students who sit for licensing examinations; or

“(ix) the employability of the graduates of the institution.

“(B) Failure of an institution subject to the requirements of section 487(a)(32) to comply with such section.

“(C) A knowing and willful misuse of Federal student aid from any source.

“(D) A violation of section 487(a)(20).

“(E) A violation of the default manipulation regulations promulgated by the Secretary under section 435(m)(3).

“(F) Failure to comply with the program review process described in section 498A, including any disclosure requirement described in paragraph (2)(C) or (5) of section 498A(b).

“(G) A violation of the program integrity regulations promulgated by the Secretary under this Act.

“(H) A violation of this Act that the Secretary has determined, by regulation, to be a serious violation for purposes of this section.”.

SEC. 14. Requirements for accrediting agencies or associations.

Section 496(a) of the Higher Education Act of 1965 (20 U.S.C. 1099b(a)) is amended—

(1) in paragraph (7), by striking “and” after the semicolon;

(2) in paragraph (8), by striking the period and inserting “; and”; and

(3) by adding at the end the following new paragraph:

“(9) such agency or association does not require any institution to enter into predispute arbitration agreements with the students of the institution.”.

SEC. 15. Program review and data.

Section 498A of the Higher Education Act of 1965 (20 U.S.C. 1099c–1) is amended to read as follows:

“SEC. 498A. Program review and data.

“(a) Program reviews for institutions participating under title IV.—

“(1) IN GENERAL.—The Secretary—

“(A) may conduct program reviews, including on-site visits, of each institution of higher education participating in a program authorized under this title; and

“(B) shall conduct a program review under this subsection of each institution of higher education that poses a significant risk of failure to comply with this title, as described in paragraphs (2) and (3).

“(2) MANDATORY REVIEWS.—

“(A) IN GENERAL.—The Secretary shall, on an annual basis, conduct program reviews of each institution of higher education participating in a program authorized under this title that meets 1 or more of the following criteria:

“(i) The Secretary determines that—

“(I) more than 15 percent of the students enrolled at the institution have received a Federal Direct Unsubsidized Stafford Loan during the previous year; and

“(II) the institution has a cohort default rate, as defined in section 435(m), that is more than 20 percent.

“(ii) The Secretary determines that—

“(I) the institution has a cohort default rate, as defined in section 435(m), that exceeds the national average, as determined by the Secretary in accordance with such section; and

“(II) the institution has an aggregate amount of defaulted loans, as determined by the Secretary, that places the institution in the highest 1 percent of institutions participating in programs authorized under this title in terms of the aggregate amount of defaulted loans.

“(iii) In the case of proprietary institutions of higher education, the institution received more than 80 percent of the institution’s revenues from Federal funds as defined in section 166(2), during the 2 most recent years for which data is available.

“(iv) The institution is among the top 1 percent of institutions participating in programs authorized under this title in terms of numbers or rates of complaints related to Federal student financial aid, educational practices and services, or recruiting and marketing practices, as reported in the complaint tracking system established under section 161.

“(v) As of the date of the determination, the institution is among the top 1 percent of institutions in terms of low graduation rates, as determined by the Secretary, of all institutions participating in programs authorized under this title.

“(vi) The institution spends more than 20 percent of the institution’s revenues on recruiting and marketing activities and executive compensation.

“(vii) In the fiscal year immediately following the most recent cohort default rate period—

“(I) the institution’s loan defaults increased by 50 percent or more as compared to the preceding period; and

“(II) more than 50 percent of the students attending the institution received loans under this title.

“(viii) The institution, or an executive of the institution, has publicly acknowledged or disclosed that the institution—

“(I) is in violation or noncompliance with any provision of law administered by a relevant Federal agency or relevant State entity or agency; or

“(II) is being investigated regarding a potential violation of such provision of law.

“(ix) The institution—

“(I) is a proprietary institution of higher education that has acquired a nonprofit institution of higher education at any point during the 1-year period preceding the date of the determination; or

“(II) was a proprietary institution of higher education and has become a nonprofit institution of higher education at any time during the 1-year period preceding the date of the determination.

“(B) PUBLICATION OF INSTITUTIONS REVIEWED.—The Secretary shall—

“(i) post, on a publicly available website, the name of each institution of higher education that is reviewed under subparagraph (A);

“(ii) indicate, on such website, with respect to each such institution, which of the mandatory review criteria, as described in subparagraph (A), such institution met; and

“(iii) indicate on the College Navigator website of the Department, or any successor website, the name of each institution of higher education that is reviewed under subparagraph (A).

“(C) INSTITUTIONAL DISCLOSURE OF REVIEW.—Each institution of higher education that is reviewed under subparagraph (A) shall—

“(i) post on the home page of the institution's website that the institution will be subject to a mandatory program review and why the institution is being reviewed and shall maintain such posting and explanation for 1 year or until the Secretary has issued its final program review report under subsection (c)(5)(C), whichever occurs sooner;

“(ii) provide a clear, conspicuous disclosure of the information described in clause (i) to students who inquire about admission to the institution or submit an application for admission to the institution prior to the student signing an enrollment agreement with the institution, for 1 year or until the Secretary has issued the final program review report under subsection (c)(6)(C), whichever occurs sooner; and

“(iii) include the information described in clause (i) on materials of acceptance or admission submitted to each student before the student enrolls in the institution, for 1 year or until the Secretary has issued the final program review report under subsection (c)(6)(C), whichever occurs sooner.

“(3) RISK-BASED REVIEWS.—

“(A) IN GENERAL.—The Secretary shall use a risk-based approach to select, on an annual basis not less than 2 percent of institutions of higher education participating in a program authorized under this title that are not reviewed under paragraph (2), for a program review. Such approach shall prioritize program reviews of institutions that—

“(i) have received large increases in funding under this title during the 5-year period preceding the date of the determination;

“(ii) have a large proportion of overall revenue from Federal funds, as defined in section 166(2);

“(iii) have a significant fluctuation in Federal Direct Stafford Loan volume, Federal Pell Grant award volume, or any combination thereof, in the year for which the selection is made, compared to the year prior to such year, that is not accounted for by changes in the Federal Direct Stafford Loan program, the Federal Pell Grant program, or any combination thereof;

“(iv) have experienced sharp increases in enrollment in absolute numbers or rate of growth;

“(v) have high rates of defaults, relative to all other institutions of higher education participating in a program authorized under this title, for loans issued under this title over the lifetime of the loans;

“(vi) have a large aggregate dollar amount of loans under this title in default, or a high cohort default rate as described in section 435(m);

“(vii) have a high student default risk, as compared to the student default risk for all institutions participating in a program under this title;

“(viii) have a high proportion or high rate of complaints related to Federal student financial aid, educational practices and services, or recruiting and marketing practices, as reported in the complaint tracking system established under section 161;

“(ix) have extremely low graduation rates, as determined by the Secretary;

“(x) are in poor financial health according to financial responsibility standards described in section 498(c);

“(xi) are spending a large percentage of the institution's revenues on recruiting and marketing activities and executive compensation;

“(xii) in the case of proprietary institutions of higher education, have large profit margins and profit growth;

“(xiii) have been put on notice, warning, or probation by, or is subject to a show cause order from, a nationally recognized accrediting agency or association that is recognized by the Secretary pursuant to part H of title IV;

“(xiv) has been found to have compliance problems under this title, or is at significant risk of failing to comply with applicable Federal or State laws, by a relevant Federal agency or a relevant State entity or agency, including the Comptroller General of the United States;

“(xv) has had a large amount of funds returned under section 484B; or

“(xvi) in the case of proprietary institutions of higher education, have experienced a change in ownership or control of the institution, including a buyout.

“(B) CRITERIA FOR RISK-BASED REVIEWS.—The Secretary shall publish, and update as necessary, the specific criteria that the Secretary will use to determine which institutions of higher education are selected for risk-based reviews under subparagraph (A).

“(4) PUBLIC DISCLOSURE OF VIOLATIONS.—The Secretary shall—

“(A) post on the College Navigator website, or any successor website, of the Department, the name of each institution of higher education that is found to have violated a provision of this title knowingly and willfully or with gross negligence;

“(B) indicate on such website, with respect to each such institution, which of the provisions of this title the institution violated; and

“(C) maintain such posting until the date the institution of higher education rectifies the violation or the date that is 1 year after the date the Secretary issues the final program review report under subsection (c)(6)(C) with respect to such institution, whichever date is later.

“(5) INSTITUTIONAL DISCLOSURE OF VIOLATIONS.—Each institution of higher education that is found to have violated a provision of this title knowingly and willfully or with gross negligence shall—

“(A) not later than 15 days after the date of issuance of the final program review report containing the finding, post on the home page of the institution’s website that the institution has been found to have violated a provision of this title knowingly and willfully or with gross negligence, including the provision the institution was found to have violated;

“(B) maintain such posting until the date the institution rectifies the violation or the date that is 1 year after the date the Secretary issues the final program review report under subsection (c)(6)(C) with respect to such institution, whichever date is later; and

“(C) include the information described in subparagraph (A) on materials of acceptance or admission submitted to each student before the student enrolls in the institution until the date the institution rectifies the violation or the date that is 1 year after the date the Secretary issues the final program review report under subsection (c)(6)(C) with respect to such institution, whichever date is later.

“(b) Characteristics of program reviews.—

“(1) NOTICE.—The Secretary may give not more than 72 hours notice to an institution of higher education that will undergo a program review pursuant to subsection (b) of such review.

“(2) SHARING OF INFORMATION.—The Secretary shall share all final program review determinations conducted under this section with relevant Federal agencies and relevant State entities or agencies, and appropriate accrediting agencies and associations, to enable such agencies, entities, and associations to determine the eligibility of institutions for funds or accreditation.

“(3) INTERACTION WITH OTHER FEDERAL AGENCIES AND LAWS.—To the extent practicable, the Secretary shall coordinate program reviews conducted under this section with other reviews and audits conducted by the Department, and with relevant Federal agencies and relevant State entities or agencies.

“(4) VIOLATIONS DISCOVERED THROUGH PROGRAM REVIEW.—

“(A) VIOLATIONS OF THIS TITLE.—If, in the course of conducting a program review, the Secretary obtains evidence that any institution of higher education or person has engaged in conduct that may constitute a violation of this title, including a failure to fully comply with the program review process and reporting requirements under this section, the Secretary may sanction such institution or person, pursuant to section 489A.

“(B) VIOLATIONS OF OTHER FEDERAL LAWS.—If, in the course of conducting a program review, the Secretary obtains evidence that any institution of higher education or person has engaged in conduct that may constitute a violation of Federal law, the Secretary shall transmit such evidence to the Attorney General of the United States, the Director of the Bureau of Consumer Financial Protection, the Commissioner of the Federal Trade Commission, or the head of any other appropriate Federal agency who may institute proceedings under appropriate law.

“(C) RULE OF CONSTRUCTION.—Nothing in this paragraph shall be constructed to affect any other authority of the Secretary to disclose information.

“(5) CONDUCT OF REVIEWS.—When conducting program reviews under this section, the Secretary shall assess the institution of higher education's compliance with the provisions of this title. Each program review shall include, at a minimum, the following:

“(A) With regard to the institutional information, the Secretary shall assess financial capability, administrative capability, and program integrity, including whether the institution—

“(i) knowingly and willfully misused Federal student aid from any source;

“(ii) violated section 487(a)(20);

“(iii) engaged in any substantial misrepresentation or other serious violation, as defined in section 489A; or

“(iv) violated the program integrity regulations promulgated by the Secretary under this Act.

“(B) With regard to student information, the Secretary shall examine—

“(i) graduation rates compared with all other institutions participating in a program authorized under this title;

“(ii) student complaints, including interviews with current and former students, faculty and staff, and accrediting agencies; and

“(iii) information from the complaint data system established under section 161.

“(6) ADMINISTRATIVE PROCESS.—

“(A) TRAINING.—The Secretary shall provide training, including investigative training, to personnel of the Department designed to improve the quality of financial and compliance audits and program reviews conducted under this section, including instruction about appropriately and effectively conducting such audits and reviews for institutions of higher education from different sectors of higher education.

“(B) CARRYING OUT PROGRAM REVIEWS.—In carrying out program reviews under this section, the Secretary shall—

“(i) establish guidelines designed to ensure uniformity of practice in the conduct of such reviews;

“(ii) make available to each institution of higher education participating in a program authorized under this title complete copies of all review guidelines and procedures used in program reviews, except that internal training materials for Department staff related to identifying instances of fraud, misrepresentation, or intentional noncompliance shall not be disclosed;

“(iii) permit an institution of higher education to correct or cure an administrative, accounting, or recordkeeping error within 90 days of the issuance of the final program review report, if the error is not part of a pattern of error and there is no evidence of fraud or misconduct related to the error;

“(iv) without sharing personally identifiable information and in accordance with section 444 of the General Education Provisions Act (20 U.S.C. 1232g, commonly known as the ‘Family Educational Rights and Privacy Act of 1974’), inform the relevant Federal agencies and relevant State entities or agencies, and accrediting agency or association, whenever the Secretary finds a violation of this title or sanctions an institution of higher education under section 432, 489A, or 498; and

“(v) provide to an institution of higher education 90 calendar days to review and respond to any program review report and relevant materials related to the report before any final program review report is issued.

“(C) FINAL PROGRAM REVIEW DETERMINATION.—

“(i) IN GENERAL.—Not later than 180 calendar days after issuing a program review report under this section, the Secretary shall review and consider an institution of higher education’s response, and issue a final program review determination or audit determination. The final determination shall include—

“(I) a written statement addressing the institution of higher education’s response;

“(II) a written statement of the basis for such determination; and

“(III) a copy of the institution’s response.

“(ii) CONFIDENTIALITY.—The Secretary shall maintain and preserve at all times the confidentiality of any program review report until a final program review determination is issued, other than to inform the relevant Federal agencies and relevant State entities or agencies, and accrediting agency or association, as required under this section.

“(D) REPORTS DISCLOSED TO THE INSTITUTION.—The Secretary shall promptly disclose each program review report and each final program review determination to the institution of higher education under review.

“(E) REMOVAL OF PERSONALLY IDENTIFIABLE INFORMATION.—Any personally identifiable information from the education records of students shall be removed from any program review report or final program review determination before the report is shared with any relevant Federal agency, State entity or agency, or accrediting agency or association.

“(7) FOLLOW-UP REVIEWS AFTER VIOLATIONS.—The Secretary shall conduct follow-up reviews of each institution of higher education that has been found in violation of a provision of this title not later than 1 year after the date of such finding. Such follow-up reviews may only assess whether the institution of higher education has corrected violations found in a previous program review or final program review determination.

“(c) Definitions.—In this section:

“(1) EXECUTIVE COMPENSATION.—The term ‘executive compensation’, when used with respect to an institution of higher education, means the wages, salary, fees, commissions, fringe benefits, deferred compensation, retirement contributions, options, bonuses, property, and any other form of remuneration that the Secretary determines is appropriate, given to the 5 percent of employees at the institution who are the highest compensated.

“(2) RELEVANT FEDERAL AGENCY.—The term ‘relevant Federal agency’ means—

“(A) the Department of Education;

“(B) the Department of Veterans Affairs;

“(C) the Department of Defense;

“(D) the Bureau of Consumer Financial Protection;

“(E) the Federal Trade Commission; or

“(F) any other Federal agency that provides Federal student assistance or that the Secretary determines appropriate.

“(3) RELEVANT STATE ENTITY OR AGENCY.—The term ‘relevant State entity or agency’ means—

“(A) an appropriate State licensing or authorizing agency;

“(B) the attorney general (or the equivalent thereof) of the State; or

“(C) any other State entity or agency that the Secretary determines appropriate.”.

SEC. 16. Consumer protections for students.

(a) Definitions.—In this section:

(1) FEDERAL FINANCIAL ASSISTANCE PROGRAM.—The term “Federal financial assistance program” means a program that provides Federal education assistance funds, as described in section 103 of the Higher Education Act of 1965 (20 U.S.C. 1003), to any postsecondary educational institution.

(2) POSTSECONDARY EDUCATIONAL INSTITUTION.—The term “postsecondary educational institution” means an educational institution that awards a degree or certificate and is located in any State and includes—

(A) an institution of higher education, as defined in section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002);

(B) a postsecondary educational institution, as defined in section 203 of the Adult Education and Family Literacy Act (29 U.S.C. 3272); and

(C) an educational institution, as defined under section 3452 of title 38, United States Code.

(3) STATE.—

(A) STATE.—The term “State” includes, in addition to the several States of the United States, the Commonwealth of Puerto Rico, the District of Columbia, Guam, American Samoa, the United States Virgin Islands, the Commonwealth of the Northern Mariana Islands, and the freely associated States.

(B) FREELY ASSOCIATED STATES.—The term “freely associated States” means the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau.

(b) Consumer protections.—Notwithstanding any other provision of law, a postsecondary educational institution is not eligible to participate in a Federal financial assistance program with respect to any program of postsecondary education or training, including a degree or certificate program, that is designed to prepare students for entry into a recognized occupation or profession that requires licensing or other established requirements as a pre-condition for entry into such occupation or profession, unless—

(1) the successful completion of the program fully qualifies a student, in the Metropolitan Statistical Area in which the student resides, to—

(A) take any examination required for entry into the recognized occupation or profession in the Metropolitan Statistical Area in which the student resides, including satisfying all State or professionally mandated programmatic and specialized accreditation requirements, if any; and

(B) be certified or licensed or meet any other academically related pre-conditions that are required for entry into the recognized occupation or profession in the Metropolitan Statistical Area in which the student resides; and

(2) the institution offering the program provides timely placement for all of the academically related pre-licensure requirements for entry into the recognized occupation or profession in the Metropolitan Statistical Area in which the student resides, such as clinical placements, internships, or apprenticeships.

(c) Effective date.—This section shall take effect on the date that is 180 days after the date of the enactment of this Act.


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