[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6407 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 6407

 To ensure that students and taxpayers receive the full value of their 
                         education investments.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           September 13, 2012

     Mr. Tierney (for himself and Mr. George Miller of California) 
 introduced the following bill; which was referred to the Committee on 
                      Education and the Workforce

_______________________________________________________________________

                                 A BILL


 
 To ensure that students and taxpayers receive the full value of their 
                         education investments.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``College Student Rebate Act of 
2012''.

SEC. 2. EDUCATIONAL LOSS RATIO.

    (a) Program Participation Agreements.--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:
            ``(30) In the case of a proprietary institution of higher 
        education (as defined in section 102(b)), such institution 
        will--
                    ``(A) expend not less than 80 percent of such 
                institution's revenues for an institutional fiscal year 
                on educational and related expenses (as defined in 
                subsection (i)(4)); or
                    ``(B) for each institutional fiscal year in which 
                the institution expends less than 80 percent of such 
                revenues on such educational and related expenses, 
                issue a rebate for each student who was enrolled at the 
                institution during such institutional fiscal year, 
                calculated and distributed in accordance with 
                subsection (k).''.
    (b) Educational Loss Ratio.--Section 487 of such Act (20 U.S.C. 
1094) is further amended--
            (1) in subsection (i)--
                    (A) by redesignating paragraphs (4) through (6) as 
                paragraphs (5) through (7), respectively; and
                    (B) by inserting after paragraph (3), the 
                following:
            ``(4) Educational and related expenses.--The term 
        `educational and related expenses' shall be defined by the 
        Secretary by regulation, except that such term shall not 
        include revenue expended for advertising and promotion 
        activities, excessive administrative expenses including 
        excessive executive compensation, recruiting, lobbying 
        expenses, or payments to shareholders.''; and
            (2) by adding at the end the following new subsection:
    ``(k) Implementation of Rebate Requirement for Insufficient 
Educational Expenditures.--
            ``(1) Calculation of rebate amount for each student.--For 
        purposes of subsection (a)(30), the amount of a rebate for each 
        student at an institution subject to subparagraph (B) of such 
        subsection shall be calculated by--
                    ``(A) determining the difference between 80 percent 
                and the percentage of the institution's revenues 
                expended on educational and related expenses (as 
                defined in subsection (i)(4)); and
                    ``(B) applying the percentage determined under 
                subparagraph (A) to the total amount of tuition, fees, 
                and institutional charges provided to the institution 
                by the student, or on the student's behalf, from all 
                sources for the applicable period of enrollment.
            ``(2) Distribution of individual student rebates.--Each 
        rebate issued for a student by an institution described in 
        subsection (a)(30)(B) shall be distributed as follows:
                    ``(A) To the Secretary, an amount that bears the 
                same ratio to the total rebate for such student as the 
                amount of tuition, fees, and institutional charges 
                provided to the institution for the student from 
                sources under this title bears to the total amount of 
                tuition, fees, and institutional charges provided to 
                the institution for the applicable period of enrollment 
                by or on behalf of the student from all sources, which 
                shall be credited, in a manner consistent with section 
                484B(b)(3), to outstanding balances on loans, to 
                awards, and to other assistance made under this title 
                to the student or on behalf of the student for the 
                period of enrollment for which a rebate is required.
                    ``(B) To each third party who provided an amount to 
                the institution for tuition, fees, and institutional 
                charges on the student's behalf, including the 
                Secretary of Defense, the Secretary of Veterans 
                Affairs, or an employer, an amount that bears the same 
                ratio to the total rebate for such student as the 
                amount of tuition, fees, and institutional charges 
                provided to the institution for the student from such 
                third party bears to the total amount of tuition, fees, 
                and institutional charges provided to the institution 
                for the applicable period of enrollment by or on behalf 
                of the student from all sources.
                    ``(C) To the student, the amount of the total 
                rebate for such student remaining after payment to the 
                Secretary and each third party under subparagraphs (A) 
                and (B).
            ``(3) Student rebate fee prohibited.--An institution that 
        is required to issue a rebate for a student under subsection 
        (a)(30) may not assess a new student fee, increase an existing 
        student fee, withhold or reduce any portion of financial 
        assistance provided to any student, or otherwise increase the 
        cost of attendance for any student, to satisfy such rebate 
        requirement.
            ``(4) No change in 90/10 calculations.--Rebates required 
        under subsection (a)(30) and issued in accordance with this 
        subsection shall in no way affect or be considered in the 
        calculation of revenue requirements under subsection (a)(24).
            ``(5) Calculation of institution's revenues.--In making 
        calculations under subsection (a)(30) and this subsection, an 
        institution's revenues for an institutional fiscal year shall 
        be calculated in accordance with subsection (d)(1), except that 
        an institution shall not be required to use the cash basis of 
        accounting.''.

SEC. 3. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect on 
July 1, 2014.
                                 <all>