[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 1939 Introduced in Senate (IS)]

114th CONGRESS
  1st Session
                                S. 1939

To amend the Higher Education Act of 1965 to provide for institutional 
 ineligibility based on low cohort repayment rates and to require risk 
         sharing payments of institutions of higher education.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 5, 2015

Mrs. Shaheen (for herself and Mr. Hatch) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
To amend the Higher Education Act of 1965 to provide for institutional 
 ineligibility based on low cohort repayment rates and to require risk 
         sharing payments of institutions of higher education.

    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 ``Student Protection and Success 
Act''.

SEC. 2. INSTITUTIONAL INELIGIBILITY BASED ON LOW COHORT REPAYMENT RATE.

    (a) In General.--Section 455 of the Higher Education Act of 1965 
(20 U.S.C. 1087e) is amended by adding at the end the following:
    ``(r) Ineligibility Due to Low Cohort Repayment Rate.--
            ``(1) In general.--Beginning with the first fiscal year for 
        which data is available after the date of enactment of the 
        Student Protection and Success Act and each succeeding fiscal 
        year, an institution that has a cohort repayment rate that is 
        equal to or less than the cut-off rate, as determined under 
        paragraph (2), shall not be eligible to participate in a 
        program under this part for such fiscal year and for the 2 
        succeeding fiscal years.
            ``(2) Cut-off rate.--
                    ``(A) First year.--For the first fiscal year for 
                which data is available after the date of enactment of 
                the Student Protection and Success Act, the cut-off 
                rate for purposes of paragraph (1) shall be equal to 45 
                percent.
                    ``(B) Subsequent years.--For each fiscal year after 
                the first fiscal year for which data is available after 
                the date of enactment of the Student Protection and 
                Success Act, the cut-off rate for purposes of paragraph 
                (1) for an institution shall be the previous fiscal 
                year's cut-off rate or 10 percentage points lower than 
                the average cohort repayment rate determined under 
                subparagraph (C) for the same type of institution for 
                the previous fiscal year, whichever rate is higher, but 
                not equal to or more than 70 percent.
                    ``(C) Average rates.--Beginning with the first 
                fiscal year for which data is available after the date 
                of enactment of the Student Protection and Success Act 
                and each succeeding fiscal year, the Secretary shall 
                determine the average cohort repayment rate for each of 
                2-year institutions of higher education and 4-year 
                institutions of higher education in the United States 
                for the fiscal year and for the previous fiscal year.
            ``(3) Appeals.--
                    ``(A) In general.--An institution may appeal the 
                loss of eligibility under this subsection to the 
                Secretary within 30 days of receiving notification from 
                the Secretary of the loss of eligibility under this 
                subsection.
                    ``(B) Continued participation.--During an appeal 
                under subparagraph (A), the Secretary may permit the 
                institution to continue to participate in a program 
                under this part if the institution demonstrates to the 
                satisfaction of the Secretary that the Secretary's 
                calculation of its cohort repayment rate is not 
                accurate, and that recalculation would increase its 
                cohort repayment rate above the cut-off rate applicable 
                to such institution.
                    ``(C) Required payment.--If an institution 
                continues to participate in a program under this part, 
                and the institution's appeal of the loss of eligibility 
                is unsuccessful, the institution shall be required to 
                pay to the Secretary an amount equal to the amount of 
                loans made by the Secretary under this part to 
                borrowers attending, or planning to attend, that 
                institution during the pendency of such appeal and the 
                interest, special allowance, reinsurance, and any 
                related payments made by the Secretary (or which the 
                Secretary is obligated to make) with respect to such 
                loans.
            ``(4) Cohort repayment rate.--
                    ``(A) In general.--In this subsection, the term 
                `cohort repayment rate' means, for any fiscal year 
                beginning with fiscal year 2016, in which 30 or more 
                borrowers at the institution enter repayment on Federal 
                Direct Stafford Loans, Federal Direct Unsubsidized 
                Stafford Loans, or Federal Direct Consolidation Loans, 
                received for attendance at the institution, the 
                percentage of those borrowers who are not in default 
                and who make at least a one dollar reduction on their 
                initial student loan principal balance before the end 
                of the second fiscal year following the fiscal year in 
                which the borrowers entered repayment, except as 
                provided in subparagraph (B).
                    ``(B) Exception.--The `cohort repayment rate' 
                calculation under subparagraph (A) shall not include in 
                the calculation a borrower who is--
                            ``(i) in deferment on repayment of a loan 
                        described in subparagraph (A) due to study in 
                        an approved graduate fellowship program or in 
                        an approved rehabilitation training program for 
                        the disabled;
                            ``(ii) in deferment on repayment of a loan 
                        described in subparagraph (A) during a period 
                        of at least half-time enrollment in college or 
                        a career school;
                            ``(iii) in deferment on repayment of a loan 
                        described in subparagraph (A) during a period 
                        of service qualifying for loan discharge or 
                        cancellation under part E;
                            ``(iv) in deferment on repayment of a loan 
                        described in subparagraph (A) due to active 
                        duty military service of the borrower during a 
                        war, military operation, or national emergency;
                            ``(v) in deferment on repayment of a loan 
                        described in subparagraph (A) during the 13 
                        months following the conclusion of qualifying 
                        active duty military service by the borrower, 
                        or until the borrower returns to enrollment on 
                        at least a half-time basis, whichever is 
                        earlier, if the borrower is a member of the 
                        National Guard or other reserve component of 
                        the Armed Forces and was called or ordered to 
                        active duty while enrolled at least half-time 
                        at an eligible school or within 6 months of 
                        having been enrolled at least half-time;
                            ``(vi) in mandatory forbearance on 
                        repayment of a loan described in subparagraph 
                        (A) for the full fiscal year; or
                            ``(vii) serving as a volunteer under the 
                        Peace Corps Act (22 U.S.C. 2501 et seq.) or the 
                        Domestic Volunteer Service Act of 1973 (42 
                        U.S.C. 4950 et seq.).
                    ``(C) Publication of repayment rates.--The 
                Secretary shall publish the cohort repayment rates for 
                institutions determined under this subsection.''.
    (b) Ineligibility in Other Programs.--
            (1) Pell grants.--Section 401(j) of the Higher Education 
        Act of 1965 (20 U.S.C. 1070a(j)) is amended--
                    (A) in the heading, by striking ``Based on Default 
                Rates'';
                    (B) in paragraph (1), by inserting ``until the 
                first fiscal year for which data is available, as 
                determined under section 455(r)(1)'' after ``succeeding 
                fiscal year'';
                    (C) in paragraph (2), by inserting ``or cohort 
                repayment rate determination'' after ``default rate 
                determination''; and
                    (D) by adding at the end the following:
            ``(3) Ineligibility based on low cohort repayment rates.--
        No institution of higher education shall be an eligible 
        institution for purposes of this subpart if such institution of 
        higher education is ineligible to participate in a program 
        under part D due to a low cohort repayment rate, as determined 
        under section 455(r).''.
            (2) Student loan insurance program.--Section 435(a) of the 
        Higher Education Act of 1965 (20 U.S.C. 1085(a)) is amended--
                    (A) in paragraph (2)--
                            (i) in the heading, by striking ``based on 
                        high default rates'';
                            (ii) in subparagraph (A), by striking ``An 
                        institution'' and inserting ``Until the first 
                        fiscal year for which data is available, as 
                        determined under section 455(r)(1), an 
                        institution''; and
                            (iii) by adding at the end the following:
            ``(E) No institution of higher education shall be an 
        eligible institution for purposes of this part if such 
        institution of higher education is ineligible to participate in 
        a program under part D due to a low cohort repayment rate, as 
        determined under section 455(r).''; and
                    (B) in paragraph (6)(A), by inserting ``and until 
                the first fiscal year for which data is available, as 
                determined under section 455(r)(1),'' after ``July 1, 
                1999,''.
            (3) Federal perkins loans.--Section 462 of the Higher 
        Education Act of 1965 (20 U.S.C. 1087bb) is amended--
                    (A) in subsection (a)--
                            (i) in paragraph (1), by inserting ``or the 
                        institution is ineligible to participate in a 
                        program under part D due to a low cohort 
                        repayment rate, as determined under section 
                        455(r)'' after ``subsection (f)''; and
                            (ii) in paragraph (2)(D), by inserting ``or 
                        the institution is ineligible to participate in 
                        a program under part D due to a low cohort 
                        repayment rate, as determined under section 
                        455(r)'' after ``subsection (f)'';
                    (B) in subsection (b)--
                            (i) in paragraph (2), by inserting ``or the 
                        institution is ineligible to participate in a 
                        program under part D due to a low cohort 
                        repayment rate, as determined under section 
                        455(r)'' after ``subsection (f)''; and
                            (ii) in paragraph (3), by inserting ``or 
                        the institution is ineligible to participate in 
                        a program under part D due to a low cohort 
                        repayment rate, as determined under section 
                        455(r)'' after ``subsection (f)'';
                    (C) in subsection (e)--
                            (i) in paragraph (2), by inserting ``until 
                        the first fiscal year for which data is 
                        available, as determined under section 
                        455(r)(1),'' after ``succeeding fiscal year''; 
                        and
                            (ii) in paragraph (3)--
                                    (I) in subparagraph (A), by 
                                inserting ``until the first fiscal year 
                                for which data is available, as 
                                determined under section 455(r)(1),'' 
                                after ``any succeeding fiscal year''; 
                                and
                                    (II) by adding at the end the 
                                following:
                    ``(F) Low cohort repayment rates.--An institution 
                that is ineligible to participate in a program under 
                part D due to a low cohort repayment rate, as 
                determined under section 455(r), shall not be eligible 
                to participate in a program under this part.''; and
                    (D) in subsection (f)(2), by inserting ``until the 
                first fiscal year for which data is available, as 
                determined under section 455(r)(1),'' after 
                ``subsequent years''.

SEC. 3. COLLEGE OPPORTUNITY BONUS PROGRAM.

    Subpart 1 of part A of title IV of the Higher Education Act of 1965 
(20 U.S.C. 1070a et seq.) is amended by adding at the end the 
following:

``SEC. 401B. COLLEGE OPPORTUNITY BONUS PROGRAM.

    ``(a) Program Authority.--The Secretary shall award grants to 
eligible institutions of higher education that are distributed under a 
formula determined by the Secretary that includes enrollment of and 
completion by students who are eligible to receive a Federal Pell 
Grant, as well as enrollment of and completion by transfer students who 
are eligible to receive a Federal Pell Grant.
    ``(b) Grants.--The Secretary shall award grants to eligible 
institutions of higher education that the Secretary determines have a 
strong record of making college more affordable and increasing college 
access and success for low-income and moderate-income students.
    ``(c) Uses of Funds.--Each eligible institution of higher education 
that receives a grant under this section may use the grant funds to 
support reforms to further increase college access and success for low- 
and moderate-income students, by making key investments and adopting 
best practices, such as--
            ``(1) awarding additional need-based financial aid to 
        students enrolled at the institution who are eligible to 
        receive a Federal Pell Grant;
            ``(2) enhancing academic and student support services; and
            ``(3) establishing or expanding accelerated learning 
        opportunities.
    ``(d) Amount of Grant Funds.--Each eligible institution of higher 
education that receives a grant under this section shall receive annual 
grant funds based on a formula determined by the Secretary that 
includes--
            ``(1) the number of students enrolled at the institution 
        who are eligible to receive a Federal Pell Grant;
            ``(2) a per-student base amount, which shall be based on 
        the amounts of Federal Pell Grants received by students 
        enrolled at the institution; and
            ``(3) the number of students enrolled at the institution 
        who are eligible to receive a Federal Pell Grant who 
        transferred into the institution.
    ``(e) Supplement Not Supplant.--Funds made available under this 
section shall be used to supplement, and not supplant--
            ``(1) other State funds that States would otherwise expend 
        to carry out activities under this section to improve college 
        affordability and graduate additional low- and moderate-income 
        students; and
            ``(2) institutional funds that eligible institutions of 
        higher education receiving a grant under this section would 
        otherwise expend to carry out activities under this section to 
        improve college affordability and graduate additional low- and 
        moderate-income students.
    ``(f) Funding.--The grant program under this section shall be 
funded only with risk-sharing payments received by the Secretary under 
section 454(d).''.

SEC. 4. RISK-SHARING PAYMENTS.

    Section 454 of the Higher Education Act of 1964 (20 U.S.C. 1087d) 
is amended--
            (1) in subsection (a)--
                    (A) in paragraph (5), by striking ``and'';
                    (B) in paragraph (6), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(7) provide that the institution accepts the 
        institutional risk-sharing requirements under subsection (d), 
        if applicable.''; and
            (2) by adding at the end the following:
    ``(d) Institutional Risk-Sharing Based on Cohort Nonrepayment Loan 
Balances.--
            ``(1) In general.--Each institution of higher education 
        participating in the direct student loan program under this 
        part for a fiscal year shall remit to the Secretary, at such 
        times as the Secretary may specify, a risk-sharing payment 
        based on the cohort nonrepayment loan balance of the 
        institution, as determined under paragraph (2).
            ``(2) Determination of risk-sharing payments.--
                    ``(A) Determination of cohort loan balance.--The 
                cohort loan balance of an institution for a fiscal year 
                equals the total principal amount of all loans made 
                under this part (except Federal Direct PLUS Loans) to 
                attend such institution for the cohort of borrowers who 
                entered repayment, deferment, or forbearance on such 
                loans in the third preceding fiscal year for which the 
                determination is made.
                    ``(B) Determination of cohort nonrepayment loan 
                balance.--
                            ``(i) In general.--The cohort nonrepayment 
                        loan balance of an institution for a fiscal 
                        year equals, from the total amount of the loans 
                        described in subparagraph (A), the total loan 
                        balance of those borrowers who have not made at 
                        least a 1 dollar reduction in their principal 
                        balance in the 3 consecutive fiscal years since 
                        their loans entered repayment, deferment, or 
                        forbearance.
                            ``(ii) Exception.--The cohort nonrepayment 
                        loan balance calculation under clause (i) shall 
                        not take into consideration a borrower who 
                        was--
                                    ``(I) in deferment on repayment of 
                                a loan described in subparagraph (A) in 
                                the 3 consecutive fiscal years 
                                described in clause (i) due to study in 
                                an approved graduate fellowship program 
                                or in an approved rehabilitation 
                                training program for the disabled;
                                    ``(II) in deferment on repayment of 
                                a loan described in subparagraph (A) in 
                                the 3 consecutive fiscal years 
                                described in clause (i) during which 
                                time the borrower was in a period of at 
                                least half-time enrollment in college 
                                or a career school;
                                    ``(III) in deferment on repayment 
                                of a loan described in subparagraph (A) 
                                in the 3 consecutive fiscal years 
                                described in clause (i) during which 
                                time the borrower was in a period of 
                                service qualifying for loan discharge 
                                or cancellation under part E;
                                    ``(IV) in deferment on repayment of 
                                a loan described in subparagraph (A) in 
                                the 3 consecutive fiscal years 
                                described in clause (i) during which 
                                time the borrower was on active duty 
                                military service during a war, military 
                                operation, or national emergency;
                                    ``(V) in mandatory forbearance on 
                                repayment of a loan described in 
                                subparagraph (A) for the full fiscal 
                                year; or
                                    ``(VI) serving as a volunteer under 
                                the Peace Corps Act (22 U.S.C. 2501 et 
                                seq.) or the Domestic Volunteer Service 
                                Act of 1973 (42 U.S.C. 4950 et seq.), 
                                during the 3 consecutive fiscal years 
                                described in clause (i).
                    ``(C) Determination of payment.--
                            ``(i) In general.--The risk-sharing payment 
                        of an institution for a fiscal year equals 20 
                        percent of the amount determined under clause 
                        (ii).
                            ``(ii) Amount based on cohort nonrepayment 
                        loan balance and unemployment rate.--
                                    ``(I) In general.--The amount under 
                                this clause is determined by 
                                subtracting the amount determined under 
                                subclause (II) from the cohort 
                                nonrepayment loan balance determined 
                                under subparagraph (B).
                                    ``(II) Amount based on unemployment 
                                rate.--The amount under this subclause 
                                is determined by multiplying the 
                                average national unemployment rate, as 
                                defined by the Bureau of Labor 
                                Statistics, for the 3 previous fiscal 
                                years from the date of the 
                                determination by the cohort loan 
                                balance determined under subparagraph 
                                (A).''.
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