1.Short title; table of contents
(a)
This Act may be cited as the
Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act
of 2019
or the PROTECT Students Act of 2019
.
(b)The table of contents for this Act is as follows:Sec. 1. Short title; table of contents.
Sec. 2. References.
Sec. 3. Effective date.
Sec. 4. Definitions.
TITLE I—For-profit institutions
Sec. 101. Closing the GI Bill loophole and restoring the 85/15 rule for for-profit institutions.
Sec. 102. Process for for-profit institutions to convert to nonprofit or public status.
Sec. 103. For-Profit Education Oversight Coordination Committee.
TITLE II—Student and borrower protections
Sec. 201. Gainful employment programs.
Sec. 202. Prohibition on institutions limiting student legal action.
Sec. 203. Enforcement unit established in the Office of Federal Student Aid.
Sec. 204. Establishment and maintenance of complaint resolution and tracking system.
Sec. 205. Borrower defense to repayment.
TITLE III—Ensuring integrity at institutions of higher education
Sec. 301. Restrictions on sources of funds for recruiting and marketing activities.
Sec. 302. Strengthening the incentive compensation ban.
Sec. 303. Definition of nonprofit institution of higher education.
Sec. 304. Definition of public institution of higher education.
Sec. 305. Enhanced civil penalties, State enforcement, and private right of action.
Sec. 306. Substantial misrepresentation prohibited.
2.Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision, the
reference shall be considered to be made to a section or other provision
of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).
3.Except as otherwise specified, this Act, and the amendments made by this Act, shall take effect
beginning on July 1, 2020.
4.
(a)Section 103 (20 U.S.C. 1003) is amended—
(1)by redesignating paragraphs (15) through (22), (23), and (24) as paragraphs (17) through (24),
(26), and (27);
(2)by inserting after paragraph (14) the following:
(16)Revenue sharing arrangementsThe term revenue sharing arrangement means an arrangement between an
institution of
higher education and a third party contractor under which—
(A)the third party contractor provides, exclusively or nonexclusively, educational products or
services to
prospective students or students attending the institution of higher
education; and
(B)the third party contractor or institution of higher education pays a fee or provides other material
benefits,
including revenue- or profit-sharing, to the institution of higher
education or third party contractor in connection with the educational
products or
services provided to prospective students or students attending the
institution of higher education.
; and
(3)by inserting after paragraph (24), as redesignated by paragraph (1), the following:
(25)The term third party contractor means any State, person, or entity that enters into a contract or agreement, including a revenue
sharing arrangement, with an eligible institution of higher education to
act on the institution’s behalf, including any entity that—
(A)sells the names of prospective students (also known as a lead generator
); or
(B)offers services including recruiting, financial aid packaging, curriculum development,
facilities management, hiring and oversight of faculty, and the provision
of student services
representatives, job placement counselors, or other employees (also known
as an online program manager
).
.
(b)Renaming proprietary institutions for-Profit institutions
(1)Section 102 (20 U.S.C. 1002) is amended—
(A)in subsection (a)(1)(A), by striking proprietary institution
and inserting for-profit institution
; and
(B)in subsection (b)—
(i)in the subsection heading, by striking Proprietary
and inserting For-profit
;
(ii)in the matter preceding subparagraph (A) of paragraph (1), by striking proprietary
and inserting for-profit
; and
(iii)in paragraph (2), by striking proprietary
each place the term appears and inserting for-profit
.
(2)
(A)Department of Education Organization ActThe Department of Education Organization Act (20 U.S.C. 3401 et seq.) is amended—
(i)in section 219 (20 U.S.C. 3426)—
(I)in the section heading, by striking Proprietary
and inserting For-profit
;
(II)by striking Proprietary
each place the term appears and inserting For-Profit
; and
(III)by striking proprietary
each place the term appears and inserting for-profit
; and
(ii)in section 1, by striking the item relating to section 219 in the table of contents and inserting
the following:
219. Liaison for For-Profit Institutions of Higher Education..
(B)Higher Education Act of 1965The Act (20 U.S.C. 1001 et seq.) is amended—
(i)in each of sections 435 and 443(b)(8), by striking proprietary
each place the term appears and inserting for-profit
; and
(ii)in section 807(d)(1)(A)(iii), by striking proprietary
and inserting for-profit
.
(C)Scientific and Advanced-Technology Act of 1992Section 3(j)(2)(B) of the Scientific and Advanced-Technology Act of 1992 (20 U.S.C. 1862i(j)(2)(B))
is amended by striking proprietary institution
and inserting for-profit institution
.
(3)
(A)Any reference to a proprietary institution, as defined in section 102(b) of the Higher Education
Act
of 1965 (20 U.S.C. 1002) on the day before the date of enactment of this
Act, in any law, rule,
regulation, certificate, directive, instruction, or other official paper
in force on the date of enactment of this Act shall be considered to refer
and apply to a for-profit institution, as defined in section 102(b) of the
Higher Education Act of 1965 (20 U.S.C. 1002(b)), as amended by this Act.
(B)Any reference to the Liaison for Proprietary Institutions of Higher Education in any law, rule,
regulation, certificate, directive, instruction, or other official paper
in force on the date of enactment of this Act shall be considered to refer
and apply to the Liaison for For-Profit Institutions of Higher Education
established under section 219 of the Department of Education Organization
Act (20 U.S.C. 3401), as amended by this Act.
<enum>I</enum><header>For-profit institutions</header>
<section id="id18ca49e91d624a9891c80fe701622d85"><enum>101.</enum><header>Closing the GI Bill loophole and restoring the 85/15 rule for for-profit institutions</header>
<subsection id="id903d216a9c0b480db53e2610151666aa"><enum>(a)</enum><header>In general</header><text>Section 102(b) (20 U.S.C. 1002), as amended by section 4(b), is further amended—</text>
<paragraph id="id5DD0CFCEE7DD468BA88F2961A614EE58"><enum>(1)</enum><text>in paragraph (1)—</text>
<subparagraph id="idd2b17ec8da294b6daf3d7701219bfe07"><enum>(A)</enum><text>in subparagraph (D), by striking <quote>and</quote> after the semicolon; and</text>
</subparagraph><subparagraph id="id159dfcd29cb94408918631c686433d71"><enum>(B)</enum><text>in subparagraph (E), by striking the period at the end and inserting <quote>; and</quote>; and</text>
</subparagraph><subparagraph id="id1c115037bcfb422d8b2e81bf6539ec99"><enum>(C)</enum><text>by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="idcd2f5072d6e94b77916664023b4c703d" style="OLC">
<subparagraph id="idae0df632555c4af193bb11a160453456"><enum>(F)</enum><text>meets the requirements of paragraph (2).</text></subparagraph><after-quoted-block>;</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="id792c63fb4dd04c1da48f02802d9b52cb"><enum>(2)</enum><text>by redesignating paragraph (2) as paragraph (3); and</text>
</paragraph><paragraph id="idceb76ab888194af08040a586fe1eb6b8"><enum>(3)</enum><text>by inserting after paragraph (1) the following:</text>
<quoted-block display-inline="no-display-inline" id="ide58daa546c004782a84ceeb44c150757" style="OLC">
<paragraph id="id49a10d10aa5740419ae6499ce1721c14"><enum>(2)</enum><header>Revenue sources</header>
<subparagraph id="id87b4723885724476b0c9a100419dfeb2"><enum>(A)</enum><header>In general</header><text>In order to qualify as a for-profit institution of higher education under this subsection, an
institution shall derive not less than 15 percent of the institution’s
revenues from sources other than Federal education assistance funds, as
calculated in accordance with subparagraphs (B) and (C).</text>
</subparagraph><subparagraph id="idd02b5b4be5c74de097fbef23a85f0d73"><enum>(B)</enum><header>Federal education assistance funds</header><text>In this paragraph, the term <term>Federal education assistance funds</term> means any Federal financial assistance provided, under this Act or any other Federal law, through
a grant, contract, subsidy, loan, guarantee, insurance, or other means to
an institution of higher education, including Federal financial assistance
that is
disbursed or delivered to an institution or on behalf of a student or to a
student to be used to attend the institution, except that such term shall
not include any monthly housing stipend provided under the Post-9/11
Veterans Educational Assistance Program under chapter 33 of title 38,
United States Code.</text>
</subparagraph><subparagraph id="id500c2e331f6a4b0caf35a8092416eb45"><enum>(C)</enum><header>Implementation of non-Federal revenue requirement</header><text>In making calculations under subparagraph (A), an institution of higher education shall—</text>
<clause id="id49b9fee5e4b2455f9dde8b514a9c5572"><enum>(i)</enum><text>use the cash basis of accounting;</text>
</clause><clause id="idafb30a3d17a045e79e78a2d00bc2b422"><enum>(ii)</enum><text>consider as revenue only those funds generated by the institution from—</text>
<subclause id="id14c59fabd3e446d7a15e2b1b94090898"><enum>(I)</enum><text>tuition, fees, and other institutional charges for students enrolled in programs eligible for
assistance under title IV;</text>
</subclause><subclause id="id0610592319004542a12896831ab3e791"><enum>(II)</enum><text>activities conducted by the institution that are necessary for the education and training of the
institution’s students, if such activities are—</text>
<item id="idb59cd6cf07344c8bb29e7f76c71be903"><enum>(aa)</enum><text>conducted on campus or at a facility under the control of the institution;</text>
</item><item id="ide70f633ee2924647bb66ec0628d0812e"><enum>(bb)</enum><text>performed under the supervision of a member of the institution’s faculty; and</text>
</item><item id="id59d5fa0c8f5d45c09960f9290c1961af"><enum>(cc)</enum><text>required to be performed by all students in a specific educational program at the institution; and</text>
</item></subclause><subclause id="idba499830d249408fbba67431934bd01c"><enum>(III)</enum><text>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;</text>
</subclause></clause><clause id="ida02c0a95058546d4b028ebc0120611c5"><enum>(iii)</enum><text>presume that any Federal education assistance funds that are disbursed or delivered to an
institution on behalf of a student or directly to a student will be used
to pay the student’s tuition, fees, or other institutional charges,
regardless of whether the institution credits such funds to the student’s
account or pays such funds directly to the student, except to the extent
that the student’s tuition, fees, or other institutional charges are
satisfied by—</text>
<subclause id="ide3e4990c64a245ecab7ffb4515600d20"><enum>(I)</enum><text>grant funds provided by an outside source that—</text>
<item id="id482d926e33e94a8e8ba099987b4dd0fa"><enum>(aa)</enum><text>has no affiliation with the institution; and</text>
</item><item id="idebd4362b99f74059b52c21913fc333f8"><enum>(bb)</enum><text>shares no employees, executives, or board members with the institution;</text>
</item></subclause><subclause id="id3C9B4D1C4A1F40DB87E04D6CA02E5DDC"><enum>(II)</enum><text>funds provided under a contractual arrangement with a Federal, State, or local government agency
for the purpose of providing job training to low-income individuals who
are in need of that training; or</text>
</subclause><subclause id="ida221fc6d390c4227bf4f79713db0412c"><enum>(III)</enum><text>institutional scholarships described in clause (v);</text>
</subclause></clause><clause id="id264e53d2e25240358f8a9b72eb7fe689"><enum>(iv)</enum><text>include no loans made by an institution of higher education as revenue to the school, except for
payments made by students on such loans;</text>
</clause><clause id="id55a9c2ec5185424a9fe3a634f49ac0b2"><enum>(v)</enum><text>include a scholarship provided by the institution—</text>
<subclause id="id8b874708b4a9497ead2616aa74d8c15e"><enum>(I)</enum><text>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</text>
</subclause><subclause id="ide380e7603f7d4aadb373da1f9cd53ac1"><enum>(II)</enum><text>only to the extent that funds in that account represent designated funds, or income earned on such
funds, from an outside source that—</text>
<item id="id27ad9b6873da45779f65238df51664a6"><enum>(aa)</enum><text>has no affiliation with the institution; and</text>
</item><item id="id10183a9201d34e92b3b20489d2661868"><enum>(bb)</enum><text>shares no employees, executives, or board members with the institution; and</text>
</item></subclause></clause><clause id="id03bd6d7d417a4b05a125e2c56cbf6d7c"><enum>(vi)</enum><text>exclude from revenues—</text>
<subclause id="id4dcf1207879543eea1bcec50963fa8a0"><enum>(I)</enum><text>the amount of funds the institution received under part C of title IV, unless the institution used
those funds to pay a student’s institutional charges;</text>
</subclause><subclause id="id1bb4194340c9443a8e62f564f83324a8"><enum>(II)</enum><text>the amount of funds the institution received under subpart 4 of part A of title IV;</text>
</subclause><subclause id="ide4d655bee206481da7f4a520bec52d66"><enum>(III)</enum><text>the amount of funds provided by the institution as matching funds for any Federal program;</text>
</subclause><subclause id="id11016b5a4e16492faa27b2f2e60e931b"><enum>(IV)</enum><text>the amount of Federal education assistance funds provided to the institution to pay institutional
charges for a student that were refunded or returned; and</text>
</subclause><subclause id="id9ea09115b48648afad6e5edb78f0ca11"><enum>(V)</enum><text>the amount charged for books, supplies, and equipment, unless the institution includes that amount
as tuition, fees, or other institutional charges.</text>
</subclause></clause></subparagraph><subparagraph id="id9ad86328639b4d63a7768566ecce2138"><enum>(D)</enum><header>Report to congress</header><text>Not later than July 1, 2020, and by July 1 of each succeeding year, the Secretary shall submit to
the authorizing committees a report that contains, for each for-profit
institution of higher education that receives assistance under title IV
and as provided in the audited financial statements submitted to the
Secretary by each institution pursuant to the requirements of section
487(c)—</text>
<clause id="ide691d7d379f84683a3df640309d71b6f"><enum>(i)</enum><text>the amount and percentage of such institution’s revenues received from Federal education assistance
funds; and</text>
</clause><clause id="id68230ef072fb47bdbe82a403adc6e20e"><enum>(ii)</enum><text>the amount and percentage of such institution’s revenues received from other sources.</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="idd58d93bc56254ee8bcb6026282cf1dd7"><enum>(b)</enum><header>Repeal of existing requirements</header><text>Section 487 (20 U.S.C. 1094) is amended—</text>
<paragraph id="id03b4e992ff904b898496b05876c58e81"><enum>(1)</enum><text>in subsection (a)—</text>
<subparagraph id="id08c87f8e957a432f995d90780e2cec94"><enum>(A)</enum><text>by striking paragraph (24);</text>
</subparagraph><subparagraph id="id1651bd9996b54054a35d859e3205ccbb"><enum>(B)</enum><text>by redesignating paragraphs (25) through (29) as paragraphs (24) through (28), respectively;</text>
</subparagraph><subparagraph id="ided5b88adf85444f2acf203352dd0d5b8"><enum>(C)</enum><text>in paragraph (24)(A)(ii) (as redesignated by subparagraph (B)), by striking <quote>subsection (e)</quote> and inserting <quote>subsection (d)</quote>; and</text>
</subparagraph><subparagraph id="id468ae0d7c29d498baef82cdca9a97555"><enum>(D)</enum><text>in paragraph (26) (as redesignated by subparagraph (B)), by striking <quote>subsection (h)</quote> and inserting <quote>subsection (g)</quote>;</text>
</subparagraph></paragraph><paragraph id="idbb6c8e1884764360943ad8428c356169"><enum>(2)</enum><text>by striking subsection (d);</text>
</paragraph><paragraph id="ida89794621cf446b2801d1dcbdc43a636"><enum>(3)</enum><text>by redesignating subsections (e) through (j) as subsections (d) through (i), respectively;</text>
</paragraph><paragraph id="id16fec55294ba43a394eeaa1acf5bbecc"><enum>(4)</enum><text>in subsection (d) (as redesignated by paragraph (3)), by striking <quote>(a)(25)</quote> and inserting <quote>(a)(24)</quote>;</text>
</paragraph><paragraph id="idca44acb7217b41a090a7741c9b32d25b"><enum>(5)</enum><text>in subsection (f)(1) (as redesignated by paragraph (3)), by striking <quote>subsection (e)(2)</quote> and inserting <quote>subsection (d)(2)</quote>; and</text>
</paragraph><paragraph id="id26c1c59e529b4d6ebf8d1b6770cb3953"><enum>(6)</enum><text>in subsection (g)(1) (as redesignated by paragraph (3)), by striking <quote>subsection (a)(27)</quote> in the matter preceding subparagraph (A) and inserting <quote>subsection (a)(26)</quote>.</text>
</paragraph></subsection><subsection id="idf887a3135709418f87043f2cf636cedb"><enum>(c)</enum><header>Conforming amendments</header><text>The Act (20 U.S.C. 1001 et seq.) is amended—</text>
<paragraph id="id4701562952f34ebdb2b6309ddf59224b"><enum>(1)</enum><text>in section 152 (20 U.S.C. 1019a)—</text>
<subparagraph id="id1f7e0190a9a74488955136696b943978"><enum>(A)</enum><text>in subsection (a)(1)(A), by striking <quote>subsections (a)(27) and (h) of section 487</quote> and inserting <quote>subsections (a)(26) and (g) of section 487</quote>; and</text>
</subparagraph><subparagraph id="idaea094da869f4bb7b427f1b85941a600"><enum>(B)</enum><text>in subsection (b)(1)(B)(i)(I), by striking <quote>section 487(e)</quote> and inserting <quote>section 487(d)</quote>;</text>
</subparagraph></paragraph><paragraph id="idd8a89870375e499f9aa29ec8354fea92"><enum>(2)</enum><text>in section 153(c)(3) (20 U.S.C. 1019b(c)(3)), by striking <quote>section 487(a)(25)</quote> each place the term appears and inserting <quote>section 487(a)(24)</quote>;</text>
</paragraph><paragraph id="id94ed0ddb18af421d896b11053b441b2b"><enum>(3)</enum><text>in section 496(c)(3)(A) (20 U.S.C. 1099b(c)(3)(A)), by striking <quote>section 487(f)</quote> and inserting <quote>section 487(e)</quote>; and</text>
</paragraph><paragraph id="id6017e101ec434b6d9c47e90382aa0ecf"><enum>(4)</enum><text>in section 498(k)(1) (20 U.S.C. 1099c(k)(1)), by striking <quote>section 487(f)</quote> and inserting <quote>section 487(e)</quote>.</text>
</paragraph></subsection></section><section id="idF0C226BE9C364F59A9CEC1D442AAA572"><enum>102.</enum><header>Process for for-profit institutions to convert to nonprofit or public status</header>
<subsection id="id00c25f4755bc40a4acebefdde7fb6fcc"><enum>(a)</enum><header>Conversion process</header><text>Part B of title I (20 U.S.C. 1011 et seq.) is further amended by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="ide8a6762faacd4a87b97e7d338baf2bff" style="OLC">
<section id="id0c48e0a8327647e883bcdcc270fb9de6"><enum>124.</enum><header>Process for for-profit institutions to convert to nonprofit or public status</header>
<subsection id="idd8897076ae53419894eedfcdfdd3f03d"><enum>(a)</enum><header>Determination</header>
<paragraph id="id669386a320144333812ae836741d59d2"><enum>(1)</enum><header>In general</header><text>In any case where the Secretary determines that a for-profit institution of higher education, as
defined in section 102(b), meets
the applicable requirements of subsection (b), the Secretary shall approve
the
conversion of the institution of higher education to a nonprofit
or public institution of higher education for not more than a
5-year period.</text>
</paragraph><paragraph id="id9b9be6fc18914a34b93151104fab1756"><enum>(2)</enum><header>Periodic review</header><text>For each for-profit institution that is converted under this section to a nonprofit or public
institution of
higher education, the Secretary shall—</text>
<subparagraph id="ide39e9f4fdd4946908d0f709e8d70a495"><enum>(A)</enum><text>review the determination not less than once every 5 years; and</text>
</subparagraph><subparagraph id="idda0127d7781643b3a832df9950754324"><enum>(B)</enum><text>at the conclusion of a review described in subparagraph (A)—</text>
<clause id="id11586f1f9a804d4db311bd165076bf57"><enum>(i)</enum><text>in a case where the Secretary determines the institution continues to meet the requirements of this
section, approve the institution’s status as a nonprofit institution of
higher education or public institution of higher education for an
additional period not to exceed 5 years; and</text>
</clause><clause id="id4b78f7aa66994969982f917106cfda7a"><enum>(ii)</enum><text>in a case where the Secretary determines the institution no longer meets the requirements, classify
the institution as a for-profit institution.</text>
</clause></subparagraph></paragraph></subsection><subsection id="id1d3b5b0f1e6f49faa28f053c8962a0c0"><enum>(b)</enum><header>Requirements</header><text>To be eligible to convert to a nonprofit or public institution of higher education, a for-profit
institution
of higher education shall submit an application to the Secretary that
demonstrates that—</text>
<paragraph id="id80b990bea65a4413ad067f6caddaafcf"><enum>(1)</enum><text>the institution, as of the date of the application, meets the definition of a nonprofit or public
institution of higher education;</text>
</paragraph><paragraph id="ide48e43b1ceca498bb7d971f9be29edf5"><enum>(2)</enum><text>the institution has not acquired any other institution of higher education (as defined in section
102), or a significant portion of the assets of such other institution,
for more than the value of such other institution or such assets,
respectively, as determined in accordance with subsection (d); and</text>
</paragraph><paragraph id="idab1cf21fa1f6498b8f490c4d129f8b5b"><enum>(3)</enum><text>in the case of an institution that has been acquired by another party, such institution is not
controlled by such party.</text>
</paragraph></subsection><subsection id="id696e6395907e4193accc6e8675c988e6"><enum>(c)</enum><header>Transition period</header><text>A for-profit institution of higher education approved for conversion under subsection (a) shall be
subject to
any rules and regulations that apply to for-profit institutions of higher
education, as defined in section 102(b), for a minimum 5-year period after
conversion, which may be extended by the Secretary if the Secretary
identifies a reason for concern relating to the institution’s converted
status.</text>
</subsection><subsection id="id1366e63fa2374ed0bf64480616535fb6"><enum>(d)</enum><header>Value</header><text>The term <term>value</term>, with respect to an acquisition under subsection (b)(2)—</text>
<paragraph id="id505618b67ac94b21bd2133356dbcf1bc"><enum>(1)</enum><text>includes the value of any ongoing relationship (including any contract, agreement, lease, or other
arrangement between the acquiring institution and the acquired
institution) between affiliates, as defined in section 180.905 of title 2,
Code of Federal Regulations, as in effect on the date of enactment of the <short-title>PROTECT Students Act of 2019</short-title>; and</text>
</paragraph><paragraph id="id18dc583ea6fe40f2ae20bd2d46bde060"><enum>(2)</enum><text>may be demonstrated through—</text>
<subparagraph id="id4a1e5fc77b5e4c9ca71993c60a2a6e7c"><enum>(A)</enum><text>third-party valuation;</text>
</subparagraph><subparagraph id="id3d1e270394174421aef6cb39dba53719"><enum>(B)</enum><text>independent financing of the acquisition based upon the assets acquired; or</text>
</subparagraph><subparagraph id="id98ddc448beb640ceacb97398e70d78b1"><enum>(C)</enum><text>full and open competition in the acquisition, as such term is defined in section 2.101(b) of title
48, Code of Federal Regulations, as in effect on the date of the enactment
of the <short-title>PROTECT Students Act of 2019</short-title>, of services or assets.</text>
</subparagraph></paragraph></subsection><subsection id="idbc4360f44fe24c14b994b48d017f2138"><enum>(e)</enum><header>Publication</header>
<paragraph id="id4985439070024df6ade3f2904aef656c"><enum>(1)</enum><header>Application</header><text>Before the Secretary may approve the conversion of an institution of higher education under
subsection (a), the Secretary shall publish the application of the
institution in the Federal Register with a notice and comment period of
not less than 60 days.</text>
</paragraph><paragraph id="idfec42a1811ac4066a705c5789aab1494"><enum>(2)</enum><header>Determination</header><text>The Secretary shall publish each determination on an application for conversion under this section,
and the reasons for such determination, in the Federal Register.</text>
</paragraph></subsection><subsection id="id544266de929c4843bbb9166a816a0e88"><enum>(f)</enum><header>Tax exempt status</header><text>In carrying out this section, the Secretary may consider the nonprofit corporation status under
State law or the tax exempt status of an institution of higher education
under section 501(c)(3) of the Internal Revenue Code of 1986, but shall
not
use such statuses as the sole determining factor for approval under
subsection (a).</text>
</subsection><subsection id="idc39835b11d48464792a043fa598efdeb"><enum>(g)</enum><header>Public representation and marketing of nonprofit status</header><text>A for-profit institution of higher education that receives assistance under title IV that is
seeking to
convert under this section shall not promote or market itself, in any
manner, as a nonprofit institution of higher
education until—</text>
<paragraph id="id3bbb6178c30c43b4954d6643ee6f4adf"><enum>(1)</enum><text>the Secretary has approved the conversion of the institution to a nonprofit institution under this
section;</text>
</paragraph><paragraph commented="no" id="id1E151F635B4F4E39BEFFA47BF7002675"><enum>(2)</enum><text>the Commissioner of Internal Revenue has approved the institution as tax exempt for purposes of the
Internal Revenue Code of 1986 and the institution is an organization
described in clause (ii) or (vi) of section 170(b)(1)(A) of such Code; and</text>
</paragraph><paragraph id="id5ee857baf34d4280b64485e19314f6d5"><enum>(3)</enum><text>a nationally recognized accrediting agency or association recognized by the Secretary pursuant to
section
496 has approved the nonprofit status of the
institution.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id47ea3694ba8e4bd7b235a4c82d297f0e"><enum>(b)</enum><header>Review and enforcement process</header>
<paragraph id="id96842feb91c74909afd198a45a9bf20e"><enum>(1)</enum><header>In general</header><text>Section 487(c)(1) of the Act (20 U.S.C. 1094(c)(1)) is amended—</text>
<subparagraph id="ide681e5b4efe743f998156eb1c4683838"><enum>(A)</enum><text>by redesignating subparagraphs (B) through (I) as subparagraphs (C) through (J), respectively; and</text>
</subparagraph><subparagraph id="id843cc8fef5e24cf989f2e857c1f35c15"><enum>(B)</enum><text>by inserting after subparagraph (A) the following:</text>
<quoted-block display-inline="no-display-inline" id="iddb75fb4c2acc450096eac981f73419f2" style="OLC">
<subparagraph id="id69eb1645e659440aa68b9e4756f27957"><enum>(B)</enum><clause commented="no" display-inline="yes-display-inline" id="id684E579E4866419C810693F0039F5AB8"><enum>(i)</enum><text>a requirement that an institution of higher education shall use the same qualified, independent
organization or person, in accordance with standards established by the
Comptroller General for the audit of governmental organizations, programs,
and functions, and as prescribed in regulations of the Secretary, for both
the financial and compliance audits required for a given year under
subparagraph (A);</text>
</clause><clause id="idE4A7196779B64B38BB5EBD1C17D781F5" indent="up1"><enum>(ii)</enum><text>a requirement that the qualified, independent organization or person chosen to conduct the annual
financial and compliance audits under subparagraph (A) shall document, in
the audit, any transactions or relationships that may conflict with an
institution’s status as a nonprofit institution of higher education or
public institution of higher education; and</text>
</clause><clause id="idD965E14CF7094868BF32005DCFEAC7D7" indent="up1"><enum>(iii)</enum><text>in accordance with section 489A, in any case where the Secretary determines, after providing an
institution with reasonable notice
and an opportunity for a hearing, that the institution is classified as a
public institution of higher education or a nonprofit institution for
purposes of this Act but is in violation of, or has failed to carry out,
any requirements relating to such nonprofit or public status in accordance
with paragraphs (13) and (15) of section 103 or section 124, a process
through which the Secretary may—</text>
<subclause id="id8DCB753AA6BD4DE7A5F284FF97785871"><enum>(I)</enum><text>limit, suspend, or terminate the institution’s participation in any program under this title under
section 489A(b)(1);</text>
</subclause><subclause id="idAF08E51A4819430C80CCC87968146BBB"><enum>(II)</enum><text>impose a civil penalty under section 489A(c); or</text>
</subclause><subclause id="id73025F5B735B4D82A768DBC039F02575"><enum>(III)</enum><text>take an emergency action under section 498A(d) against an institution.</text></subclause></clause></subparagraph><after-quoted-block>; </after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph commented="no" id="id0fbc1bf1f0214089ae306f3fe8cb9fd7"><enum>(2)</enum><header>Conforming amendments</header><text>Section 487(i) (20 U.S.C. 1094(i)), as redesignated by section 101(b)(3), is further amended—</text>
<subparagraph commented="no" id="id745B9C7C77024BE7961F2E61B4A8435B"><enum>(A)</enum><text>by striking <quote>subsection (c)(1)(D),</quote>; and</text>
</subparagraph><subparagraph commented="no" id="idF2414E89D5454744BF2F769DD4C807CC"><enum>(B)</enum><text>by
inserting <quote>or subsection (b)(1) or (c) of section 489A</quote> after <quote>of this section</quote>.</text>
</subparagraph></paragraph></subsection></section><section id="ideaf9f08d64274d73bd3d98cf003a7723"><enum>103.</enum><header>For-Profit Education Oversight Coordination Committee</header><text display-inline="no-display-inline">Part B of title I (20 U.S.C. 1011 et seq.), as amended by section 102, is further amended by adding
at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="id6c27df0dde4a46baacdaafc9c718cd05" style="OLC">
<section id="id7aea818d1a424f76a94e2985fe0111d8"><enum>125.</enum><header>For-Profit Education Oversight Coordination Committee</header>
<subsection id="idc1a72fa0c5444ae380cd011962c5e6ef"><enum>(a)</enum><header>Definitions</header><text>In this section:</text>
<paragraph id="id91991a35a01546aa8f93e1e0aa226c19"><enum>(1)</enum><header>Executive officer</header><text>The term <term>executive officer</term>, with respect to a for-profit institution that is a publicly traded corporation, means—</text>
<subparagraph id="id5be23e5bb49642f9ae48388a06ab8a7b"><enum>(A)</enum><text>the president of such corporation;</text>
</subparagraph><subparagraph id="id892c7627f02546eeb4fcc8614d868a4b"><enum>(B)</enum><text>a vice president of such corporation who is in charge of a principal business unit, division, or
function of such corporation, such as sales, administration, or finance;
or</text>
</subparagraph><subparagraph id="id7862cfc9bc7b48f4bcc10808e9d9a64d"><enum>(C)</enum><text>any other officer or person who performs a policy-making function for such corporation.</text>
</subparagraph></paragraph><paragraph id="id414465ee481e4381af7e06eced0bf064"><enum>(2)</enum><header>Federal education assistance funds</header><text>The term <term>Federal education assistance funds</term> has the meaning given the term in section 102(b)(2)(B).</text>
</paragraph><paragraph id="ide281d1b57e484a34bfc7d2bc269379e6"><enum>(3)</enum><header>For-profit institution</header><text>The term <term>for-profit institution</term>—</text>
<subparagraph id="id64097177df6f4358abd39613e51c217b"><enum>(A)</enum><text>means a for-profit institution of higher education as defined in section 102(b)(2); and</text>
</subparagraph><subparagraph id="id7f0a9fefa2894ac29ff72729e66e2b71"><enum>(B)</enum><text>includes a former for-profit institution of higher education that has been approved for conversion
under section 124
but is still in the transition period required under section 124(c).</text>
</subparagraph></paragraph><paragraph id="idff5dae888f7243c9b5a4917aab4d0717"><enum>(4)</enum><header>Private education loan</header><text>The term <term>private education loan</term>—</text>
<subparagraph id="idcd50b633c1b6478ab7ca1ac7caa58862"><enum>(A)</enum><text>means a loan provided by a private educational lender (as defined in section 140(a) of the Truth in
Lending Act (15 U.S.C. 1650(a))) that—</text>
<clause id="idf523cd1ac5dd41f9bc35ac5699e86f15"><enum>(i)</enum><text>is not made, insured, or guaranteed under title IV;</text>
</clause><clause id="id5cb333713b1a4d24b64a85c608c3c876"><enum>(ii)</enum><text>is issued expressly for postsecondary educational expenses to a borrower, regardless of whether the
loan is provided through the educational institution that the subject
student attends or directly to the borrower from the private educational
lender; and</text>
</clause><clause id="id60756bd04e5c478c94ce3dac900e877d"><enum>(iii)</enum><text>is not made, insured, or guaranteed under title VII or title VIII of the Public Health Service Act
(42 U.S.C. 292 et seq. and 296 et seq.); and</text>
</clause></subparagraph><subparagraph id="id7e7cef9f31e94ed18961070611d6b74c"><enum>(B)</enum><text>does not include an extension of credit under an open end consumer credit plan, a reverse mortgage
transaction, a residential mortgage transaction, or any other loan that is
secured by real property or a dwelling.</text>
</subparagraph></paragraph><paragraph id="id04c302da618d4698aa457aaf9ce99b5c"><enum>(5)</enum><header>Recruiting and marketing activities</header><text>The term <term>recruiting and marketing activities</term> means the recruiting and marketing activities described in section 126(d)(2).</text>
</paragraph><paragraph id="id38d01a596d184fe693dadfe2abbdd362"><enum>(6)</enum><header>State approval agency</header><text>The term <term>State approval agency</term> means any State agency that determines whether an institution of higher education is legally
authorized within such State to provide a program of education beyond
secondary education.</text>
</paragraph><paragraph commented="no" id="ide3ffd72ebe624dd9a7fb67f008bd8351"><enum>(7)</enum><header>Veterans service organization</header><text>The term <term>veterans service organization</term> means an organization recognized by the Secretary of Veterans Affairs for the representation of
veterans under section 5902 of title 38, United States Code.</text>
</paragraph></subsection><subsection id="id6cd57356034e432384ec3005ff783726"><enum>(b)</enum><header>Establishment of committee</header>
<paragraph id="id01e8473b0b694ded9ef63c76da2a9b0c"><enum>(1)</enum><header>Establishment</header><text>There is established in the executive branch a committee to be known as the <quote>For-Profit Education Oversight Coordination Committee</quote> (referred to in this section as the <quote>Committee</quote>) and to be composed of the head (or the designee of such head) of each of the following Federal
entities:</text>
<subparagraph id="id21604036e0a145c6967a04c2a053d49d"><enum>(A)</enum><text>The Department of Education.</text>
</subparagraph><subparagraph id="idb939a257b61d443894b8b7c820ebc56a"><enum>(B)</enum><text>The Bureau of Consumer Financial Protection.</text>
</subparagraph><subparagraph id="id9d860a70a0764d36bfa8b1fa329e64d9"><enum>(C)</enum><text>The Department of Justice.</text>
</subparagraph><subparagraph id="idc7ba7aec50e34bcab5743c3199a68159"><enum>(D)</enum><text>The Securities and Exchange Commission.</text>
</subparagraph><subparagraph id="id04d93f34db334d32850b1353f24083aa"><enum>(E)</enum><text>The Department of Defense.</text>
</subparagraph><subparagraph id="id72e85a754da2409eb5c8d11a9f565225"><enum>(F)</enum><text>The Department of Veterans Affairs.</text>
</subparagraph><subparagraph id="id51b9d473cbb54cb49a086168a131fd4e"><enum>(G)</enum><text>The Federal Trade Commission.</text>
</subparagraph><subparagraph id="id83b5148d666741b78aedcc10946496bc"><enum>(H)</enum><text>The Department of Labor.</text>
</subparagraph><subparagraph id="id18e5358d7a29478ca8a8c26583ca2048"><enum>(I)</enum><text>The Internal Revenue Service.</text>
</subparagraph><subparagraph id="idd78ff5f415624e44a55559d3f8853110"><enum>(J)</enum><text>The enforcement unit of the Performance-Based Organization established under section 141(g).</text>
</subparagraph><subparagraph id="idd56b4c0f6f394de8b57dd30bc25a2793"><enum>(K)</enum><text>At the discretion of the Chairperson of the Committee, any other relevant Federal agency or
department.</text>
</subparagraph></paragraph><paragraph id="idddd30edb48144e0e8982e6353fce764f"><enum>(2)</enum><header>Purposes</header><text>The Committee shall have the following purposes:</text>
<subparagraph id="id9bce4ea33f4f4cdc9071a3bec4a35726"><enum>(A)</enum><text>Coordinate Federal oversight of for-profit institutions to—</text>
<clause id="id08d5cc45f061493082e797f77b90a767"><enum>(i)</enum><text>improve enforcement of applicable Federal laws and regulations;</text>
</clause><clause id="id0bc14375c14e4eb4965170a2bacc1e83"><enum>(ii)</enum><text>increase accountability of for-profit institutions to students and taxpayers;
and</text>
</clause><clause id="idcc7ac5873d35489d96c91f126d4e058b"><enum>(iii)</enum><text>ensure the promotion of quality education programs.</text>
</clause></subparagraph><subparagraph id="ide85c7b2e640e41d787ac3c967f9224ea"><enum>(B)</enum><text>Coordinate Federal activities to protect students from unfair, deceptive, abusive, unethical,
fraudulent, or predatory practices, policies, or procedures of for-profit
institutions.</text>
</subparagraph><subparagraph id="id677b5536541a48c685de66dd2c870e7c"><enum>(C)</enum><text>Encourage information sharing among agencies related to Federal investigations, audits, program
reviews, inquiries, complaints, financial statements, and other
information relevant to the oversight of for-profit institutions.</text>
</subparagraph><subparagraph id="idccb7cf5993ff470c94b2c0aab4740316"><enum>(D)</enum><text>Develop binding memoranda of understanding that the Federal entities represented on the committee
will use regarding the sharing of information to exercise the oversight
described in this section.</text>
</subparagraph><subparagraph id="id798cd1716f3741da9ad3bab74a8f9eb0"><enum>(E)</enum><text>Increase coordination and cooperation between Federal and State agencies, including State Attorneys
General and State approval agencies, with respect to improving oversight
and accountability of for-profit institutions.</text>
</subparagraph><subparagraph id="id51104ca7fbfd40d7a9867546455a8a90"><enum>(F)</enum><text>Develop best practices and consistency among Federal and State agencies in the dissemination of
consumer information regarding for-profit institutions
to ensure that students, parents, and other stakeholders have easy access
to such information.</text>
</subparagraph></paragraph><paragraph id="id9f521c39c448477e84b75cf6bcd438be"><enum>(3)</enum><header>Membership</header>
<subparagraph id="idf7f39648b0914753bf0a8d0829e91583"><enum>(A)</enum><header>Designees</header><text>For any designee described in paragraph (1), the head of the member entity shall appoint a
high-level official who exercises significant decision-making authority
for the oversight or investigatory activities and responsibilities related
to for-profit institutions of the respective member
entity.</text>
</subparagraph><subparagraph id="id5f31f54937584021b78940247fe8f0fc"><enum>(B)</enum><header>Chairperson</header><text>The Secretary of Education or the designee of such Secretary shall serve as the Chairperson of the
Committee.</text>
</subparagraph><subparagraph id="id6b3c3528b76649728fc3dfc1502bba84"><enum>(C)</enum><header>Committee support</header><text>The head of each entity described in paragraph (1) shall ensure appropriate staff and officials of
such entity are available to support the Committee-related work of such
entity.</text>
</subparagraph></paragraph></subsection><subsection id="id05de84c4db3445398fede7e1b512f14b"><enum>(c)</enum><header>Meetings</header>
<paragraph id="id8682f1ac85dd41b89090b527761c0328"><enum>(1)</enum><header>Committee meetings</header><text>The members of the Committee shall meet regularly, but not less than once during each quarter of
each fiscal year, to carry out the purposes described in subsection
(b)(2).</text>
</paragraph><paragraph id="id694fda498c6c457db11ade725b81189e"><enum>(2)</enum><header>Meetings with State agencies and stakeholders</header><text>The Committee shall meet not less than once each fiscal year, and shall otherwise interact
regularly, with State Attorneys General, State approval agencies, veterans
service organizations, and consumer advocates to carry out the purposes
described in subsection (b)(2).</text>
</paragraph></subsection><subsection id="idfc8463ec18244ba0923ac4e3120617f9"><enum>(d)</enum><header>Director</header><text>The Chairperson shall appoint a full-time executive director to support the Committee and may
appoint and fix the pay
of additional staff as the Chairperson considers
appropriate.</text>
</subsection><subsection id="idd79c01b29682484fbda280d5ed10c1f6"><enum>(e)</enum><header>Report</header>
<paragraph id="id023b6a075b284424be2455cc43b46c8e"><enum>(1)</enum><header>In general</header><text>The Committee shall submit a report each year to the authorizing committees and any other committee
of Congress that the Committee
determines appropriate.</text>
</paragraph><paragraph id="id01b3c303b34541fe94d210982eacb009"><enum>(2)</enum><header>Public access</header><text>The report described in paragraph (1) shall be made available to the public in a manner that is
easily accessible to parents, students, and other stakeholders, in
accordance with the best practices developed under subsection (b)(2)(F).</text>
</paragraph><paragraph id="id6aeed9d5ba5841ac84fda7c9b16a75fb"><enum>(3)</enum><header>Contents</header>
<subparagraph id="idb908c3bbcf1e4cd185f48057fbf144e4"><enum>(A)</enum><header>In general</header><text>The report shall include—</text>
<clause id="idbec17aefaa654f3b883022e0eb835e39"><enum>(i)</enum><text>an accounting of any action (as defined in subparagraph (C)) taken by the Federal Government, any
member entity of the Committee, or a State—</text>
<subclause id="id475478a17941476381941d1c9609f806"><enum>(I)</enum><text>to enforce Federal or State laws and regulations applicable to for-profit institutions;</text>
</subclause><subclause id="idca2209f06f4248f19190fca5b92931c5"><enum>(II)</enum><text>to hold for-profit institutions accountable to students and taxpayers; and</text>
</subclause><subclause id="id43045270e6ee4326aeb4ae9fa799abd7"><enum>(III)</enum><text>to promote quality education programs;</text>
</subclause></clause><clause id="id1f69c4ebf9ed45368c3fcb7589954ae7"><enum>(ii)</enum><text>a summary of complaints against each for-profit institution received by any
member entity of the Committee;</text>
</clause><clause id="idedf23c1f41cc4544941194d4eec20f71"><enum>(iii)</enum><text>the data described in subparagraph (B) and any other data relevant to for-profit institutions that
the Committee determines appropriate; and</text>
</clause><clause id="id8a3e450e0f64408b853e66683a19a0bc"><enum>(iv)</enum><text>recommendations of the Committee for such legislative and administrative actions as the Committee
determines are necessary to—</text>
<subclause id="id231012f8651b4c6e91c724adf7ee4c86"><enum>(I)</enum><text>improve enforcement of applicable Federal laws;</text>
</subclause><subclause id="idced0d012630f46e59f98b8d1c0ef4a14"><enum>(II)</enum><text>increase accountability of for-profit institutions to students and taxpayers;
and</text>
</subclause><subclause id="id6a5acb064c454e61b17fcf019eb02958"><enum>(III)</enum><text>ensure the promotion of quality education programs.</text>
</subclause></clause></subparagraph><subparagraph id="id4b88e381986f4fc2b7b5114b6e288919"><enum>(B)</enum><header>Data</header>
<clause id="ideaf61493f74543c59f39afb1a47346bc"><enum>(i)</enum><header>Industry-wide and institution-level data</header><text>The report shall include data on all for-profit institutions, including the
following:</text>
<subclause id="id6e4de27f4d7443e0b60da1b5dff056cb"><enum>(I)</enum><text>The following data, in the aggregate for all for-profit institutions and disaggregated for each
individual
for-profit institution:</text>
<item id="id1513c9c304e74bb5a061010da05b0dec"><enum>(aa)</enum><text>The total amount of Federal education assistance funds that for-profit institutions
received for the previous academic year, and the percentage of the total
amount of Federal education assistance funds provided to institutions of
higher
education (as defined in section 102) for such previous academic year that
reflects such total amount of Federal education assistance funds provided
to
for-profit institutions for such previous academic
year.</text>
</item><item id="id1c9e02a63f534b0293f32222ea2d3f27"><enum>(bb)</enum><text>The total amount of Federal education assistance funds that for-profit institutions
received for the previous academic year, disaggregated by whether the
funds were provided—</text>
<subitem id="id2c394fa8b4e34257aa742dac6ded4647"><enum>(AA)</enum><text>in the form of a loan under title IV;</text>
</subitem><subitem id="id1002b2c732c04a91bcf3e90b671acb66"><enum>(BB)</enum><text>in the form of a grant under such title;</text>
</subitem><subitem id="idf192024d40324555be62c5e8ba4ff714"><enum>(CC)</enum><text>under chapter 33 of title 38, United States Code;</text>
</subitem><subitem id="id6b6806ccfe254139b1eefee9d04eea6a"><enum>(DD)</enum><text>for tuition and expenses under section 2007 of title 10, United States Code;</text>
</subitem><subitem id="idc56f3f8247474e80b95893ddf36c61c3"><enum>(EE)</enum><text>under section 1784a of title 10, United States Code; and</text>
</subitem><subitem id="iddb520fd32d4146c392a543d6948ad87f"><enum>(FF)</enum><text>in a manner not described in subitems (AA) through (EE).</text>
</subitem></item><item id="idd3132b2c95a4445f809fc1d35888d9d1"><enum>(cc)</enum><text>The percentage of the total amount of Federal education assistance funds provided to institutions
of
higher education (as defined in section 102) for such previous academic
year for each of the programs described in subitems (AA) through (EE) of
item (bb) that reflects such total amount of Federal education assistance
funds provided to for-profit institutions for such previous
academic year for each of such programs.</text>
</item><item id="id25121ad1ef0c4b42a419362e56bc05ee"><enum>(dd)</enum><text>Expenses by classification, including separate classifications for—</text>
<subitem id="id9E24AA4F2E194801B2707E778298F2FA"><enum>(AA)</enum><text>pre-enrollment recruiting and marketing activities;</text>
</subitem><subitem id="idDDECA57CF5834194AE314F6EED0C36F5"><enum>(BB)</enum><text>student instruction; and</text>
</subitem><subitem id="id7A5DAE5F91454A89B9932255DBAC14BD"><enum>(CC)</enum><text>student support services.</text>
</subitem></item><item id="id8e7c9e14ed7c431780e9d4b5978f96ac"><enum>(ee)</enum><text>Net income and other changes in equity.</text>
</item><item id="ide6f34bee9b0f40489a8b3ccc2176f3fa"><enum>(ff)</enum><text>Executive compensation for the 10 highest-paid for-profit institution executives.</text>
</item><item id="id0b161771bff3455b88a953c2cadc7c64"><enum>(gg)</enum><text>The average retention and graduation rates for students pursuing a certificate or a degree at
for-profit institutions.</text>
</item><item commented="no" display-inline="no-display-inline" id="id0159E218FC0C4B5B9828F8905778BC34"><enum>(hh)</enum><text display-inline="yes-display-inline">The average cohort default rate (as defined in section 435(m)).</text>
</item><item commented="no" id="ide5c76bb0a70e484a87104ab4d1356855"><enum>(ii)</enum><text>With respect to all careers requiring the passage of a licensing examination, and disaggregated by
each such career—</text>
<subitem commented="no" id="id61b58f1bfc3e40cbb4623e5ff593cdd9"><enum>(AA)</enum><text>the average passage rate of individuals who attended a for-profit institution taking
such examination to pursue such a career;</text>
</subitem><subitem commented="no" id="idc4409bb1ab6144168dae0097c9a099bc"><enum>(BB)</enum><text>the average passage rate of all individuals taking such exam to pursue such a career; and</text>
</subitem><subitem commented="no" id="idE82F40063FC74DC6BCBCCB17A242D1DE"><enum>(CC)</enum><text>the percentage of all individuals taking such exam who attended a for-profit institution.</text>
</subitem></item><item commented="no" id="id94ee53457a104929863ac0ea88ddd948"><enum>(jj)</enum><text>Information regarding the use of private education loans at for-profit institutions that includes—</text>
<subitem commented="no" id="id2e9c35e2588149f387be97b0a064511e"><enum>(AA)</enum><text>an estimate of the total number of such loans; and</text>
</subitem><subitem commented="no" id="id8364b79880654fa0959003eadef0ea54"><enum>(BB)</enum><text>information on the average debt, default rate, and interest rate of such loans.</text>
</subitem></item></subclause><subclause id="id86fd7afe65134c91a016aff78286ad04"><enum>(II)</enum><text>The financial composite scores, in accordance with section 498, for each for-profit institution,
the name and dollar amount of any letters of credit required under subpart
L of part 668 of title 34, Code of Federal Regulations (or any successor
regulation), and the name of each institution placed under the
heightened
cash monitoring payment method, as established under section 668.162(d) of
title 34, Code of Federal Regulations (or any successor regulation).</text>
</subclause></clause><clause id="id057f7047e31c45bdb7da4efb5bafa403"><enum>(ii)</enum><header>Data on corporations</header>
<subclause id="id5da4c0f1d9aa466c85f57b1c1fda78d0"><enum>(I)</enum><header>In general</header><text>The report shall include data on for-profit institutions that are publicly
traded corporations, consisting of information on—</text>
<item id="id34a9a43176f64ad1ad0dd67db679c5da"><enum>(aa)</enum><text>any pre-tax profit of such for-profit institutions—</text>
<subitem id="idb681df5f57854dda86d4867cec25b51b"><enum>(AA)</enum><text>reported as a total amount and as the average percentage of revenue for all such for-profit
institutions; and</text>
</subitem><subitem id="id1df3c67d71e44ea19dd7b23a97551d9e"><enum>(BB)</enum><text>reported as a total amount and as the average percentage of revenue for each such for-profit
institution;</text>
</subitem></item><item id="id62c287b0572a48eb8630ac84b2ba16d8"><enum>(bb)</enum><text>spending on pre-enrollment recruiting and marketing activities, student instruction, and student
support services, and for each of the 3 categories separately reported—</text>
<subitem id="id3250b923065f4df4834c688a70d4ed25"><enum>(AA)</enum><text>as a total amount and the average percentage of revenue for all such for-profit institutions; and</text>
</subitem><subitem id="id45dbf47a3b6240e39e9f6f4f0174dfc5"><enum>(BB)</enum><text>for each such for-profit institution;</text>
</subitem></item><item id="idc4755b0ef9a14ff7b2c5c6574a0bdd3c"><enum>(cc)</enum><text>total compensation packages of the executive officers of each such for-profit institution;</text>
</item><item id="id5a7f728fad0a41aca8a2c5178c9c787a"><enum>(dd)</enum><text>a list of institutional loan programs offered by each such for-profit institution that includes
information on the default and interest rates of
such programs; and</text>
</item><item id="id7a381e3afbe24baf81eab4cc3437fdc6"><enum>(ee)</enum><text>the data described in subclauses (II) and (III).</text>
</item></subclause><subclause id="id9afcb247385d4ffdab33552695bca09a"><enum>(II)</enum><header>Disaggregated by ownership</header><text>The report shall include data on for-profit institutions that are corporations, disaggregated by
corporate or parent entity, brand
name, and campus, consisting of—</text>
<item id="id7033f13802cc498f97f889c9ba26b889"><enum>(aa)</enum><text>the total cost of attendance for each program at each such for-profit institution;</text>
</item><item id="id36e2a05004fd46c2a7e9f1beca61b185"><enum>(bb)</enum><text>total enrollment, disaggregated by—</text>
<subitem id="id45d467aa56d649fa9f2682b69436b4a5"><enum>(AA)</enum><text>individuals enrolled in programs taken exclusively online;</text>
</subitem><subitem id="idd14c39ce9a174cdcb1cdf4915c1e020f"><enum>(BB)</enum><text>individuals enrolled in programs that are exclusively in person; and</text>
</subitem><subitem id="idc41c4132f93449ab818d56b686941cb9"><enum>(CC)</enum><text>individuals enrolled in programs that are a mix of online and in person;</text>
</subitem></item><item id="id2b84672d35f84651abf6b4bb1c6f26d7"><enum>(cc)</enum><text>the retention and graduation rates for students pursuing a degree at such for-profit institutions,
including the number of students who enroll each
year and withdraw in less than one year;</text>
</item><item id="id533e075cffff4058b3055776737ac719"><enum>(dd)</enum><text>the percentage of students enrolled in such for-profit institutions who
complete a program of such an institution within—</text>
<subitem id="idc3ef80d3b76f4a418d4fc82d8ac0e570"><enum>(AA)</enum><text>the standard period of completion for such program; and</text>
</subitem><subitem id="id36132acf2b5b4c24853805cbae71116f"><enum>(BB)</enum><text>a period that is 150 percent of such standard period of completion;</text>
</subitem></item><item id="id95d7d65c54ec4e728105c5ec6b69f5c7"><enum>(ee)</enum><text>the average cohort default rate, as defined in section 435(m), for such for-profit institutions,
and an annual list of cohort default rates (as so
defined) for all for-profit institutions;</text>
</item><item id="idf46ab2e3820a40048f11e08376ab79a2"><enum>(ff)</enum><text>the median educational debt incurred by students who complete a program at such a for-profit
institution of higher education;</text>
</item><item id="id3db5c332ad73463ebc4c92eafe89afdf"><enum>(gg)</enum><text>the median educational debt incurred by students who start but do not complete a program at such a
for-profit institution of higher education;</text>
</item><item id="id2c473be1b82345788aee5859df5ec005"><enum>(hh)</enum><text>the job placement rate for students who complete a program at such a for-profit institution of
higher education and the type of employment obtained by such students;</text>
</item><item id="id6a7c363c784d407aba46f98fc68a7323"><enum>(ii)</enum><text>for careers requiring the passage of a licensing examination, the rate of individuals who attended
such a for-profit institution and passed such an
examination; and</text>
</item><item id="idb5e36c9248a040c1a72a0327206638c8"><enum>(jj)</enum><text>the number of complaints from students enrolled in such for-profit institutions
that have been submitted to any member entity of the Committee.</text>
</item></subclause><subclause id="id8d13d9b556384df8be8a7e7277c798f8"><enum>(III)</enum><header>Department of Defense and Veterans Affairs assistance</header>
<item id="id1f6b1d6f519a46989cf9dace33b9615c"><enum>(aa)</enum><header>In general</header><text>To the extent practicable, the report shall provide information on the data described in subclause
(II) for individuals who pay for the costs of attending a
for-profit institution of higher education that is a corporation by using
Federal education
assistance
provided under—</text>
<subitem id="id3c12583702d04b4ea0649e16d414306b"><enum>(AA)</enum><text>chapter 33 of title 38, United States Code;</text>
</subitem><subitem id="id3c580bd7a7634f749eaeca53817f7047"><enum>(BB)</enum><text>section 2007 of title 10, United States Code; and</text>
</subitem><subitem id="id29d004e23c5c493ea12ca74bfba25745"><enum>(CC)</enum><text>section 1784a of title 10, United States Code.</text>
</subitem></item><item commented="no" id="ida5a8c52a99c74f8db6777bbffdcd0059"><enum>(bb)</enum><header>Revenue</header><text>The report shall provide information on the revenue of such for-profit institutions
that is derived from the Federal
education assistance described in item (aa).</text>
</item></subclause></clause><clause id="id7305d2d615664aa2af5873572de893bf"><enum>(iii)</enum><header>Comparison data</header><text>The report shall provide information comparing, in the aggregate and disaggregated by State, each
of the data elements described in clause
(ii) for for-profit
institutions that are publicly traded corporations, for-profit
institutions
that are not owned or operated by a publicly traded company, nonprofit
institutions, and public institutions.</text>
</clause><clause id="id51361b015a90475d83eecde0824eb94f"><enum>(iv)</enum><header>Information regarding ownership interests</header><text>The report shall, for each for-profit institution of higher education that is not a publicly traded
corporation, report the name of any individual,
partnership, or corporation that holds an ownership interest of 5 percent
or greater of the for-profit institution of higher education.</text>
</clause></subparagraph><subparagraph id="id240cd00ba806455587bf006ab65b1b0f"><enum>(C)</enum><header>Accounting of any action</header><text>For the purposes of subparagraph (A)(i), the term <term>any action</term> shall include—</text>
<clause id="ida3dad76c522847d6b05622b9f9d4caf0"><enum>(i)</enum><text>a complaint filed by a Federal or State agency in a local, State, Federal, or Tribal court;</text>
</clause><clause id="id06bf8e88568b41fca5fab2a13a7b6f70"><enum>(ii)</enum><text>an administrative proceeding by a Federal or State agency involving noncompliance of any applicable
law or regulation;</text>
</clause><clause id="idf4cacb9d8493429c9bbb35ed1ab10715"><enum>(iii)</enum><text>any other review, audit, or administrative process by any Federal or State agency that results in a
penalty, suspension, or termination from any Federal or State program; or</text>
</clause><clause id="id99F8C00F056544AFB79CAC48A4291679"><enum>(iv)</enum><text>a negative or adverse action taken by an accrediting agency or association recognized by the
Secretary
pursuant to section
496 with respect
to an approved institution or program.</text>
</clause></subparagraph></paragraph></subsection><subsection id="id28f4600164354c08adc9da67bf88ee7f"><enum>(f)</enum><header>For-Profit college warning list for parents and students</header>
<paragraph id="id6f98032c55e14110bf2a316a99dae764"><enum>(1)</enum><header>In general</header><text>Each academic year, the Committee shall publish a list to be known as the <quote>For-Profit College Warning List for Parents and Students</quote> to be comprised of for-profit institutions—</text>
<subparagraph id="id5d54c54acb3d44cd9abadd8137758e2c"><enum>(A)</enum><text>that have engaged in illegal activity during the previous academic year as determined by a Federal
or State court;</text>
</subparagraph><subparagraph id="id80a56bff5c2a44fd9b4ad9fb1fa2e371"><enum>(B)</enum><text>that have entered into a settlement with a Federal or State entity resulting in a
monetary payment;</text>
</subparagraph><subparagraph id="idbbbc422e56374fbaacfd8e724d9aba36"><enum>(C)</enum><text>that have had any higher education program limited, withdrawn, or suspended by an external entity
(such as a Federal or State entity or an accrediting
agency or association recognized by the Secretary pursuant to section
496); and</text>
</subparagraph><subparagraph id="idb85505e94331477a82b0fc4d70a23b87"><enum>(D)</enum><text>for which the Committee has sufficient evidence of widespread or systemic unfair, deceptive,
abusive, unethical, fraudulent, or predatory practices, policies, or
procedures that pose a threat to the academic success, financial security,
or general best interest of students.</text>
</subparagraph></paragraph><paragraph id="id398fbcf335bf49b490dc697704be6d2d"><enum>(2)</enum><header>Determinations</header><text>In making a determination pursuant to paragraph (1)(D), the Committee may consider evidence that
includes the following:</text>
<subparagraph id="id69f821f0668149968df3787abf876694"><enum>(A)</enum><text>Any consumer complaint collected by any member entity of the Committee.</text>
</subparagraph><subparagraph id="id26e7d9d3b89140ed96656aa9b5bbb850"><enum>(B)</enum><text>Any complaint filed by a Federal or State entity in a Federal, State, local, or Tribal court.</text>
</subparagraph><subparagraph id="ide330d41e83a844c38567a924f24b2207"><enum>(C)</enum><text>Any administrative proceeding by a Federal or State entity involving noncompliance of any
applicable law or regulation.</text>
</subparagraph><subparagraph id="id68b9d56941d94999b0c82dd2f51bcbea"><enum>(D)</enum><text>Any other review, audit, or administrative process by any Federal or State entity that results in a
penalty, suspension, or termination from any Federal or State program.</text>
</subparagraph><subparagraph id="idd4f7aa62e72043d5939d528e7c24d1a3"><enum>(E)</enum><text>Data or information submitted by a for-profit institution to any accrediting
agency or association recognized by the Secretary pursuant to
section 496 or the findings or adverse actions of any such accrediting
agency or association.</text>
</subparagraph><subparagraph id="idab9bdc00bc92445697398b5064cfdafe"><enum>(F)</enum><text>Information submitted by a for-profit institution to any member entity of the
Committee.</text>
</subparagraph><subparagraph id="idaa17832afe79454cbf126b9c303ff1d0"><enum>(G)</enum><text>Any other evidence that the Committee determines relevant in making such determination.</text>
</subparagraph></paragraph><paragraph id="id550c5056211b4d73a44e572a926e86e8"><enum>(3)</enum><header>Publication</header><text>Not later than July 1 of each fiscal year, the Committee shall publish the list under paragraph (1)
prominently and in a manner that is easily accessible to parents,
students, and other stakeholders, in accordance with any best practices
developed under subsection (b)(2)(F).</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</section><enum>II</enum><header>Student and borrower protections</header>
<section id="id3a20e6356bfd4921bd3d942ad6e2512a"><enum>201.</enum><header>Gainful employment programs</header>
<subsection id="id16acd205896149a9aca4f8412ddea396"><enum>(a)</enum><header>In general</header><text>Section 102 (20 U.S.C. 1002), as amended by sections 4(b) and 101, is further amended—</text>
<paragraph id="id0bbbcc190d3446338de8c4f3fc8e6f36"><enum>(1)</enum><text>in subsection (b)(1)(A)—</text>
<subparagraph id="idb25805228b1240c2b5e39ef5152edcb1"><enum>(A)</enum><text>by striking clause (ii);</text>
</subparagraph><subparagraph id="id039def21e2924fc8896d20d7f36c0f36"><enum>(B)</enum><text>by striking <quote>(i) provides</quote> and inserting <quote>provides</quote>; and</text>
</subparagraph><subparagraph id="id0bee27cd6ea14e81b03dc71942975b04"><enum>(C)</enum><text>by striking <quote>recognized occupation; or</quote> and inserting <quote>recognized occupation, as described in subsection (e);</quote>;</text>
</subparagraph></paragraph><paragraph id="id96f185348a4447cfaff667e2e2fa0d61"><enum>(2)</enum><text>in subsection (c)(1)(A), by inserting <quote>, as described in subsection (e)</quote> after <quote>recognized occupation</quote>; and</text>
</paragraph><paragraph id="idc5603f73fc6f4f9693bdbebf20de0e17"><enum>(3)</enum><text>by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="id0f664ebfd4334ad08b01e3ab5ca1b16b" style="OLC">
<subsection id="id2ab27633f8ff467b873fc1dc2fe6bbab"><enum>(e)</enum><header>Gainful employment in a recognized occupation</header>
<paragraph id="idcfa6cf6639e547bfa885bed964a27c4f"><enum>(1)</enum><header>Definitions</header><text>In this subsection:</text>
<subparagraph id="idefe5b17e3aae441ebb5cf321c39fc80d"><enum>(A)</enum><header>Debt-to-earnings rates</header><text>The term <term>debt-to-earnings rates</term> means the discretionary income rate and the annual earnings rate, as determined under the gainful
employment rules.</text>
</subparagraph><subparagraph id="idf8727e4f4f5b428ebb89e63a883fe611"><enum>(B)</enum><header>Eligible training program</header><text>The term <term>eligible training program</term> means a program of training that—</text>
<clause id="id0746fcc194a64c548caa9bbc580c6ea6"><enum>(i)</enum><text>in order to qualify for assistance under title IV, is required under subsection (b)(1)(A)(i) or
(c)(1)(A), or section 101(b)(1), to satisfy the gainful employment
requirements of this subsection; and</text>
</clause><clause id="id918ac68b4bf14b8abf229f39c0b216ed"><enum>(ii)</enum><text>is offered by an institution eligible to receive assistance under such title.</text>
</clause></subparagraph><subparagraph id="idf81fc1f9941841e8ab4e3921b0f2bca4"><enum>(C)</enum><header>Gainful employment rules</header><text>The term <term>gainful employment rules</term> means the rules issued under subpart Q of title 34, Code of Federal Regulations, as published on
October 31, 2014, relating to gainful employment in a recognized
occupation.</text>
</subparagraph></paragraph><paragraph id="idd4395479d14c4239be2a1d5471c5a8b6"><enum>(2)</enum><header>In general</header><text>An eligible training program prepares students for gainful employment in a recognized occupation if
the eligible training program complies with all requirements of the
gainful employment rules (including any modifications made by this
subsection), including—</text>
<subparagraph id="id726e8ac118d44ce2b7dccd47859a0e03"><enum>(A)</enum><text>the provisions relating to the calculation of debt-to-earnings rates for the eligible training
program, using actual annual earnings data of students who completed the
eligible training program;</text>
</subparagraph><subparagraph id="id4b58f0bb7cfc426ab6feecfbd0bfe29a"><enum>(B)</enum><text>the provisions relating to the determination of outcomes for an eligible training program based on
the debt-to-earnings rates, including whether an eligible training program
is a <quote>passing</quote>, <quote>failing</quote>, or <quote>zone</quote> program;</text>
</subparagraph><subparagraph id="id2243d70a8ef44ae6be2414d1210ae76a"><enum>(C)</enum><text>the provisions relating to the associated consequences for an eligible training program that is not
passing the debt-to-earnings rates, including a student warning and
ultimate loss of eligibility for assistance under title IV;</text>
</subparagraph><subparagraph id="id477f80b8ef9e4d3f80f6f4168fb84602"><enum>(D)</enum><text>the requirements relating to disclosure, reporting, and certification; and</text>
</subparagraph><subparagraph id="id91e995b69cc54bdd9c8ed9bc38338c60"><enum>(E)</enum><text>the calculation of completion rates, withdrawal rates, repayment rates, program cohort default
rates, and median loan debt for the eligible training program.</text>
</subparagraph></paragraph><paragraph id="idf92cb681f1a64a91ac214d33907f9bc1"><enum>(3)</enum><header>Annual calculations and verifications</header><text>The Secretary shall carry out all of the following:</text>
<subparagraph id="ida16a8ff92aeb4bc68b283b954bfe6626"><enum>(A)</enum><text>On an annual calendar year basis (notwithstanding section 668.403(c)(5) of the gainful employment
rules) and for each eligible training program, calculate for each award
year both of the debt-to-earnings rates for the eligible training program,
issue a notice of determination, and enforce restrictions based on those
determinations. In order to carry out the preceding sentence, the
Secretary shall—</text>
<clause id="id3ba4c6b105b24ba58755424d4930c551"><enum>(i)</enum><text>create a list of students who completed the eligible training program during the cohort period
identified by the Secretary;</text>
</clause><clause id="idf032835aff4e4dbe90f385d16b6febc8"><enum>(ii)</enum><text>provide the list to the institution offering the eligible training program and allow the
institution a 45-day period beginning the day after the date that the
Secretary provides the list to the institution, to submit any corrections
to the list;</text>
</clause><clause id="id368f64b1d94d421fb2651995e9415fee"><enum>(iii)</enum><text>after resolving any corrections, provide the institution with the final list and submit the final
list of students who completed the eligible training program to the Social
Security Administration, the Internal Revenue Service, or any other
Federal agency that administers a database that contains earnings
information
that can be matched to the individuals named in the final list, and
retrieve the mean and median annual earnings
of students on the lists, in aggregate and not in individual form, within
10 business days after submission;</text>
</clause><clause id="idec3e8b43f2af461188628b47e4f76b11"><enum>(iv)</enum><text>calculate and send the debt-to-earnings rates to the institution offering the eligible training
program and allow the institution a 45-day period, beginning after the
date the Secretary notifies an institution of the debt-to-earnings rates,
to challenge the accuracy of information used to calculate the eligible
training program’s median loan debt;</text>
</clause><clause id="id86fff2aacbbb43e3800152a011a2f8d7"><enum>(v)</enum><text>subject to the resolution of any challenge, issue a notice of determination informing the
institution—</text>
<subclause id="id9247d986f3a142d5938cc24837288907"><enum>(I)</enum><text>of the final debt-to-earnings rates of each eligible training program to the institution offering
the program;</text>
</subclause><subclause id="id25f5ffdfc447424daf03a364acf624ea"><enum>(II)</enum><text>of the final determination regarding whether the program is a passing, failing, or zone program, or
is ineligible, and the consequences of that determination;</text>
</subclause><subclause id="id47fc174bc4614bc28459879302e03c92"><enum>(III)</enum><text>whether the program could become ineligible based on its final debt-to-earnings rates for the next
award year;</text>
</subclause><subclause id="id818f9b0c865b44f4bc43e5cb356c7155"><enum>(IV)</enum><text>whether the institution is required to provide warnings to enrolled students and prospective
students; and</text>
</subclause><subclause id="id4df3c71100284da1af97931ef079bcec"><enum>(V)</enum><text>if the program is determined to be a failing or zone program due to the final debt-to-earnings
rates, how the program may make an alternate earnings appeal, in
accordance with paragraph (4);</text>
</subclause></clause><clause id="ide6dbbc39d1c342c080cf7962f4da7647"><enum>(vi)</enum><text>with respect to an institution that receives a notification from the Secretary under clause
(v)(III) and that does not submit an intent to appeal in accordance with
paragraph (4) or for which the appeal is denied, require the institution,
not later than 30 days after receiving the notification of the
determination or denial, to—</text>
<subclause id="idc29a745aa5604e7faa9c2564db40f32b"><enum>(I)</enum><text>issue warnings to enrolled students and prospective students; and</text>
</subclause><subclause id="idf7d0533db85144498a356dbcbe122610"><enum>(II)</enum><text>update the disclosure template, as required by the gainful employment rules, as modified by
paragraph (5); and</text>
</subclause></clause><clause id="id2a2f435df3c545f8a59c62bae536f5a1"><enum>(vii)</enum><text>enforce restrictions whereby—</text>
<subclause id="id210e8744c1d249a4b0edae6b31ebed57"><enum>(I)</enum><text>an institution may not disburse program funds under title IV to students enrolled in an ineligible
program; and</text>
</subclause><subclause id="id431a296dec6147ef82c756ea776d81c1"><enum>(II)</enum><text>an institution may not seek to reestablish the eligibility of a failing or zone program that it
discontinued voluntarily, reestablish the eligibility of a program that is
ineligible under the debt-to-earnings rates, or establish the eligibility
of a program that is substantially similar to the discontinued or
ineligible program, until 3 years following the date specified in the
notice of determination informing the institution of the program’s
ineligibility or the date the institution discontinued the failing or zone
program; and</text>
</subclause></clause></subparagraph><subparagraph id="id4e08e645ca8340219bbfe046b32df2e5"><enum>(B)</enum><text>develop processes to verify, on an annual calendar year basis, that—</text>
<clause id="ide8482f5c1e8449cb9796da4020b03f79"><enum>(i)</enum><text>required warnings under the gainful employment rules are delivered to enrolled students and
prospective students and are published on the eligible training program’s
disclosure template, in accordance with subparagraph (A)(vii); and</text>
</clause><clause id="idea6447fe7da94a09825bcda10d227554"><enum>(ii)</enum><text>each eligible training program is publishing the disclosure template on the website of the eligible
training program, as required by the gainful employment rules, as modified
by paragraph (5).</text>
</clause></subparagraph></paragraph><paragraph id="id0b775d9fbbf0421f8d70506cdf7d03f8"><enum>(4)</enum><header>Alternate earnings appeals process</header><text>The Secretary shall establish and enforce an appeals process for any institution of higher
education that wish to file an alternate earnings appeal for an eligible
training program that is a failing or zone program under the
debt-to-earnings rates. The appeals process shall be carried out in
accordance with the gainful employment rules, except that the appeals
process shall also—</text>
<subparagraph id="idd1665664c5284300a718b4a97599569b"><enum>(A)</enum><text>allow an institution to file an alternate earnings appeal, in accordance with the gainful
employment rules, to request the recalculation of a gainful employment
program’s most recent final debt-to-earnings rates issued by the
Secretary, except that—</text>
<clause id="ide59742b72a794dde9ea1c7e66a4b6990"><enum>(i)</enum><text>any institution that elects to submit alternate earnings from an institutional survey shall, in
addition to the other requirements in the gainful employment rules—</text>
<subclause id="idce147bf0e6e84c0bb7a1ff2390864573"><enum>(I)</enum><text>include a test for non-response bias;</text>
</subclause><subclause id="id0212944716fe420c96c6b4e248082ecd"><enum>(II)</enum><text>allow for an exception to issues of bias due to sample sizes below 10; and</text>
</subclause><subclause id="id02496d6825c34235841ffee67328c746"><enum>(III)</enum><text>subject the institutional survey instrument and survey responses to an audit by the Inspector
General of the Department; and</text>
</subclause></clause><clause id="id5de8d04d68d0464d888ecd80bae9e30d"><enum>(ii)</enum><text>the Inspector General of the Department shall—</text>
<subclause id="id956acbed1ab04944a9671c426fcd4149"><enum>(I)</enum><text>audit the institutional survey instrument, and the survey responses, submitted by an institution
under clause (i); and</text>
</subclause><subclause id="id9177bac053cc4c778608a9f04984241b"><enum>(II)</enum><text>furnish data showing the Inspector General verified the accuracy of student survey responses; and</text>
</subclause></clause></subparagraph><subparagraph id="idcd0d2161742c4d4bbca39af2adf7ce2d"><enum>(B)</enum><text>require the Secretary to accept the alternate earnings estimate from an institutional survey if the
test for non-response bias includes a response rate that guarantees that
the lower bound of the 95 percent confidence interval of the alternate
earnings estimate is at or above the earnings level retrieved from the
Social Security Administration, the Internal Revenue Service, or any other
Federal agency with a database containing individual-level earnings data.</text>
</subparagraph></paragraph><paragraph id="id0dc71488ead84dadb083e60b5d07dd34"><enum>(5)</enum><header>Gainful employment disclosure requirements</header><text>Notwithstanding section 668.412(a) of the gainful employment rules, the Secretary
shall include in the disclosure template all the
information listed in paragraphs (1) through (16) of section 668.412(a)
of the gainful employment rules, unless the Secretary—</text>
<subparagraph id="idC70BBF0E8F6A4D9C998FF32D06D0B92A"><enum>(A)</enum><text>determines that consumer testing supports the noninclusion of the information listed in any such
paragraph; and</text>
</subparagraph><subparagraph id="idBF38681A873E4D248EB2B163EB3726BE"><enum>(B)</enum><text>publishes the Secretary's determination, and the consumer testing supporting the determination, on
the public website of the Department.</text>
</subparagraph></paragraph><paragraph id="id322311d6d70241b2aabc26b1e99609da"><enum>(6)</enum><header>Role of Social Security Administration, the Internal Revenue Service, and other Federal agencies</header><text>The Commissioner of Social Security, the Commissioner of Internal Revenue, and the head of any
other Federal agency
that administers the database of individual-level earnings data shall, in
coordination with the Secretary, timely
provide the Secretary with the earnings information as required in
accordance with paragraph (3)(A)(iii) and the gainful employment rules.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id380bef7c9a0447088aa5d8e68e7d8d92"><enum>(b)</enum><header>Conforming amendment</header><text>Section 101(b)(1) (20 U.S.C. 1001(b)(1)) is amended by inserting <quote>, as described in section 102(e),</quote> after <quote>recognized occupation</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="idDB132F4B0D62474BB5DF6660556BC2C4"><enum>(c)</enum><header>Effective date</header><text>Notwithstanding section 3, this section shall take effect on the date of enactment of this Act.</text>
</subsection></section><section id="idae8f0b95617c4ba19d63488e2f493098"><enum>202.</enum><header>Prohibition on institutions limiting student legal action</header>
<subsection id="idc2478f19ddc9437194e0692353e9d3ac"><enum>(a)</enum><header>Enforcement of arbitration agreements</header>
<paragraph id="id5510d4913d064db1919913cbf8fe0173"><enum>(1)</enum><header>In general</header><text>Chapter 1 of title 9, United States Code, (relating to the enforcement of arbitration
agreements) shall not apply to an enrollment agreement made between a
student and an institution of higher education.</text>
</paragraph><paragraph id="id6fe751d65dd346a48bfabc37cbf590d2"><enum>(2)</enum><header>Definition</header><text>In this section, the term <term>institution of higher education</term> has the meaning given such term in section 102 of the Higher Education Act of 1965 (20 U.S.C.
1002), as amended by section 101 of this Act.</text>
</paragraph></subsection><subsection id="ideaefe0e8c66948fbb427bc0c00a15b92"><enum>(b)</enum><header>Prohibition on limitations on ability of students To pursue claims against certain institutions of
higher education</header><text>Section 487(a) (20 U.S.C. 1094(a)), as amended by section 101, is further amended by adding at the
end the following:</text>
<quoted-block display-inline="no-display-inline" id="id9fa02cfcb19e451c80a5e2d2cfc395fb" style="OLC">
<paragraph commented="no" id="ida43358d0bd984d7ea4d8e880d38dab8c"><enum>(29)</enum><text>The institution will not require any student to agree to, and will not enforce, any limitation or
restriction (including a limitation or restriction on any available choice
of applicable law, a jury trial, or venue) on the ability of a student to
pursue a claim, individually or with others, against an institution in
court.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="id77f30defbff34b2a880fda6ee68329fd"><enum>(c)</enum><header>Effective date</header><text>Notwithstanding section 3, this section shall take effect on the date of enactment of this Act.</text>
</subsection></section><section id="id95d842f7c4ef48739ae7b95b93107488"><enum>203.</enum><header>Enforcement unit established in the Office of Federal Student Aid</header><text display-inline="no-display-inline">Section 141 (20 U.S.C. 1018) is amended—</text>
<paragraph id="idf5a9806098514108965c96db5b57e818"><enum>(1)</enum><text>by redesignating subsections (g) through (i) as subsections (h) through (j), respectively; and</text>
</paragraph><paragraph id="idbfada826720f48938ff79b1949c34a43"><enum>(2)</enum><text>by inserting after subsection (f) the following:</text>
<quoted-block display-inline="no-display-inline" id="id3ffb9e3fcfa34022861a1eccada13fa0" style="OLC">
<subsection id="ide6d2e1fab97647b1a702f1d0f83cc00a"><enum>(g)</enum><header>Enforcement unit</header>
<paragraph id="id4cd0575c975b46db899f44150330b855"><enum>(1)</enum><header>In general</header><text>The Chief Operating Officer, in consultation with the Secretary, shall establish an enforcement
unit within the PBO (referred to in this section as the <quote>enforcement unit</quote>).</text>
</paragraph><paragraph id="id3f32924fe4f74e6c88e2dfc67d54414c"><enum>(2)</enum><header>Appointment</header>
<subparagraph id="id4ae7e7bbcc9f4d86969915a487ce45aa"><enum>(A)</enum><header>Chief enforcement officer</header><text>The Chief Operating Officer, in consultation with the Secretary, shall appoint a Chief Enforcement
Officer as a senior manager, in accordance with subsection (e), to
perform the functions described in this subsection. The Chief
Enforcement Officer shall report solely and directly to the Chief
Operating Officer.</text>
</subparagraph><subparagraph id="id9a6d36f3625544ed84fd6604305050b2"><enum>(B)</enum><header>Bonus</header><text>Notwithstanding subsection (e), the Chief Enforcement Officer may receive a bonus, separately
determined from the methodology which applies to the calculation of
bonuses for other senior managers, based upon the Chief Operating
Officer’s evaluation of the Chief Enforcement Officer’s performance in
relation to the goals set forth in a performance agreement related to the
specific duties of the enforcement unit.</text>
</subparagraph></paragraph><paragraph id="id7b80e1db3d254f08b0199f20f17ac607"><enum>(3)</enum><header>Duties</header><text>The enforcement unit shall—</text>
<subparagraph id="iddcea17e549ad4095ba8e16b712e9fad6"><enum>(A)</enum><text>receive, process, and analyze allegations and complaints regarding the potential violation of
Federal or State law (including civil and criminal law) or other unfair,
deceptive, or abusive acts or practices, by institutions of higher
education, third party servicers that contract with such institutions,
and third party contractors;</text>
</subparagraph><subparagraph id="idb51dfe50452b4733a76ae7709b83613f"><enum>(B)</enum><text>investigate and coordinate investigations of potential or actual misconduct of institutions of
higher
education, third party servicers that contract with such institutions,
and third party contractors; and</text>
</subparagraph><subparagraph id="id27a6f685eb864f6293cb52c2fe9e3206"><enum>(C)</enum><text>enforce compliance with laws governing Federal student financial assistance programs under title
IV, including through the use of an emergency action in accordance to
section 489A, the limitation, suspension, or termination of the
participation of an eligible institution in a
program under title IV, or the imposition of a civil penalty in accordance
with section 489A.</text>
</subparagraph></paragraph><paragraph id="id3e72e2dacc6e430ab22a7a3723e1231e"><enum>(4)</enum><header>Coordination and staffing</header><text>The enforcement unit shall—</text>
<subparagraph id="id262b4c9cf4bf45d28a9ef244e75918a9"><enum>(A)</enum><text>coordinate with relevant Federal and State agencies and oversight bodies, including the For-Profit
Education Oversight Coordination Committee established under section 125;
and</text>
</subparagraph><subparagraph id="idc2b22967897c4706aec1bf892de657ea"><enum>(B)</enum><text>hire staff, (including by appointing not more than 10 individuals in positions of excepted
service, as described in
subsection (h)(3)) with such expertise as is necessary to
conduct investigations, respond to allegations
and complaints, and enforce compliance with laws governing Federal student
financial assistance programs under title IV.</text>
</subparagraph></paragraph><paragraph id="idac0c6dac4cf04909ad61c56e9cc93e54"><enum>(5)</enum><header>Divisions</header>
<subparagraph id="id84554CABAE624304B5C528A57900E69D"><enum>(A)</enum><header>In General</header><text>The enforcement unit shall have separate divisions with the following focus areas:</text>
<clause id="idee8d74d67ed34c2798ed449a66b4b831"><enum>(i)</enum><text>An investigations division to investigate potential or actual misconduct at institutions of higher
education, third party servicers that contract with such institutions,
and third party contractors.</text>
</clause><clause id="id677911a85546485e82fd6414c346a6a4"><enum>(ii)</enum><text>A division focused on evaluating the claims of borrowers who assert a defense to repayment of
Federal student loans, or groups of borrowers who qualify to assert such a
defense to repayment, under section 455(h).</text>
</clause><clause id="id49e257582ece431bb70638a3715436da"><enum>(iii)</enum><text>A division focused on oversight of the Jeanne Clery Disclosure of Campus Security Policy and Campus
Crime Statistics Act, the reporting of crime and fire statistics by
institutions of higher education, and the oversight and enforcement of
section 120 (relating to drug and alcohol abuse prevention).</text>
</clause><clause id="id82d07e7a434e4acd83294159d6afd824"><enum>(iv)</enum><text>A division to administer the Secretary’s authority to fine, limit, suspend, terminate, or take
action against institutions of higher
education, third party servicers that contract with such institutions,
and third party contractors, participating in the Federal student
financial assistance programs under
title IV.</text>
</clause><clause commented="no" id="id1c2565c25cec4e9cb931a2e98a17ca58"><enum>(v)</enum><text>A division that administers a program of compliance monitoring and oversight of institutions of
higher
education, third party servicers that contract with such institutions,
and third party contractors, including systems
and procedures to support the eligibility, certification, and oversight of
program participants, for all institutions of higher education
participating in the Federal student financial assistance programs under
title IV.</text>
</clause><clause id="id747e877166834a3bb144b9fea4233a61"><enum>(vi)</enum><text>Any other division that the Chief Enforcement Officer, in coordination with the Chief Operating
Officer and the Secretary, determines is necessary.</text>
</clause></subparagraph><subparagraph id="id5A1D2C56092B48DBA8125B73FA387256"><enum>(B)</enum><header>Reporting</header><text>The staff of each division described in subparagraph (A) shall report to the Chief
Enforcement Officer.</text>
</subparagraph></paragraph><paragraph id="idd2e60bcdf3db4601ab8b5e86cf351a58"><enum>(6)</enum><header>Actions recommended</header><text>The Chief Enforcement Officer may recommend, as appropriate to the particular circumstance, that
the Chief Operating Officer—</text>
<subparagraph id="iddf63499550db4b9ab79268992f926d7d"><enum>(A)</enum><text>terminate, suspend, or limit an institution of higher education, a
third party servicer that contracts with such institution, or a third
party contractor, from
participation in one or more programs under
title IV
(in accordance with section 489A), or
provisionally certify such participation (in accordance to section
498(h));</text>
</subparagraph><subparagraph id="id67eb35602f774fcb9aa202a6b0e7d6cc"><enum>(B)</enum><text>impose a civil penalty in accordance with section 489A;</text>
</subparagraph><subparagraph id="iddb8f343bf416401f9d1840d3d8bf0a49"><enum>(C)</enum><text>make a recommendation to the Secretary about whether to approve or deny the claims of borrowers,
including groups of borrowers, who assert a defense to repayment in
accordance with section 455(h); or</text>
</subparagraph><subparagraph id="id41A1D10D6632488A9F3F966C21E4DA93"><enum>(D)</enum><text>carry out any other enforcement activity applicable to the Department under section 489A.</text>
</subparagraph></paragraph><paragraph id="id187195d27f584b428eedbd836e05f250"><enum>(7)</enum><header>Definitions</header><text>In this subsection—</text>
<subparagraph id="id7dee9950958846ac8a00365868432090"><enum>(A)</enum><text>the term <term>institution of higher education</term> has the meaning given that term in section 102; and</text>
</subparagraph><subparagraph id="id43e49787c39a4e259c568b8612e1db06"><enum>(B)</enum><text>the term <term>third party servicer</term> has the meaning given that term in section 481(c).</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="id144096da00ec4bc0a6b4b0a167952040"><enum>204.</enum><header>Establishment and maintenance of complaint resolution and tracking system</header><text display-inline="no-display-inline">Title I (20 U.S.C. 1001 et seq.) is amended by adding at the end the following new part:</text>
<quoted-block display-inline="no-display-inline" id="id92fe1b06c38c4322aa6ace568118f2fb" style="OLC">
<part id="id492066093e9e437286d40af8b7d3c7b4"><enum>F</enum><header>Complaint tracking system</header>
<section id="id000b4b62911646778fea2441b922a5d3"><enum>161.</enum><header>Complaint tracking system</header>
<subsection id="id2cc5ef9d6e4f4d04a75f344df07e7ac3"><enum>(a)</enum><header>In General</header>
<paragraph id="id13f0cae7cdc444429f04495d376df890"><enum>(1)</enum><header>In general</header><text>The Secretary shall maintain 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 and reports (including
evidence, as available) of suspicious activity (such as unfair, deceptive,
or abusive acts or practices) regarding—</text>
<subparagraph id="id8997c770794c40f6a05d75828a358d1b"><enum>(A)</enum><text>Federal student financial aid and the servicing of postsecondary education loans by loan servicers;</text>
</subparagraph><subparagraph id="id4d9543dac06a4dc183e9eab5ae8de283"><enum>(B)</enum><text>educational practices and services of institutions of higher education; and</text>
</subparagraph><subparagraph id="id594b9336b3b94bc49c0917c3dab8d077"><enum>(C)</enum><text>the recruiting and marketing practices of institutions of higher education.</text>
</subparagraph></paragraph><paragraph id="idc5e3df5b11404074a9195409c3bf8dee"><enum>(2)</enum><header>Definitions</header><text>In this section—</text>
<subparagraph id="id93029c5a297a406d986f579480a8b0d0"><enum>(A)</enum><text>the term <term>institution of higher education</term> has the meaning given that term in section 102; and</text>
</subparagraph><subparagraph id="idb051f87273654ccbae93b4e407984d39"><enum>(B)</enum><text>the term <term>recruiting and marketing activities</term> means activities described in section 126(d)(2) (as added by section 301 of the <short-title>Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act
of 2019</short-title>).</text>
</subparagraph></paragraph></subsection><subsection id="idcaabb7fed08c4ceb97a9efc00a2c840e"><enum>(b)</enum><header>Complaints</header><text>Complaints and reports of suspicious activity submitted to the tracking system by students,
borrowers of student loans, staff, or the general public—</text>
<paragraph id="id13212b45393743c9b7323ccd7c16aee2"><enum>(1)</enum><text>may remain anonymous, if the complainant so chooses; and</text>
</paragraph><paragraph id="idc5d465676fbe4ee6b7758b6259fcb39a"><enum>(2)</enum><text>may describe problems that are systematic in nature and not associated with a particular student.</text>
</paragraph></subsection><subsection id="idcfc4e3a8d4ba4fec908b7cc5f493514f"><enum>(c)</enum><header>Establishment of complaint tracking office</header><text>The Secretary shall establish within the Department an office whose functions shall include
establishing and administering the complaint tracking system, and
widely disseminating information about the complaint tracking system,
established under this subsection. The Secretary shall—</text>
<paragraph id="id16b6c8e3fad843a785ad694af01a4ea9"><enum>(1)</enum><text>to the extent necessary, combine and consolidate the other offices and functions of the Department
to ensure that the office established under this subsection is the single
point of contact for students and borrowers with complaints or reports of
suspicious activity regarding Federal student financial aid, student loan
servicers, educational practices and services of institutions of higher
education, and recruiting and marketing activities of institutions of
higher education; and</text>
</paragraph><paragraph id="idf16b0ae34e704c85b7c1e2b6ebd4ed3d"><enum>(2)</enum><text>to the extent practicable, ensure that the office established under this subsection will work with
the Student Loan Ombudsman appointed in accordance with section 141(f) and
the Student Loan Ombudsman of the Bureau of Consumer Financial Protection
to
assist borrowers of Federal student loans that submit complaints or
reports of suspicious activity to the complaint tracking system.</text>
</paragraph></subsection><subsection id="idbe99eeec20ba42baabace4a2c3cbdd75"><enum>(d)</enum><header>Handling of complaints</header>
<paragraph id="id0de04076c96c41bcb57c759228bad4c4"><enum>(1)</enum><header>Timely response to complaints</header><text>The Secretary shall establish, in consultation with the heads of appropriate agencies (including
the Director of the Bureau of Consumer Financial Protection), reasonable
procedures to provide a response to complainants not more than 90 days
after receiving a complaint in the complaint tracking system, in writing
where
appropriate. Each response shall include a description of—</text>
<subparagraph id="ide51b60b6aee341168ec5423f43977295"><enum>(A)</enum><text>the steps that have been taken by the Secretary in response to the complaint or report of
suspicious activity;</text>
</subparagraph><subparagraph id="id760ded1c65b441f6a5140dca29f81887"><enum>(B)</enum><text>any responses received by the Secretary from the institution of higher education or from a
servicer; and</text>
</subparagraph><subparagraph id="id73b2b7282a8b4c78adf5f068a128c7e0"><enum>(C)</enum><text>any additional actions that the Secretary has taken, or plans to take, in response to the complaint
or report of suspicious activity.</text>
</subparagraph></paragraph><paragraph id="idd05e949c568a454587ddb6b45d947c12"><enum>(2)</enum><header>Timely response to secretary by institution of higher education or loan servicer</header><text>If the Secretary determines that it is necessary, the Secretary shall notify an institution of
higher education or loan servicer that is the subject of a complaint or
report
of
suspicious activity through the complaint tracking system under this
subsection regarding the complaint or report and directly address and
resolve the complaint or report in the system. Not later than 60 days
after receiving such notice, such institution or loan servicer shall
provide a
response to
the Secretary concerning the complaint or report, including—</text>
<subparagraph id="idb909793335984aa0bab5acdca8b862f6"><enum>(A)</enum><text>the steps that have been taken by the institution or loan servicer to respond to the complaint or
report;</text>
</subparagraph><subparagraph id="idd440703e4595466582eee15b5f60c0e4"><enum>(B)</enum><text>all responses received by the institution or loan servicer from the complainant; and</text>
</subparagraph><subparagraph id="ideb4647d46a2644c0b2cbaf95e754fe0d"><enum>(C)</enum><text>any additional actions that the institution or loan servicer has taken, or plans to take, in
response to
the
complaint or report.</text>
</subparagraph></paragraph><paragraph id="id8749921b3935490b8bed580bd1b50b8d"><enum>(3)</enum><header>Further investigation</header><text>The Secretary may, in the event that the complaint is not adequately resolved or addressed by the
responses of the institution of higher education or loan servicer under
paragraph (2),
ask additional questions of such institution or loan servicer or seek
additional
information from or action by the institution or loan servicer.</text>
</paragraph><paragraph id="id076df6cc3f9042fa8d8c79d4957a3db2"><enum>(4)</enum><header>Provision of information</header>
<subparagraph id="id6efcca475b5f4353b773bad45fff7163"><enum>(A)</enum><header>In general</header><text>An institution of higher education or loan servicer shall, in a timely manner, comply with a
request by
the
Secretary for information in the control or possession of such institution
or loan servicer
concerning a complaint or report of suspicious activity received by the
Secretary under this subsection, including supporting written
documentation, subject to subparagraph (B).</text>
</subparagraph><subparagraph id="id757a1dcda456469f8670d0c0477c441f"><enum>(B)</enum><header>Exceptions</header><text>An institution of higher education or loan servicer shall not be required to make available under
this
subsection—</text>
<clause id="id5c02dbea716a426085dc1b2e566e790b"><enum>(i)</enum><text>any nonpublic or confidential information, including any confidential commercial information;</text>
</clause><clause id="id5dac678b182d463e82dee20e36fd83d2"><enum>(ii)</enum><text>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</text>
</clause><clause id="idd9717eca45024cf08c9321be76fd2f42"><enum>(iii)</enum><text>any information required to be kept confidential by any other provision of law.</text>
</clause></subparagraph></paragraph><paragraph id="id3054d5f970934da4bb9cd800f8f01846"><enum>(5)</enum><header>Compliance</header><text>An institution of higher education or loan servicer shall comply with the requirements to provide
responses and
information, in accordance with this subsection, as a condition of
receiving funds under title IV or as a condition of the contract with the
Department, as applicable.</text>
</paragraph></subsection><subsection id="id35c9e4e3a88449fba9826834a29c7f73"><enum>(e)</enum><header>Transparency</header>
<paragraph id="ide143364db5d84d75ac1e196489122b44"><enum>(1)</enum><header>Collecting and sharing information with Federal, State, and nationally recognized accrediting
agencies</header><text>In accordance with section 444 of the General Education Provisions Act (20 U.S.C. 1232g) (commonly
referred to as the <quote>Family Educational Rights and Privacy Act of 1974</quote>) and other laws, the Secretary shall coordinate with the heads of relevant Federal or State
agencies or entities, and nationally recognized accrediting agencies or
associations recognized by the Secretary pursuant to section
496 to—</text>
<subparagraph id="id9d9fdcd51ec94794b7ad02a2c10cf7b2"><enum>(A)</enum><text>collect any complaints and reports of suspicious activity described in subsection (a)(1) from such
agencies, entities, or associations; and</text>
</subparagraph><subparagraph id="idb70d80d6e7fc4e11a0102885710c6eb3"><enum>(B)</enum><text>route complaints and reports received by the complaint tracking system under this section and
complaints and reports collected in accordance with subparagraph (A) to
the
Department, the Department of Justice, the Department of Defense, the
Department of Veterans Affairs, the Federal Trade Commission Consumer
Sentinel Network, the Bureau of Consumer Financial Protection, any
equivalent State agency, or the relevant nationally recognized accrediting
agency or association.</text>
</subparagraph></paragraph><paragraph id="idcc96c8c7a3e04510b32ddaf5a9b9ee3c"><enum>(2)</enum><header>Interaction with existing complaint systems</header><text>To the extent practicable, all procedures established under this section, and all coordination
carried out under paragraph (1), shall be established and carried out
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).</text>
</paragraph><paragraph id="id4427309e95e946fc9def9aecb68e385c"><enum>(3)</enum><header>Public information</header>
<subparagraph id="id7f8e061093ba476b87a93fa5796b74fb"><enum>(A)</enum><header>In general</header><text>The Secretary shall, on an annual basis, publish on the website of the Department information on
the complaints and reports of suspicious activity received for each
institution of higher education or loan servicer under this subsection,
including—</text>
<clause id="iddd85b465a8fa44e1a9d44574117eb4fa"><enum>(i)</enum><text>the number of complaints and reports received;</text>
</clause><clause id="id684c76efcd5143869324e59b91913f3e"><enum>(ii)</enum><text>the types of complaints and reports received; and</text>
</clause><clause id="idcd3d5db2844a4551acd7cc98552825ca"><enum>(iii)</enum><text>where applicable, information about the resolution of the complaints and reports.</text>
</clause></subparagraph><subparagraph id="idcc3bc1b7d0aa4ed38ec4796bd54a43c9"><enum>(B)</enum><header>Data privacy</header><text>In carrying out subparagraph (A), the Secretary shall—</text>
<clause id="id40d0a517930f4a899c903de91c64f38b"><enum>(i)</enum><text>comply with applicable data privacy laws and regulations; and</text>
</clause><clause id="idf4929d17563c4ea9b2d41d1531016ab4"><enum>(ii)</enum><text>ensure that personally identifiable information is not shared.</text>
</clause></subparagraph></paragraph><paragraph id="id275f3463bda5480cb381be6097d0df4a"><enum>(4)</enum><header>Reports</header><text>Each year, the Secretary shall prepare and submit to Congress a report describing—</text>
<subparagraph id="idb20ee17a577a463c942e12e5f9b61d63"><enum>(A)</enum><text>the types and nature of complaints or reports the Secretary has received under this section;</text>
</subparagraph><subparagraph id="ide31eab3de0dc45a3b60d752344d7f187"><enum>(B)</enum><text>the extent to which complainants are receiving adequate resolution pursuant to this section;</text>
</subparagraph><subparagraph id="id28141326973441f895e72d60d31a9f17"><enum>(C)</enum><text>whether particular types of complaints or reports are more common in a given sector of institutions
of higher education or with particular loan servicers;</text>
</subparagraph><subparagraph id="id0253b3896639489b9ed2e27647548c37"><enum>(D)</enum><text>any legislative recommendations that the Secretary determines are necessary to better assist
students and families regarding the activities described in subsection
(a)(1); and</text>
</subparagraph><subparagraph id="id8d77040ac0c74166b435d1a3f7a9d052"><enum>(E)</enum><text>the institutions of higher education and loan servicers with the highest volume of complaints and
reports, as
determined by the Secretary.</text></subparagraph></paragraph></subsection></section></part><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="ide1da53838d6a41f39460b8d628ecfb90"><enum>205.</enum><header>Borrower defense to repayment</header><text display-inline="no-display-inline">Section 455(h) (20 U.S.C. 1087e) is amended to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="idD4B04E058468472FAAA12ECE227113B4" style="OLC">
<subsection id="id2a64a0d97e4a4347bc6bec4444011d1c"><enum>(h)</enum><header>Borrower defenses</header>
<paragraph id="id9d001458bd954f1a933aa818b3208925"><enum>(1)</enum><header>Application</header>
<subparagraph id="id0ad93ddfebc04aae89def8d0cafd11c0"><enum>(A)</enum><header>In General</header><text>A borrower of a loan under this part or part B may submit an application to the Secretary claiming
a defense to
repayment of the loan (as described in paragraph (7)) (referred to in this
subsection as a <quote>borrower defense</quote>), at any
time and regardless of the current payment status of the loan. The
application shall—</text>
<clause id="id3f2ca66accc84fd99f86412cca48d17d"><enum>(i)</enum><text>certify that the borrower received the proceeds of a loan or loans issued under this part or part B
to attend an eligible institution of higher education;</text>
</clause><clause id="id812a0c1b01e8469fba88c1e74dd68f63"><enum>(ii)</enum><text>provide evidence that supports the borrower defense;</text>
</clause><clause id="id48ef8a55989449e38599928033c51e0d"><enum>(iii)</enum><text>indicate whether the borrower has made a claim with respect to the information underlying the
borrower defense with any third party, such as the holder of a performance
bond or a tuition recovery program, and, if so, the amount of any payment
received by the borrower or credited to the borrower’s loan obligation;
and</text>
</clause><clause id="idb62dc8f245d84babb5d07c13aaba24ad"><enum>(iv)</enum><text>provide any other information or supporting documentation reasonably requested by the Secretary.</text>
</clause></subparagraph><subparagraph id="id6048f48312e84f69aa8e2a1fe60fa5e6"><enum>(B)</enum><header>Borrower defense for a group</header>
<clause id="ideffd1b0caf7047a987bcbcb38a76d9cb"><enum>(i)</enum><header>In general</header>
<subclause id="id531AEAF9FA4748D29C46195D8376ADFE"><enum>(I)</enum><header>Group defense</header><text>The Secretary may initiate and carry out a process to determine whether a group of borrowers,
identified by the
Secretary, has a borrower defense.</text>
</subclause><subclause id="idF086BED71F174663B77FB297D01C229D"><enum>(II)</enum><header>Identification of group</header><text>The Secretary may—</text>
<item id="idCC78EF2E9C4442D08B12A0F5C3E4B028"><enum>(aa)</enum><text>identify members of such a group from individually filed applications
submitted under subparagraph (A); or</text>
</item><item id="id94259819E236413DB0DF776FF49152B5"><enum>(bb)</enum><text>if the Secretary determines that there are common facts and claims that apply to borrowers who have
not filed an application under subparagraph (A), identify such
members based on
information in the possession of the Secretary.</text>
</item></subclause><subclause id="id22F1C9E33E9A4FFCA1B1B4593938DA3A"><enum>(III)</enum><header>Representative</header><text>In the case of a group identified by the Secretary under this clause, the Secretary shall designate
a Department official to
present the group’s claim in the process described under paragraph (2).</text>
</subclause></clause><clause id="idee86f0ff34bd4a72ab507d40c77c33c5"><enum>(ii)</enum><header>Application for a group</header><text>A State attorney general or nonprofit legal assistance organization that represents borrowers may
submit an application described in subparagraph (A) on behalf of a group
of borrowers whose claims are similar or identical, without
requiring an application from each individual borrower in that group or
class.</text>
</clause><clause id="idf33287cf9d3948aea4e5064d4a974cbe"><enum>(iii)</enum><header>Notification</header>
<subclause id="iddc84dbecd7fe43908904a6807000aa44"><enum>(I)</enum><text>Upon initiation of the process under clause (i) or receipt of an application under clause (ii),
the Secretary shall provide the borrowers who may be members of a group
borrower defense claim with a written notice of such initiation or
receipt, as the case may be, and an option to opt out of the
proceeding under this subsection for that group.</text>
</subclause><subclause id="id62661bf93f9f4e7cb544611466e117e5"><enum>(II)</enum><text>Upon receipt of an application on behalf of a group of borrowers under clause (ii),
the Secretary shall provide the entity submitting that application with a
written determination,
not later than 120 days after receipt of the application, stating—</text>
<item id="id4f46289c2c50488d9a8d7c29b9874fb7"><enum>(aa)</enum><text>whether the Secretary will forgo the review of claims for individual borrowers and instead will
review the claims for the group described in that application (or for a
subset of borrowers in that group, if applicable);</text>
</item><item commented="no" id="id3ee2ad786e9140eba29da18cd57f0c80"><enum>(bb)</enum><text>if the Secretary determines not to evaluate the application for that group (or not to evaluate the
application for all the requested members of that group), the reasons
for the determination; and</text>
</item><item commented="no" id="id1da4d5b3a4ff40e9ac35d99278426621"><enum>(cc)</enum><text>that the Secretary may reconsider the determination in item (bb) if presented with new evidence
that would
allow for the consideration of claims for the group described in
the application.</text>
</item></subclause></clause><clause commented="no" id="id753D07C604734B7BAB4EE8C4592F2BE2"><enum>(iv)</enum><header>Relief</header><text>If the Secretary approves a group application for relief under this subsection, all borrowers in
the group who have not affirmatively opted out are entitled to relief,
regardless of whether an individual borrower filed an application.</text>
</clause></subparagraph></paragraph><paragraph id="idce1454518e6846d5bd91f49e6af45dc6"><enum>(2)</enum><header>Process</header>
<subparagraph id="id5F3A42E200E34F8AB32361AF2ACE4B8B"><enum>(A)</enum><header>In General</header><text>Upon receipt of an application from an individual borrower or upon receipt of an application from a
group of
borrowers or initiation of a claim on behalf of a group of borrowers, as
described in paragraph (1)(B), the Secretary shall
carry out the following activities:</text>
<clause id="idecfd789ab45444339b5592511381072d"><enum>(i)</enum><text>With regard to the borrower's payment status (including each borrower in such group who does not
opt out under paragraph (1)(B)(iii)(I)), the Secretary shall—</text>
<subclause id="id82306c51b0bf4bb48694b3202f2b03ff"><enum>(I)</enum><text>grant an administrative forbearance without requiring documentation from the borrower, including a
forbearance for any period necessary for the Secretary to determine the
borrower's eligibility for discharge;</text>
</subclause><subclause id="id7072DC706A1A4BED851BFEFC80CB5779"><enum>(II)</enum><text>notify the borrower of the option to decline that forbearance and continue making payments on the
loan;</text>
</subclause><subclause id="id1cd1ba57a7b04d2ba41570dbf5191056"><enum>(III)</enum><text>provide the borrower with information about the availability of an income-based repayment plan; and</text>
</subclause><subclause id="id6e092da30800423ebbf4c33686cd2226"><enum>(IV)</enum><text>if the borrower’s loan is in default—</text>
<item id="id80911C8FB80D4CD7855F424F21E5BF6D"><enum>(aa)</enum><text>suspend collection activity on the loan, including any garnishments or offsets, until a decision
on
the borrower’s claim is issued;</text>
</item><item id="idC2722838546E406BA18B61EF2C55F5B4"><enum>(bb)</enum><text>notify the borrower of the suspension of collection activity;</text>
</item><item commented="no" id="idE4D25B95FEAA492F8548B285C135E1B6"><enum>(cc)</enum><text>notify the borrower that if the Secretary determines the borrower does not qualify for a discharge
of the loan, collection activity will resume unless the borrower chooses
to make payments under any repayment plan, including income-based
repayment described under section
493C; and</text>
</item><item commented="no" id="idD56EBF01A54C4C729CE7C1FA96C04856"><enum>(dd)</enum><text>notify the borrower that if the Secretary determines the borrower does not qualify for a discharge
of the loan, and if the borrower makes payments under any repayment plan,
including an
income-based repayment, as described
in item (cc), the Secretary shall submit a report to the consumer
reporting agencies to which the Secretary previously made adverse credit
reports with regard to the borrower’s loan under this part or part B to
remove the borrower's record of default and the Secretary shall refund any
collection
costs paid by the borrower subsequent to the borrower submitting an
application
under paragraph (1), but prior to the suspension of the collection
activity, as described in item (aa).</text>
</item></subclause></clause><clause commented="no" id="iddddd0bc5652944a3bfcfe2069ec74512"><enum>(ii)</enum><text>With regard to the fact-finding process, the Secretary shall designate a Department official (which
shall not be an
official designated under paragraph (1)(B)(i)(III) and
shall be a staff member in the enforcement unit, in accordance with
section
141(g)) to—</text>
<subclause commented="no" id="id2dd4179fb8d94b9e84c607f94432f405"><enum>(I)</enum><text>notify the institution of higher education of the borrower defense application or the initiation of
the borrower defense claim;</text>
</subclause><subclause commented="no" id="ide5c2c47c139c4f12a07939e1811f2e5e"><enum>(II)</enum><text>determine whether the borrower has established a borrower
defense, which shall include—</text>
<item commented="no" id="id5f5738c046664e7187bb5817722c392d"><enum>(aa)</enum><text>consideration of evidence or argument presented by the borrower; and</text>
</item><item commented="no" id="id3fab028f332f4280a57509218d0996f5"><enum>(bb)</enum><text>consideration of additional information, including—</text>
<subitem commented="no" id="id20a19e7ef56d4fb6bae7c180176dc7f1"><enum>(AA)</enum><text>Department records;</text>
</subitem><subitem commented="no" id="id51bb95eff58b4f57a6cb61eae896114c"><enum>(BB)</enum><text>any response or submission from the institution; and</text>
</subitem><subitem commented="no" id="id6aca047468f14b909ed71825cff7b89f"><enum>(CC)</enum><text>any additional information; and</text>
</subitem></item></subclause><subclause commented="no" id="id5993fef2e46b4deb859608d31d28c5f2"><enum>(III)</enum><text>upon the borrower’s reasonable request, identify and provide to the borrower any records the
Secretary is considering as part of the borrower’s claim.</text>
</subclause></clause><clause commented="no" id="idB05FF1423BF8436A9AD333D27952CEC8"><enum>(iii)</enum><text>Not later than 18 months after the date of receipt of an application under paragraph (1)(A) or
(1)(B)(ii), or the initiation of a claim under paragraph (1)(B)(i), as
the case may be, the Secretary shall determine if a borrower or group of
borrowers has a successful borrower defense claim. If the Secretary fails
to issue a determination by the date that is 18 months after the date of
receipt of such application or initiation, the loan underlying the
borrower defense claim shall be automatically discharged.</text>
</clause></subparagraph><subparagraph commented="no" id="id7174e7af837747d0be112cced1a732c8"><enum>(B)</enum><header>Institution's response</header><text>An institution shall provide information to the Secretary, not later than 30 days after the date of
a request by the
Secretary, and as directed by
the Secretary, regarding any response or submission that is requested from
the Secretary relating to a borrower defense claim.</text>
</subparagraph></paragraph><paragraph id="idc2c5938ec1094b759a09947796a2e5af"><enum>(3)</enum><header>Standard of evidence</header><text>A borrower defense claim shall be approved under this subsection, if the Secretary finds that a
preponderance of the evidence shows that the borrower has established a
borrower
defense that meets the requirements of this subsection.</text>
</paragraph><paragraph id="id87D53AD574314EFBBA3AFA49DA2C8674"><enum>(4)</enum><header>Successful borrower defense claim</header>
<subparagraph id="id4F5AEFCB4CDF4741B6417AD47DDC6FF2"><enum>(A)</enum><header>Borrower relief</header>
<text>If a borrower is determined to have a borrower defense in accordance with this subsection, the
Secretary shall—</text>
<clause id="idd3ff537de95c469eac8dbae70f65d1d7"><enum>(i)</enum><text>discharge the borrower of the borrower’s obligation to repay the loan
(including associated interest, costs, and fees that the borrower would
otherwise be
obligated to pay) in regards to which there is a borrower defense;</text>
</clause><clause id="id52B9DA66481743C484246B8CC0B388A7"><enum>(ii)</enum><text>notify the borrower of the discharge described in clause (i) and the other information described in
subparagraph (C);</text>
</clause><clause id="idE31316EEBECB4743A44220F189387DDD"><enum>(iii)</enum><text>retroactively waive any interest that accrued after the borrower submitted an application under
this subsection;</text>
</clause><clause id="id6218e0437778497f8e3f8663670b20bd"><enum>(iv)</enum><text>provide the borrower such further relief as the Secretary determines is appropriate under the
circumstances, which shall include—</text>
<subclause id="id871a773b91b74014a6beaf9beec8146e"><enum>(I)</enum><text>reimbursing the borrower for amounts paid toward the loan voluntarily or through enforced
collection; and</text>
</subclause><subclause id="id0fcb7953a16b437fb9fe2374fc24ad58"><enum>(II)</enum><text>determining that the borrower is not in default on the loan and is eligible to receive assistance
under title IV; and</text>
</subclause></clause><clause id="id2d68b439289a4c70acd0f7a87967a2b5"><enum>(v)</enum><text>not later than 30 days after the date of such determination, submit new reports to consumer
reporting agencies to which the Secretary previously made adverse
credit
reports with regard to the borrower’s loan under this part or part B.</text>
</clause></subparagraph><subparagraph id="idC137003D2F89492BA995D60A424EEB82"><enum>(B)</enum><header>Amount of loan discharge</header>
<clause id="id0A7D396314CD48F7A0854EA2006C6893"><enum>(i)</enum><header>In General</header><text>There shall be a presumption that on the finding of a successful borrower defense claim, the full
amount of the borrower's loan shall be discharged as described in
subparagraph (A). If the Secretary determines that discharge of the full
amount of the loan is not appropriate in a particular case, the Secretary
shall provide the borrower with—</text>
<subclause id="id91ED24453DE14F2B99038BCBE2300807"><enum>(I)</enum><text>a written explanation as to why partial relief is appropriate; and</text>
</subclause><subclause id="id995D4DFAC4974050ACF7818D4ACB1889"><enum>(II)</enum><text>if the borrower defense is a defense based on State law and described in paragraph (7)(B)(i) or is
a defense described in paragraph (7)(B)(ii) or (7)(B)(iii), include an
assurance that
the amount of relief is not less than the amount of relief that would be
afforded under State law.</text>
</subclause></clause><clause id="idB89071C2A70442339F7D8AC63BC6FBA5"><enum>(ii)</enum><header>Substantial misrepresentation</header><text>Notwithstanding clause (i), in the case of a determination that a borrower defense based on
paragraph (7)(B)(iv) has been established, the full amount of the
borrower's loan shall be discharged.</text>
</clause><clause id="idd60c1659cd434ba7a0a861af01a67c1c"><enum>(iii)</enum><header>Limitation</header>
<text>The total amount of relief granted with respect to a borrower defense regarding a loan under this
part or part B shall not exceed the amount
of
the loan under this part or part B, as the case may be, and any associated
interest, costs, and fees. Such amount will be reduced
by the
amount of any refund, reimbursement, indemnification, restitution,
compensatory damages, settlement, debt forgiveness, discharge,
cancellation, compromise, or any other financial benefit received by, or
on behalf of, the borrower that was related to the borrower defense
and that reduced the borrower’s debt for the loan under this part or part
B.</text>
</clause><clause commented="no" id="idD1A68231B24248AC9B1267DF601CCE00"><enum>(iv)</enum><header>Relief for a non-Federal loan or out-of-pocket expenses</header><text>Any relief provided to a borrower, such as relief for an education loan that is not a Federal loan
or refunds from a State tuition recovery fund for out-of-pocket expenses,
shall not decrease the amount of relief that the borrower shall be
entitled to for a loan under this part or part B based on a borrower
defense.</text>
</clause><clause commented="no" id="id4443511f54a346478f15c95d05f969b2"><enum>(v)</enum><header>Minimum amount of relief</header><text>A borrower that has a borrower defense based on State law and described in paragraph (7)(B)(i) or a
defense described in paragraph (7)(B)(ii) or (7)(B)(iii) shall not receive
an amount of
relief that is less than the relief the borrower would receive under the
applicable State law.</text>
</clause></subparagraph><subparagraph id="ida520f3afcebc48d9b6b44707e9f4a042"><enum>(C)</enum><header>Notification</header><text>If a borrower defense is successful the Secretary shall
notify the borrower (or the entity that submitted the application, in the
case of an application
described in paragraph (1)(B)(ii))
in writing—</text>
<clause commented="no" id="idfe4a219f840f41a0b55986f4e3923586"><enum>(i)</enum><text>of the reasons for the approval and the evidence that was relied upon;</text>
</clause><clause commented="no" id="idebdd441a17a6486480b2632be8afc20e"><enum>(ii)</enum><text>that the borrower is relieved of the obligation to repay the loan (or a portion of the loan, as
described in subparagraph (B)) and
associated costs and fees that the borrower would otherwise be obligated
to pay;</text>
</clause><clause commented="no" id="idDC1EDD59A0B54580B80642578D8D81AC"><enum>(iii)</enum><text>in the event the Secretary does not grant a discharge of the full amount of the loan, an
explanation of the reason why partial relief is granted, and (if
applicable) an assurance described in subparagraph (B)(i)(II);</text>
</clause><clause commented="no" id="id5cd1b42cfd81421f9f76d319e284f854"><enum>(iv)</enum><text>that the borrower will be reimbursed for some or all of the amounts paid toward the loan
voluntarily or
through enforced collection, if applicable;</text>
</clause><clause commented="no" id="ide90fe7223608443a9ccf0240d34eb0ae"><enum>(v)</enum><text>of the amount of any portion of the loan that is due and payable to the Secretary;</text>
</clause><clause commented="no" id="id7ccaa7b5578b4655bc6a46f73dff9165"><enum>(vi)</enum><text>that if any balance remains on the loan, the loan will return to the status prior to the
borrower's submission of the application, except that in the case of a
loan that was in default prior to such application, the borrower shall
first be removed from default status and given the opportunity to enter
repayment, including income-based repayment described under section 493C,
before the loan will
be
sent to collections;</text>
</clause><clause commented="no" id="idB0A7E7F39CDD4552AA253092F767F01B"><enum>(vii)</enum><text>that if the borrower chooses to make payments, including payments under income-based repayment as
described in clause
(vi), the Secretary shall—</text>
<subclause commented="no" id="idBB33EECA2685469B906944CF49514233"><enum>(I)</enum><text>submit a report to the consumer reporting
agencies to which the Secretary previously made adverse credit reports
with regard to the borrower’s loan under this part or part B to remove the
record of default; and</text>
</subclause><subclause commented="no" id="id8CACC89D56CF41F58F215667A2A8452B"><enum>(II)</enum><text>refund any collection
costs paid with regard to that loan by the borrower subsequent to the
borrower
submitting an application under paragraph (1);</text>
</subclause></clause><clause commented="no" id="ida70685fbb2f04df1890630c6d9c3f1a6"><enum>(viii)</enum><text>that if only some of the loan will be discharged, the borrower will have the opportunity for
reconsideration of the borrower's claim as described in paragraph (6);</text>
</clause><clause commented="no" id="id97d167c1680241d0b5de42f0222c40fa"><enum>(ix)</enum><text>that the borrower is eligible to receive assistance under title IV, if applicable; and</text>
</clause><clause commented="no" id="id184fadab7a56456eb8fa40aa9d5325ed"><enum>(x)</enum><text>that reports to consumer reporting agencies to which the Secretary previously made adverse credit
reports with regard to the borrower’s loan
shall be updated not later than 30 days from the date the determination
under this paragraph was made.</text>
</clause></subparagraph></paragraph><paragraph id="idd6ab959274f44618be1fd2f5140cf6c2"><enum>(5)</enum><header>Denial of borrower defense claim</header><text>If the Secretary denies a borrower defense, the Secretary
shall retroactively waive a portion of interest that accrued during the
forbearance period (as described
in subparagraph (B)) and notify the borrower—</text>
<subparagraph id="id95452C6FBF85469CB02A94D33B9333C9"><enum>(A)</enum><text>of the reasons
for the denial and the evidence that was relied upon;</text>
</subparagraph><subparagraph id="id130BDE537E594A058FEEFA2614D18320"><enum>(B)</enum><text>that the interest accruing on the relevant loan after the first 12-month period of forbearance
that occurred from the time the borrower's application was submitted under
this subsection will be retroactively waived;</text>
</subparagraph><subparagraph id="idF15F657CB70249D587A952133F4C8E55"><enum>(C)</enum><text>of the amount of any portion of the loan
that is due and payable to the Secretary;</text>
</subparagraph><subparagraph id="id195565AC93F8448199E47CFC470799DA"><enum>(D)</enum><text>whether the Secretary will
reimburse any amounts previously collected prior to the suspension of the
collection activity, as described in paragraph (2)(A)(i)(IV)(aa);</text>
</subparagraph><subparagraph id="id7C60DAF5F0994E8087BFC3F61D40A525"><enum>(E)</enum><text>that
if any balance remains on the loan, the loan will return to the status
prior to the
borrower's submission of the application, except that in the case of a
loan that was in default prior to such application, the borrower shall
first be removed from default status and given the opportunity to enter
repayment, including income-based repayment described under section 493C,
before the
loan will be sent to collections; and</text>
</subparagraph><subparagraph id="id0933522A5DFA456A8354A8EFFAF0BFA9"><enum>(F)</enum><text>that the borrower shall have the
opportunity
for reconsideration of the borrower's claim as described in paragraph (6).</text>
</subparagraph></paragraph><paragraph id="idCBB4B3811461448B8EEC98EBD63ADA13"><enum>(6)</enum><header>Reconsideration</header>
<subparagraph id="idCF349BC343CF491D99154F1907A2E812"><enum>(A)</enum><header>In General</header><text>The decision of the Secretary and
any relief that may be granted on the claim shall be considered the final
agency action that shall be subject to appeal in district court, except
that—</text>
<clause id="id2ee6333bfd4a4f4db6ae76122f02a669"><enum>(i)</enum><text>if the borrower defense is denied in full or in part, the borrower may request that the Secretary
reconsider the borrower defense upon the identification of new evidence in
support of the borrower’s claim; and</text>
</clause><clause id="iddfb952b05e3a439b864cf7ab64c4ce6b"><enum>(ii)</enum><text>the Secretary may reopen a borrower defense application at any time to consider evidence that was
not considered in making the previous decision on that application.</text>
</clause></subparagraph><subparagraph id="id9F2D3E5AA24A43789C4030B7A19FB392"><enum>(B)</enum><header>Prohibition on rescinding relief</header><text>The Secretary shall not reduce the amount of any relief that was previously granted to a borrower
under this section, or reinstate any amounts owed on a previously
discharged loan.</text>
</subparagraph></paragraph><paragraph id="id3b8a212b9e2e4ae182214f54eed96989"><enum>(7)</enum><header>Borrower defense claims and establishing a borrower defense</header>
<subparagraph id="id5f3092247dcf4e2cad45571836a6e16e"><enum>(A)</enum><header>Claims</header>
<clause id="idB5D0C404AE8645E8A73638EC372BD6D3"><enum>(i)</enum><header>In General</header><text>Notwithstanding any other provision of State or Federal law, a borrower may claim as a defense to
repayment of a loan made under this part or part B any borrower defense
established under subparagraph (B). Such a borrower defense claim may
include—</text>
<subclause id="id8641a8cdb8d74b6bb79776c65ca17012"><enum>(I)</enum><text>a defense to repayment of amounts owed to the Secretary on a loan under this part or part B, in
whole or in
part; and</text>
</subclause><subclause id="idf53e2aa531f342bd952ac64e7d362026"><enum>(II)</enum><text>a right to recover amounts previously collected by the Secretary on such loan, in
whole or in part.</text>
</subclause></clause><clause commented="no" id="idf6157b252e5749c386918acfc44e6c38"><enum>(ii)</enum><header>Consolidation loan</header><text>In the case of a Direct Consolidation Loan—</text>
<subclause commented="no" id="id04C3FB92250E452DB0C7556CBA74491A"><enum>(I)</enum><text>the Secretary shall consider a borrower defense claim to such loan by determining
whether a borrower defense described in subparagraph (B) has been
established with regard to a loan made under this part or part B that was
paid off by the Direct Consolidation Loan;</text>
</subclause><subclause commented="no" id="id431A876362A3466C932FBE91ABC2CE13"><enum>(II)</enum><text>the Secretary shall discharge the appropriate portion of the Direct Consolidation Loan if the
borrower is determined to have a borrower defense with respect to a loan
made under this part or part B that was paid off by the Direct
Consolidation Loan; and</text>
</subclause><subclause commented="no" id="id8F8C23F7F2B646C59A2E4E5BC3D2386E"><enum>(III)</enum><text>the Secretary shall return to the borrower any payments made by the borrower or otherwise recovered
on the Direct Consolidation Loan or the loans that were paid off by the
Direct Consolidation Loan that exceed the amount owed on that
portion of the Direct Consolidation Loan that was not discharged, if—</text>
<item commented="no" id="id6275FAC7EB084ABFAB7444D934993325"><enum>(aa)</enum><text>the borrower is determined to have a borrower defense with respect to a loan made under this part
or part B that was paid off by the Direct Consolidation Loan; and</text>
</item><item commented="no" id="id03620AE957D34C1E882B23479C08CA86"><enum>(bb)</enum><text>the payment was made directly to the Secretary on the loan.</text>
</item></subclause></clause><clause commented="no" id="id24799121B0584FF89CD55C4266F0F05F"><enum>(iii)</enum><header>PLUS Loan</header><text>In the case of a Direct PLUS Loan made on behalf of a student, the
Secretary shall consider a borrower defense claim related to the
student on whose behalf the Direct PLUS Loan was borrowed. Any
amounts discharged will be applied to the parent or borrower of the Direct
PLUS Loan.</text>
</clause></subparagraph><subparagraph id="idC8B2CF82FBDE4EF89151F52DF2A48AA6"><enum>(B)</enum><header>Establishing a borrower defense</header><text>A borrower has established a borrower defense if—</text>
<clause id="idd375278759f445748f2ccc0713549ebd"><enum>(i)</enum><text>the borrower (whether as an individual or as a member of a group or class) or a government agency,
has
obtained against the institution of higher education a judgment relating
to the borrower's claim based on State or
Federal law in a court or administrative tribunal of competent
jurisdiction;</text>
</clause><clause id="idfca24624804240cdb6fd55a2a0853109"><enum>(ii)</enum><text>the institution of higher education that the borrower attended using a loan under this part failed
to perform the institution’s obligations under the terms of a contract
with the borrower;</text>
</clause><clause id="id01525D69CA0E44999D6B44C78BCDDB63"><enum>(iii)</enum><text>the borrower was subject to any act or omission of the institution related to the making of the
loan
for enrollment at the institution or the provision of educational services
for which the loan was provided that would give rise to a cause of action
against the institution under applicable State law;</text>
</clause><clause id="idd1d4b5c35b0c4b119c6aee66a285ddaf"><enum>(iv)</enum><text>the institution of higher education, a third servicer that contracts
with such institution, or third party contractor made a
substantial
misrepresentation; or</text>
</clause><clause id="id9e62b6f4f0144ff4b6a32551c1781a19"><enum>(v)</enum><text>the institution has made any other act or omission that the Secretary, through
regulations, or any Federal law, has established is an act or omission
that constitutes a borrower defense
under this subsection.</text>
</clause></subparagraph><subparagraph id="idE64159DDA7134F949506E9A82BBF0B35"><enum>(C)</enum><header>Limitation</header><text>A violation by an institution of a requirement in this Act (including implementing regulations) is
not a basis for a borrower defense under this subsection unless the
violation would otherwise constitute a basis for a borrower defense, as
described in this paragraph.</text>
</subparagraph></paragraph><paragraph commented="no" id="ide79b77264e5b4ef0a0811b50c44e3937"><enum>(8)</enum><header>Finding of substantial misrepresentation</header><text>An eligible institution is deemed to have engaged in a substantial misrepresentation for purposes
of this subsection when an eligible institution, third party servicer that
contracts with such institution,
or third party contractor, commits a substantial misrepresentation, as
defined in section 489A. A
sworn statement or attestation from the borrower shall be considered as
evidence, and, in the Secretary’s discretion, may be sufficient evidence
for the Secretary to find that a substantial misrepresentation was made to
a borrower. If the Secretary determines that an eligible institution,
third party servicer that contracts with such
institution, or third party contractor, has engaged in a substantial
misrepresentation, the Secretary
shall, in addition to finding a borrower defense under this section, take
enforcement action against the institution, third party servicer that
contracts with such institution, or third party contractor, in accordance
with section 489A.</text>
</paragraph><paragraph id="idD6D1E930817F4F20905780810F083B94"><enum>(9)</enum><header>Action against the institution</header>
<text>If a borrower is determined to have established a borrower defense in accordance with this
subsection, the Secretary shall initiate an appropriate proceeding to
require the institution
whose act or omission resulted in the borrower defense to repay to the
Secretary the amount discharged under paragraph (7)(A) whether by offset,
claim on a letter of credit, or other protection provided by the
institution.</text>
</paragraph><paragraph id="idA804265974AD42859F6A7AC842EA57BC"><enum>(10)</enum><header>Reporting</header><text>Not less than once every 3 months, the Secretary shall publish on a website, and report to
Congress, data—</text>
<subparagraph id="id1A21541ECA9A464784124EA39E8C62B2"><enum>(A)</enum><text>for each institution, on—</text>
<clause id="id2BD65B0219D34E5ABEC561C93E16B7B2"><enum>(i)</enum><text>the
number of claims considered under this subsection;</text>
</clause><clause id="id37B3EFF8BE154FEC972715C796D7C778"><enum>(ii)</enum><text>the number of those claims
pending and the date of receipt of the application, or the date of the
initiation of the claim by the Secretary, of those claims; and</text>
</clause><clause id="idDA032D35254842D0B0AF3940212E1DCA"><enum>(iii)</enum><text>the number of claims under this subsection
for which a determination has been made and the results of each such
determination; and</text>
</clause></subparagraph><subparagraph id="id7bdf140a8f4a4332b8c8dcc76af01f0f"><enum>(B)</enum><text>in the aggregate, and disaggregated by State, on—</text>
<clause id="id2930f35ede1e49eebd81ce398bd468d1"><enum>(i)</enum><text>the total number of claims pending under this subsection;</text>
</clause><clause id="ida37ff275e84e4ed2864e5d302f271550"><enum>(ii)</enum><text>the number of those claims that are approved borrower defense claims and total dollar amount of
relief;</text>
</clause><clause id="id36b1a89d96bf440d8837db5e15443dd2"><enum>(iii)</enum><text>the percentage of those total approved claims receiving partial relief and the median student loan
debt
remaining for borrowers receiving partial relief; and</text>
</clause><clause id="id3ad9826e0719423b8cbd7bf1ab75f84d"><enum>(iv)</enum><text>the number of those claims that are denied borrower defense claims.</text></clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</section><enum>III</enum><header>Ensuring integrity at institutions of higher education</header>
<section id="id068b288137a44a85b947cb8b5e34f3cc"><enum>301.</enum><header>Restrictions on sources of funds for recruiting and marketing activities</header>
<subsection id="idB8A5B79852634326823D1E9C173DA550"><enum>(a)</enum><header>Repeal</header><text display-inline="yes-display-inline">Section 119 of the Higher Education Opportunity Act (20 U.S.C. 1011m) is repealed.</text>
</subsection><subsection id="id51E48C75B5E74568B6499D08883F90E8"><enum>(b)</enum><header>Amendment to the Higher Education Act of 1965</header><text display-inline="yes-display-inline">Part B of title I of the Act (20 U.S.C. 1011 et seq.), as amended by title I, is further amended
by adding at the end the
following:</text>
<quoted-block display-inline="no-display-inline" id="ida219d2d9f790416ab5b3cf22062a7cc0" style="OLC">
<section id="idD433F5768C794F63A26287131B54088A"><enum>126.</enum><header>Use of Federal funds; restrictions on sources of funds for recruiting and marketing activities</header>
<subsection id="id92758FFDE050444A80322D23A084FA49"><enum>(a)</enum><header>Prohibition</header>
<paragraph id="id0EB4E1253DD1437AB6A9A2396682BFD3"><enum>(1)</enum><header>In General</header><text display-inline="yes-display-inline">No Federal student aid funding under this Act received by an institution of higher education
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 paragraph (2).</text>
</paragraph><paragraph id="id62EBB3A2B84A4467B5163DAC985A3625"><enum>(2)</enum><header>Applicability</header><text>The prohibition in paragraph (1) applies with respect to the following Federal actions:</text>
<subparagraph id="id6a053050ebc34fb7ad25873b0aabe3e6"><enum>(A)</enum><text>The awarding of any Federal contract.</text>
</subparagraph><subparagraph id="id8c7dc313c2ae4ee796ef34b3afc595e9"><enum>(B)</enum><text>The making of any Federal grant.</text>
</subparagraph><subparagraph id="id00b8d24ef75f4826a78456607118301e"><enum>(C)</enum><text>The making of any Federal loan.</text>
</subparagraph><subparagraph id="ide657b92df04c429bae59948e710a15b2"><enum>(D)</enum><text>The entering into of any Federal cooperative agreement.</text>
</subparagraph><subparagraph id="iddc1e9b868ff04adbbbd89568af90a303"><enum>(E)</enum><text>The extension, continuation, renewal, amendment, or modification of any Federal contract, grant,
loan, or cooperative agreement.</text>
</subparagraph></paragraph></subsection><subsection id="id5ABA9EC79BA040CD9CE4932A9CE5F3C4"><enum>(b)</enum><header>Lobbying and Earmarks</header><text>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.</text>
</subsection><subsection id="ide2df062cd23e45c2b2ca5a464b6f3443"><enum>(c)</enum><header>Restrictions on sources of funds for recruiting and marketing activities</header>
<paragraph id="id3c103b460a684b08ae5ca8b57c1ef439"><enum>(1)</enum><header>In general</header><text>An institution of higher education may not use
revenues derived from Federal education assistance funds for recruiting
or marketing activities described in paragraph (2).</text>
</paragraph><paragraph id="id226cf191db6241d2bb0d00e69a6ff1e3"><enum>(2)</enum><header>Covered activities</header>
<subparagraph id="id0411FA32E0FF4923B5CF5A2DF2507AC7"><enum>(A)</enum><header>In General</header><text>Except as provided in subparagraph (B), the recruiting and marketing activities subject to
paragraph
(1) shall include the following:</text>
<clause id="idaf08cb84edec4ac3aa5f4df3f09df6b1"><enum>(i)</enum><text>Advertising and promotion activities, including paid announcements in newspapers, magazines, radio,
television, billboards, electronic media, naming rights, or any other
public medium of communication, including paying for displays or
promotions at job fairs, military installations, or college recruiting
events.</text>
</clause><clause id="id749c59796ab14650947af4a59574318d"><enum>(ii)</enum><text>Efforts to identify and attract prospective students, either directly or through a third party
contractor, including 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—</text>
<subclause id="idf62b03cce29c4c39bc81727b3a2a45ce"><enum>(I)</enum><text>paying employees responsible for overseeing enrollment and for contacting potential students
in-person, by phone, by email, or by other Internet communications
regarding enrollment; and</text>
</subclause><subclause id="id68af7d5c89d44085983df39410b75eca"><enum>(II)</enum><text>soliciting an individual to provide contact information to an institution of higher education,
including websites established for such purpose and funds paid to third
parties for such purpose.</text>
</subclause></clause><clause id="idcbec3bbee9814fc29a44791de80cfaf7"><enum>(iii)</enum><text>Such other activities as the Secretary may prescribe, including paying for promotion
or sponsorship of education or military-related associations.</text>
</clause></subparagraph><subparagraph id="idc49d4a657df3452aab8f25a2eb1e8ebe"><enum>(B)</enum><header>Exceptions</header><text>Any activity that is required as a condition of receipt of funds by an institution under title IV,
is
specifically authorized under such title, or is otherwise specified by the
Secretary, shall not be considered to be a covered activity
under this paragraph.</text>
</subparagraph></paragraph><paragraph id="id9ac4b46c641044d2b2378922019efecf"><enum>(3)</enum><header>Rule of construction</header><text>Nothing in this subsection shall be construed as a limitation on the use by an institution of
revenues
derived from sources other than Federal education assistance funds.</text>
</paragraph><paragraph id="id74fc90e7dee94b068c5f285cd615d93c"><enum>(4)</enum><header>Reports</header><text>Each institution of higher education, that derives
65 percent or more of revenues from Federal education assistance funds
shall report annually to the Secretary and to Congress and shall include
in such report—</text>
<subparagraph id="id1bb9d55502bf45a995e1ff6cb3c42839"><enum>(A)</enum><text>the institution’s expenditures on advertising, marketing, and recruiting;</text>
</subparagraph><subparagraph id="id32903d327f2e4980a8a937427aba463b"><enum>(B)</enum><text>a verification from an independent auditor that the institution is in compliance with the
requirements of this subsection; and</text>
</subparagraph><subparagraph id="id19c0c4c5982e4fd8a65f5b08086e384f"><enum>(C)</enum><text>a certification from the institution that the institution is in compliance with the requirements of
this subsection.</text>
</subparagraph></paragraph><paragraph id="id126A2C9216F941E3A597218DBA7FE8A1"><enum>(5)</enum><header>Federal education assistance funds</header><text>In this subsection, the term <term>Federal education assistance funds</term> has the meaning given that term in section 102(b)(2)(B) (as added by section 101 of the <short-title>Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act
of 2019</short-title>).</text>
</paragraph></subsection><subsection id="id1BB0ECEC35F74CB4BA0CEDB7C0E87AE9"><enum>(d)</enum><header>Certification</header><text>Each institution of higher education receiving
Federal funding under this Act, as a condition for receiving such funding,
shall annually certify to the Secretary that the requirements of this
section have been met.</text>
</subsection><subsection id="idD20D37414FA344568F6707277A39ADAC"><enum>(e)</enum><header>Actions To Implement and Enforce</header><text>The Secretary shall take such actions as are necessary to ensure that the provisions of this
section are implemented and enforced.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection></section><section id="id8bf4a0c7bc214f208de9b30d3aa0aaba"><enum>302.</enum><header>Strengthening the incentive compensation ban</header>
<subsection id="id7dd071e99b9845ebaf917b0c959fd36d"><enum>(a)</enum><header>Sense of congress regarding incentive compensation</header><text>It is the sense of Congress that—</text>
<paragraph id="id2f6caacd63104c78bbc83105a9a86ad9"><enum>(1)</enum><text>the use of commission-paid sales practices, also known as incentive compensation, leads to overly
aggressive, manipulative, and often misleading tactics in advertising,
recruiting, and counseling students;</text>
</paragraph><paragraph id="id2fd6f80b55e4420f88222ba5a32476d6"><enum>(2)</enum><text>such practices are inappropriate at any institution benefitting from Federal funding and an implied
Federal
endorsement through participation in programs under title IV of the Higher
Education Act of 1965 (20 U.S.C. 1070 et seq.);</text>
</paragraph><paragraph id="idc1bb3c5a223143228bb843586df7fbf9"><enum>(3)</enum><text>previous investigations by the Federal Trade Commission, as well as by Congress, including the
Permanent Subcommittee on Investigations of the Senate (referred to as the <quote>Nunn Commission</quote>) in 1991 and the Committee on Health, Education, Labor, and Pensions of the Senate in 2012, found
that incentive compensation schemes frequently contribute to high-pressure
sales and other predatory abuses at federally supported schools;</text>
</paragraph><paragraph id="idA4DDFFFA90FE4F349A9AB97989996325"><enum>(4)</enum><text>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
the use of such abusive practices at any point in the process of
recruiting or enrolling students, or assisting students in securing
employment; and</text>
</paragraph><paragraph id="id809e047b813a440790c56381725cc37c"><enum>(5)</enum><text>an institution that receives assistance under title IV of such Act remains responsible for the
actions of any entity that performs functions and tasks on the
institution’s behalf, and these responsibilities include ensuring that
employees, third party servicers that contract with such institutions, and
third party contractors are not paid
for services that would
convert these payments into prohibited incentive compensation because of
the activities in which the employees, third party servicers that contract
with such institutions, or third
party contractors engage.</text>
</paragraph></subsection><subsection id="id82f3efeb9f7847649b0934ca028179d5"><enum>(b)</enum><header>Amendments</header><text>Section 487 (20 U.S.C. 1094) is amended—</text>
<paragraph id="idcbe7c13b9c364729ab97a99b447889ab"><enum>(1)</enum><text>in subsection (a), by striking paragraph (20) and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="idC58DC88A7A7C414596C28E9ED8F66FDF" style="OLC">
<paragraph id="id89909c8ee68a45ff8bd41e889c83a0ca"><enum>(20)</enum><text>The institution, any third party servicer that contracts with such
institution, and any third party contractor will comply
with the ban on prohibited incentive compensation ban under subsection
(j).</text>
</paragraph><after-quoted-block>; and</after-quoted-block></quoted-block>
</paragraph><paragraph id="id77b2338529364fa0afb344562ef1f241"><enum>(2)</enum><text>by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline" id="id533270d792954e1aac653fda41487e42" style="OLC">
<subsection id="id4187fd93c62049569bfba69db8f62861"><enum>(j)</enum><header>Incentive compensation ban</header>
<paragraph id="id3a5021d3fdd34323acf6cc7ffa7f6f36"><enum>(1)</enum><header>Definitions</header><text>In this subsection:</text>
<subparagraph id="id31ec007f7a224c05aaa2a6d9cd75c4f7"><enum>(A)</enum><header>Covered activity</header>
<clause id="idb5970c4a63bd4487bd4f66693751a3a2"><enum>(i)</enum><header>In general</header><text>The term <term>covered activity</term> means any of the following activities:</text>
<subclause id="id9c00830490a54858b4ee06de6a593985"><enum>(I)</enum><text>Securing enrollment of students into the institution of higher education, which includes—</text>
<item id="idb5e063336229404780843bd476be8cac"><enum>(aa)</enum><text>activities that an individual or entity engages in at any point in time during an educational
program for the purpose of the admission or matriculation of students for
any period of time, including contact in any form with a prospective
student, such as contact through preadmission or advising activities,
scheduling an appointment to visit the enrollment office or any other
office of the institution, attendance at such an appointment, or
involvement in a prospective student’s signing of an enrollment agreement
or financial aid application; and</text>
</item><item id="ide5c68dc8262448718168450b21d52abf"><enum>(bb)</enum><text>other recruitment and marketing activities.</text>
</item></subclause><subclause id="id42b6d9847dfb42f5829749b4c8b8d8f5"><enum>(II)</enum><text>Securing or awarding financial aid to students for attendance at the institution, including—</text>
<item id="id8e733fa534df414b8029907b0c234c9c"><enum>(aa)</enum><text>any involvement in a prospective student’s signing of a financial aid application; and</text>
</item><item id="id64b0814ed485470e9580bc26bd003603"><enum>(bb)</enum><text>completing financial aid applications on behalf of a prospective applicant (including activities
authorized by the Department, such as the FAA Access tool, which can be
used to enter, correct, verify, or analyze financial aid application
data).</text>
</item></subclause><subclause id="id52abb6fcc680453490e480e89e5c87ee"><enum>(III)</enum><text>Improving job placement activities for students attending, or who have attended, the institution.</text>
</subclause><subclause id="iddbc8981a586d45b1b5678aec9dccc169"><enum>(IV)</enum><text>Reducing the number of students who default on their student loans.</text>
</subclause></clause><clause id="id2f7f3f0d4d9e404da51f66ce01e9243b"><enum>(ii)</enum><header>Exclusion</header><text>The term <term>covered activity</term> does not include—</text>
<subclause id="ida61050249f054b1797b16c8cef53bc8f"><enum>(I)</enum><text>the provision of student contact information for prospective students, if any payment for such
service is not based on—</text>
<item id="id1f35df5770014313a133d547747270e3"><enum>(aa)</enum><text>any additional conduct or action by the third party servicer that contracts with such institutions
or third party contractor or the
prospective student, such as
participation in preadmission or advising activities, scheduling an
appointment to visit the enrollment office or any other office of the
institution or attendance at such an appointment, or the signing, or being
involved in the signing, of a prospective student’s enrollment agreement
or financial aid application; or</text>
</item><item id="id72e8c85f8a494f1db63b7fa8d180ed7a"><enum>(bb)</enum><text>the number of students (calculated at any point in time of an educational program) who apply for
enrollment, are awarded financial aid, or are enrolled for any period of
time, including through completion of an educational program; or</text>
</item></subclause><subclause id="id35d15829912c4c8f8375d63472670d1b"><enum>(II)</enum><text>student support services not included in the covered activities under clause (i).</text>
</subclause></clause></subparagraph><subparagraph id="id40a50b9bee8c4dc6a26d32f741d8d76e"><enum>(B)</enum><header>Prohibited incentive compensation</header>
<clause id="id2c01fbf6d2014610bcedba1b7ec2f628"><enum>(i)</enum><header>In general</header><text>The term <term>prohibited incentive compensation</term> includes—</text>
<subclause id="id0b9e82119eeb41b6ac31babf00cdff8d"><enum>(I)</enum><text>any commission, bonus, or other incentive payment, of a sum of money or other item of value, paid
to or given to a person or an entity that is not a
fixed salary or wages and that is paid or given for meeting a certain
quota or numerical target, or avoiding penalties for a benchmark set in
Federal law, relating to covered activities;</text>
</subclause><subclause id="id9b39945c821548d696e426ecb81deab1"><enum>(II)</enum><text>other direct or indirect forms of payment for meeting a certain quota or numerical target, or
avoiding penalties for a benchmark set in Federal law, relating to covered
activities, including—</text>
<item commented="no" id="id6ea9fb1e930c435d938c8e3a0d0ec9f1"><enum>(aa)</enum><text>tuition sharing as a measure of compensation when based on a formula that relates the amount
payable to the entity to meeting a certain quota or numerical target, or
avoiding penalties for a benchmark set in Federal law, as a result of the
covered activity of the entity;</text>
</item><item commented="no" id="id42655e7b78f74ae3aab2b007e3623301"><enum>(bb)</enum><text>profit-sharing plans from which distributions are made to individuals based on meeting a certain
quota or numerical target, or
avoiding penalties for a benchmark set in Federal law, as a result of
covered activities by the recipient;</text>
</item><item id="id697f0a2441db4945a77bc49a0ca0b780"><enum>(cc)</enum><text>salary adjustments that take the form of incentive payments based directly or indirectly on meeting
a quota or numerical target. or avoiding penalties for a benchmark set in
Federal law, with respect to a covered activity;</text>
</item><item id="idfe3babd2175c4ae08835935e79b52f8b"><enum>(dd)</enum><text>payments based on meeting a certain quota or numerical target, or avoiding penalties for a
benchmark set in Federal law, relating to covered activities;
and</text>
</item><item id="ide1fd51d3839e43bb96dde9c46bfb4134"><enum>(ee)</enum><text>bonuses or other payments based on meeting a certain quota or numerical target, or avoiding
penalties for a benchmark set in Federal law, relating to covered
activities;</text>
</item></subclause><subclause id="id41e10e858dfc426ca0adc2f196fbbab8"><enum>(III)</enum><text>a decrease or removal of a payment or benefit described in subclause (I) or (II) (and not excluded
under clause (ii)), if that decrease or removal is based directly or
indirectly on meeting a certain quota or numerical target, or avoiding
penalties for a benchmark set in Federal law, relating to covered
activities; and</text>
</subclause><subclause id="id3f9df05a67eb4d45b64051f21bb243e3"><enum>(IV)</enum><text>a change in employment status, such as a promotion, demotion, or termination if based on meeting a
certain quota or numerical target, or avoiding penalties for a benchmark
set in Federal law, relating to covered activities.</text>
</subclause></clause><clause id="idb4ab52365fb44e4292d8fc5479f8f451"><enum>(ii)</enum><header>Exclusions</header><text>The following payments or benefits shall not be considered prohibited incentive compensation, if
the payment
or benefit is determined in a way that is not related to the role the
recipient plays in any covered activity:</text>
<subclause id="id1cd12373d7744dc38facd0867f012e95"><enum>(I)</enum><text>A profit sharing plan, including a qualified cash or deferred arrangement (as defined in section
401(k)(2) of the Internal Revenue Code of 1986) offered to all employees
on a basis that is neutral with respect to the role the recipient plays in
any covered activity.</text>
</subclause><subclause id="id6552520072104bd696f9c8d597783b53"><enum>(II)</enum><text>An employee benefits plan offered to all employees on a basis that is neutral with respect to the
role the recipient plays in any covered activity.</text>
</subclause><subclause id="id6397389f240f43f5aed60a770b89c421"><enum>(III)</enum><text>A cost of living adjustment.</text>
</subclause><subclause id="id7e4a0bbef5704d65b578f1c9feb68757"><enum>(IV)</enum><text>A payment to a senior executive with responsibility for the development of policies that affect
marketing and recruitment, enrollment, financial aid, or student support
services, including job placement services.</text>
</subclause></clause></subparagraph><subparagraph commented="no" id="ide4dc5b23ff954a93849a861d7a4042a4"><enum>(C)</enum><header>Recruitment and marketing activity</header><text>The term <term>recruitment and marketing activity</term> means—</text>
<clause commented="no" id="ida75175a79963429794942140030b7b77"><enum>(i)</enum><text>broad information dissemination and disseminating targeted information to individuals;</text>
</clause><clause commented="no" id="idFFC24E39A0D447578088E48929CCF8C3"><enum>(ii)</enum><text>soliciting individuals regarding an institution;</text>
</clause><clause commented="no" id="idd2328482f17c49fca89956b599dcea8b"><enum>(iii)</enum><text>advertising a program that disseminates information to potential students;</text>
</clause><clause commented="no" id="id4c635c5115cd4f50a73c13264015479b"><enum>(iv)</enum><text>collecting contact information;</text>
</clause><clause commented="no" id="id6C23AD9623954387B06C761DBCE179CC"><enum>(v)</enum><text>contacting potential applicants for the admission or matriculation of a student into an
institution;</text>
</clause><clause commented="no" id="id15bcbbf114984ae682f4c57c4d550bcd"><enum>(vi)</enum><text>screening pre-enrollment information to determine whether a prospective student meets the
requirements that an institution has established for enrollment in an
academic program;</text>
</clause><clause commented="no" id="id88D45102CBD94127B329ECC3F22F800D"><enum>(vii)</enum><text>aiding individuals in filling out any information relating to an application for admission or
matriculation into an institution;</text>
</clause><clause commented="no" id="id7f9d839b0147474a8d29e3e00b06b6c8"><enum>(viii)</enum><text>determining whether an enrollment application is materially complete, as long as the enrollment
decision remains with the institution; or</text>
</clause><clause commented="no" id="id42C90BDBFCCA4D0EB0C1773E946B49F6"><enum>(ix)</enum><text>any other activity described in section 126(d)(2).</text>
</clause></subparagraph><subparagraph commented="no" id="ida373cfc6dbbd40c9a929cf013ffe2f11"><enum>(D)</enum><header>Student support services</header><text>The term <term>student support services</term> means any of the following services:</text>
<clause commented="no" id="id9b0e76f04e094de0b84b1bc82a2b6d8f"><enum>(i)</enum><text>Counseling or other nonacademic support activities provided to students that is not a covered
activity.</text>
</clause><clause commented="no" id="id7b51686a5c144bbb83c3a2cc7c58b507"><enum>(ii)</enum><text>Institutional services provided to students, such as information technology assistance, food
service, or housing, that is not a covered activity.</text>
</clause><clause commented="no" id="id78fd676a1c6845c284b7f88fc5dc9446"><enum>(iii)</enum><text>Other services involved in the administration of support for students that is not a covered
activity.</text>
</clause></subparagraph></paragraph><paragraph id="id2c4c1a3b88564eb6a0cfac162c8e039c"><enum>(2)</enum><header>Incentive compensation ban</header>
<subparagraph id="idc252d780bfff43afbd3ed3fb415708f8"><enum>(A)</enum><header>In general</header><text>The institution, any third party servicer that contracts with such
institution, and any third party contractor shall not provide any
prohibited incentive compensation to any person or
entity.</text>
</subparagraph><subparagraph id="id7685e80fe2864a4cb283cd924314a880"><enum>(B)</enum><header>Applicability</header><text>The ban on prohibited incentive compensation under this subsection applies to any entity or
individual engaged in
any covered activity, including—</text>
<clause id="id6080fcd93d86421f8a338d84c59044ce"><enum>(i)</enum><text>with respect to an entity engaged in any student recruitment or admission activity or in making
decisions about the award of financial aid, any institution or entity that
undertakes the recruiting or the admitting of students or that makes
decisions about and awards program funds under this title; and</text>
</clause><clause id="id9d9574854cf84ba296d8efcfba354f79"><enum>(ii)</enum><text>with respect to an individual engaged in any student recruitment or admission activity or in making
decisions about the award of financial aid—</text>
<subclause id="id63457cb1fbda44f582af0f14bead21cc"><enum>(I)</enum><text>any employee who undertakes recruiting or admitting of students or who makes decisions about and
awards program funds under this title; and</text>
</subclause><subclause id="id995a77eb47134425a99d39d1e473e141"><enum>(II)</enum><text>any higher-level employee with responsibility for recruitment or admission of students, or making
decisions about awarding program funds under this title.</text>
</subclause></clause></subparagraph><subparagraph id="id17057724bc0b4cfa94003065b2b428cf"><enum>(C)</enum><header>Exclusion of certain employees</header><text>The ban on prohibited incentive compensation under this subsection shall not apply to any senior
manager or
executive level employee who—</text>
<clause id="idD8BC6474A9EC4960AA1C41E0E21BD17E"><enum>(i)</enum><text>is involved only in the development of policy
related to the manner in which marketing and recruitment, enrollment,
financial aid,
or student support services will be pursued or provided; and</text>
</clause><clause id="id59107E54EBAA4EEFB58E9A40A58ACC61"><enum>(ii)</enum><text>does
not engage in individual student contact or other covered activities.</text>
</clause></subparagraph><subparagraph id="id401e2896bd604ba782f77b54a7b54ee1"><enum>(D)</enum><header>Individual with multiple adjustments to compensation</header><text>An employee of an institution, a third party servicer that
contracts with such institution, or a third party contractor, who
receives multiple adjustments to compensation in a calendar year and is
engaged in a covered activity shall be considered to be engaged in
prohibited incentive compensation if the adjustments create compensation
that is based
in any part, directly or indirectly, upon meeting certain quotas or
numerical targets, or avoiding penalties for a benchmark
set in Federal law, regarding those covered activities.</text>
</subparagraph></paragraph><paragraph id="idd60a1f4489804fc7bab5043cdab700aa"><enum>(3)</enum><header>Notice of incentive compensation ban</header>
<subparagraph id="id30DB333093734E758DC643D513232608"><enum>(A)</enum><header>Notice to servicer and contractor</header><text>The institution shall provide notice of the ban on prohibited incentive compensation under this
subsection at least once
a
year to each third party servicer and third party contractor that
contracts with the institution.</text>
</subparagraph><subparagraph id="id2E6C93AE70D1426BB84E36407215A567"><enum>(B)</enum><header>Notice to employees</header><text>The institution, and any third party contractor or third party servicer that contracts with such
institution, shall—</text>
<clause id="id6e8bf989fed24d12b6c4703bcdd87016"><enum>(i)</enum><text>provide notice of the ban on prohibited incentive compensation under this subsection at least once
a
year to employees; and</text>
</clause><clause id="id29c463ad15cc43b793caed437e9e8bf8"><enum>(ii)</enum><text>publish a clear statement in all internal recruitment materials, including guides or manuals,
acknowledging the ban on prohibited incentive compensation under this
subsection.</text>
</clause></subparagraph></paragraph><paragraph commented="no" id="id0bdee2a85953467ba595cf5426aa2a9c"><enum>(4)</enum><header>Consequences for incentive compensation violation</header>
<subparagraph commented="no" id="id5164be2ff880441aaaa9d70ecaf69c0d"><enum>(A)</enum><header>In general</header><text>The Secretary, in coordination with the Office of the Inspector General of the Department of
Education, shall develop a written policy for the enforcement of the
ban on prohibited incentive compensation under this subsection, and shall
update that
policy as needed.</text>
</subparagraph><subparagraph commented="no" id="id8a01c8a9aec44ca4ae7391233c2f16ef"><enum>(B)</enum><header>Contents of policy</header><text>The policy developed under subparagraph (A)—</text>
<clause commented="no" id="id2e2d04d96be041559fdf114064df1473"><enum>(i)</enum><text>shall require that compliance review occur on an annual basis;</text>
</clause><clause commented="no" id="id86952900e8454968ad97e9a9e91c1a3b"><enum>(ii)</enum><text>may include automatic triggers for inquiries by the Department or regular <quote>secret shopper</quote> or audit-based investigations to ensure that institutions of higher education remain in compliance
with the ban; and</text>
</clause><clause commented="no" id="id4155c66d66ec4b829720001ce4d97dd2"><enum>(iii)</enum><text>shall explain the range of sanctions, as described in section 489A, that the Secretary may carry
out to enforce this
subsection.</text>
</clause></subparagraph><subparagraph id="idacceb91043db4625847f362560dcc12a"><enum>(C)</enum><header>Report</header><text>The Department shall publish an annual report, and shall submit that report to the authorizing
committees and the For-Profit Education Oversight Coordination Committee
established under section 125, which shall include—</text>
<clause id="id289a8cf1ba6e430b9e1517bfb33bd30d"><enum>(i)</enum><text>a description of the status of any investigations conducted under this subsection;</text>
</clause><clause id="id005c64d870714c3fa7d601df4d85549c"><enum>(ii)</enum><text>the names of institutions found to be not in compliance with this subsection;</text>
</clause><clause id="ide67d451f3e5a4825a372b575694ced0b"><enum>(iii)</enum><text>the sanctions the non-compliant institution of higher education faced; and</text>
</clause><clause id="id6dbdbda8e7e54dc589f196ce035b7bbe"><enum>(iv)</enum><text>in the case of an institution subject to liability for funds under this title pursuant to
subparagraph (B)(iii), the amount of such liability.</text></clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection></section><section id="idbc6a75f87d714a53a7c63311a46ab098"><enum>303.</enum><header>Definition of nonprofit institution of higher education</header><text display-inline="no-display-inline">Section 103 (20 U.S.C. 1003) is amended by striking paragraph (13) and inserting the following:</text>
<quoted-block display-inline="no-display-inline" id="id207ebbd01b8a4d91b60082e822e37d9e" style="OLC">
<paragraph id="idfa737365d8e4448d91e5819d222b3e8b"><enum>(13)</enum><header>Nonprofit</header>
<subparagraph id="idaf766a7c18154a7c8d7af223b0cd7338"><enum>(A)</enum><header>In general</header><text>The term <term>nonprofit</term>—</text>
<clause id="ida7613ca43e7b4300934aeff2cf10a81b"><enum>(i)</enum><text>as applied to a school, agency, organization, or institution, means a school, agency, organization,
or institution controlled, owned, and operated by one or more nonprofit
corporations or associations, no part of the net earnings of which inures,
or may lawfully inure, to the benefit of any private shareholder or
individual; and</text>
</clause><clause id="id5ae2991071684abab2f9d8abefa08084"><enum>(ii)</enum><text>as applied to an institution of higher education, means an institution—</text>
<subclause id="id4496d77444d346f7a8c4720ded2f58f6"><enum>(I)</enum><text>that meets the requirements of subparagraph (A);</text>
</subclause><subclause id="idc65b9282344446f8853b73dc8bd507ff"><enum>(II)</enum><text>that is an organization described in section 170(b)(1)(A)(ii) or (vi) of the Internal Revenue Code
of 1986; and</text>
</subclause><subclause id="id9f12598ad1e844d3a07f0e69ee14feab"><enum>(III)</enum><text>with respect to which—</text>
<item id="idb2b0219ba96f4a44940db2a0d02da918"><enum>(aa)</enum><text>no member of the governing board of the institution (other than any ex officio member serving at
the pleasure of the remainder of the governing board and receiving a fixed
salary) receives any substantial direct or indirect economic benefit
(including a lease, promissory note, or other contract) from the
institution; and</text>
</item><item id="id98a78a069c254f9d85820628359769c0"><enum>(bb)</enum><text>no person with the power to appoint or remove members of the governing board receives any such
substantial direct or indirect economic benefit (including a lease,
promissory note, or other contract) from the institution.</text>
</item></subclause></clause></subparagraph><subparagraph id="id42aa172081fb482eb421c2159d4de9b5"><enum>(B)</enum><header>Exclusions</header>
<clause id="ida11c1c7241e34fe5a670d5c091bbd4e1"><enum>(i)</enum><header>In general</header><text>An institution of higher education shall not be considered a nonprofit institution of higher
education, as defined in this paragraph, if—</text>
<subclause id="idbf662dfc35d8475584badd549fb01174"><enum>(I)</enum><text>one or more core functions are under the control of, or subject to significant
direction from an entity that is not a public institution of higher
education or is not formed as a nonprofit corporation; or</text>
</subclause><subclause id="id41607058aca64a5d94d17146a4dac5ed"><enum>(II)</enum><text>a substantial share of the assets of the institution are committed to a joint venture with a person
or entity that is not a public institution of higher education and is not
a nonprofit corporation, and the core functions of the venture are
conducted by, under the control of, or subject to significant direction
from that person or entity.</text>
</subclause></clause><clause id="id5e052124207244669f5fb14036c72a24"><enum>(ii)</enum><header>Presumption of significant direction</header><text>There shall be a conclusive presumption that an entity exercises significant direction if one or
more of the entity’s employees or owners serves as an officer, member of
the board, or person holding similar authority for the institution of
higher education.</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</section><section id="id3dc84d90f5e540c7a468de6ce45ca501"><enum>304.</enum><header>Definition of public institution of higher education</header><text display-inline="no-display-inline">Section 103 (20 U.S.C. 1003), as amended by section 4, is further amended—</text>
<paragraph id="id9126d3930e814a25b17c61daf75e078c"><enum>(1)</enum><text>by inserting after paragraph (14) the following:</text>
<quoted-block display-inline="no-display-inline" id="ida90485f4293a4b22936647aed4d868d0" style="OLC">
<paragraph id="idda68ca560c404f91b3ffd1ae22a28429"><enum>(15)</enum><header>Public institution of higher education</header>
<subparagraph id="ide489fb79325746c1985f4c9ff15922d9"><enum>(A)</enum><header>In general</header><text>The term <term>public</term>, when used with respect to an institution of higher education, means an institution of higher
education—</text>
<clause id="idd6e6485f9fcf46bf8dd7692baf802d6c"><enum>(i)</enum><subclause commented="no" display-inline="yes-display-inline" id="id01AF3D63118940F095F39B790346A7B1"><enum>(I)</enum><text>operated by—</text>
<item id="idfabf7b481b6841ae9fbb196699578267" indent="up1"><enum>(aa)</enum><text>the Federal Government;</text>
</item><item id="idefdab568a54746a29180e5cbaba3923e" indent="up1"><enum>(bb)</enum><text>a State, as defined in section 3306(j)(1) of the Internal Revenue Code of 1986;</text>
</item><item id="id25a56101cb9c4772b0d0971bd5317329" indent="up1"><enum>(cc)</enum><text>a local government, as defined in section 1393(a)(5) of such Code; or</text>
</item><item id="id0a57ca715f3e448cb03748c83a18be19" indent="up1"><enum>(dd)</enum><text>an Indian tribal government, as defined in section 7701(a)(40) of such Code;</text>
</item></subclause><subclause id="ida9adb3c1c4ba4306a4a1868a827bca14" indent="up1"><enum>(II)</enum><text>for which all obligations of the institution are valid and binding obligations of the State, local
government, or Indian tribal government; and</text>
</subclause><subclause id="idbfdecbbff9824a1c835105185ed74664" indent="up1"><enum>(III)</enum><text>for which the full faith and credit of such State, local government, or Indian tribal government is
pledged for the timely payment of such obligations; or</text>
</subclause></clause><clause id="id03aa97b94307431d94b66c95746ee007"><enum>(ii)</enum><text>that is an instrumentality of a State or local government (as such terms are defined in
subparagraph (A)).</text>
</clause></subparagraph><subparagraph id="id0747a2856ed04d9087b873557b6fa5fe"><enum>(B)</enum><header>Instrumentality of a state or local government</header><text>An institution shall be considered an instrumentality of a State or local government for purposes
of this paragraph if the institution meets all of the following
requirements:</text>
<clause id="idd230f848ebff4eecad472c46a5d64002"><enum>(i)</enum><text>The employees of the institution are employees of the State or local government.</text>
</clause><clause id="iddd03f8418be0402fb9c2a3c1ccf46827"><enum>(ii)</enum><text>Any liability of the institution is payable to the same degree as if the liability was a liability
of the State or local government, in the State or local government
jurisdiction where the institution is formed.</text>
</clause><clause id="id94481bae6e0349f2830a143dd2d4f852"><enum>(iii)</enum><text>The institution is subject to the same financial oversight and open public records laws as the
State or local government, in the State or local government jurisdiction
where the institution is formed.</text>
</clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></section><section id="id03da9797a9f24fa09445e9a129f658ea"><enum>305.</enum><header>Enhanced civil penalties, State enforcement, and private right of action</header>
<subsection id="id9481baac9d35449594b879636736d315"><enum>(a)</enum><header>In general</header><text>Part G of title IV (20 U.S.C. 1088 et seq.) is amended by inserting after section 489 the
following:</text>
<quoted-block display-inline="no-display-inline" id="id2228FFF06C0F4AC19C3F7F71C2762E39" style="OLC">
<section id="id229e65c59eeb4ee4a7e8b71feb694ab8"><enum>489A.</enum><header>Enhanced civil penalties, State enforcement, and private right of action</header>
<subsection id="idde1b944a347b42e7850e02ea5c34dabd"><enum>(a)</enum><header>Definitions</header><text>In this section:</text>
<paragraph id="id51158ac472804a35a1ba0f30f30e66a8"><enum>(1)</enum><header>Misrepresentation</header><text>The term <term>misrepresentation</term> means any false, erroneous, or misleading statement an eligible institution of higher education,
a third party servicer that contracts with
such institution,
or a third party contractor makes directly or indirectly to a student,
prospective student, or any
member of the public, or to an accrediting agency or
association, State approval agency, or the Secretary. A misrepresentation
includes—</text>
<subparagraph id="idb91b701e3def4b69b1b9195c24cd120e"><enum>(A)</enum><text>the making of a statement that has the likelihood or tendency to deceive; or</text>
</subparagraph><subparagraph id="id4ddef6addd32407fa49a729bbb2eb91a"><enum>(B)</enum><text>the omission of any material facts necessary in order to make any statements made, in light of the
circumstances under which they were made, not false, deceptive, unfair,
erroneous, or
misleading.</text>
</subparagraph></paragraph><paragraph id="ida5dd79ced86c4ac587f6eaa4473b2e09"><enum>(2)</enum><header>Officer of an institution of higher education</header><text>The term <term>officer of an institution of higher education</term> including at any nonprofit, for-profit, or public institution of higher education, includes the
president, chief executive officer, and chief financial officer of an
institution of higher education as well as all officers charged with
overseeing a principal business unit, division, or function, such as
sales, administration, or finance.</text>
</paragraph><paragraph id="idf7a8cfd0e0304a7595dbf88ab0654708"><enum>(3)</enum><header>Prospective student</header><text>The term <term>prospective student</term> means any individual who has contacted an institution of higher education for the purpose
of requesting information about enrolling at the institution of higher
education or who has been contacted directly or indirectly by the
institution of higher
education or a third party contractor through advertising about enrolling
at the
institution.</text>
</paragraph><paragraph commented="no" id="id2b3b8349a5e74f87acb243205f89d507"><enum>(4)</enum><header>State approval agency</header><text>The term <term>State approval agency</term> means any State agency that determines whether an institution of higher education is legally
authorized within such State to provide a program of education beyond
secondary education.</text>
</paragraph><paragraph id="id14dea80c20a540b8b8ff65da37e763f1"><enum>(5)</enum><header>Substantial misrepresentation</header><text>The term <term>substantial misrepresentation</term> means any misrepresentation on which the person to whom it was made could reasonably be expected
to rely, or has reasonably relied, to that person’s detriment.</text>
</paragraph></subsection><subsection id="ida71f9308d86c49d7b7b4326f4793264f"><enum>(b)</enum><header>Limitation, suspension, or termination of eligibility status</header>
<paragraph id="id1cac12cb1e2d4a36931bc4e95f4d581d"><enum>(1)</enum><header>In general</header><text>Upon determination, after reasonable notice and opportunity for a hearing, that an eligible
institution, a third party servicer that
contracts with such institution, or a third party contractor has
violated or failed to carry out
any provision of this title, any regulation prescribed under this title,
or any applicable special arrangement, agreement, or limitation, the
Secretary may limit, suspend, or terminate the participation of that
institution in any program under this title, or the eligibility of that
third party contractor or third party servicer to contract with any
institution, subject to the requirements of paragraph (2).</text>
</paragraph><paragraph id="id73d07bb9af1e48a993621a66db5fa39e"><enum>(2)</enum><header>Suspension procedures</header><text>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.</text>
</paragraph><paragraph commented="no" id="id59d7c1e11530431baacbf00476b09430"><enum>(3)</enum><header>Substantial misrepresentation</header><text>Upon determination, after reasonable notice and
opportunity for a hearing, that an eligible institution, a third party
servicer that contracts with such institution,
or a third party contractor has engaged in
substantial misrepresentation, including a misrepresentation relating to
the nature of
an educational program, financial charges, the space availability in
a program of the institution for which a student is considering
enrollment, admission requirements, the transferability of
credits, whether one of that institution's programs meets necessary State
standards to
obtain certification or sit for licensing examinations, the passage rates
of students in obtaining certifications or sitting for licensing
examinations, or the employability or earnings of graduates, the Secretary
may
suspend, limit, or terminate the eligibility status for any or all
programs under this title of any otherwise eligible institution, or of
any third party contractor or third party servicer to contract with any
institution, in accordance with procedures specified in paragraph (1),
until the Secretary finds that such practices have been
corrected.</text>
</paragraph></subsection><subsection id="id3b5ab86b5ce64881b61f6831bc897bfd"><enum>(c)</enum><header>Civil penalties</header>
<paragraph id="id6DB459280D9F4F2A9C1EFF0C8F62F169"><enum>(1)</enum><header>In General</header><text>The Secretary shall impose a civil penalty upon an eligible institution, a third party servicer
that contracts with such institution, or a third party contractor, upon
making
a
determination, after reasonable notice and opportunity for a hearing, that
an eligible institution, a third party
servicer that contracts with such institution, or a third party contractor
has—</text>
<subparagraph id="id9683b7dbbfd24e31923b6e6218483dca"><enum>(A)</enum><text>violated or failed to carry out any provision of this title or any regulation prescribed under this
title; or</text>
</subparagraph><subparagraph id="idc8c84a3238bd40ccb5274c3d60a5d4f7"><enum>(B)</enum><text>engaged in a substantial misrepresentation, including a substantial misrepresentation described in
subsection
(b)(3).</text>
</subparagraph></paragraph><paragraph id="idbe63cb0ee8494d8ba27af5d2809b65b1"><enum>(2)</enum><header>Amount of civil penalties</header>
<subparagraph id="id5d7690ac84c64011aeda702583c4a143"><enum>(A)</enum><text>A civil penalty imposed for a violation or failure described under paragraph (1)(A) shall not
exceed $100,000 (subject to such adjustments for
inflation as may be prescribed in regulation) for each such violation.</text>
</subparagraph><subparagraph id="id890e7ee09fc445ab8abcd1c8ba0ef868"><enum>(B)</enum><text>A civil penalty imposed for a violation described under paragraph (1)(B) shall be in an amount not
to exceed the greater of—</text>
<clause id="idb4b6cee63cf4464587cf9c59fcfec36d"><enum>(i)</enum><text>$100,000 (subject to such adjustments for inflation as may be prescribed in regulation) for each
such violation; or</text>
</clause><clause id="ida845ebc9087e4e41bd02e4f5f59443c4"><enum>(ii)</enum><subclause commented="no" display-inline="yes-display-inline" id="idA9C11C99D89D42D798AA55C0830E9ED9"><enum>(I)</enum><text>in the case of an institution, 1.0 percent of the amount of funds the institution received through
this title in the most recent
award year prior to the determination for each such violation; and</text>
</subclause><subclause commented="no" id="idAD06BDBE64394F45A53B92B39CD474B6" indent="up1"><enum>(II)</enum><text>in the case of a third party servicer that contracts with such institution or a third party
contractor, the amount of the contract with
the institution.</text>
</subclause></clause></subparagraph></paragraph><paragraph id="id2d219d0f00904e6ab99d1b611a3c2dab"><enum>(3)</enum><header>Treatment of multiple institutions</header><text>For the purpose of determining the amount of civil penalties under this subsection, 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.</text>
</paragraph></subsection><subsection id="idfa692b6ed04a4cbcb687a094a01f17dc"><enum>(d)</enum><header>Emergency action</header>
<text>The Secretary may take an emergency action against an institution, a
third party servicer that contracts with such institution, or a third
party contractor, 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, third party servicer
that contracts with such institution, or third party contractor
(by registered mail,
return receipt requested), withhold funds from the institution or its
students, or from the third party servicer that
contracts with such institution or third party contractor, and
withdraw the
institution’s authority to obligate funds under this title, or the
authority of the third party servicer that
contracts with such institution or third party contractor to act on
behalf of an institution under any program under this title, if the
Secretary—</text>
<paragraph id="id0b58b09fe00f4c0080b6c469e3528f0a"><enum>(1)</enum><text>receives information, determined by the Secretary to be reliable, that the institution, or
third party servicer that contracts with such institution, or third party
contractor is
violating any provision of this title, any regulation prescribed under
this title, or any applicable special arrangement, agreement, or
limitation;</text>
</paragraph><paragraph id="id2092f898d0a84f4895a098ad66a9772b"><enum>(2)</enum><text>determines that immediate action is necessary to prevent misuse of Federal funds; and</text>
</paragraph><paragraph id="id80bb173da45742feb73015ed2e8e78c0"><enum>(3)</enum><text>determines that the likelihood of loss outweighs the importance of the procedures prescribed in
subsection (b) for limitation, suspension, or termination,</text>
</paragraph><continuation-text commented="no" continuation-text-level="subsection">except that an emergency action shall not exceed 30 days unless the limitation, suspension, or
termination proceedings are initiated by the Secretary against the
individual or organization within that period of time, and except that the
Secretary shall provide the individual or organization an opportunity to
show cause, if it so requests, that the emergency action is unwarranted.</continuation-text></subsection><subsection id="id18d953341eab4a108296c4f91bbc383d"><enum>(e)</enum><header>Individual or organization with substantial control</header><text>If an individual who, or entity that, exercises substantial control, as determined by the
Secretary
in accordance with the definition of substantial control in subpart 3 of
part H, over one or more institutions participating in any program under
this title, or, for purposes of this section over one or
more organizations that contract with an institution to administer any
aspect of the institution’s student assistance program under this title,
is determined to have committed one or more violations of the requirements
of any program under this title, or has been suspended or debarred in
accordance with the regulations of the Secretary, the Secretary may use
such determination, suspension, or debarment as the basis for imposing an
emergency action on, or limiting, suspending, or terminating, in a single
proceeding, the participation of any or all institutions under the
substantial control of that individual or entity.</text>
</subsection><subsection id="idda14b8df3270453a9abcf6624db17486"><enum>(f)</enum><header>Disposition of amounts recovered</header>
<paragraph id="id849357658cbe49e591f3ec0102583820"><enum>(1)</enum><header>Use for student relief fund</header><text>For each fiscal year, an amount equal to 100 percent of the amounts recovered or collected under
this section shall be deposited into the Student Relief Fund established
under subsection (g).</text>
</paragraph><paragraph commented="no" id="id34ab7f2f1c8a4e248e4bfc7b35dc5fe7"><enum>(2)</enum><header>Report</header><text>The Secretary shall regularly publish, on the website of the Department, a detailed accounting of
the funds in the Student Relief Fund, including the amount of funds that
were collected and deposited into the Student Relief
Fund under paragraph (1), and how those funds were used, pursuant to
subsection (g)(1).</text>
</paragraph></subsection><subsection id="id6d010c0dba46447b8ae5935c81eaea52"><enum>(g)</enum><header>Student relief fund</header>
<paragraph id="id686481fdc34a4060ac72e4f6be94985a"><enum>(1)</enum><header>Establishment</header><text>The Secretary shall establish a Student Relief Fund (referred to in this subsection as the <quote>Fund</quote>) that shall be used, subject to the availability of funds, to provide financial relief to any
student that is enrolled in an institution of higher education that—</text>
<subparagraph id="idaa62ec64c0d142a6af79a53455f3b914"><enum>(A)</enum><text>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</text>
</subparagraph><subparagraph id="id3425001bef7a4968a784a68f8ab41673"><enum>(B)</enum><text>has been sanctioned under subsection (b) or (c).</text>
</subparagraph></paragraph><paragraph id="id281368af5deb4bb39bf8e53250042390"><enum>(2)</enum><header>Treatment and availability of funds</header>
<subparagraph id="id2aaf0c0950cc4f0e8bbb3862b3480d86"><enum>(A)</enum><header>Funds that are not government funds</header><text>Funds obtained by or transferred to the Fund shall not be construed to be Government funds,
appropriated monies, or Federal education assistance funds, as defined in
section 102(b)(2)(B) (as added by section 101 of the <short-title>Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act
of 2019</short-title>).</text>
</subparagraph><subparagraph id="id89d2835f5d8c43a8b8454025cd4ba790"><enum>(B)</enum><header>Amounts not subject to apportionment</header><text>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.</text>
</subparagraph><subparagraph id="idc73bf36c3d894aa18d2292650e92fc70"><enum>(C)</enum><header>No fiscal year limitation</header><text>Sums deposited in the Fund shall remain in the Fund and be available for expenditure under this
subsection without fiscal year limitation.</text>
</subparagraph></paragraph></subsection><subsection id="idf23cfd088a3f42f1bfd6d25ecea332fc"><enum>(h)</enum><header>State enforcement</header>
<paragraph commented="no" id="id1e32b97b25f4456c936eaa64c6415e68"><enum>(1)</enum><header>In general</header>
<subparagraph commented="no" id="id2C95BCB7F4B44254B422E47ED52E00C8"><enum>(A)</enum><header>State cause of action</header><text>A violation described in subparagraph (B) shall be a cause of action enforceable by a State,
through the attorney general (or the
equivalent thereof) of such 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 (3) for such violation, including a civil
penalty under subsection (c), or any remedies otherwise available
under law.</text>
</subparagraph><subparagraph commented="no" id="idA76FCC9EBF4D45B184F5D3DED2A1C734"><enum>(B)</enum><header>Violations</header><text>A violation described in this subparagraph is:</text>
<clause commented="no" id="ide8d0ec4a6b514540aada2a197ec20af4"><enum>(i)</enum><text>A substantial misrepresentation.</text>
</clause><clause commented="no" id="idf28d7b26fad24b9a88990c4b12475397"><enum>(ii)</enum><text>A violation of section 487(a)(20).</text>
</clause><clause commented="no" id="idaaf03d38477d4c769605e8530999ac71"><enum>(iii)</enum><text>A violation of the default manipulation regulations promulgated by the Secretary under section
435(m)(3).</text>
</clause><clause commented="no" id="id1b9f046819a94e2cbbccc644bb1328e2"><enum>(iv)</enum><text>A violation of the program integrity regulations promulgated by the Secretary under this Act,
including regulations promulgated in section 102, section 455, and part H.</text>
</clause><clause commented="no" id="id0bd782d7e09f4d6b9cb2f6548396ef86"><enum>(v)</enum><text>In accordance with section 455(h), any act or omission of the institution,
third party servicer that contracts with such institution, or third party
contractor, related to the
making of
the loan for enrollment at the institution or the provision of educational
services for which the loan was provided that would give rise to a cause
of action against the institution under applicable State law.</text>
</clause></subparagraph></paragraph><paragraph id="id9588f4abe1d2456887ee8fbfd11ef395"><enum>(2)</enum><header>Notice required</header>
<subparagraph id="id03d0c39e43314d87b1fa7d3cba1f81f3"><enum>(A)</enum><header>In general</header><text>Except as provided in subparagraph (B), before initiating any action in a court or other
administrative or regulatory proceeding against any institution of higher
education, third party servicer that
contracts with such institution, or third party contractor, as authorized
by paragraph (1), a State
attorney general or the equivalent thereof shall timely provide to the
Secretary a copy of the complete complaint to be filed and written notice
describing such action or proceeding.</text>
</subparagraph><subparagraph id="id64d1404e57154d0da81be2ef55b58c95"><enum>(B)</enum><header>Waiver of prior notice</header><text>If prior notice is not practicable under subparagraph (A), the State attorney general or equivalent
thereof shall provide
to the Secretary a copy of the complete
complaint and the notice described in subparagraph (A) immediately upon
instituting the
action or proceeding.</text>
</subparagraph><subparagraph id="id356da94318a8450c865b5453f9f50c8c"><enum>(C)</enum><header>Contents of notice</header><text>The notification required under this paragraph shall, at a minimum, describe—</text>
<clause id="id0a0c573dbbf84030a5cc877b6b2ee348"><enum>(i)</enum><text>the identity of the parties;</text>
</clause><clause id="idf21f25de8de64767a6d8c8465ff6ea29"><enum>(ii)</enum><text>the alleged facts underlying the proceeding; and</text>
</clause><clause id="id6afd65c18ec041958f6553706794b4a6"><enum>(iii)</enum><text>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.</text>
</clause></subparagraph></paragraph><paragraph id="idf6e6eee89ed24efca9ebef5b6e11cd9c"><enum>(3)</enum><header>Preservation of State authority</header>
<subparagraph id="id97cc1a0d03cb49d5a0baa10f094230cf"><enum>(A)</enum><header>State claims</header><text>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.</text>
</subparagraph><subparagraph id="ide8b4b00fd32940baacb7c6e57ea6ab50"><enum>(B)</enum><header>Relief</header>
<clause id="idc261439e5bc34f1f9c564cf331c779ae"><enum>(i)</enum><header>In general</header><text>Except as provided in clause (ii), relief under this subsection may include, without limitation—</text>
<subclause id="idaee823637d754e58a0ef987ddff5c1f5"><enum>(I)</enum><text>rescission or reformation of contracts;</text>
</subclause><subclause id="ida9bdb01187b44c3aa0cdf9724131dcfd"><enum>(II)</enum><text>refund of moneys or return of real property;</text>
</subclause><subclause id="idbe7342bffee1423099e094ea3421afc5"><enum>(III)</enum><text>restitution;</text>
</subclause><subclause id="ide7cebffc2bb34046b201ec1f8304f775"><enum>(IV)</enum><text>disgorgement or compensation for unjust enrichment;</text>
</subclause><subclause id="id866ad35917e0422c8489e730674d987d"><enum>(V)</enum><text>payment of damages or other monetary relief;</text>
</subclause><subclause id="idad3fa91d298d4926bc95a5af45a9ef06"><enum>(VI)</enum><text>public notification regarding the violation, including the costs of notification; or</text>
</subclause><subclause id="id94a89f4ed62c45aab95c25f0acb1bb1a"><enum>(VII)</enum><text>limits on the activities or functions of involved persons, institutions, third party servicers that
contract with institutions, or third party contractors.</text>
</subclause></clause><clause commented="no" id="idc1fb49af2a4a43cbbd55b6dbb97c598b"><enum>(ii)</enum><header>Exclusion</header><text>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 or withdrawal of the
authority of the third party servicer or third party contractor to act on
behalf of an institution or contract with an institution.</text>
</clause></subparagraph></paragraph></subsection><subsection id="ID66a2be15eb39474b859e28839ced5cd6"><enum>(i)</enum><header>Private Right of Action</header>
<paragraph id="ID764d014482a84cb9a681963b4ce9402b"><enum>(1)</enum><header>In general</header>
<subparagraph id="idF5B5742D5695441EBFF031F415E2ABA9"><enum>(A)</enum><header>Private right of action</header><text>A violation described in subparagraph (B) shall be subject to a private right of action
enforceable by a
student or
former student of an institution of higher education, on behalf of such
individual or such individual and a class, in an appropriate district
court of the United States or any other court of competent jurisdiction
that also has jurisdiction over the defendant. The student or former
student may seek any relief provided under subsection (h)(3)(B) for such
violation, or any remedies otherwise available to the individual under law
and equity.</text>
</subparagraph><subparagraph commented="no" id="idE735AD04DBBF450D8ED41557F897586C"><enum>(B)</enum><header>Violations</header><text>A violation described in this subparagraph is:</text>
<clause commented="no" id="id38D1C7C0810B489C8AD4DABDB15E158E"><enum>(i)</enum><text>A substantial misrepresentation.</text>
</clause><clause commented="no" id="idAC166B0FCC4E4899A49717803AC2B501"><enum>(ii)</enum><text>A violation of section 487(a)(20).</text>
</clause><clause commented="no" id="idC16E85D6E5304693B85232D3F728AD06"><enum>(iii)</enum><text>A violation of the default manipulation regulations promulgated by the Secretary under section
435(m)(3).</text>
</clause><clause commented="no" id="id348572E2B2DF4FE3ACE450865204EA36"><enum>(iv)</enum><text>A violation of the program integrity regulations promulgated by the Secretary under this Act,
including regulations promulgated in section 102, section 455, and part
H.</text>
</clause></subparagraph></paragraph><paragraph id="id5088f326218c45beb297c2421d15c2ce"><enum>(2)</enum><header>Amount of damages</header>
<subparagraph id="id2a7ab4b7c54742a29e5852c30b7cfd32"><enum>(A)</enum><header>In general</header><text>Any institution of higher education, third party servicer that
contracts with such institution, or third party contractor, that commits
a substantial misrepresentation
may be held liable to a student or former student of that institution in
an amount equal to the sum of—</text>
<clause id="idcefa117609b24569b39bd49245a5492a"><enum>(i)</enum><text>any actual damage sustained by such individual as a result of each substantial misrepresentation;</text>
</clause><clause id="idbc9798e9a0e9467cab57e483cc1d3ef8"><enum>(ii)</enum><text>any additional damages as the court may allow; and</text>
</clause><clause id="id41ae557b46e042e3b5775aa98dd500ea"><enum>(iii)</enum><text>in the case of any successful action to enforce the foregoing liability, the costs of the action,
together with a reasonable attorney’s fee as determined by the court.</text>
</clause></subparagraph><subparagraph commented="no" id="idcf2cb26c8430444180f4aed4e9781efa"><enum>(B)</enum><header>Ability to assess punitive damages</header>
<clause commented="no" id="idD3CEFCA0E77744B9A8031090C8EC8217"><enum>(i)</enum><header>In General</header><text>On a finding by the court that the institution of higher education, third party servicer that
contracts with such institution, or third party contractor, has committed
a
violation described in paragraph (1)(B) with actual or constructive
knowledge or reckless disregard for
such violation, the court may assess punitive damages not to exceed
threefold the sum of actual damages sustained by the plaintiff or class,
including court costs and a reasonable attorney’s fee.</text>
</clause><clause id="idd67b593082534997ab73c55f2baeacb3"><enum>(ii)</enum><header>Factors considered by court</header><text>In determining the amount of liability in any action under clause (i), the court shall
consider, among other relevant factors—</text>
<subclause id="id02243c339c0941e281d6e1991495ea29"><enum>(I)</enum><text>in any individual action under this subsection, the frequency and persistence of noncompliance by
the institution of higher education, third party servicer that contracts
with such
institution, or third party contractor and the nature of such
noncompliance; or</text>
</subclause><subclause id="id96898a18acb44324b419a69c8df3375b"><enum>(II)</enum><text>in any class action under this subsection, in addition to the factors listed in clause (i), the
financial resources of the institution of higher education, third party
servicer that contracts with such institution,
or third party contractor and the number of persons adversely
affected.</text>
</subclause></clause></subparagraph></paragraph><paragraph id="id2215cce783e64bd3a8129f74a97f3820"><enum>(3)</enum><header>Jurisdiction</header><text>An action to enforce any liability created by this subsection may be brought in any appropriate
United States district court without regard to the amount in controversy,
or in any other court of competent jurisdiction.</text>
</paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection commented="no" id="ID9f516b8b16164242beadda4e895fc30a"><enum>(b)</enum><header>Conforming amendments</header><text>Section 487(c), as amended by section 102(b), is further amended—</text>
<paragraph commented="no" id="IDe677159e19ab4c9fbe9f892799ee1696"><enum>(1)</enum><text>in paragraph (1), by striking subparagraphs (G) through (J);</text>
</paragraph><paragraph commented="no" id="IDd7c570679456498a9896ca18e8427271"><enum>(2)</enum><text>by striking paragraphs (2) and (3); and</text>
</paragraph><paragraph commented="no" id="IDdcb4bfec1965457cb4795f056c77758f"><enum>(3)</enum><text>by redesignating paragraphs (4) through (7), as paragraphs (2) through (5), respectively.</text>
</paragraph></subsection></section><section commented="no" id="idBEB42121BEB0411296B979A27728EE6E"><enum>306.</enum><header>Substantial misrepresentation prohibited</header><text display-inline="no-display-inline">Section 487(a) (20 U.S.C. 1094(a)), as amended by section 202(b), is further amended by adding at
the end the following:</text>
<quoted-block display-inline="no-display-inline" id="id58C536272D1B474EA439D430142FB1CA" style="OLC">
<paragraph commented="no" id="idAD0F9187D45F4371AEC9C8EA829C96BB"><enum>(30)</enum><text>The institution will not make a substantial misrepresentation, as defined in section 489A.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></section>