[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4138 Introduced in Senate (IS)]

<DOC>






118th CONGRESS
  2d Session
                                S. 4138

  To establish an alternative, outcomes-based process for authorizing 
 innovative, high-quality higher education providers to participate in 
      programs under title IV of the Higher Education Act of 1965.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 17, 2024

 Mr. Bennet (for himself and Mr. Rubio) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
  To establish an alternative, outcomes-based process for authorizing 
 innovative, high-quality higher education providers to participate in 
      programs under title IV of the Higher Education Act of 1965.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Higher Education Innovation Act''.

SEC. 2. ALTERNATIVE AUTHORIZATION SYSTEM.

    Part H of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1099a et seq.) is amended by adding at the end the following:

             ``Subpart 4--Alternative Authorization System

``SEC. 498C. ALTERNATIVE AUTHORIZATION SYSTEM.

    ``(a) Definitions.--In this section:
            ``(1) Innovation authorizer.--The term `innovation 
        authorizer' or `authorizer' means an entity that has been 
        approved by the Secretary to carry out authorization of 
        eligible entities.
            ``(2) Eligible entity.--The term `eligible entity' means an 
        institution of higher education or another entity that--
                    ``(A) promotes and supports student success 
                outcomes and cost-effectiveness in postsecondary 
                education;
                    ``(B) provides an educational program--
                            ``(i) that leads to a degree or 
                        certificate;
                            ``(ii) of course bundles; or
                            ``(iii) that leads to an industry-
                        recognized credential that meets the 
                        requirements for licensing in the relevant 
                        field;
                    ``(C) agrees to specified outcome-based oversight 
                and reporting requirements described in this section;
                    ``(D) demonstrates that the entity provides high-
                quality education by meeting or exceeding the minimum 
                thresholds for each of the performance metrics that are 
                required by the innovation authorizer in accordance 
                with subsection (b) and which are developed in 
                accordance with subsection (d);
                    ``(E) meets the definition of an institution of 
                higher education under section 101 or 102, except that 
                the entity need not meet the requirements described 
                in--
                            ``(i) section 101(a)(5);
                            ``(ii) section 102(b)(1)(A)(ii)(II); or
                            ``(iii) section 102(b)(1)(D); and
                    ``(F) meets the other requirements for 
                participation in this title.
            ``(3) Teach-out plan.--The term `teach-out plan' means a 
        written plan that provides for the equitable treatment of 
        students if an eligible entity ceases to operate before all 
        students have completed their program of study, and may 
        include, if required by the Secretary, an agreement between 
        eligible entities or between an eligible entity and another 
        institution for such a teach-out plan.
            ``(4) Course bundle.--The term `course bundle' means a 
        series of courses, or the equivalent, that lead to--
                    ``(A) proficiency in a set of marketable skills or 
                competencies; or
                    ``(B) an industry-recognized credential that meets 
                the requirements for licensing in the relevant field.
            ``(5) Completion.--The term `completion' means--
                    ``(A) in the case of a course bundle--
                            ``(i) completion of a series of courses--
                                    ``(I) that lead to proficiency in a 
                                set of marketable skills or 
                                competencies; or
                                    ``(II) that result in an industry-
                                recognized credential that meets the 
                                requirements for licensing in the 
                                relevant field; or
                            ``(ii) successful completion of a set of 
                        assessments--
                                    ``(I) that demonstrates proficiency 
                                in a set of marketable skills or 
                                competencies; or
                                    ``(II) that results in an industry-
                                recognized credential that meets the 
                                requirements for licensing in the 
                                relevant field; and
                    ``(B) in the case of a program leading to a 
                certificate or degree, receipt of the certificate or 
                degree.
    ``(b) Approval of Innovation Authorizers.--
            ``(1) In general.--The Secretary shall establish a process 
        for approving innovation authorizers to carry out the 
        authorization of eligible entities.
            ``(2) Request for applications.--Not later than 275 days 
        after the date of enactment of this subpart, the Secretary 
        shall publish a request for applications from entities that 
        desire to become innovation authorizers. Any accrediting agency 
        or association currently recognized by the Secretary or any 
        entity not currently recognized by the Secretary may apply to 
        be approved as innovation authorizers.
            ``(3) Application requirements.--An entity that desires to 
        be approved by the Secretary as an innovation authorizer under 
        paragraph (1) shall submit an application to the Secretary that 
        includes the following information:
                    ``(A) Information on the entity's prior experience 
                as an authorizer, accreditor, programmatic accreditor, 
                or industry validator, or strong evidence and history 
                that demonstrates the entity is equipped to be a high-
                quality authorizer.
                    ``(B) An explanation of why the entity is qualified 
                and capable of being an innovation authorizer, 
                accompanied by supporting documentation.
                    ``(C) Evidence that the entity is financially able 
                to meet the requirements for authorizing eligible 
                entities, including the requirements under paragraph 
                (7).
                    ``(D) A description of the process that the entity 
                will use for awarding authorization, and suspending or 
                revoking an eligible entity's authorization, 
                including--
                            ``(i) the performance metrics the 
                        authorizer will use in making determinations 
                        about authorization, which shall meet the 
                        requirements described under subsection (d);
                            ``(ii) the minimum threshold for each 
                        performance metric described in clause (i), 
                        which shall require an eligible entity to meet 
                        or exceed the 60th-percentile student outcome 
                        for each such performance metric in order to be 
                        awarded authorization by the innovation 
                        authorizer;
                            ``(iii) any other criteria or metrics that 
                        the entity will use as an innovation authorizer 
                        to award authorization status to an eligible 
                        entity, if applicable; and
                            ``(iv) the process for--
                                    ``(I) monitoring authorized 
                                eligible entities, ensuring that each 
                                eligible entity continues to meet the 
                                criteria for authorization (including 
                                the threshold for each applicable 
                                performance metric as described in 
                                clause (ii)); and
                                    ``(II) ensuring the accuracy and 
                                validity of data.
                    ``(E) A description of the entity's area of 
                educational or subject matter focus, if applicable.
                    ``(F) The composition or membership of the entity 
                that seeks to become an innovation authorizer, and the 
                entity's relationship or work with applicable 
                industries and businesses.
                    ``(G) A demonstration that the entity has--
                            ``(i) clear and effective controls to 
                        protect against conflicts of interest, or the 
                        appearance of conflicts of interest, between 
                        the entity that wishes to be an innovation 
                        authorizer and eligible entities (including 
                        controls regarding potential conflicts of 
                        interest between board members, commissioners, 
                        evaluation team members, consultants, 
                        administrative staff, and other representatives 
                        of the entity that wishes to be an authorizer 
                        and eligible entities); and
                            ``(ii) requirements to ensure that, as an 
                        authorizer, the entity and the staff, and 
                        representatives of the entity will be separate 
                        and independent (as defined in section 496(b)), 
                        both administratively and financially, from any 
                        eligible entities and will receive no benefit, 
                        financial or otherwise, from authorizing an 
                        eligible entity.
                    ``(H) An agreement that the entity will make 
                applicable authorization data, documents, and 
                determinations publicly available.
            ``(4) Dissemination of information.--For the purpose of 
        determining minimum thresholds for performance metrics under 
        paragraph (3)(D)(ii) and subsection (d)(1)(B), the Secretary 
        shall--
                    ``(A) disseminate to innovation authorizers, on an 
                annual basis, information about 60th-percentile student 
                outcomes on the performance criteria described under 
                subsection (d), in the aggregate for all students and 
                disaggregated by student income quartile and field of 
                study; and
                    ``(B) provide the information described in 
                subparagraph (A) to an innovation authorizer or an 
                entity that wishes to apply to become an innovation 
                authorizer upon request.
            ``(5) Limitation, suspension, or termination of authorizer 
        approval.--
                    ``(A) Notice and opportunity for correction.--If 
                the Secretary determines that an innovation authorizer 
                has failed to apply and effectively enforce the 
                performance criteria, including the minimum thresholds 
                for such criteria, specified in the innovation 
                authorizer's application under paragraph (3) in 
                awarding, monitoring, and revoking authorization status 
                for eligible entities, the Secretary shall provide 
                notice to the innovation authorizer and give the 
                innovation authorizer a 6-month period to apply and 
                enforce the performance criteria and minimum thresholds 
                described in the innovation authorizer's application 
                under paragraph (3).
                    ``(B) Limitation, suspension, or termination.--If, 
                after the 6-month period described in subparagraph (A), 
                the Secretary determines that an innovation authorizer 
                has still failed to effectively enforce the performance 
                criteria and minimum thresholds specified in that 
                innovation authorizer's application under paragraph 
                (3), the Secretary shall limit, suspend, or terminate 
                the recognition of that innovation authorizer.
            ``(6) Loss of authorizer approval.--In the case of an 
        eligible entity authorized by an innovation authorizer whose 
        recognition has been limited, suspended, or terminated by the 
        Secretary--
                    ``(A) if the eligible entity successfully 
                demonstrates to the Secretary that the eligible entity 
                meets the performance criteria and minimum thresholds 
                that such authorizer specified in its application under 
                paragraph (3), the eligible entity shall have 6 months 
                to apply for accreditation by another accrediting 
                agency or association or authorization by another 
                innovation authorizer; or
                    ``(B) the eligible entity shall prepare a teach-out 
                plan that meets the Secretary's regulations for teach-
                out plans and shall submit such plan to the Secretary.
            ``(7) Authorizer risk sharing.--Each innovation authorizer 
        shall enter into an agreement with the Secretary whereby the 
        innovation authorizer agrees to pay the Secretary an amount 
        equal to not less than 25 percent of the amount of Federal 
        student loans that are held by current and former students of 
        any eligible entity authorized by the innovation authorizer 
        under subsection (d) and that are in default each fiscal year.
    ``(c) Eligibility for Federal Pell Grant Funding.--Eligible 
entities that are authorized by an innovation authorizer shall be 
eligible to receive Federal Pell Grant funding in accordance with 
subsection (f).
    ``(d) Authorization by an Innovation Authorizer.--
            ``(1) Authorization process.--
                    ``(A) In general.--An innovation authorizer may 
                authorize an eligible entity, if--
                            ``(i) that eligible entity meets the 
                        criteria under subsection (a)(2); and
                            ``(ii) in the case of--
                                    ``(I) an eligible entity that has 
                                not carried out an educational program 
                                for more than 2 years, the eligible 
                                entity agrees to, and describes a high-
                                quality, evidence-based plan to, meet 
                                within 2 years the specific performance 
                                metrics and minimum thresholds required 
                                by the innovation authorizer in 
                                accordance with subsection (b)(3)(D); 
                                and
                                    ``(II) an eligible entity that has 
                                carried out an educational program for 
                                more than 2 years, the eligible entity 
                                demonstrates that the eligible entity 
                                meets the specific performance metrics 
                                and minimum thresholds required by the 
                                innovation authorizer in accordance 
                                with subsection (b)(3)(D).
                    ``(B) Performance metrics.--
                            ``(i) In general.--In accordance with 
                        subparagraph (C), each innovation authorizer 
                        shall--
                                    ``(I) use, in order to determine 
                                whether to award authorization to an 
                                eligible entity, not less than--
                                            ``(aa) 1 performance metric 
                                        relating to student learning, 
                                        as described in clause (ii);
                                            ``(bb) the performance 
                                        metric relating to completion, 
                                        as described in clause (iii); 
                                        and
                                            ``(cc) 2 performance 
                                        metrics relating to the benefit 
                                        to the student and 
                                        affordability, as described in 
                                        clause (iv);
                                    ``(II) establish the minimum 
                                thresholds for each performance metric 
                                that the eligible entity must meet or 
                                exceed in order to be authorized by the 
                                authorizer in accordance with 
                                subsection (b)(3)(D)(ii), ensuring that 
                                each minimum threshold meets or exceeds 
                                the 60th-percentile student outcome for 
                                the performance metric; and
                                    ``(III) in the determination about 
                                whether an eligible entity meets the 
                                required threshold for authorization 
                                for each performance metric, include 
                                data from all students who enroll in 
                                the eligible entity.
                            ``(ii) Student learning.--The performance 
                        metrics relating to student learning are the 
                        following:
                                    ``(I) A nationally defined, 
                                demonstrated, objective, and verifiable 
                                measure of student learning, including 
                                a measure of the knowledge or skills 
                                gained by the student from the 
                                educational program or institution.
                                    ``(II) Demonstrated quality based 
                                on an evaluation conducted by an 
                                independent evaluator that uses 
                                evaluation criteria approved by the 
                                What Works Clearinghouse of the 
                                Institute of Education Sciences and 
                                shows statistically significant 
                                increases in student learning.
                                    ``(III) Pass rates and overall 
                                scores on qualifying or licensing 
                                examinations.
                            ``(iii) Completion.--
                                    ``(I) In general.--The performance 
                                metric relating to completion is the 
                                percentage of all students who complete 
                                the educational program and each 
                                program of study in--
                                            ``(aa) 100 percent of the 
                                        normal time for completion of 
                                        each program of study;
                                            ``(bb) 150 percent of the 
                                        normal time for completion of 
                                        each program of study; and
                                            ``(cc) 200 percent of the 
                                        normal time for completion of 
                                        each program of study.
                                    ``(II) Transfer students.--In 
                                determining the percentage under 
                                subclause (I), an eligible entity may 
                                include the students in each program of 
                                study who transfer and successfully 
                                complete a program of study.
                            ``(iv) Benefit to student and 
                        affordability.--The performance metrics 
                        relating to benefit to the student and 
                        affordability are the following:
                                    ``(I) Rates of employment or 
                                enrollment in and completion of 
                                graduate or professional school.
                                    ``(II) Increases in income for 
                                students.
                                    ``(III) The cost of tuition and 
                                fees, the net price disaggregated by 
                                income quintile and educational 
                                program, and the median total loan debt 
                                accrued by students who were enrolled 
                                in the eligible entity.
                                    ``(IV) Student loan repayment rates 
                                for Federal and private student loans, 
                                if applicable.
                                    ``(V) Median income of students who 
                                were enrolled in the eligible entity.
                    ``(C) Data source.--When an innovation authorizer 
                uses data about income or employment, as described in 
                subparagraph (B)(iv), the following provisions shall 
                apply:
                            ``(i) The innovation authorizer shall use 
                        wage data gathered in accordance with clauses 
                        (iii) and (iv) and shall disaggregate such data 
                        (except that such disaggregation shall not be 
                        required in a case in which the results would 
                        reveal personally identifiable information 
                        about an individual student), by--
                                    ``(I) educational program based on 
                                the Classification of Instructional 
                                Programs Code developed by the National 
                                Center for Education Statistics;
                                    ``(II) credential received;
                                    ``(III) noncompleters;
                                    ``(IV) eligible entity; and
                                    ``(V) State and region of 
                                employment.
                            ``(ii) The innovation authorizer shall 
                        include data for--
                                    ``(I) 1 year after educational 
                                program completion;
                                    ``(II) 3 years after educational 
                                program completion; and
                                    ``(III) 5 years after educational 
                                program completion.
                            ``(iii) Notwithstanding any other provision 
                        of law, the Secretary, in cooperation with the 
                        Commissioner of Social Security, and each 
                        eligible entity whose wage data will be 
                        evaluated in accordance with subparagraph 
                        (B)(iv) shall establish a system through which 
                        relevant data may be retrieved from the Social 
                        Security Administration, including data on 
                        median annual earnings and employment metrics.
                            ``(iv) The Secretary, innovation 
                        authorizers, and eligible entities shall not 
                        share personally identifiable information of a 
                        student in carrying out this subparagraph, 
                        except as necessary to enable individuals who 
                        are employed by the Department to meet the 
                        reporting requirements and data dissemination 
                        purposes and requirements under this Act.
                    ``(D) Transparency.--Notwithstanding the specific 
                performance metrics used by any specific authorizer, 
                each authorized eligible entity shall make public and 
                disaggregate information on all of the metrics 
                described under subparagraph (B) for the eligible 
                entity as a whole and for each educational program of 
                the eligible entity, as applicable.
            ``(2) Renewing authorization.--An innovation authorizer 
        shall require each eligible entity that has been authorized by 
        the innovation authorizer to have the eligible entity's 
        authorization renewed not later than 2 years after the eligible 
        entity is first authorized, and not later than every 5 years 
        thereafter.
            ``(3) Loss of authorization.--
                    ``(A) In general.--An innovation authorizer shall 
                remove an eligible entity from authorized status if, 
                for 2 consecutive calendar years, that eligible entity 
                falls below the minimum threshold for any performance 
                metric required for authorization by the innovation 
                authorizer in accordance with subsection (b)(3)(D).
                    ``(B) Petition to regain authorization.--An 
                eligible entity that is removed from authorized status 
                may petition an innovation authorizer to regain 
                authorization by demonstrating to the innovation 
                authorizer that the eligible entity is ensuring quality 
                and student success and has met, and will continue to 
                meet, the minimum thresholds for each performance 
                metric required for authorization by the innovation 
                authorizer in accordance with subsection (b)(3)(D).
            ``(4) Accreditation deemed.--Authorization by an innovation 
        authorizer approved by the Secretary under this section shall 
        be deemed recognized accreditation for purposes of title IV.
    ``(e) Accreditation and Authorization; Changing Accreditors or 
Authorizers.--
            ``(1) Accreditation and authorization.--An eligible entity 
        that otherwise meets the requirements for authorization by an 
        innovation authorizer and the requirements for accreditation by 
        a recognized accrediting agency or association may hold 
        accreditation and authorization from both entities.
            ``(2) Changing accreditors or authorizers.--An eligible 
        entity that otherwise meets the relevant requirements for 
        accreditation or authorization may notify the Secretary and 
        change accreditation or authorization status--
                    ``(A) from an innovation authorizer to a recognized 
                accrediting agency or association; or
                    ``(B) from a recognized accrediting agency or 
                association to an innovation authorizer.
    ``(f) Eligibility for Federal Pell Grant Funding.--
            ``(1) Authorizer federal pell grant funding requirements.--
                    ``(A) Aggregate innovation authorizer federal pell 
                grant cap.--
                            ``(i) Individual authorizer cap.--The 
                        Secretary shall determine, in accordance with 
                        subparagraph (B) for each award year and for 
                        each innovation authorizer, the total maximum 
                        amount of Federal Pell Grant funds that all 
                        eligible entities that are authorized by a 
                        given innovation authorizer may receive through 
                        tuition and fee payments from enrolled students 
                        who receive a Federal Pell Grant.
                            ``(ii) Aggregate authorizer cap.--The 
                        Secretary shall determine each innovation 
                        authorizer Federal Pell Grant cap, as described 
                        in clause (i), in a manner that ensures that 
                        the aggregate amount of Federal Pell Grant 
                        funds that all eligible entities authorized by 
                        all innovation authorizers receive each year 
                        does not exceed 0.5 percent of total Federal 
                        Pell Grant funding for the previous award year.
                    ``(B) Individual innovation authorizer federal pell 
                grant cap.--The Secretary shall determine each 
                innovation authorizer's cap under subparagraph (A)(i) 
                based on--
                            ``(i) the authorizer's experience and track 
                        record of awarding authorization to eligible 
                        entities; and
                            ``(ii) the performance criteria and minimum 
                        thresholds that the authorizer uses in 
                        determining whether to award authorization to 
                        eligible entities, as specified in subsection 
                        (b)(3)(D).
            ``(2) Eligible entity federal pell grant funding 
        requirements.--
                    ``(A) In general.--An eligible entity that is 
                authorized by an innovation authorizer in accordance 
                with this section is eligible to receive Federal Pell 
                Grant funds in accordance with subparagraphs (B), (C), 
                and (D).
                    ``(B) Eligible entity total cap on federal pell 
                grant funding.--Each award year, an eligible entity 
                described in subparagraph (A) will be eligible to 
                receive (through tuition and fee payments from enrolled 
                students) a maximum total amount of Federal Pell Grant 
                funding that--
                            ``(i) shall be determined by the innovation 
                        authorizer;
                            ``(ii) shall be determined in a manner so 
                        as to ensure that the innovation authorizer 
                        does not exceed the innovation authorizer's 
                        Federal Pell Grant cap;
                            ``(iii) shall be based on the eligible 
                        entity's history and track record of meeting or 
                        exceeding the relevant performance metrics 
                        minimum thresholds; and
                            ``(iv) shall not exceed 15 percent of total 
                        Federal Pell Grant funding for eligible 
                        entities authorized by the innovation 
                        authorizer for the previous award year.
                    ``(C) Federal pell grant allocations.--
                            ``(i) Full federal pell grant.--An eligible 
                        entity authorized by an innovation authorizer 
                        that provides validated documentation from an 
                        independent evaluator that the eligible entity 
                        has met or exceeded the minimum thresholds for 
                        each of the authorizer's performance metrics 
                        for at least 5 consecutive years shall be 
                        eligible to receive up to the full amount of 
                        Federal Pell Grant funding that each enrolled 
                        student is eligible to receive, subject to the 
                        cap described in subparagraph (B).
                            ``(ii) 50-percent reimbursement federal 
                        pell grant.--An eligible entity authorized by 
                        an innovation authorizer that provides 
                        validated documentation from an independent 
                        evaluator that the eligible entity has met or 
                        exceeded the minimum thresholds for each of the 
                        authorizer's performance metrics for at least 3 
                        consecutive years but less than 5 consecutive 
                        years and has been determined by such 
                        authorizer to have a strong evidence basis for 
                        continuing to annually meet such minimum 
                        thresholds for each performance metric shall be 
                        eligible for a pay for performance contract 
                        with the following terms:
                                    ``(I) The eligible entity shall be 
                                eligible to receive up to 50 percent of 
                                the amount of Federal Pell Grant 
                                funding that each enrolled student is 
                                eligible to receive, subject to the cap 
                                described in subparagraph (B).
                                    ``(II) The eligible entity shall 
                                provide a bond or matching funds to pay 
                                for the remaining 50 percent of the 
                                amount of Federal Pell Grant funding 
                                that each enrolled student is otherwise 
                                eligible to receive.
                                    ``(III) The Secretary shall 
                                reimburse the eligible entity for an 
                                amount equal to the amount that the 
                                eligible entity provided under 
                                subclause (II) for each enrolled 
                                student, except that such amount may 
                                not exceed the remaining cost of 
                                tuition and fees for each student--
                                            ``(aa) for whom the 
                                        eligible entity provided 
                                        matching funds as described in 
                                        subclause (II); and
                                            ``(bb) who successfully 
                                        completes the educational 
                                        program.
                            ``(iii) 75-percent reimbursement federal 
                        pell grant.--An eligible entity authorized by 
                        an innovation authorizer that provides 
                        validated documentation from an independent 
                        evaluator that the eligible entity has met or 
                        exceeded the minimum thresholds for each of the 
                        authorizer's performance metrics for at least 1 
                        year but less than 3 consecutive years and has 
                        been determined by such authorizer to have a 
                        strong evidence basis for continuing to 
                        annually meet such minimum thresholds for each 
                        performance metric shall be eligible for a pay 
                        for performance contract with the following 
                        terms:
                                    ``(I) The eligible entity shall be 
                                eligible to receive up to 25 percent of 
                                the amount of Federal Pell Grant 
                                funding that each enrolled student is 
                                eligible to receive, subject to the cap 
                                described in subparagraph (B).
                                    ``(II) The eligible entity shall 
                                provide--
                                            ``(aa) a bond for 25 
                                        percent of the amount of 
                                        Federal Pell Grant funding that 
                                        each enrolled student is 
                                        otherwise eligible to receive; 
                                        and
                                            ``(bb) a bond or matching 
                                        funds for the remaining 75 
                                        percent of the amount of 
                                        Federal Pell Grant funding that 
                                        each enrolled student is 
                                        otherwise eligible to receive.
                                    ``(III) If the eligible entity 
                                meets the minimum thresholds for each 
                                of the authorizer's performance metrics 
                                for 2 consecutive years after the date 
                                of the pay for performance contract, 
                                the Secretary shall reimburse the 
                                eligible entity for an amount equal to 
                                the amount that the eligible entity 
                                provided under subclause (II)(bb) for 
                                each enrolled student, except that such 
                                amount may not exceed the remaining 
                                cost of tuition and fees for each 
                                student--
                                            ``(aa) for whom the 
                                        eligible entity provided 
                                        matching funds as described in 
                                        subclause (II)(bb); and
                                            ``(bb) who successfully 
                                        completes the educational 
                                        program.
                                    ``(IV) If the eligible entity fails 
                                to meet the minimum thresholds for each 
                                of the authorizer's performance 
                                criteria for 2 consecutive years after 
                                the date of the contract, the eligible 
                                entity shall reimburse the Federal 
                                Government in an amount equal to the 
                                amount described in subclause (I).
                            ``(iv) 100-percent reimbursement federal 
                        pell grant.--An eligible entity that has no 
                        track record of meeting, exceeding, or failing 
                        to meet the minimum thresholds for each of the 
                        authorizer's performance metrics, and that has 
                        been determined by an innovation authorizer to 
                        have a strong and rigorous evidence base 
                        demonstrating an ability to consistently and 
                        annually meet or exceed the minimum thresholds 
                        for each of the performance metrics of that 
                        innovation authorizer shall be eligible for a 
                        pay for performance contract with the following 
                        terms:
                                    ``(I) The eligible entity shall 
                                provide funds equal to 100 percent of 
                                the amount of Federal Pell Grant 
                                funding that each enrolled student is 
                                otherwise eligible to receive.
                                    ``(II) If the eligible entity meets 
                                the minimum thresholds for each of the 
                                authorizer's performance metrics for 2 
                                consecutive years after the date of the 
                                pay for performance contract, the 
                                Secretary shall reimburse the eligible 
                                entity for an amount equal to the 
                                amount that the eligible entity 
                                provided under subclause (I) for each 
                                enrolled student, except that such 
                                amount may not exceed the remaining 
                                cost of tuition and fees for each 
                                student--
                                            ``(aa) for whom the 
                                        eligible entity provided funds 
                                        as described in subclause (I); 
                                        and
                                            ``(bb) who successfully 
                                        completes the educational 
                                        program.
                    ``(D) Federal pell grant amount treated as 
                payment.--Notwithstanding the actual amount of Federal 
                Pell Grant funding that an eligible entity receives 
                (which, in accordance with subparagraphs (B) and (C), 
                may not be the full amount of Federal Pell Grant 
                funding that each enrolled student who is eligible for 
                a Federal Pell Grant is eligible to receive), an 
                eligible entity--
                            ``(i) shall treat each student as having 
                        paid the total amount of Federal Pell Grant 
                        funding for which the student is eligible;
                            ``(ii) shall not charge students additional 
                        tuition or fees to compensate for any amount of 
                        Federal Pell Grant funding for which the 
                        eligible entity--
                                    ``(I) must provide a bond or 
                                matching funds or for which the 
                                eligible entity otherwise must wait for 
                                reimbursement under subparagraph (C); 
                                or
                                    ``(II) may fail to receive due to a 
                                cap described under subparagraph (B); 
                                and
                            ``(iii) shall not charge a higher amount of 
                        tuition or fees to a student who is eligible 
                        for a Federal Pell Grant.
                    ``(E) Rule of construction.--Nothing in 
                subparagraph (D) shall be construed as prohibiting an 
                eligible entity from reducing the amount of tuition and 
                fees the eligible entity charges to a student who is 
                eligible for a Federal Pell Grant based on student 
                need.
                    ``(F) Students exceeding cap.--An eligible entity 
                may elect to enroll students whose collective 
                eligibility for Federal Pell Grants would otherwise 
                result in the eligible entity exceeding the cap under 
                subparagraph (B) but such eligible entity shall comply 
                with subparagraph (D).
            ``(3) Federal pell grant eligibility for students.--
                    ``(A) In general.--A student may receive a Federal 
                Pell Grant and use funding from such grant to attend an 
                eligible entity or a program of an eligible entity that 
                is authorized by an innovation authorizer under this 
                subpart if the student meets the other requirements for 
                receiving a Federal Pell Grant, as described in section 
                401.
                    ``(B) Eligibility period.--For the purpose of 
                calculating a student's remaining period of eligibility 
                for Federal Pell Grant funding under section 401, the 
                Secretary shall consider only Federal Pell Grant 
                funding actually paid to an eligible entity on behalf 
                of the student, in accordance with subparagraphs (B) 
                and (C) of paragraph (2).
    ``(g) Access to Title IV Funding.--
            ``(1) Continuation of title iv eligibility.--An institution 
        of higher education that was eligible to participate in, and 
        receive funding under, this title prior to seeking and gaining 
        authorization under this section may petition the Secretary to 
        continue to be eligible to receive loans made under this title 
        if the institution is an eligible entity described under clause 
        (i) or (ii) of subsection (f)(2)(C).
            ``(2) Recommendations.--Not later than 2 years after the 
        date of enactment of this subpart, the Secretary, in 
        consultation with innovation authorizers, eligible entities, 
        and stakeholders, shall make recommendations to Congress 
        regarding a process for providing all eligible entities with 
        access to loans made under this title.
    ``(h) Reports.--
            ``(1) Reports from authorized eligible entities to 
        innovation authorizers.--Each eligible entity that is 
        authorized by an innovation authorizer shall prepare and submit 
        an annual report to the innovation authorizer containing such 
        information as that innovation authorizer may require.
            ``(2) Reports from innovation authorizers to the 
        secretary.--Each innovation authorizer shall prepare and submit 
        an annual report to the Secretary containing such information 
        as the Secretary may require.''.

SEC. 3. TERMINATION OF APPROPRIATIONS.

    No funds shall be authorized to carry out this Act, including the 
amendments made by this Act, 5 years after the date of enactment of 
this Act.

SEC. 4. TERMINATION OF AUTHORIZATION.

    Subpart 4 of part H of title IV of the Higher Education Act of 
1965, as added by section 2, shall expire on the date that is 5 years 
after the date of enactment of this Act.
                                 <all>