[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4701 Introduced in Senate (IS)]

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118th CONGRESS
  2d Session
                                S. 4701

    To amend the Higher Education Act of 1965 regarding proprietary 
   institutions of higher education in order to protect students and 
                               taxpayers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                July 11 (legislative day, July 10), 2024

  Mr. Durbin introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
    To amend the Higher Education Act of 1965 regarding proprietary 
   institutions of higher education in order to protect students and 
                               taxpayers.

    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 ``Protecting Our Students and 
Taxpayers Act of 2024'' or ``POST Act of 2024''.

SEC. 2. 85/15 RULE.

    (a) In General.--Section 102(b) of the Higher Education Act of 1965 
(20 U.S.C. 1002(b)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (D), by striking ``and'' after 
                the semicolon;
                    (B) in subparagraph (E), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following:
                    ``(F) meets the requirements of paragraph (2).'';
            (2) by redesignating paragraph (2) as paragraph (3); and
            (3) by inserting after paragraph (1) the following:
            ``(2) Revenue sources.--
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Alternative financing arrangement.--
                        The term `alternative financing agreement' 
                        means a financing agreement between--
                                    ``(I) a student of an institution; 
                                and
                                    ``(II)(aa) the institution;
                                    ``(bb) any entity or individual--
                                            ``(AA) in the institution's 
                                        ownership tree; or
                                            ``(BB) with any common 
                                        ownership of the institution 
                                        and the entity providing the 
                                        funds; or
                                    ``(cc)(AA) an entity that has any 
                                other relationship or agreement with 
                                the institution; or
                                    ``(BB) an entity with common 
                                ownership with an entity described in 
                                subitem (AA).
                            ``(ii) Federal education assistance 
                        funds.--The term `Federal education assistance 
                        funds' means Federal funds that are disbursed 
                        or delivered to or on behalf of a student to be 
                        used to attend such institution, as calculated 
                        under subparagraph (C).
                    ``(B) 85/15 rule.--In order to qualify as a 
                proprietary 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 (A) and 
                (C).
                    ``(C) Implementation of non-federal revenue 
                requirement.--In making calculations under subparagraph 
                (B), an institution of higher education shall--
                            ``(i) use the cash basis of accounting;
                            ``(ii) consider as revenue only those funds 
                        generated by the institution from--
                                    ``(I) tuition, fees, and other 
                                institutional charges for students 
                                enrolled in programs eligible for 
                                assistance under title IV;
                                    ``(II) activities conducted by the 
                                institution that are necessary for the 
                                education and training of the 
                                institution's students, if such 
                                activities are--
                                            ``(aa) conducted on campus 
                                        or at a facility under the 
                                        control of the institution;
                                            ``(bb) performed under the 
                                        supervision of a member of the 
                                        institution's faculty;
                                            ``(cc) required to be 
                                        performed by all students in a 
                                        specific educational program at 
                                        the institution; and
                                            ``(dd) related directly to 
                                        services performed by students;
                                    ``(III) a contractual arrangement 
                                with a Federal agency for the purpose 
                                of providing job training to low-income 
                                individuals who are in need of such 
                                training; and
                                    ``(IV) funds paid by a student, or 
                                on behalf of a student by a party 
                                unrelated to the institution, its 
                                owners, or affiliates, for an education 
                                or training program that is not 
                                eligible for assistance under title IV, 
                                as long as--
                                            ``(aa) such noneligible 
                                        program does not include any 
                                        courses offered in an eligible 
                                        program of the proprietary 
                                        institution;
                                            ``(bb) such noneligible 
                                        program is provided by the 
                                        institution, and taught by an 
                                        instructor of the institution, 
                                        at--

                                                    ``(AA) its main 
                                                campus or one of its 
                                                additional locations, 
                                                as approved by the 
                                                appropriate accrediting 
                                                agency or association;

                                                    ``(BB) another 
                                                school facility 
                                                approved by the 
                                                appropriate State 
                                                agency or accrediting 
                                                agency or association; 
                                                or

                                                    ``(CC) an employer 
                                                facility; and

                                            ``(cc) such noneligible 
                                        program is not a program where 
                                        the institution is merely 
                                        providing facilities for test 
                                        preparation courses, acting as 
                                        a proctor, or overseeing a 
                                        course of self-study;
                            ``(iii) 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--
                                    ``(I) grant funds provided by an 
                                outside source that--
                                            ``(aa) has no affiliation 
                                        with the institution; and
                                            ``(bb) shares no employees, 
                                        executives, or board members 
                                        with the institution; and
                                    ``(II) institutional scholarships 
                                described in clause (vi);
                            ``(iv) include no loans made by an 
                        institution of higher education as revenue to 
                        the school, except for payments made by current 
                        or former students to the institution during 
                        the fiscal year for which the determination is 
                        being made on such loans that are--
                                    ``(I) used to satisfy tuition, 
                                fees, and other institutional charges;
                                    ``(II) bona fide, as evidenced by 
                                standalone repayment agreements between 
                                the students and the institution that 
                                are enforceable promissory notes;
                                    ``(III) issued at intervals related 
                                to the institution's enrollment 
                                periods;
                                    ``(IV) subject to regular loan 
                                repayments and collections by the 
                                institution; and
                                    ``(V) separate from the enrollment 
                                contracts signed by the students;
                            ``(v) include funds from an income share 
                        agreement, or any other alternative financing 
                        agreement, with a student only if--
                                    ``(I) the institution clearly 
                                identifies the student's institutional 
                                charges, and such charges are the same 
                                or less than the stated rate for 
                                institutional charges;
                                    ``(II) the agreement clearly 
                                identifies the maximum time and maximum 
                                amount a student would be required to 
                                pay, including the implied or imputed 
                                interest rate and any fees and revenue 
                                generated for a related third party, 
                                the institution, or an entity described 
                                in subparagraph (A)(i)(II), for that 
                                maximum time period; and
                                    ``(III) all payments under the 
                                agreement are applied with a portion 
                                allocated to the return of capital and 
                                a portion allocated to profit, with 
                                revenue, interest, and fees not 
                                included in the calculation;
                            ``(vi) include a scholarship provided by 
                        the institution--
                                    ``(I) only if the scholarship is in 
                                the form of monetary aid based upon the 
                                academic achievements or financial need 
                                of students, disbursed to qualified 
                                student recipients during each fiscal 
                                year from an established restricted 
                                account; and
                                    ``(II) only to the extent that 
                                funds in that account represent 
                                designated funds, or income earned on 
                                such funds, from an outside source 
                                that--
                                            ``(aa) has no affiliation 
                                        with the institution; and
                                            ``(bb) shares no employees, 
                                        executives, or board members 
                                        with the institution; and
                            ``(vii) exclude from revenues--
                                    ``(I) 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;
                                    ``(II) the amount of funds the 
                                institution received under subpart 4 of 
                                part A of title IV;
                                    ``(III) the amount of funds 
                                provided by the institution as matching 
                                funds for any Federal program;
                                    ``(IV) the amount of Federal 
                                education assistance funds provided to 
                                the institution to pay institutional 
                                charges for a student that were 
                                refunded or returned; and
                                    ``(V) the amount charged for books, 
                                supplies, and equipment, unless the 
                                institution includes that amount as 
                                tuition, fees, or other institutional 
                                charges.
                    ``(D) Regaining eligibility.--Notwithstanding 
                subparagraph (B), a proprietary institution of higher 
                education that fails to meet the requirements of such 
                subparagraph for a fiscal year shall be ineligible for 
                purposes of this paragraph for a period of not less 
                than 2 institutional fiscal years. To regain 
                eligibility under this paragraph, the proprietary 
                institution shall demonstrate compliance with all 
                eligibility and certification requirements under 
                section 498 for a minimum of 2 institutional fiscal 
                years after the institutional fiscal year in which the 
                institution became ineligible.
                    ``(E) Report to congress.--Not later than July 1, 
                2026, and by July 1 of each succeeding year, the 
                Secretary shall submit to the authorizing committees a 
                report that contains, for each proprietary 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)--
                            ``(i) the amount and percentage of such 
                        institution's revenues received from Federal 
                        education assistance funds; and
                            ``(ii) the amount and percentage of such 
                        institution's revenues received from other 
                        sources.''.
    (b) Repeal of Existing Requirements.--Section 487 of the Higher 
Education Act of 1965 (20 U.S.C. 1094) is amended--
            (1) in subsection (a)--
                    (A) by striking paragraph (24);
                    (B) by redesignating paragraphs (25) through (29) 
                as paragraphs (24) through (28), respectively;
                    (C) in paragraph (24)(A)(ii) (as redesignated by 
                subparagraph (B)), by striking ``subsection (e)'' and 
                inserting ``subsection (d)''; and
                    (D) in paragraph (26) (as redesignated by 
                subparagraph (B)), by striking ``subsection (h)'' and 
                inserting ``subsection (g)'';
            (2) by striking subsection (d);
            (3) by redesignating subsections (e) through (j) as 
        subsections (d) through (i), respectively;
            (4) in the matter preceding paragraph (1) of subsection (d) 
        (as redesignated by paragraph (3)), by striking ``(a)(25)'' and 
        inserting ``(a)(24)'';
            (5) in subsection (f)(1) (as redesignated by paragraph 
        (3)), by striking ``subsection (e)(2)'' and inserting 
        ``subsection (d)(2)''; and
            (6) in subsection (g)(1) (as redesignated by paragraph 
        (3)), by striking ``subsection (a)(27)'' in the matter 
        preceding subparagraph (A) and inserting ``subsection 
        (a)(26)''.
    (c) Conforming Amendments.--The Higher Education Act of 1965 (20 
U.S.C. 1001 et seq.) is amended--
            (1) in section 152 (20 U.S.C. 1019a)--
                    (A) in subsection (a)(1)(A), by striking 
                ``subsections (a)(27) and (h) of section 487'' and 
                inserting ``subsections (a)(26) and (g) of section 
                487''; and
                    (B) in subsection (b)(1)(B)(i)(I), by striking 
                ``section 487(e)'' and inserting ``section 487(d)'';
            (2) in section 153(c)(3) (20 U.S.C. 1019b(c)(3)), by 
        striking ``section 487(a)(25)'' each place the term appears and 
        inserting ``section 487(a)(24)'';
            (3) in section 496(c)(3)(A) (20 U.S.C. 1099b(c)(3)(A)), by 
        striking ``section 487(f)'' and inserting ``section 487(e)''; 
        and
            (4) in section 498(k)(1) (20 U.S.C. 1099c(k)(1)), by 
        striking ``section 487(f)'' and inserting ``section 487(e)''.

SEC. 3. EFFECTIVE DATE.

    The amendments made by this Act shall take effect on July 1, 2025.
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