[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5021 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 5021
To provide consumer protections for students.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 16, 2026
Mr. Merkley (for himself, Mr. Durbin, and Mr. Blumenthal) introduced
the following bill; which was read twice and referred to the Committee
on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To provide consumer protections for students.
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 Students from Worthless
Degrees Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Federal education assistance funds.--The term ``Federal
education assistance funds'' has the meaning given the term in
section 487(a)(24) of the Higher Education Act of 1965 (20
U.S.C. 1094(a)(24)).
(2) Freely associated states.--The term ``freely associated
States'' means the Republic of the Marshall Islands, the
Federated States of Micronesia, and the Republic of Palau.
(3) Institution of higher education.--The term
``institution of higher education''--
(A) means a postsecondary education institution
that receives Federal education assistance funds; and
(B) includes an institution of higher education, as
defined in section 102 of the Higher Education Act of
1965 (20 U.S.C. 1002).
(4) State.--The term ``State'' includes, in addition to the
several States of the United States, the Commonwealth of Puerto
Rico, the District of Columbia, Guam, American Samoa, the
United States Virgin Islands, the Commonwealth of the Northern
Mariana Islands, and the freely associated States.
SEC. 3. PROTECTIONS IN OCCUPATIONS REQUIRING STATE LICENSURE.
Notwithstanding any other provision of law, an institution of
higher education is not eligible to receive Federal education
assistance funds with respect to any program of postsecondary education
or training, including a degree or certificate program and any program
offered by distance education or correspondence courses to students
located in a State other than where the institution is physically
located, that is designed to prepare students for entry into a
recognized occupation or profession that requires licensing or other
established requirements as a pre-condition for entry into such
occupation or profession, unless, by not later than 1 year after the
date of enactment of this Act--
(1) the successful completion of the program fully
qualifies a student, in the metropolitan statistical area in
which the student resides, in the State in which the student
resides, and in any State in which the institution indicates,
through advertising or marketing activities or direct contact
with potential students, that a student will be prepared to
work in the occupation or profession after successfully
completing the program, to--
(A) take any examination required for entry into
the recognized occupation or profession in the
metropolitan statistical area and any State described
in this paragraph, including satisfying all Federal,
State, or professionally mandated programmatic and
specialized accreditation requirements, if any; and
(B) be certified or licensed or meet any other
academically related pre-conditions that are required
for entry into the recognized occupation or profession
in any such State; and
(2) the institution offering the program provides timely
placement for all of the academically related pre-licensure
requirements for entry into the recognized occupation or
profession, such as clinical placements, internships, or
apprenticeships.
SEC. 4. PROTECTING STUDENTS AT GAINFUL EMPLOYMENT PROGRAMS AND
PROTECTING ALL STUDENTS AND FEDERAL FUNDS FROM LOW-
EARNING PROGRAMS.
(a) Defining Gainful Employment Programs.--
(1) Additional institutions.--Section 101(b)(1) of the
Higher Education Act of 1965 (20 U.S.C. 1001(b)(1)) is amended
by inserting ``, that meets the standards for debt-to-earnings
in section 498C,'' after ``gainful employment in a recognized
occupation''.
(2) Proprietary institution of higher education.--Section
102(b)(1)(A)(i) of the Higher Education Act of 1965 (20 U.S.C.
1002(b)(1)(A)(i)) is amended by inserting ``that meets the
standards for debt-to-earnings in section 498C'' after
``gainful employment in a recognized occupation''.
(3) Postsecondary vocational institution.--Section
102(c)(1)(A) of the Higher Education Act of 1965 (20 U.S.C.
1002(c)(1)(A)) is amended by inserting ``that meets the
standards for debt-to-earnings in section 498C'' after
``gainful employment in a recognized occupation''.
(4) Eligible program.--Section 481(b)(1)(A)(i) of the
Higher Education Act of 1965 (20 U.S.C. 1088(b)(1)(A)(i)) is
amended by inserting ``and meets the standards for debt-to-
earnings in section 498C'' after ``gainful employment in a
recognized profession''.
(b) Debt-to-Earnings.--Subpart 3 of part H of title IV of the
Higher Education Act of 1965 (20 U.S.C. 1099c et seq.) is amended by
adding at the end the following:
``SEC. 498C. DEBT-TO-EARNINGS.
``(a) Definitions.--In this section:
``(1) Annual debt-to-earnings rate.--The term `annual debt-
to-earnings rate' means, for a cohort period and eligible
program, the rate that is calculated for the cohort period for
students, as defined by the Secretary, who completed the
eligible program during such cohort period by dividing the
annual loan payment for such cohort period, as calculated by
the Secretary, by the median annual earnings for such cohort
period.
``(2) Annual loan payment.--The term `annual loan payment'
means, for a cohort period and eligible program, the annual
loan payment for the cohort of students who completed the
eligible program during the cohort period, calculated by the
Secretary by using--
``(A) the median loan debt of the cohort;
``(B) an amortization period of--
``(i) 10 years, in the case of an eligible
program that leads to an undergraduate
certificate or diploma, a postbaccalaureate
certificate, an associate degree, or a graduate
certificate;
``(ii) 15 years, in the case of an eligible
program that leads to a baccalaureate degree or
a master's degree; or
``(iii) 20 years, in the case of an
eligible program not described in clause (i) or
(ii); and
``(C) an annual interest rate that is--
``(i) in the case of an eligible program
that is an undergraduate certificate or diploma
program, postbaccalaureate certificate program,
or associate degree program, the average of the
annual statutory interest rates on Federal
Direct Unsubsidized Loans applicable to
undergraduate students for the three
consecutive award years ending in the final
year of the cohort period;
``(ii) in the case of an eligible program
that is a graduate certificate program or a
master's degree program, the average of the
annual statutory interest rates on Federal
Direct Unsubsidized Loans applicable to
graduate students that were in effect during
the three consecutive award years ending in the
final year of the cohort period;
``(iii) in the case of an eligible program
that is a bachelor's degree program, the
average of the annual statutory interest rates
on Federal Direct Unsubsidized Loans applicable
to undergraduate students for the six
consecutive award years ending in the final
year of the cohort period; and
``(iv) in the case of an eligible program
that is a doctoral program or a first
professional degree program, the average of the
annual statutory interest rates on Federal
Direct Unsubsidized Loan applicable to graduate
students for the six consecutive award years
ending in the final year of the cohort period.
``(3) Cohort period.--The term `cohort period' means--
``(A) a period of 2 award years, with respect to an
eligible program for which the number of students who
completed the eligible program in the 2-year period is
30 or more; and
``(B) a period of 4 award years, with respect to an
eligible program not described in subparagraph (A).
``(4) Discretionary debt-to-earnings rate.--The term
`discretionary debt-to-earnings rate' means the rate that is
calculated for a cohort period and eligible program by
calculating the quotient of--
``(A) the annual loan payment for such cohort
period; divided by
``(B) the discretionary earnings for such cohort
period.
``(5) Discretionary earnings.--The term `discretionary
earnings' means the difference between--
``(A) the median annual earnings for a cohort
period; and
``(B) the amount that is 150 percent of the poverty
level for an individual, as determined by the Secretary
of Health and Human Services for the most recent
calendar year for which median annual earnings data has
been obtained.
``(6) Median annual earnings.--The term `median annual
earnings' means, for a cohort period and an eligible program,
the midpoint of the annual earnings of students who completed
the program--
``(A) for a 2-year cohort period--
``(i) in the fourth and fifth award years
prior to the year for which the most recent
data are available from the Federal agency with
earnings data, except as provided in clause
(ii); and
``(ii) in the seventh and eighth award
years prior to the year for which the most
recent data are available from such Federal
agency, for qualifying graduate programs; and
``(B) for a 4-year cohort period--
``(i) in the fourth, fifth, sixth, and
seventh award years prior to the year for which
the most recent data are available from the
Federal agency with earnings data, except as
provided in clause (ii); and
``(ii) in the seventh, eighth, ninth, and
tenth award years prior to the year for which
the most recent data are available from such
Federal agency, for qualifying graduate
programs.
``(7) Median loan debt.--The term `median loan debt' means,
for a cohort period and an eligible program, the amount
obtained by--
``(A) calculating the loan debt, including private
education loans (as defined in section 140(a) of the
Truth in Lending Act (15 U.S.C. 1650(a))) for each
student who completed the eligible program during such
cohort period, based on the lesser of--
``(i) the loan debt incurred by each
student; or
``(ii) the total amount for tuition and
fees and books, equipment, and supplies for
each student, less the amount of institutional
grant or scholarship funds provided to that
student;
``(B) removing, if applicable, the number of
largest loan debts equivalent to the number of students
for whom the Federal agency with earnings data reports
it is unable to match to earnings data; and
``(C) calculating the median of the remaining loan
debts of the cohort of students.
``(8) Qualifying graduate program.--
``(A) In general.--The term `qualifying graduate
program' means an eligible program--
``(i) for which the Secretary has
identified outlier earnings growth; and
``(ii) whose students must complete
required postgraduation training programs of
not less than 3 years to obtain licensure in
one of the following fields:
``(I) Medicine.
``(II) Osteopathy.
``(III) Dentistry.
``(IV) Clinical psychology.
``(V) Marriage and family
counseling.
``(VI) Clinical social work.
``(VII) Clinical counseling.
``(B) Outlier earnings growth.--For purposes of
subparagraph (A)(i), the Secretary may identify an
eligible program as having outlier earnings growth if
there is a growth in the median earnings for students
who have completed the program that is reflected by a
percent change in the median earnings of such students
between the median earnings of such students measured 4
years after completion of the program and the median
earnings of such students measured 10 years after
completion of the program, that is more than 2 standard
deviations above the average earnings growth for other
programs with the same credential level, measured 4
years after completion and 10 years after completion.
``(b) Standards.--
``(1) In general.--An eligible program does not meet the
standards for debt-to-earnings if, for 2 of any 3 consecutive
award years, the applicable cohort of students fails the debt-
to-earnings rates, as described in paragraph (2).
``(2) Failing.--A cohort of students who completed an
eligible program during the cohort period ending on the last
day of an award year fails the debt-to-earnings rates for the
award year if the cohort has--
``(A) a discretionary debt-to-earnings rate for
such cohort period equal to or greater than 20 percent;
and
``(B) an annual debt-to-earnings rate for such
cohort period equal to or greater than 8 percent.
``(c) Process.--
``(1) Data match.--In order to ensure compliance with
paragraph (2), the Commissioner of the Internal Revenue
Service, the Commissioner of the Social Security
Administration, and the head of any other Federal agency that
administers the database of individual-level earnings data
shall, in coordination with the Secretary, timely ensure
secure, annual data matches of earnings data with Department of
Education data to produce the median annual earnings of each
eligible program.
``(2) Requirements of the secretary.--The Secretary shall--
``(A) on an annual calendar year basis--
``(i) for each eligible program--
``(I) calculate for each award year
the discretionary debt-to-earnings rate
and the annual debt-to-earnings rate
for the program; and
``(II) publish the discretionary
debt-to-earnings rate and the annual
debt-to-earnings rate for the eligible
program for each award year on a
website established and maintained by
the Secretary;
``(ii) for each eligible program that is a
program of training to prepare students for
gainful employment in a recognized occupation
or a graduate or professional degree program
offered by an institution of higher education
described in section 101(a), issue a notice of
determination not later than 45 days after
completing the data match described in
paragraph (1), informing the institution that
provides the program--
``(I) of the final discretionary
debt-to-earnings rate and the annual
debt-to-earnings rate for the program,
which may not be appealed by the
institution unless the institution
believes that the Secretary erred in
the calculation of any such measure;
``(II) of the final determination
regarding whether the program meets the
standards for debt-to-earnings, as
described in subsection (b);
``(III) whether the program does
not meet the standards for debt-to-
earnings as described in subsection
(b)(1) or could not meet such standards
in the next year if it fails the debt-
to-earnings rates, as described in
subsection (b)(2), in such next year;
and
``(IV) whether the institution is
required to provide warnings to
enrolled students and prospective
students of the program's failure, or
risk of failure, to meet the standards,
as determined under subclause (III);
and
``(iii) for each eligible program that is a
program of training to prepare students for
gainful employment in a recognized occupation
that does not meet the standards for debt-to-
earnings as described in subsection (b)(1),
enforce the consequences under subsection (d);
and
``(B) develop processes to verify, on an annual
calendar year basis--
``(i) that each eligible program that is a
program of training to prepare students for
gainful employment in a recognized occupation,
or a graduate or professional degree program
offered by an institution of higher education
described in section 101(a), provides the
warning described in subparagraph (A)(ii)(IV),
if applicable; and
``(ii) that each eligible program that is a
program of training to prepare students for
gainful employment in a recognized occupation
that does not meet the standards for debt-to-
earnings as described in subsection (b)(1) does
not receive funds as described in subsection
(d).
``(d) Consequences of Not Meeting Standards.--
``(1) No disbursement of funds for enrollment in ineligible
programs.--An institution may not disburse program funds under
this title to students enrolled in a program of training to
prepare students for gainful employment in a recognized
occupation that does not meet the standards for debt-to-
earnings as described in this section.
``(2) Time period to reestablish eligibility.--An
institution may not seek to reestablish the eligibility of a
program of training to prepare students for gainful employment
in a recognized occupation that does not meet the standards for
debt-to-earnings as described in this section, or establish the
eligibility of a program of training to prepare students for
gainful employment in a recognized occupation that is
substantially similar to the program that did not meet such
standards, until the date that is 3 years after the date of the
notice of determination issued under subsection (c)(2)(A)(ii)
that the program of training to prepare students for gainful
employment in a recognized occupation does not meet the
standards.
``(e) Equal Treatment of All Programs and Professions.--In carrying
out this section, the Secretary shall apply the requirements equally to
all categories of programs and professions and shall not differentiate,
delay implementation, or adjust any deadline, with respect to tipped
professions or any other category of professions or programs unless
explicitly authorized under this section.
``(f) Regulations.--The Secretary shall issue regulations to carry
out this section not later than 1 year after the date of enactment of
the Protecting Students from Worthless Degrees Act, except that such
regulations shall not be subject to the requirements of sections 482
and 492.''.
(c) Program Participation Requirements.--Section 487 of the Higher
Education Act of 1965 (20 U.S.C. 1094) is amended--
(1) in subsection (a), by adding at the end the following:
``(30) The institution will--
``(A) provide to the Secretary not later than the
first December 31 following the date of enactment of
the Protecting Students from Worthless Degrees Act (or,
for any institution that does not have an active
program participation agreement as of such date, the
first December 31 after the institution enters into the
agreement), in accordance with procedures established
by the Secretary, a certification signed by the most
senior executive officer of the institution that the
institution and each of the eligible gainful employment
programs included on the eligibility and certification
approval report of the institution under subpart 3 of
part H meet the requirements of subsection (i);
``(B) include with its certification an explanation
of how each eligible gainful employment program is not
substantially similar to any ineligible or discontinued
program described in subsection (i)(2)(D); and
``(C) update the certification within 10 days if
there are any changes in the approvals for an eligible
gainful employment program, or other changes for an
eligible gainful employment program that make the
existing certification no longer accurate.'';
(2) by redesignating subsections (i) and (j) as subsections
(j) and (k), respectively; and
(3) by inserting after subsection (h) the following:
``(i) Certification Requirements for Gainful Employment Programs.--
``(1) Definition of gainful employment program.--In this
subsection, the term `gainful employment program' means a
program of training that--
``(A) in order to qualify for assistance under this
title, is required under subsection (b)(1)(A)(i) or
(c)(1)(A) of section 102, or section 101(b)(1), to
satisfy gainful employment requirements, including
debt-to-earnings; and
``(B) is offered by an institution eligible to
receive assistance under this title.
``(2) In general.--Each eligible gainful employment program
included on the eligibility and certification approval report
of an institution of higher education shall comply with each of
the following:
``(A) The gainful employment program is approved by
a recognized accrediting agency or is otherwise
included in the institution's accreditation by its
recognized accrediting agency, or, if the institution
is a public postsecondary vocational institution, the
program is approved by a recognized State agency for
the approval of public postsecondary vocational
education in lieu of accreditation.
``(B) The gainful employment program is
programmatically accredited, if such accreditation is
required by--
``(i) a Federal governmental entity;
``(ii) a governmental entity in the State
in which the institution is located; or
``(iii) a governmental entity in a State in
which the institution is not physically
located, if the institution--
``(I) offers postsecondary
education through distance education or
correspondence courses to students
located in that State; or
``(II) is otherwise subject to that
State's jurisdiction, as determined by
that State.
``(C) The gainful employment program satisfies the
applicable educational prerequisites for professional
licensure or certification requirements in the State in
which the institution is located or a State described
in subparagraph (B)(iii), so that a student who
completes the program and seeks employment in any such
State qualifies to take any licensure or certification
examination that is needed for the student to practice
or find employment in an occupation that the program
prepares students to enter.
``(D) The gainful employment program is not
substantially similar to a program offered by the
institution that, in any of the 3 years prior to the
date of the eligibility and certification approval
report--
``(i) failed the standards for debt-to-
earnings in section 498C, the low earnings
outcome measure described in section 454(c)(2),
or any subsequent outcome measure that the
Secretary determines serves the best interests
of students and taxpayers; and
``(ii)(I) became ineligible for funding; or
``(II) was voluntarily discontinued by the
institution.
``(3) Requirements ensuring student awareness.--Before an
institution offering a gainful employment program enrolls any
student who intends to reside, practice, or seek employment in
a State for which the program does not satisfy the applicable
educational prerequisites for professional licensure or
certification requirements needed for that occupation in that
State, the institution shall notify the student that the
gainful employment program does not satisfy the prerequisites.
``(4) Requirements regarding reestablishment of
eligibility.--The institution shall not seek to reestablish the
eligibility of a gainful employment program that is ineligible
for funding under this subsection or subsection (a)(30) until
not less than 3 years following the date specified in the
notice of determination informing the institution of the
program's ineligibility.''.
(d) Application of Earnings Outcomes Requirements to Undergraduate
Certificate or Diploma Programs.--Section 454 of the Higher Education
Act of 1965 (20 U.S.C. 1087d) is amended--
(1) in subsection (c)(2), by inserting ``undergraduate
certificate or diploma,'' after ``if the program awards an'';
(2) in subsection (c)(3)(A)(iii)(I), by inserting ``, or
undergraduate certificate or diploma,'' after ``in the case of
a determination made for an educational program that awards a
baccalaureate or lesser degree''; and
(3) in subsection (c)(3)(B)(i), by inserting ``, or
undergraduate certificate or diploma,'' after ``with respect to
an educational program that awards a baccalaureate or lesser
degree''.
(e) Applying Earning Outcomes Requirements Equally to All
Professions, Including Tipped Professions.--
(1) In general.--Section 454(c) of the Higher Education Act
of 1965 (20 U.S.C. 1087d(c)) is amended by adding at the end
the following:
``(8) Equal treatment of all programs and professions.--In
carrying out this subsection, the Secretary shall apply the
requirements equally to all categories of programs and
professions and shall not differentiate, delay implementation,
or adjust any deadline, with respect to tipped professions or
any other category of professions or programs unless explicitly
authorized in this subsection.''.
(2) No regulations allowing delay for tipped professions.--
(A) In general.--Paragraph (3) of section
668.402(c) of title 34, Code of Federal Regulations, as
amended by the final rule submitted by the Department
of Education relating to ``Accountability in Higher
Education and Access Through Demand-Driven Workforce
Pell: Student Tuition and Transparency System (STATS)
and Earnings Accountability'' (91 Fed. Reg. 40136 (July
1, 2026)), shall have no force or effect.
(B) Effective date.--Subparagraph (A) shall take
effect on July 1, 2027.
SEC. 5. STATE AUTHORIZATION REQUIREMENTS FOR DISTANCE EDUCATION
PROGRAMS.
Section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001) is
amended--
(1) in subsection (a)(2), by inserting ``, in accordance
with subsection (d)'' before the semicolon; and
(2) by adding at the end the following:
``(d) State Authorization.--
``(1) In general.--An institution that offers postsecondary
education through distance education or correspondence courses
shall meet the requirements of subsection (a)(2) by being
legally authorized within each State in which the institution's
enrolled students are located, subject to paragraph (2).
``(2) State authorization reciprocity agreements.--An
institution described in paragraph (1) that is located in a
State that participates in a State authorization reciprocity
agreement with another State and that is covered by such State
authorization reciprocity agreement, is considered to meet
State requirements for the institution to be legally offering
postsecondary distance education or correspondence courses in
the other State--
``(A) subject to any additional requirements of
that State; and
``(B) if the institution documents, in the manner
required by the Secretary, that each State in which the
institution's enrolled students are located has a State
process--
``(i) to review and take appropriate action
on complaints from any of such enrolled
students concerning the institution, including
enforcing applicable State law; and
``(ii) to make the complaints public.
``(3) State authorization reciprocity agreement defined.--
In this subsection, the term `State authorization reciprocity
agreement' means an agreement between 2 or more States that--
``(A) authorizes an institution located and legally
authorized in a State covered by the agreement to
provide postsecondary education through distance
education or correspondence courses to students located
in other States covered by the agreement; and
``(B) does not prohibit any State in the agreement
from enforcing the State's own statutes and
regulations, regardless as to whether such statutes and
regulations are general and apply to all educational
institutions or specifically directed at a subset of
educational institutions.''.
<all>