Higher Education Reform and Opportunity Act of 2013

Summary: Higher Education Reform and Opportunity Act of 2013 - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to make the following entities, programs, and courses eligible for funding under title IV if they are accredited by an authorized accreditation authority in a state that has an alternative accreditation agreement with the Secretary of Education:    institutions that provide postsecondary courses;   postsecondary apprenticeship programs; and   postsecondary education courses or programs provided by institutions of postsecondary education, nonprofit organizations, or for-profit organizations or businesses.  Lists the items to be included in a state's alternative accreditation agreement with the Secretary, including the standards those entities, programs, and courses must meet to receive and maintain their accreditation. Requires that agreement to include the state's assurance that only entities, programs, and courses that provide credits toward a postsecondary certification, credential, or degree (as defined by the state in the agreement) will be accredited. Establishes the formula for determining the administrative cost allowance for: (1) the entities, programs, and courses that are accredited through the alternative accreditation system and that administer the Federal Pell Grant, Federal Perkins Loan, Federal Work-Study, and Federal Supplemental Educational Opportunity Grant programs in accordance with the agreement; and (2) states that will administer those programs for such entities, programs, and courses in accordance with the agreement.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Higher Education Reform and 
Opportunity Act of 2013''.

SEC. 2. AMENDMENTS TO THE HIGHER EDUCATION ACT.

    (a) Definition of Institution of Higher Education.--Section 102(a) 
of the Higher Education Act of 1965 (20 U.S.C. 1002(a)) is amended--
            (1) by redesignating paragraphs (5) and (6) as paragraphs 
        (6) and (7), respectively;
            (2) in paragraph (1), in the matter preceding subparagraph 
        (A), by striking ``Subject to paragraphs (2) through (4)'' and 
        inserting ``Subject to paragraphs (2) through (5)'';
            (3) in paragraph (1)--
                    (A) by redesignating subparagraphs (B) and (C) as 
                subparagraphs (C) and (D), respectively; and
                    (B) by inserting after subparagraph (A) the 
                following:
                    ``(B) if accredited by an authorized accreditation 
                authority in a State that has an alternative 
                accreditation agreement with the Secretary, as 
                described in paragraph (5)--
                            ``(i) an institution that provides 
                        postsecondary education;
                            ``(ii) a postsecondary apprenticeship 
                        program; or
                            ``(iii) a postsecondary education course or 
                        program provided by an institution of 
                        postsecondary education, a nonprofit 
                        organization, or a for-profit organization or 
                        business;''; and
            (4) by inserting after paragraph (4), the following:
            ``(5) State alternative accreditation.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, a State may establish an alternative 
                accreditation system for the purpose of establishing 
                institutions that provide postsecondary education and 
                postsecondary education courses or programs as eligible 
                for funding under title IV if the State enters into an 
                agreement with the Secretary for the establishment of 
                the alternative accreditation system. Such 
                institutions, courses, or programs may include--
                            ``(i) institutions that provide 
                        postsecondary education;
                            ``(ii) postsecondary apprenticeship 
                        programs;
                            ``(iii) any other postsecondary education 
                        course or program offered at an institution of 
                        postsecondary education, a nonprofit 
                        organization, or a for-profit organization or 
                        business; and
                            ``(iv) any of the entities described in 
                        clauses (i) through (iii) that do not award a 
                        postsecondary certification, credential, or 
                        degree, provided that such entity provides 
                        credit that will apply toward a postsecondary 
                        certification, credential, or degree.
                    ``(B) Alternative accreditation agreement.--The 
                alternative accreditation agreement described in 
                subparagraph (A) shall include the following:
                            ``(i) The designation of one or more 
                        authorized accrediting entities within the 
                        State, such as the State Department of 
                        Education, another State agency, an industry-
                        specific accrediting agency, or another entity, 
                        and an explanation of the process through which 
                        the State will select such authorized 
                        accrediting entities.
                            ``(ii) The standards or criteria that an 
                        institution that provides postsecondary 
                        education and a postsecondary education course 
                        or program must meet in order to--
                                    ``(I) receive an initial 
                                accreditation as part of the 
                                alternative accreditation system; and
                                    ``(II) maintain such accreditation.
                            ``(iii) A description of the appeals 
                        process through which an institution that 
                        provides postsecondary education and a 
                        postsecondary education course or program may 
                        appeal to an authorized accrediting entity if 
                        such institution, course, or program is denied 
                        accreditation under the State alternative 
                        accreditation system.
                            ``(iv) Each authorized accrediting entity's 
                        policy regarding the transfer of credits 
                        between institutions that provide postsecondary 
                        education and postsecondary education courses 
                        or programs within the State that are 
                        accredited as part of the alternative 
                        accreditation system.
                            ``(v) The Secretary's reporting 
                        requirements for the State regarding the State 
                        alternative accreditation system, including--
                                    ``(I) the contents of reports that 
                                must be submitted to the Secretary, 
                                which may include information such as--
                                            ``(aa) in the case of a 
                                        postsecondary education course 
                                        or program that is accredited 
                                        through the State alternative 
                                        accreditation system--

                                                    ``(AA) the number 
                                                and percentage of 
                                                students who 
                                                successfully complete 
                                                each such postsecondary 
                                                education course or 
                                                program; and

                                                    ``(BB) the number 
                                                and percentage of 
                                                students who 
                                                successfully obtain a 
                                                postsecondary 
                                                certification, 
                                                credential, or degree 
                                                using credit obtained 
                                                from each such 
                                                postsecondary education 
                                                course or program; and

                                            ``(bb) in the case of an 
                                        institution that provides 
                                        postsecondary education that is 
                                        accredited through the State 
                                        alternative accreditation 
                                        system--

                                                    ``(AA) the number 
                                                and percentage of 
                                                students who 
                                                successfully obtain a 
                                                postsecondary 
                                                certification, 
                                                credential, or degree 
                                                from such institution; 
                                                and

                                                    ``(BB) the number 
                                                and percentage of 
                                                students who do not 
                                                successfully obtain a 
                                                postsecondary 
                                                certification, 
                                                credential, or degree 
                                                from such institution 
                                                but do obtain credit 
                                                from such institution 
                                                toward a postsecondary 
                                                degree, credential, or 
                                                certification;

                                    ``(II) the frequency with which 
                                such reports must be submitted to the 
                                Secretary; and
                                    ``(III) any requirements for third 
                                party verification of information 
                                contained in such reports.
                            ``(vi) The State policy regarding public 
                        accessibility to certain information relating 
                        to institutions that provide postsecondary 
                        education and postsecondary education courses 
                        and programs accredited under the State 
                        alternative accreditation system, including--
                                    ``(I) the information described in 
                                subclause (I) of clause (v); and
                                    ``(II) information about the rates 
                                of job placement for individuals that 
                                have graduated from an institution or 
                                completed a course or program that is 
                                accredited under the State alternative 
                                accreditation system.
                            ``(vii) An assurance by the State that 
                        under the State alternative accreditation 
                        system, only institutions that provide 
                        postsecondary education and postsecondary 
                        education courses or programs that provide 
                        credits toward a postsecondary certification, 
                        credential, or degree (as defined by the State 
                        in accordance with clause (viii)) will be 
                        accredited.
                            ``(viii) The State's definition of a 
                        postsecondary certification, credential, or 
                        degree, as such term applies to the requirement 
                        described in clause (vii).
                            ``(ix) A description of the agreements that 
                        the State will enter into with institutions 
                        that provide postsecondary education and 
                        postsecondary education courses or programs 
                        that are accredited under the alternative 
                        accreditation system to enable such 
                        institutions, courses, or programs to be 
                        eligible under a program authorized under title 
                        IV, for participation in the direct student 
                        loan program, and for the origination of loans 
                        under part D of title IV, and how such 
                        agreements will operate in lieu of the 
                        agreements described in sections 487 and 454.
                            ``(x) A description of how the State will 
                        select institutions that provide postsecondary 
                        education and postsecondary education courses 
                        or programs that are accredited under the 
                        alternative accreditation system, in lieu of 
                        the selection process described in section 453, 
                        for--
                                    ``(I) participation in the direct 
                                student loan program under part D of 
                                title IV; and
                                    ``(II) approval allowing such 
                                institution, program, or course to 
                                originate direct loans under part D of 
                                title IV.
                            ``(xi) A description of how the State will 
                        administer title IV funds for institutions that 
                        provide postsecondary education, postsecondary 
                        apprenticeship programs, and postsecondary 
                        education courses or programs provided by an 
                        institution of postsecondary education, a 
                        nonprofit organization, or a for-profit 
                        organization or business that are accredited 
                        through the alternative accreditation system.
                    ``(C) Administrative costs for pell grant 
                students.--
                            ``(i) Pell grants administered by 
                        entities.--In the case of an institution that 
                        provides postsecondary education, a 
                        postsecondary apprenticeship program, or an 
                        entity that provides a postsecondary education 
                        course or program that is accredited through 
                        the alternative accreditation system and that 
                        will administer the Federal Pell Grant, Federal 
                        Perkins Loan, Federal Work-Study, and Federal 
                        Supplemental Educational Opportunity Grants in 
                        accordance with the agreement described in 
                        subparagraph (B)(xi), the Secretary shall, in 
                        lieu of carrying out section 690.10 of title 
                        34, Code of Federal Regulations, and subject to 
                        available appropriations, pay $5.00 to the 
                        institution, apprenticeship program, or entity, 
                        as the case may be, for each student who 
                        receives a Federal Pell Grant at that 
                        institution, apprenticeship program, or entity 
                        for an award year.
                            ``(ii) Pell grants administered by 
                        states.--In the case of an institution that 
                        provides postsecondary education, a 
                        postsecondary apprenticeship program, or an 
                        entity that provides a postsecondary education 
                        course or program that is accredited through 
                        the alternative accreditation system and will 
                        not administer the Federal Pell Grant, Federal 
                        Perkins Loan, Federal Work-Study, and Federal 
                        Supplemental Educational Opportunity Grants, 
                        but will have such programs administered by the 
                        State in accordance with the agreement 
                        described in subparagraph (B)(xi), the 
                        Secretary shall, in lieu of carrying out 
                        section 690.10 of title 34, Code of Federal 
                        Regulations, and subject to available 
                        appropriations, pay $5.00 to the State for each 
                        student who receives a Federal Pell Grant at 
                        that institution, apprenticeship program, or 
                        entity, as the case may be, for an award year.
                            ``(iii) Use of funds.--All funds that an 
                        institution, apprenticeship program, entity, or 
                        the State receives under this subparagraph 
                        shall be used solely to pay the cost of--
                                    ``(I) administering the Federal 
                                Pell Grant, Federal Perkins Loan, 
                                Federal Work-Study, and Federal 
                                Supplemental Educational Opportunity 
                                Grants; and
                                    ``(II) carrying out the reporting 
                                requirements described under 
                                subparagraph (B)(v).
                            ``(iv) Financial aid services.--If an 
                        institution, apprenticeship program, or entity 
                        described in this subparagraph enrolls a 
                        significant number of students who are 
                        attending less-than-full-time or are 
                        independent students, such institution, 
                        apprenticeship program, entity, or the State, 
                        as the case may be, shall use a reasonable 
                        proportion of the funds provided under this 
                        subparagraph to make financial aid services 
                        available during times and in places that will 
                        most effectively accommodate the needs of those 
                        students.''.
    (b) Title IV Eligibility Requirements.--Part G of title IV of the 
Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is amended by 
adding at the end the following:

``SEC. 493E. STATE ACCREDITED INSTITUTIONS, PROGRAMS, OR COURSES.

    ``Notwithstanding any other provision of law, an institution, 
program, or course that is eligible for funds under this title in 
accordance with section 102(a)(1)(B) and meets the requirements of 
section 102(a)(5) shall not be required to meet any other requirements 
of this title. For purposes of this title, such an institution, 
program, or course shall be deemed to be an eligible institution that 
meets the requirements of section 487.''.