SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Educational Quality Index Act of 
1997''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) cohort default rates alone do not indicate the quality 
        of an educational institution;
            (2) for the purpose of evaluating performance of an 
        institution of higher education, the population which that 
        institution serves should be taken into account;
            (3) schools whose students are from less affluent 
        backgrounds have more difficulty with cohort default rate 
        standards;
            (4) use of the cohort default rates as a determinant for 
        participation in Federal student loan programs has kept 
        technical and vocational school operators from opening schools 
        in impoverished areas;
            (5) many individuals living in impoverished areas have been 
        effectively denied an opportunity to access technical and 
        vocational higher education; and
            (6) the performance of a technical or vocational 
        institution of higher education can be measured by objective 
        data concerning the outcome from the perspective of the 
        student.

SEC. 3. USE OF EDUCATIONAL QUALITY IN INSTITUTIONAL ELIGIBILITY FOR 
              GUARANTEED STUDENT LOAN PROGRAM.

      Section 435(a) of the Higher Education Act of 1965 (20 U.S.C. 
1085(a)) is amended--
            (1) in paragraph (1), by striking ``paragraph (2)'' and 
        inserting ``paragraphs (2) and (4)'';
            (2) in paragraph (2), by striking ``An institution'' and 
        inserting ``Except as provided in paragraph (4), an 
        institution'';
            (3) by adding at the end the following new paragraph:
            ``(4) Ineligibility based on educational quality index.--
                    ``(A) Use of index in place of cohort default 
                rate.--A proprietary institution of higher education 
                (as such term is defined in section 481(b)) shall not 
                be subject to ineligibility determinations under 
                paragraph (2), but shall be subject to such 
                determinations on the basis of the educational quality 
                index prescribed under this paragraph.
                    ``(B) Prescription of index.--The Secretary of 
                Education shall by regulation prescribe an educational 
                quality index for the purpose of evaluating the 
                programs of proprietary institutions of higher 
                education. Such index shall be equal to the sum of the 
                following component indexes:
                            ``(i) A placement rate index which shall be 
                        based on the percentage of students who are 
                        employed in the field for which the institution 
                        has trained them.
                            ``(ii) An index based on the institution's 
                        cohort default rate (as determined under 
                        subsection (m)).
                            ``(iii) A successful completion index which 
                        shall be based on graduation rates (as 
                        determined for purposes of section 
                        484(a)(1)(C)), or on certification or licensure 
                        rates (if available).
                    ``(C) Contents of regulations.--The regulations 
                prescribed by the Secretary under subparagraph (B) 
                shall--
                            ``(i) define the minimum aggregate score 
                        that an proprietary institution of higher 
                        education must achieve, as a sum of the 3 
                        indexes established under clauses (i), (ii), 
                        and (iii) of such subparagraph, in order for 
                        the institution to remain eligible to 
                        participate in the programs under this part;
                            ``(ii) provide that each of such indexes 
                        shall be adjusted by multiplying such index by 
                        the sum of one plus a fraction (expressed as a 
                        decimal) equal to the difference between--
                                    ``(I) the fraction (expressed as a 
                                decimal) of such institution's enrolled 
                                students who are eligible for Pell 
                                grants, minus
                                    ``(II) the fraction (expressed as a 
                                decimal) of all students at all 
                                institutions of higher education who 
                                are so eligible,
                            ``(iii) provide that the weights to be 
                        attributed to such 3 indexes for purposes of 
                        aggregating such score shall require that, of 
                        the maximum possible aggregate score--
                                    ``(I) 50 percent shall be 
                                attributed to the index described in 
                                subparagraph (B)(i);
                                    ``(II) 30 percent shall be 
                                attributed to subparagraph (B)(ii); and
                                    ``(III) 20 percent shall be 
                                attributed to subparagraph (B)(iii); 
                                and
                            ``(iv) establish the procedures for the 
                        determination of scores for individual 
                        institutions, and for the resolution of 
                        disputes concerning such scores.''.

SEC. 4. USE OF EDUCATIONAL QUALITY INDEX IN PROGRAM INTEGRITY REVIEWS.

    (a) State Review Entity Criteria.--Section 494C(a)(1) of the Higher 
Education Act of 1965 (20 U.S.C. 1099a-3(a)(1)) is amended by inserting 
before the period the following: ``or, in the case of a proprietary 
institution of higher education, an educational quality index score 
that does not equal or exceed the minimum established by the Secretary 
under section 435(a)(4)(B)(i)''.
    (b) Program Review.--Section 498A(a)(2)(A) of such Act (20 U.S.C. 
1099c-1(a)(2)(A)) is amended by inserting before the semicolon the 
following: ``or, in the case of a proprietary institution of higher 
education, an educational quality index score that does not equal or 
exceed the minimum established by the Secretary under section 
435(a)(4)(B)(i)''.
Educational Quality Index Act of 1997 - Amends the Higher Education Act of 1965 to substitute evaluations of educational quality for cohort default rates in eligibility determinations for proprietary institutions of higher education under the Federal student loan insurance program of the Federal Family Education Loan Program (guaranteed student loans). 
Establishes as the eligibility criteria requiring a program integrity review for a proprietary institution an educational quality index score that does not equal or exceed a minimum established by the Secretary of Education.
Educational Quality Index Act of 1997