SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Correctly Recognizing Educational 
Achievements To Empower Graduates Act'' or the ``CREATE Graduates 
Act''.

SEC. 2. CREATE GRADUATES.

    Title VII of the Higher Education Act of 1965 (20 U.S.C. 1133 et 
seq.) is amended by inserting after part B the following:

                       ``PART C--CREATE GRADUATES

``SEC. 751. PURPOSE.

    ``The purpose of this part is to award grants to States to support 
efforts at institutions of higher education or within systems of higher 
education to increase postsecondary degree attainment by--
            ``(1) locating, and conferring degrees to, students who 
        have accumulated sufficient applicable postsecondary credits 
        and maintained a sufficient grade point average to earn an 
        associate's degree but did not receive one;
            ``(2) providing outreach to those students who are within 
        12 credits of earning an associate's degree; and
            ``(3) establishing partnerships between 2-year and 4-year 
        institutions of higher education in States, in order to 
        strengthen the transition pathways into 4-year institutions of 
        higher education for transfer students.

``SEC. 752. GRANTS TO INCREASE DEGREE ATTAINMENT.

    ``(a) Definition of Institution of Higher Education.--In this 
section, the term `institution of higher education' has the meaning 
given the term in section 101(a).
    ``(b) Program Authorized.--
            ``(1) In general.--From amounts appropriated under 
        subsection (j), the Secretary shall award grants, on a 
        competitive basis, to States to enable the States to carry out 
        the activities described in subsections (e) and (f) in order to 
        support efforts at institutions of higher education to increase 
        degree attainment.
            ``(2) Partnerships allowed.--A State may apply for a grant 
        under this section in partnership with a nonprofit 
        organization. In any such partnership, the State higher 
        education agency or other State agency described in subsection 
        (c)(1) shall serve as the fiscal agent for purposes of the 
        grant.
    ``(c) Submission and Contents of Application.--
            ``(1) In general.--The State, acting through the State 
        higher education agency or other State agency determined 
        appropriate by the Governor or chief executive officer of the 
        State, shall submit an application to the Secretary at such 
        time, in such manner, and containing such information as the 
        Secretary may require.
            ``(2) Contents.--An application submitted under paragraph 
        (1) shall include the following:
                    ``(A) A description of the State's capacity to 
                administer the grant under this section and report 
                annually to the Secretary on the progress of the 
                activities and services described in subsection (e).
                    ``(B) A description of how the State will meet the 
                purposes of the grant program under this part through 
                outreach and memoranda of understanding with 
                institutions of higher education, including the State's 
                plan for using grant funds to meet the requirements of 
                subsections (e) and (g) and, if the State elects to use 
                grant funds under such subsection to create strong 
                articulation agreements, subsection (f)(2).
                    ``(C) A description of how the State will 
                coordinate with appropriate stakeholders, including 
                institutions of higher education, data-sharing agencies 
                within the State, and other States.
                    ``(D) A description of--
                            ``(i) the structure that the State has in 
                        place to administer the activities and services 
                        described in subsection (e), including--
                                    ``(I) the capacity of the State's 
                                longitudinal data system to--
                                            ``(aa) be clean of record 
                                        duplication and ensure 
                                        alignment of State and 
                                        institutional credit completion 
                                        records;
                                            ``(bb) include transfer 
                                        flags and course and credit 
                                        data to allow the State to run 
                                        initial degree audits for 
                                        institutions;
                                            ``(cc) include all 
                                        postsecondary educational 
                                        institutions in the State, 
                                        including public, private 
                                        nonprofit, and private for-
                                        profit institutions; and
                                            ``(dd) have in place 
                                        mechanisms to share data across 
                                        institutions, systems, and 
                                        States;
                                    ``(II) the capacity of the agency 
                                governing the State's longitudinal 
                                system to respond to data requests 
                                accurately and in a timely manner; and
                                    ``(III) the State's plan to protect 
                                student privacy with respect to data in 
                                the State longitudinal data system and 
                                comply with section 444 of the General 
                                Education Provisions Act (commonly 
                                referred to as the `Family Educational 
                                Rights and Privacy Act of 1974'); or
                            ``(ii) the State's plan to develop such 
                        administrative capacity as part of the 
                        activities carried out under the grant.
    ``(d) Award Basis and Priority.--The Secretary shall award grants 
under this section to States based on the quality of the applications 
submitted under subsection (c). In awarding grants under this section, 
the Secretary shall give priority to applications from States--
            ``(1) that do not have, as of the time of the application, 
        statewide policies or statewide initiatives in place to 
        retroactively award associate's degrees to students; or
            ``(2) that have a commitment to initiatives regarding the 
        retroactive awarding of associate's degrees that will continue 
        after the period of the grant.
    ``(e) Mandatory Use of Funds.--
            ``(1) Subgrants.--A State that receives a grant under this 
        section shall use not less than 80 percent of the grant funds 
        provided to award subgrants, on a competitive basis, to 
        institutions of higher education or systems of higher 
        education. Each institution of higher education or system of 
        higher education receiving a subgrant shall carry out all of 
        the following activities and services, pursuant to the 
        conditions under subsection (g):
                    ``(A) Identify the group of current and former 
                students at the institution of higher education, or at 
                the institutions of higher education within the system 
                of higher education, as the case may be, that, based on 
                the data held by the institution or system, meet both 
                of the following requirements:
                            ``(i) Each individual has earned not less 
                        than 60 postsecondary credit hours (or the 
                        minimum required by the State to earn an 
                        associate's degree) at the institution.
                            ``(ii) Each individual has not had any 
                        postsecondary degree, of any kind, issued to 
                        the student by an institution of higher 
                        education.
                    ``(B) Identify a subset of those current and former 
                students described in subparagraph (A) who have not 
                already earned an associate's or bachelor's degree 
                elsewhere.
                    ``(C) Perform a degree audit on each student 
                remaining in the subset described in subparagraph (B), 
                and identify each such student as one of the following:
                            ``(i) Eligible to obtain an associate's 
                        degree.
                            ``(ii) Eligible to obtain an associate's 
                        degree upon the completion of 12 or fewer 
                        postsecondary credit hours (or the equivalent).
                            ``(iii) Not eligible under either clause 
                        (i) or (ii).
                    ``(D) Provide outreach to each student identified 
                in subparagraph (C)(i), and award the earned 
                associate's degree to such student, unless such student 
                declines through a written or oral declaration.
                    ``(E) Provide outreach to each student identified 
                in subparagraph (C)(ii) that includes information 
                regarding next steps toward degree attainment, 
                including financial aid options.
            ``(2) Application process.--An institution of higher 
        education or system of higher education desiring a subgrant 
        under this subsection shall submit an application to the State 
        at such time, in such manner, and containing such information 
        as the State may require. Such application shall include a 
        written commitment from the institution or system that, if the 
        institution or system receives a grant, the institution or 
        system will carry out all of the activities described in 
        paragraph (1).
            ``(3) Priority.--Each State awarding subgrants under this 
        part shall give priority to applications from institutions of 
        higher education or systems of higher education that--
                    ``(A) have up-to-date degree audit software or 
                systems;
                    ``(B) use an opt-out, rather than an opt-in, policy 
                to award associate's degrees, if such policy is 
                permissible under applicable accreditation or State 
                standards;
                    ``(C) waive nonacademic barriers to graduation, 
                such as swimming tests, library fines, graduation fees, 
                or parking tickets;
                    ``(D) waive or amend residency and recency 
                requirements to prevent earned credits from expiring, 
                if such action is permissible under accreditation or 
                State standards;
                    ``(E) provide students with tuition waivers or 
                prior learning assessments for those who need to earn 
                remaining credits; and
                    ``(F) agree that, after the conclusion of the 
                activities described in paragraph (1) and continuing 
                after the end of the grant period, the institution or 
                system will--
                            ``(i) conduct degree audits for all 
                        enrolled students once the students earn 45 
                        credits; and
                            ``(ii) provide information about graduation 
                        deadlines to remind students of relevant 
                        requirements at least 4 months before the 
                        students graduate and again 1 month before 
                        graduation.
    ``(f) Permissive Use of Funds.--A State receiving a grant under 
this section may use--
            ``(1) not more than 15 percent of the total amount received 
        under this section for administrative purposes relating to the 
        grant under this section, including technology needed to carry 
        out the purposes of this part; and
            ``(2) not more than 5 percent of the total amount received 
        under this section to create articulation agreements between 2-
        year and 4-year institutions of higher education, in order to 
        enhance collaboration and strengthen the transition pathways 
        between such institutions for transfer students.
    ``(g) Special Conditions and Prohibitions.--
            ``(1) Availability to students.--A State, institution of 
        higher education, or system of higher education receiving a 
        grant or subgrant, as the case may be, under this section shall 
        not charge any student an additional fee or charge to 
        participate in the activities or services supported under this 
        section.
            ``(2) Prohibited uses.--A State, institution of higher 
        education, or system of higher education receiving a grant or 
        subgrant, as the case may be, under this section shall not use 
        any grant or subgrant funds for tuition, fees, room and board, 
        or any other purpose outside the goals of the grant.
            ``(3) FERPA requirements.--Each State, institution of 
        higher education, or system of higher education receiving a 
        grant or subgrant, respectively, under this section that enters 
        into a contract or other agreement with any outside entity to 
        assist in carrying out the activities or services under such 
        grant or subgrant, shall ensure that the outside entity 
        complies with all requirements of section 444 of the General 
        Education Provisions Act (commonly referred to as the `Family 
        Educational Rights and Privacy Act of 1974') that would apply 
        to the State, institution, or system.
            ``(4) Coordination.--A State receiving a grant under this 
        section shall ensure the coordination of the activities and 
        services carried out under this section with any other 
        activities carried out in the State that are similar to the 
        goals of this program, and with any other entities that support 
        the existing activities in the State, with the goal of 
        minimizing duplication.
    ``(h) Report.--
            ``(1) In general.--A State receiving a grant under this 
        section shall prepare and submit an annual report to the 
        Secretary on the activities and services carried out under this 
        section, and on the implementation of such activities and 
        services. The report shall include, for each institution of 
        higher education or system of higher education receiving a 
        subgrant, the following information:
                    ``(A) The number of students who were first 
                identified in the group described in subsection 
                (e)(1)(A).
                    ``(B) The number of students who were removed from 
                such group because the students had received a degree 
                elsewhere, in accordance with subsection (e)(1)(B).
                    ``(C) The number of degree audits performed under 
                subsection (e)(1)(C).
                    ``(D) The number of students identified under 
                subsection (e)(1)(C)(i) as eligible to obtain an 
                associate's degree.
                    ``(E) The number of students identified under 
                subsection (e)(1)(C)(ii) as eligible to obtain an 
                associate's degree upon the completion of 12 or fewer 
                credits, in the aggregate and disaggregated by race, 
                ethnicity, gender, and status as an individual with a 
                disability.
                    ``(F) The number of students identified under 
                subsection (e)(1)(C)(iii) as ineligible to obtain an 
                associate's degree and ineligible to obtain such a 
                degree upon the completion of 12 or fewer credits.
                    ``(G) The number of students awarded an associate's 
                degree under subsection (e)(1)(D).
                    ``(H) The number of students identified in 
                subsection (e)(1)(C)(ii) who are returning to an 
                institution of higher education after receiving 
                outreach described in subsection (e)(1)(E).
                    ``(I) The average amount of credit hours previously 
                earned by students described in subsection (e)(1)(C)(i) 
                when the associate's degrees are awarded.
                    ``(J) The number of students who received outreach 
                described in subsection (e)(1)(D) and who decline to 
                receive the associate's degree.
                    ``(K) The number of students who could not be 
                located or reached as part of the process.
                    ``(L) The reasons why students identified in 
                subsection (e)(1)(C)(ii) did not return to an 
                institution of higher education to receive a degree.
                    ``(M) Details of any policy changes implemented as 
                a result of implementing this program and conducting 
                the required degree audits.
            ``(2) Disaggregation.--The report shall include the 
        information described in subparagraphs (A) through (L) of 
        paragraph (1) in the aggregate and disaggregated by age, 
        gender, race or ethnicity, status as an individual with a 
        disability, and socioeconomic status (including status as a 
        Federal Pell grant recipient).
    ``(i) Enforcement Provisions.--
            ``(1) Recovery or withholding.--The Secretary may, after 
        notice and an opportunity for a hearing in accordance with 
        chapter 5 of title 5, United States Code--
                    ``(A) withhold funds provided under a grant or 
                subgrant under this section if a State or institution 
                of higher education is failing to comply substantially 
                with the requirements of this section; or
                    ``(B) take actions to recover funds provided under 
                a grant or subgrant under this section, if the State or 
                institution made an unallowable expense, or otherwise 
                failed to discharge its responsibility to properly 
                account for funds.
            ``(2) Use of recovered or unused funds.--Any funds 
        recovered or withheld under paragraph (1) shall--
                    ``(A) be credited to the appropriations account 
                from which amounts are available to make grants or 
                enter cooperative agreements under this section; and
                    ``(B) remain available until expended for any 
                purpose of that account authorized by law that relates 
                to the program under this section.
    ``(j) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary 
for fiscal year 2015 and each of the 2 subsequent fiscal years.''.
Correctly Recognizing Educational Achievements To Empower Graduates Act or the CREATE Graduates Act - Amends the Higher Education Act of 1965 to direct the Secretary of Education to award competitive grants to states and, through them, subgrants to institutions of higher education (IHEs) or systems of higher education to:  identify current or former students who have earned at least 60 postsecondary credit hours (or the state-required minimum for earning an associate's degree) at the IHE or at an IHE within the system but have not been issued a postsecondary degree by such IHE or an associate's or bachelor's degree elsewhere; perform a degree audit on each of those students to identify those who are eligible to obtain an associate's degree and those who are eligible to obtain such a degree upon the completion of 12 or fewer postsecondary credit hours (or the equivalent); provide outreach and award an associate's degree to each of those students identified as eligible to obtain an associate's degree unless the student declines the degree; and provide outreach to those students identified as eligible to obtain such a degree upon the completion of 12 or fewer postsecondary credit hours, including guidance on the steps they can take to attain such a degree.  Allows states to use up to: (1) 15% of their grant for administrative purposes, including the purchase of the technology to carry out grant requirements; and (2) 5% of their grant to create articulation agreements between 2-year and 4-year IHEs to facilitate the transfer of students between such schools.
CREATE Graduates Act