I 

116TH CONGRESS 

1ST SESSION H. R. 4724 

To amend the Higher Education Act of 1965 to make for-profit institutions 

ineligible for Federal student aid and to protect the integrity of nonprofit 

institutions of higher education. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 17, 2019 

Ms. JAYAPAL (for herself, Ms. BARRAGA ́N, Mr. BLUMENAUER, Mr. GARCI ́A of 

Illinois, Ms. GARCIA of Texas, Ms. OMAR, Ms. PRESSLEY, and Ms. 

TLAIB) introduced the following bill; which was referred to the Committee 

on Education and Labor 

A BILL 

To amend the Higher Education Act of 1965 to make forprofit institutions ineligible for Federal student aid and 

to protect the integrity of nonprofit institutions of higher 

education. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Students Not Profits 

5 Act of 2019’’. 


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1 SEC. 2. DEFINITION OF INSTITUTION OF HIGHER EDU2 CATION. 

3 The Higher Education Act of 1965 (20 U.S.C. 1001 

4 et seq.) is amended— 

5 (1) in section 101— 

6 (A) in subsection (a), in the matter pre7 ceding paragraph (1), by striking ‘‘other than 

8 title IV,’’; 

9 (B) in subsection (b)— 

10 (i) in the matter preceding paragraph 

11 (1), by striking ‘‘other than title IV,’’; 

12 (ii) in paragraph (1), by striking 

13 ‘‘and’’ after the semicolon; 

14 (iii) in paragraph (2)(B), by striking 

15 the period at the end and inserting a semi16 colon; and 

17 (iv) by adding at the end the fol18 lowing: 

19 ‘‘(3) a public, nonprofit postsecondary voca20 tional institution; and 

21 ‘‘(4) only for the purposes of part D of title IV, 

22 an institution outside the United States that is com23 parable to an institution of higher education, as de24 fined in subsection (a), and that has been approved 

25 by the Secretary for the purpose of part D of title 


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1 IV, consistent with the requirements of section 

2 452(d).’’; 

3 (C) in subsection (c), by striking ‘‘and sec4 tion 102’’; and 

5 (D) by adding at the end the following: 

6 ‘‘(d) REQUIREMENTS OF COURSES OF STUDY AND

7 ENROLLMENT.—An institution shall be considered to meet 

8 the definition of an institution of higher education in sub9 section (a) or (b) only if such institution— 

10 ‘‘(1) limits enrollment of students in distance 

11 education courses offered by the institution to not 

12 more than 50 percent of all students enrolled in the 

13 institution, unless the institution is a public or non14 profit technical institution or career and technical 

15 education school, as described in section 3(3)(C) of 

16 the Carl D. Perkins Career and Technical Education 

17 Act of 2006; 

18 ‘‘(2) limits enrollment of students who are in19 carcerated to not more than 25 percent of all stu20 dents enrolled in the institution; 

21 ‘‘(3) limits enrollment of students who do not 

22 have a secondary school diploma or its recognized 

23 equivalent to not more than 50 percent of all stu24 dents enrolled in the institution; and 


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1 ‘‘(4) if the institution offers an education or 

2 training program that leads to a certificate, or other 

3 nondegree recognized credential and funds available 

4 under title IV for students are used for enrollment 

5 in such education or program, ensures that such 

6 education or program prepares students for gainful 

7 employment in a recognized occupation. 

8 ‘‘(e) LIMITATIONS BASED ON MANAGEMENT.—An in9 stitution shall not be considered to meet the definition of 

10 an institution of higher education in subsection (a) or (b) 

11 if such institution— 

12 ‘‘(1) the institution, or an affiliate of the insti13 tution that has the power, by contract or ownership 

14 interest, to direct or cause the direction of the man15 agement or policies of the institution, has filed for 

16 bankruptcy; or 

17 ‘‘(2) the institution, the institution’s owner, the 

18 institution’s chief executive officer, or any other ex19 ecutive officer of the institution— 

20 ‘‘(A) has been convicted of, or has pled 

21 nolo contendere or guilty to, a crime involving 

22 the acquisition, use, or expenditure of funds 

23 under title IV; 

24 ‘‘(B) has been determined to have com25 mitted fraud, substantial misrepresentation, or 


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1 false certification involving funds under title IV; 

2 or 

3 ‘‘(C) has been previously employed at an 

4 institution receiving funds under title IV that 

5 closed. 

6 ‘‘(f) CERTIFICATION.—The Secretary shall certify an 

7 institution’s qualification as an institution of higher edu8 cation in accordance with the requirements of subpart 3 

9 of part H of title IV. 

10 ‘‘(g) LOSS OF ELIGIBILITY.—An institution of higher 

11 education shall not be considered to meet the definition 

12 of an institution of higher education in subsection (a) or 

13 (b) if such institution is removed from eligibility for funds 

14 under title IV as a result of an action pursuant to part 

15 H of title IV. 

16 ‘‘(h) POSTSECONDARY VOCATIONAL INSTITUTION.— 

17 ‘‘(1) PRINCIPAL CRITERIA.—For the purpose of 

18 this section, the term ‘postsecondary vocational insti19 tution’ means a school that— 

20 ‘‘(A) provides an eligible program of train21 ing to prepare students for gainful employment 

22 in a recognized occupation; 

23 ‘‘(B) meets the requirements of paragraphs 

24 (1), (2), (4), and (5) of subsection (a); and 


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1 ‘‘(C) has been in existence for at least 2 

2 years. 

3 ‘‘(2) ADDITIONAL INSTITUTIONS.—The term 

4 ‘postsecondary vocational institution’ also includes 

5 an educational institution in any State that, in lieu 

6 of the requirement in subsection (a)(1), admits as 

7 regular students individuals— 

8 ‘‘(A) who are beyond the age of compul9 sory school attendance in the State in which the 

10 institution is located; or 

11 ‘‘(B) who will be dually or concurrently en12 rolled in the institution and a secondary school. 

13 ‘‘(i) INSTITUTION OUTSIDE THE UNITED STATES.— 

14 ‘‘(1) IN GENERAL.—For the purpose of quali15 fying as an institution under subsection (b)(4), the 

16 Secretary shall establish criteria by regulation for 

17 the approval of institutions outside the United 

18 States and for the determination that such institu19 tions are comparable to an institution of higher edu20 cation, as defined in subsection 101(a) (except that 

21 a graduate medical school, nursing school, or a vet22 erinary school, located outside the United States 

23 shall not be required to meet the requirements of 

24 subsection (a)(4)). Such criteria shall include a re25 quirement that a student attending such school outVerDate Sep 11 2014 21:13 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4724.IH H4724

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1 side the United States is ineligible for loans made 

2 under part D of title IV unless— 

3 ‘‘(A) in the case of a graduate medical 

4 school located outside the United States— 

5 ‘‘(i) at least 60 percent of those en6 rolled in, and at least 60 percent of the 

7 graduates of, the graduate medical school 

8 outside the United States were not persons 

9 described in section 484(a)(5) in the year 

10 preceding the year for which a student is 

11 seeking a loan under part D of title IV; 

12 and 

13 ‘‘(ii) at least 75 percent of the individ14 uals who were students or graduates of the 

15 graduate medical school outside the United 

16 States or Canada (both nationals of the 

17 United States and others) taking the ex18 aminations administered by the Edu19 cational Commission for Foreign Medical 

20 Graduates received a passing score in the 

21 year preceding the year for which a stu22 dent is seeking a loan under part D of title 

23 IV; 

24 ‘‘(B) in the case of a veterinary school lo25 cated outside the United States that does not 


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1 meet the requirements of subsection (a)(4), the 

2 institution’s students complete their clinical 

3 training at an approved veterinary school lo4 cated in the United States; or 

5 ‘‘(C) in the case of a nursing school lo6 cated outside of the United States— 

7 ‘‘(i) the nursing school has an agree8 ment with a hospital, or accredited school 

9 of nursing (as such terms are defined in 

10 section 801 of the Public Health Service 

11 Act (42 U.S.C. 296)), located in the 

12 United States that requires the students of 

13 the nursing school to complete the stu14 dents’ clinical training at such hospital or 

15 accredited school of nursing; 

16 ‘‘(ii) the nursing school has an agree17 ment with an accredited school of nursing 

18 located in the United States providing that 

19 the students graduating from the nursing 

20 school located outside of the United States 

21 also receive a degree from the accredited 

22 school of nursing located in the United 

23 States; 

24 ‘‘(iii) the nursing school certifies only 

25 Federal Direct Stafford Loans under secVerDate Sep 11 2014 21:13 Oct 27, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4724.IH H4724

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1 tion 455(a)(2)(A), Federal Direct Unsub2 sidized Stafford Loans under section 

3 455(a)(2)(D), or Federal Direct PLUS 

4 Loans under section 455(a)(2)(B) for stu5 dents attending the institution; 

6 ‘‘(iv) the nursing school reimburses 

7 the Secretary for the cost of any loan de8 faults for current and former students in9 cluded in the calculation of the institu10 tion’s cohort default rate during the pre11 vious fiscal year; and 

12 ‘‘(v) not less than 75 percent of the 

13 individuals who were students or graduates 

14 of the nursing school, and who took the 

15 National Council Licensure Examination 

16 for Registered Nurses in the year pre17 ceding the year for which the institution is 

18 certifying a Federal Direct Stafford Loan 

19 under section 455(a)(2)(A), a Federal Di20 rect Unsubsidized Stafford Loan under 

21 section 455(a)(2)(D), or a Federal Direct 

22 PLUS Loan under section 455(a)(2)(B), 

23 received a passing score on such examina24 tion. 


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1 ‘‘(2) FAILURE TO RELEASE INFORMATION.— 

2 The failure of an institution outside the United 

3 States to provide, release, or authorize release to the 

4 Secretary of such information as may be required by 

5 paragraph (1) shall render such institution ineligible 

6 for the purpose of part D of title IV. 

7 ‘‘(3) SPECIAL RULE.—If, pursuant to this sub8 section, an institution loses eligibility to participate 

9 in the programs under title IV, then a student en10 rolled in such institution may, notwithstanding such 

11 loss of eligibility, continue to be eligible to receive a 

12 loan under part D of title IV while attending such 

13 institution for the academic year succeeding the aca14 demic year in which such loss of eligibility oc15 curred.’’; 

16 (2) by striking section 102; and 

17 (3) by redesignating section 103 as section 102. 

18 SEC. 3. REPEAL OF EXISTING REFERENCES TO PROPRI19 ETARY INSTITUTIONS. 

20 Section 487 of the Higher Education Act of 1965 (20 

21 U.S.C. 1094) is amended— 

22 (1) in subsection (a)— 

23 (A) by striking paragraph (24); 


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1 (B) by redesignating paragraphs (25) 

2 through (29) as paragraphs (24) through (28), 

3 respectively; 

4 (C) in paragraph (24)(A)(ii) (as redesig5 nated by subparagraph (B)), by striking ‘‘sub6 section (e)’’ and inserting ‘‘subsection (d)’’; and 

7 (D) in paragraph (26) (as redesignated by 

8 subparagraph (B)), by striking ‘‘subsection (h)’’ 

9 and inserting ‘‘subsection (g)’’; 

10 (2) by striking subsection (d); 

11 (3) by redesignating subsections (e) through (j) 

12 as subsections (d) through (i), respectively; 

13 (4) in subsection (f)(1) (as redesignated by 

14 paragraph (3)), by striking ‘‘subsection (e)(2)’’ and 

15 inserting ‘‘subsection (d)(2)’’; and 

16 (5) in subsection (g)(1) (as redesignated by 

17 paragraph (3)), by striking ‘‘subsection (a)(27)’’ in 

18 the matter preceding subparagraph (A) and insert19 ing ‘‘subsection (a)(26)’’. 

20 SEC. 4. CONFORMING AMENDMENTS. 

21 The Higher Education Act of 1965 (20 U.S.C. 1001 

22 et seq.) is amended— 

23 (1) in section 102, as redesignated by sub24 section (a)(3), in paragraph (5)(B), by striking ‘‘(as 

25 such term is defined in section 102)’’; 


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1 (2) in section 114— 

2 (A) in subsection (a), by striking ‘‘(as de3 fined in section 102)’’; and 

4 (B) in subsection (b)(2)(B), by striking 

5 ‘‘(as defined in section 102)’’; 

6 (3) in section 133(b)— 

7 (A) by striking paragraph (5); and 

8 (B) by redesignating paragraphs (6) 

9 through (9) as paragraphs (5) through (8), re10 spectively; 

11 (4) in section 151(2), by striking ‘‘, as such 

12 term in defined in section 102,’’; 

13 (5) in section 152— 

14 (A) in subsection (a)(1)(A), by striking 

15 ‘‘subsections (a)(27) and (h) of section 487’’ 

16 and inserting ‘‘subsections (a)(26) and (g) of 

17 section 487’’; and 

18 (B) in subsection (b)(1)(B)(i)(I), by strik19 ing ‘‘section 487(e)’’ and inserting ‘‘section 

20 487(d)’’; 

21 (6) in section 153(c)(3), by striking ‘‘section 

22 487(a)(25)’’ each place the term appears and insert23 ing ‘‘section 487(a)(24)’’; 

24 (7) in section 420L(1), by striking ‘‘, as defined 

25 in section 102,’’; 


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1 (8) in section 435(a)(1), by striking ‘‘, as de2 fined in section 102,’’; 

3 (9) section 486(b)— 

4 (A) in paragraph (2), by striking ‘‘sections 

5 102(a)(3)(A), 102(a)(3)(B)’’; 

6 (B) in paragraph (3)(B), by striking ‘‘sec7 tion 102(a)(1)(C)’’ and inserting ‘‘section 

8 101(b)(4)’’; and 

9 (C) in paragraph (3)(C), by striking ‘‘an 

10 institution of higher education that meets the 

11 requirements of subsection (a) of section 102, 

12 other than the requirement of paragraph (3)(A) 

13 or (3)(B) of such subsection,’’ and inserting 

14 ‘‘an institution of higher education that meets 

15 the requirements of section 101, other than the 

16 requirement of section 101(e)(1)(A),’’; 

17 (10) in section 487— 

18 (A) in subsection (c)(1)(A)(iii), by striking 

19 ‘‘section 102(a)(1)(C)’’ and inserting ‘‘section 

20 101(b)(4)’’; and 

21 (B) in subsection (i)— 

22 (i) by striking paragraph (4); and 

23 (ii) by redesignating paragraphs (5) 

24 and (6) as paragraphs (4) and (5), respec25 tively; 


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1 (11) in section 491(l)(2)(A), by striking ‘‘sec2 tion 102(a)(1)(C)’’ and inserting ‘‘section 

3 101(b)(4)’’; 

4 (12) in section 496— 

5 (A) in subsection (c)(3)(A), by striking 

6 ‘‘section 487(f)’’ and inserting ‘‘section 

7 487(e)’’; 

8 (B) in subsection (j), by striking ‘‘section 

9 102’’ and inserting ‘‘section 101’’; and 

10 (C) in subsection (k), by striking ‘‘section 

11 102’’ and inserting ‘‘section 101’’; 

12 (13) in section 498— 

13 (A) in subsection (g)(3), by striking ‘‘sec14 tion 102(a)(1)(C)’’ and inserting ‘‘section 

15 101(b)(4)’’; 

16 (B) in subsection (i), by striking ‘‘section 

17 102’’ and inserting ‘‘section 101’’; 

18 (C) in subsection (j), by striking ‘‘sections 

19 102(b)(1)(E) and 102(c)(1)(C)’’ and inserting 

20 ‘‘section 101(i)(1)(C)’’; and 

21 (D) in subsection (k)— 

22 (i) in paragraph (1), by striking ‘‘sec23 tion 487(f)’’ and inserting ‘‘section 

24 487(e)’’; and 


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1 (ii) in paragraph (2)(A), by striking 

2 ‘‘sections 102(b)(1)(E) and 102(c)(1)(C)’’ 

3 and inserting ‘‘section 101(i)(1)(C)’’; 

4 (14) in section 498B(b), by striking ‘‘section 

5 102(a)(1)(C)’’ and inserting ‘‘section 101(b)(4)’’; 

6 (15) in section 741(f)(2), by striking ‘‘section 

7 102’’ and inserting ‘‘section 101’’; and 

8 (16) in section 807(d)(1), by striking subpara9 graph (A) and inserting the following: 

10 ‘‘(A) intend to pursue a career in instruc11 tion at an institution of higher education in the 

12 United States; and’’. 

13 SEC. 5. INTEGRITY OF NONPROFIT INSTITUTIONS OF HIGH14 ER EDUCATION. 

15 Part B of title I of the Higher Education Act of 1965 

16 (20 U.S.C. 1011 et seq.) is amended by adding at the end 

17 the following: 

18 ‘‘SEC. 124. INTEGRITY OF NONPROFIT INSTITUTIONS OF 

19 HIGHER EDUCATION. 

20 ‘‘(a) DETERMINATION.—On determining that an in21 stitution of higher education meets the requirements 

22 under subsection (b), the Secretary shall approve the con23 version of an institution of higher education to a nonprofit 

24 institution of higher education. 


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1 ‘‘(b) APPLICATION.—To be eligible to convert under 

2 this section and participate as a nonprofit institution of 

3 higher education under this Act, an institution of higher 

4 education shall submit an application to the Secretary that 

5 demonstrates each of the following: 

6 ‘‘(1) That such institution of higher education 

7 is a nonprofit institution of higher education. 

8 ‘‘(2) That the assets or services acquired from 

9 former owners of such institution of higher edu10 cation were not acquired for more than the value of 

11 such assets or services. 

12 ‘‘(3) That no member of the governing board of 

13 such institution of higher education (other than ex 

14 officio members serving at the pleasure of the re15 mainder of the governing board and receiving a fixed 

16 salary), or any person with the power to appoint or 

17 remove members of such governing board or any im18 mediate family member of such a member of the 

19 board or such a person with power of appointment, 

20 receives any substantial direct or indirect economic 

21 benefit (including a lease, promissory note, or other 

22 contract) from such institution of higher education. 

23 ‘‘(4) That such institution of higher education 

24 is an organization described in section 501(c)(3) of 


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1 the Internal Revenue Code of 1986 and is exempt 

2 from taxation under section 501(a) of such Code. 

3 ‘‘(5) Subject to subsection (c), that none of the 

4 core functions of the institution of higher education 

5 are under the control of, or subject to significant di6 rection from, an entity that is not a public institu7 tion of higher education or other nonprofit entity. 

8 ‘‘(c) PRESUMPTION OF SIGNIFICANT DIRECTION.— 

9 For purposes of subsection (b)(5), in the case of an insti10 tution, there shall be a conclusive presumption that an en11 tity (other than such institution) exercises significant di12 rection over such institution if one or more of the employ13 ees or owners of the entity serves as an officer, member 

14 of the board, or person holding similar authority for such 

15 institution. 

16 ‘‘(d) TRANSITION PERIOD.—In the case of an institu17 tion of higher education approved for conversion under 

18 subsection (a), such institution shall be subject to any 

19 rules and regulations that apply to proprietary institutions 

20 of higher education, as defined in section 102(b), for a 

21 minimum of 5 years. 

22 ‘‘(e) VALUE.—The term ‘value’, with respect to an 

23 acquisition under subsection (b)(2)— 


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1 ‘‘(1) includes the value of any ongoing relation2 ship (including any contract, agreement, lease or 

3 other arrangement); 

4 ‘‘(2) subject to paragraph (3), may be dem5 onstrated through— 

6 ‘‘(A) a third-party appraisal based on com7 parable assets acquired by, or goods or services 

8 procured by, nonprofit corporations in similar 

9 market conditions; 

10 ‘‘(B) an independent financing of the ac11 quisition based upon the assets acquired; or 

12 ‘‘(C) a full and open competition in the ac13 quisition of services or assets, as such term is 

14 defined in section 2.101(b) of title 48, Code of 

15 Federal Regulations, as in effect on the date of 

16 the enactment of this section; and 

17 ‘‘(3) shall be subject to such other demonstra18 tion process determined appropriate by the Secretary 

19 in a case in which the Secretary does not accept a 

20 demonstration process described in paragraph (2). 

21 ‘‘(f) PUBLICATION.— 

22 ‘‘(1) APPLICATION.—Before the Secretary may 

23 approve the conversion of an institution of higher 

24 education under subsection (a), the application of 

25 such institution submitted to the Secretary under 


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1 subsection (b) shall be published in the Federal Reg2 ister with an appropriate notice and comment pe3 riod. 

4 ‘‘(2) DETERMINATION.—The Secretary shall 

5 publish each determination under this section, and 

6 the reasons for such determination, under the Fed7 eral Register. 

8 ‘‘(g) PUBLIC REPRESENTATION AND MARKETING OF

9 NONPROFIT STATUS.—An institution of higher education 

10 shall not promote or market itself, in any manner, as a 

11 nonprofit institution of higher education unless— 

12 ‘‘(1) in the case of an institution of higher edu13 cation that seeks to convert to a nonprofit institu14 tion of higher education under this section— 

15 ‘‘(A) the Secretary has given final approval 

16 of the conversion of the institution to a non17 profit institution of higher education under this 

18 section; 

19 ‘‘(B) an accrediting agency or association 

20 recognized by the Secretary pursuant to section 

21 496 has approved the nonprofit status of the 

22 institution; and 

23 ‘‘(C) the State has given final approval to 

24 the institution as a nonprofit institution of 

25 higher education, as applicable; and 


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1 ‘‘(2) the Commissioner of Internal Revenue has 

2 approved the institution as tax exempt for purposes 

3 of the Internal Revenue Code of 1986. 

4 ‘‘(h) OFFICE TO MONITOR NONPROFIT INTEG5 RITY.—Not later than 1 year after the date of enactment 

6 of the Students Not Profits Act of 2019, the Secretary 

7 shall establish an office within the Department with the 

8 expertise necessary to carry out this section. 

9 ‘‘SEC. 125. REVIEW OF GOVERNANCE. 

10 ‘‘The Secretary shall review the governance of an in11 stitution of higher education when such institution has en12 gaged in transactions or arrangements determined by the 

13 Secretary as potential indicators of private inurement, in 

14 order to promote the highest standards of nonprofit integ15 rity.’’. 

Æ 


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