II 

118TH CONGRESS 

2D SESSION S. 4138 

To establish an alternative, outcomes-based process for authorizing innovative, 

high-quality higher education providers to participate in programs under 

title IV of the Higher Education Act of 1965. 

IN THE SENATE OF THE UNITED STATES 

APRIL 17, 2024 

Mr. BENNET (for himself and Mr. RUBIO) introduced the following bill; which 

was read twice and referred to the Committee on Health, Education, 

Labor, and Pensions 

A BILL 

To establish an alternative, outcomes-based process for authorizing innovative, high-quality higher education providers to participate in programs under title IV of the 

Higher Education Act of 1965. 

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 ‘‘Higher Education In5 novation Act’’. 


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1 SEC. 2. ALTERNATIVE AUTHORIZATION SYSTEM. 

2 Part H of title IV of the Higher Education Act of 

3 1965 (20 U.S.C. 1099a et seq.) is amended by adding at 

4 the end the following: 

5 ‘‘Subpart 4—Alternative Authorization System 

6 ‘‘SEC. 498C. ALTERNATIVE AUTHORIZATION SYSTEM. 

7 ‘‘(a) DEFINITIONS.—In this section: 

8 ‘‘(1) INNOVATION AUTHORIZER.—The term ‘in9 novation authorizer’ or ‘authorizer’ means an entity 

10 that has been approved by the Secretary to carry out 

11 authorization of eligible entities. 

12 ‘‘(2) ELIGIBLE ENTITY.—The term ‘eligible en13 tity’ means an institution of higher education or an14 other entity that— 

15 ‘‘(A) promotes and supports student suc16 cess outcomes and cost-effectiveness in postsec17 ondary education; 

18 ‘‘(B) provides an educational program— 

19 ‘‘(i) that leads to a degree or certifi20 cate; 

21 ‘‘(ii) of course bundles; or 

22 ‘‘(iii) that leads to an industry-recog23 nized credential that meets the require24 ments for licensing in the relevant field; 


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1 ‘‘(C) agrees to specified outcome-based 

2 oversight and reporting requirements described 

3 in this section; 

4 ‘‘(D) demonstrates that the entity provides 

5 high-quality education by meeting or exceeding 

6 the minimum thresholds for each of the per7 formance metrics that are required by the inno8 vation authorizer in accordance with subsection 

9 (b) and which are developed in accordance with 

10 subsection (d); 

11 ‘‘(E) meets the definition of an institution 

12 of higher education under section 101 or 102, 

13 except that the entity need not meet the re14 quirements described in— 

15 ‘‘(i) section 101(a)(5); 

16 ‘‘(ii) section 102(b)(1)(A)(ii)(II); or 

17 ‘‘(iii) section 102(b)(1)(D); and 

18 ‘‘(F) meets the other requirements for par19 ticipation in this title. 

20 ‘‘(3) TEACH-OUT PLAN.—The term ‘teach-out 

21 plan’ means a written plan that provides for the eq22 uitable treatment of students if an eligible entity 

23 ceases to operate before all students have completed 

24 their program of study, and may include, if required 

25 by the Secretary, an agreement between eligible entiVerDate Sep 11 2014 03:54 Apr 26, 2024 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4138.IS S4138

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1 ties or between an eligible entity and another institu2 tion for such a teach-out plan. 

3 ‘‘(4) COURSE BUNDLE.—The term ‘course bun4 dle’ means a series of courses, or the equivalent, 

5 that lead to— 

6 ‘‘(A) proficiency in a set of marketable 

7 skills or competencies; or 

8 ‘‘(B) an industry-recognized credential that 

9 meets the requirements for licensing in the rel10 evant field. 

11 ‘‘(5) COMPLETION.—The term ‘completion’ 

12 means— 

13 ‘‘(A) in the case of a course bundle— 

14 ‘‘(i) completion of a series of 

15 courses— 

16 ‘‘(I) that lead to proficiency in a 

17 set of marketable skills or com18 petencies; or 

19 ‘‘(II) that result in an industry20 recognized credential that meets the 

21 requirements for licensing in the rel22 evant field; or 

23 ‘‘(ii) successful completion of a set of 

24 assessments— 


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1 ‘‘(I) that demonstrates pro2 ficiency in a set of marketable skills 

3 or competencies; or 

4 ‘‘(II) that results in an industry5 recognized credential that meets the 

6 requirements for licensing in the rel7 evant field; and 

8 ‘‘(B) in the case of a program leading to 

9 a certificate or degree, receipt of the certificate 

10 or degree. 

11 ‘‘(b) APPROVAL OF INNOVATION AUTHORIZERS.— 

12 ‘‘(1) IN GENERAL.—The Secretary shall estab13 lish a process for approving innovation authorizers 

14 to carry out the authorization of eligible entities. 

15 ‘‘(2) REQUEST FOR APPLICATIONS.—Not later 

16 than 275 days after the date of enactment of this 

17 subpart, the Secretary shall publish a request for ap18 plications from entities that desire to become innova19 tion authorizers. Any accrediting agency or associa20 tion currently recognized by the Secretary or any en21 tity not currently recognized by the Secretary may 

22 apply to be approved as innovation authorizers. 

23 ‘‘(3) APPLICATION REQUIREMENTS.—An entity 

24 that desires to be approved by the Secretary as an 

25 innovation authorizer under paragraph (1) shall subVerDate Sep 11 2014 03:54 Apr 26, 2024 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4138.IS S4138

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1 mit an application to the Secretary that includes the 

2 following information: 

3 ‘‘(A) Information on the entity’s prior ex4 perience as an authorizer, accreditor, pro5 grammatic accreditor, or industry validator, or 

6 strong evidence and history that demonstrates 

7 the entity is equipped to be a high-quality au8 thorizer. 

9 ‘‘(B) An explanation of why the entity is 

10 qualified and capable of being an innovation au11 thorizer, accompanied by supporting docu12 mentation. 

13 ‘‘(C) Evidence that the entity is financially 

14 able to meet the requirements for authorizing 

15 eligible entities, including the requirements 

16 under paragraph (7). 

17 ‘‘(D) A description of the process that the 

18 entity will use for awarding authorization, and 

19 suspending or revoking an eligible entity’s au20 thorization, including— 

21 ‘‘(i) the performance metrics the au22 thorizer will use in making determinations 

23 about authorization, which shall meet the 

24 requirements described under subsection 

25 (d); 


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1 ‘‘(ii) the minimum threshold for each 

2 performance metric described in clause (i), 

3 which shall require an eligible entity to 

4 meet or exceed the 60th-percentile student 

5 outcome for each such performance metric 

6 in order to be awarded authorization by 

7 the innovation authorizer; 

8 ‘‘(iii) any other criteria or metrics 

9 that the entity will use as an innovation 

10 authorizer to award authorization status to 

11 an eligible entity, if applicable; and 

12 ‘‘(iv) the process for— 

13 ‘‘(I) monitoring authorized eligi14 ble entities, ensuring that each eligible 

15 entity continues to meet the criteria 

16 for authorization (including the 

17 threshold for each applicable perform18 ance metric as described in clause 

19 (ii)); and 

20 ‘‘(II) ensuring the accuracy and 

21 validity of data. 

22 ‘‘(E) A description of the entity’s area of 

23 educational or subject matter focus, if applica24 ble. 


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1 ‘‘(F) The composition or membership of 

2 the entity that seeks to become an innovation 

3 authorizer, and the entity’s relationship or work 

4 with applicable industries and businesses. 

5 ‘‘(G) A demonstration that the entity 

6 has— 

7 ‘‘(i) clear and effective controls to pro8 tect against conflicts of interest, or the ap9 pearance of conflicts of interest, between 

10 the entity that wishes to be an innovation 

11 authorizer and eligible entities (including 

12 controls regarding potential conflicts of in13 terest between board members, commis14 sioners, evaluation team members, consult15 ants, administrative staff, and other rep16 resentatives of the entity that wishes to be 

17 an authorizer and eligible entities); and 

18 ‘‘(ii) requirements to ensure that, as 

19 an authorizer, the entity and the staff, and 

20 representatives of the entity will be sepa21 rate and independent (as defined in section 

22 496(b)), both administratively and finan23 cially, from any eligible entities and will re24 ceive no benefit, financial or otherwise, 

25 from authorizing an eligible entity. 


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1 ‘‘(H) An agreement that the entity will 

2 make applicable authorization data, documents, 

3 and determinations publicly available. 

4 ‘‘(4) DISSEMINATION OF INFORMATION.—For 

5 the purpose of determining minimum thresholds for 

6 performance metrics under paragraph (3)(D)(ii) and 

7 subsection (d)(1)(B), the Secretary shall— 

8 ‘‘(A) disseminate to innovation authorizers, 

9 on an annual basis, information about 60th-per10 centile student outcomes on the performance 

11 criteria described under subsection (d), in the 

12 aggregate for all students and disaggregated by 

13 student income quartile and field of study; and 

14 ‘‘(B) provide the information described in 

15 subparagraph (A) to an innovation authorizer 

16 or an entity that wishes to apply to become an 

17 innovation authorizer upon request. 

18 ‘‘(5) LIMITATION, SUSPENSION, OR TERMI19 NATION OF AUTHORIZER APPROVAL.— 

20 ‘‘(A) NOTICE AND OPPORTUNITY FOR COR21 RECTION.—If the Secretary determines that an 

22 innovation authorizer has failed to apply and ef23 fectively enforce the performance criteria, in24 cluding the minimum thresholds for such cri25 teria, specified in the innovation authorizer’s 


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1 application under paragraph (3) in awarding, 

2 monitoring, and revoking authorization status 

3 for eligible entities, the Secretary shall provide 

4 notice to the innovation authorizer and give the 

5 innovation authorizer a 6-month period to apply 

6 and enforce the performance criteria and min7 imum thresholds described in the innovation au8 thorizer’s application under paragraph (3). 

9 ‘‘(B) LIMITATION, SUSPENSION, OR TERMI10 NATION.—If, after the 6-month period de11 scribed in subparagraph (A), the Secretary de12 termines that an innovation authorizer has still 

13 failed to effectively enforce the performance cri14 teria and minimum thresholds specified in that 

15 innovation authorizer’s application under para16 graph (3), the Secretary shall limit, suspend, or 

17 terminate the recognition of that innovation au18 thorizer. 

19 ‘‘(6) LOSS OF AUTHORIZER APPROVAL.—In the 

20 case of an eligible entity authorized by an innovation 

21 authorizer whose recognition has been limited, sus22 pended, or terminated by the Secretary— 

23 ‘‘(A) if the eligible entity successfully dem24 onstrates to the Secretary that the eligible enti25 ty meets the performance criteria and minimum 


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1 thresholds that such authorizer specified in its 

2 application under paragraph (3), the eligible en3 tity shall have 6 months to apply for accredita4 tion by another accrediting agency or associa5 tion or authorization by another innovation au6 thorizer; or 

7 ‘‘(B) the eligible entity shall prepare a 

8 teach-out plan that meets the Secretary’s regu9 lations for teach-out plans and shall submit 

10 such plan to the Secretary. 

11 ‘‘(7) AUTHORIZER RISK SHARING.—Each inno12 vation authorizer shall enter into an agreement with 

13 the Secretary whereby the innovation authorizer 

14 agrees to pay the Secretary an amount equal to not 

15 less than 25 percent of the amount of Federal stu16 dent loans that are held by current and former stu17 dents of any eligible entity authorized by the innova18 tion authorizer under subsection (d) and that are in 

19 default each fiscal year. 

20 ‘‘(c) ELIGIBILITY FOR FEDERAL PELL GRANT

21 FUNDING.—Eligible entities that are authorized by an in22 novation authorizer shall be eligible to receive Federal Pell 

23 Grant funding in accordance with subsection (f). 

24 ‘‘(d) AUTHORIZATION BY AN INNOVATION AUTHOR25 IZER.— 


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1 ‘‘(1) AUTHORIZATION PROCESS.— 

2 ‘‘(A) IN GENERAL.—An innovation author3 izer may authorize an eligible entity, if— 

4 ‘‘(i) that eligible entity meets the cri5 teria under subsection (a)(2); and 

6 ‘‘(ii) in the case of— 

7 ‘‘(I) an eligible entity that has 

8 not carried out an educational pro9 gram for more than 2 years, the eligi10 ble entity agrees to, and describes a 

11 high-quality, evidence-based plan to, 

12 meet within 2 years the specific per13 formance metrics and minimum 

14 thresholds required by the innovation 

15 authorizer in accordance with sub16 section (b)(3)(D); and 

17 ‘‘(II) an eligible entity that has 

18 carried out an educational program 

19 for more than 2 years, the eligible en20 tity demonstrates that the eligible en21 tity meets the specific performance 

22 metrics and minimum thresholds re23 quired by the innovation authorizer in 

24 accordance with subsection (b)(3)(D). 

25 ‘‘(B) PERFORMANCE METRICS.— 


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1 ‘‘(i) IN GENERAL.—In accordance 

2 with subparagraph (C), each innovation 

3 authorizer shall— 

4 ‘‘(I) use, in order to determine 

5 whether to award authorization to an 

6 eligible entity, not less than— 

7 ‘‘(aa) 1 performance metric 

8 relating to student learning, as 

9 described in clause (ii); 

10 ‘‘(bb) the performance met11 ric relating to completion, as de12 scribed in clause (iii); and 

13 ‘‘(cc) 2 performance metrics 

14 relating to the benefit to the stu15 dent and affordability, as de16 scribed in clause (iv); 

17 ‘‘(II) establish the minimum 

18 thresholds for each performance met19 ric that the eligible entity must meet 

20 or exceed in order to be authorized by 

21 the authorizer in accordance with sub22 section (b)(3)(D)(ii), ensuring that 

23 each minimum threshold meets or ex24 ceeds the 60th-percentile student out25 come for the performance metric; and 


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1 ‘‘(III) in the determination about 

2 whether an eligible entity meets the 

3 required threshold for authorization 

4 for each performance metric, include 

5 data from all students who enroll in 

6 the eligible entity. 

7 ‘‘(ii) STUDENT LEARNING.—The per8 formance metrics relating to student learn9 ing are the following: 

10 ‘‘(I) A nationally defined, dem11 onstrated, objective, and verifiable 

12 measure of student learning, including 

13 a measure of the knowledge or skills 

14 gained by the student from the edu15 cational program or institution. 

16 ‘‘(II) Demonstrated quality based 

17 on an evaluation conducted by an 

18 independent evaluator that uses eval19 uation criteria approved by the What 

20 Works Clearinghouse of the Institute 

21 of Education Sciences and shows sta22 tistically significant increases in stu23 dent learning. 


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1 ‘‘(III) Pass rates and overall 

2 scores on qualifying or licensing ex3 aminations. 

4 ‘‘(iii) COMPLETION.— 

5 ‘‘(I) IN GENERAL.—The perform6 ance metric relating to completion is 

7 the percentage of all students who 

8 complete the educational program and 

9 each program of study in— 

10 ‘‘(aa) 100 percent of the 

11 normal time for completion of 

12 each program of study; 

13 ‘‘(bb) 150 percent of the 

14 normal time for completion of 

15 each program of study; and 

16 ‘‘(cc) 200 percent of the 

17 normal time for completion of 

18 each program of study. 

19 ‘‘(II) TRANSFER STUDENTS.—In 

20 determining the percentage under 

21 subclause (I), an eligible entity may 

22 include the students in each program 

23 of study who transfer and successfully 

24 complete a program of study. 


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1 ‘‘(iv) BENEFIT TO STUDENT AND AF2 FORDABILITY.—The performance metrics 

3 relating to benefit to the student and af4 fordability are the following: 

5 ‘‘(I) Rates of employment or en6 rollment in and completion of grad7 uate or professional school. 

8 ‘‘(II) Increases in income for stu9 dents. 

10 ‘‘(III) The cost of tuition and 

11 fees, the net price disaggregated by 

12 income quintile and educational pro13 gram, and the median total loan debt 

14 accrued by students who were enrolled 

15 in the eligible entity. 

16 ‘‘(IV) Student loan repayment 

17 rates for Federal and private student 

18 loans, if applicable. 

19 ‘‘(V) Median income of students 

20 who were enrolled in the eligible enti21 ty. 

22 ‘‘(C) DATA SOURCE.—When an innovation 

23 authorizer uses data about income or employ24 ment, as described in subparagraph (B)(iv), the 

25 following provisions shall apply: 


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1 ‘‘(i) The innovation authorizer shall 

2 use wage data gathered in accordance with 

3 clauses (iii) and (iv) and shall disaggregate 

4 such data (except that such disaggregation 

5 shall not be required in a case in which the 

6 results would reveal personally identifiable 

7 information about an individual student), 

8 by— 

9 ‘‘(I) educational program based 

10 on the Classification of Instructional 

11 Programs Code developed by the Na12 tional Center for Education Statistics; 

13 ‘‘(II) credential received; 

14 ‘‘(III) noncompleters; 

15 ‘‘(IV) eligible entity; and 

16 ‘‘(V) State and region of employ17 ment. 

18 ‘‘(ii) The innovation authorizer shall 

19 include data for— 

20 ‘‘(I) 1 year after educational pro21 gram completion; 

22 ‘‘(II) 3 years after educational 

23 program completion; and 

24 ‘‘(III) 5 years after educational 

25 program completion. 


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1 ‘‘(iii) Notwithstanding any other pro2 vision of law, the Secretary, in cooperation 

3 with the Commissioner of Social Security, 

4 and each eligible entity whose wage data 

5 will be evaluated in accordance with sub6 paragraph (B)(iv) shall establish a system 

7 through which relevant data may be re8 trieved from the Social Security Adminis9 tration, including data on median annual 

10 earnings and employment metrics. 

11 ‘‘(iv) The Secretary, innovation au12 thorizers, and eligible entities shall not 

13 share personally identifiable information of 

14 a student in carrying out this subpara15 graph, except as necessary to enable indi16 viduals who are employed by the Depart17 ment to meet the reporting requirements 

18 and data dissemination purposes and re19 quirements under this Act. 

20 ‘‘(D) TRANSPARENCY.—Notwithstanding 

21 the specific performance metrics used by any 

22 specific authorizer, each authorized eligible enti23 ty shall make public and disaggregate informa24 tion on all of the metrics described under sub25 paragraph (B) for the eligible entity as a whole 


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1 and for each educational program of the eligible 

2 entity, as applicable. 

3 ‘‘(2) RENEWING AUTHORIZATION.—An innova4 tion authorizer shall require each eligible entity that 

5 has been authorized by the innovation authorizer to 

6 have the eligible entity’s authorization renewed not 

7 later than 2 years after the eligible entity is first au8 thorized, and not later than every 5 years thereafter. 

9 ‘‘(3) LOSS OF AUTHORIZATION.— 

10 ‘‘(A) IN GENERAL.—An innovation author11 izer shall remove an eligible entity from author12 ized status if, for 2 consecutive calendar years, 

13 that eligible entity falls below the minimum 

14 threshold for any performance metric required 

15 for authorization by the innovation authorizer 

16 in accordance with subsection (b)(3)(D). 

17 ‘‘(B) PETITION TO REGAIN AUTHORIZA18 TION.—An eligible entity that is removed from 

19 authorized status may petition an innovation 

20 authorizer to regain authorization by dem21 onstrating to the innovation authorizer that the 

22 eligible entity is ensuring quality and student 

23 success and has met, and will continue to meet, 

24 the minimum thresholds for each performance 

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1 tion authorizer in accordance with subsection 

2 (b)(3)(D). 

3 ‘‘(4) ACCREDITATION DEEMED.—Authorization 

4 by an innovation authorizer approved by the Sec5 retary under this section shall be deemed recognized 

6 accreditation for purposes of title IV. 

7 ‘‘(e) ACCREDITATION AND AUTHORIZATION; CHANG8 ING ACCREDITORS OR AUTHORIZERS.— 

9 ‘‘(1) ACCREDITATION AND AUTHORIZATION.— 

10 An eligible entity that otherwise meets the require11 ments for authorization by an innovation authorizer 

12 and the requirements for accreditation by a recog13 nized accrediting agency or association may hold ac14 creditation and authorization from both entities. 

15 ‘‘(2) CHANGING ACCREDITORS OR AUTHOR16 IZERS.—An eligible entity that otherwise meets the 

17 relevant requirements for accreditation or authoriza18 tion may notify the Secretary and change accredita19 tion or authorization status— 

20 ‘‘(A) from an innovation authorizer to a 

21 recognized accrediting agency or association; or 

22 ‘‘(B) from a recognized accrediting agency 

23 or association to an innovation authorizer. 

24 ‘‘(f) ELIGIBILITY FOR FEDERAL PELL GRANT FUND25 ING.— 


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1 ‘‘(1) AUTHORIZER FEDERAL PELL GRANT

2 FUNDING REQUIREMENTS.— 

3 ‘‘(A) AGGREGATE INNOVATION AUTHOR4 IZER FEDERAL PELL GRANT CAP.— 

5 ‘‘(i) INDIVIDUAL AUTHORIZER CAP.— 

6 The Secretary shall determine, in accord7 ance with subparagraph (B) for each 

8 award year and for each innovation au9 thorizer, the total maximum amount of 

10 Federal Pell Grant funds that all eligible 

11 entities that are authorized by a given in12 novation authorizer may receive through 

13 tuition and fee payments from enrolled 

14 students who receive a Federal Pell Grant. 

15 ‘‘(ii) AGGREGATE AUTHORIZER CAP.— 

16 The Secretary shall determine each innova17 tion authorizer Federal Pell Grant cap, as 

18 described in clause (i), in a manner that 

19 ensures that the aggregate amount of Fed20 eral Pell Grant funds that all eligible enti21 ties authorized by all innovation author22 izers receive each year does not exceed 0.5 

23 percent of total Federal Pell Grant funding 

24 for the previous award year. 


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1 ‘‘(B) INDIVIDUAL INNOVATION AUTHOR2 IZER FEDERAL PELL GRANT CAP.—The Sec3 retary shall determine each innovation author4 izer’s cap under subparagraph (A)(i) based 

5 on— 

6 ‘‘(i) the authorizer’s experience and 

7 track record of awarding authorization to 

8 eligible entities; and 

9 ‘‘(ii) the performance criteria and 

10 minimum thresholds that the authorizer 

11 uses in determining whether to award au12 thorization to eligible entities, as specified 

13 in subsection (b)(3)(D). 

14 ‘‘(2) ELIGIBLE ENTITY FEDERAL PELL GRANT

15 FUNDING REQUIREMENTS.— 

16 ‘‘(A) IN GENERAL.—An eligible entity that 

17 is authorized by an innovation authorizer in ac18 cordance with this section is eligible to receive 

19 Federal Pell Grant funds in accordance with 

20 subparagraphs (B), (C), and (D). 

21 ‘‘(B) ELIGIBLE ENTITY TOTAL CAP ON

22 FEDERAL PELL GRANT FUNDING.—Each award 

23 year, an eligible entity described in subpara24 graph (A) will be eligible to receive (through 

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1 dents) a maximum total amount of Federal Pell 

2 Grant funding that— 

3 ‘‘(i) shall be determined by the inno4 vation authorizer; 

5 ‘‘(ii) shall be determined in a manner 

6 so as to ensure that the innovation author7 izer does not exceed the innovation author8 izer’s Federal Pell Grant cap; 

9 ‘‘(iii) shall be based on the eligible en10 tity’s history and track record of meeting 

11 or exceeding the relevant performance 

12 metrics minimum thresholds; and 

13 ‘‘(iv) shall not exceed 15 percent of 

14 total Federal Pell Grant funding for eligi15 ble entities authorized by the innovation 

16 authorizer for the previous award year. 

17 ‘‘(C) FEDERAL PELL GRANT ALLOCA18 TIONS.— 

19 ‘‘(i) FULL FEDERAL PELL GRANT.— 

20 An eligible entity authorized by an innova21 tion authorizer that provides validated doc22 umentation from an independent evaluator 

23 that the eligible entity has met or exceeded 

24 the minimum thresholds for each of the 

25 authorizer’s performance metrics for at 


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1 least 5 consecutive years shall be eligible to 

2 receive up to the full amount of Federal 

3 Pell Grant funding that each enrolled stu4 dent is eligible to receive, subject to the 

5 cap described in subparagraph (B). 

6 ‘‘(ii) 50-PERCENT REIMBURSEMENT

7 FEDERAL PELL GRANT.—An eligible entity 

8 authorized by an innovation authorizer 

9 that provides validated documentation 

10 from an independent evaluator that the eli11 gible entity has met or exceeded the min12 imum thresholds for each of the author13 izer’s performance metrics for at least 3 

14 consecutive years but less than 5 consecu15 tive years and has been determined by 

16 such authorizer to have a strong evidence 

17 basis for continuing to annually meet such 

18 minimum thresholds for each performance 

19 metric shall be eligible for a pay for per20 formance contract with the following 

21 terms: 

22 ‘‘(I) The eligible entity shall be 

23 eligible to receive up to 50 percent of 

24 the amount of Federal Pell Grant 

25 funding that each enrolled student is 


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1 eligible to receive, subject to the cap 

2 described in subparagraph (B). 

3 ‘‘(II) The eligible entity shall 

4 provide a bond or matching funds to 

5 pay for the remaining 50 percent of 

6 the amount of Federal Pell Grant 

7 funding that each enrolled student is 

8 otherwise eligible to receive. 

9 ‘‘(III) The Secretary shall reim10 burse the eligible entity for an amount 

11 equal to the amount that the eligible 

12 entity provided under subclause (II) 

13 for each enrolled student, except that 

14 such amount may not exceed the re15 maining cost of tuition and fees for 

16 each student— 

17 ‘‘(aa) for whom the eligible 

18 entity provided matching funds 

19 as described in subclause (II); 

20 and 

21 ‘‘(bb) who successfully com22 pletes the educational program. 

23 ‘‘(iii) 75-PERCENT REIMBURSEMENT

24 FEDERAL PELL GRANT.—An eligible entity 

25 authorized by an innovation authorizer 


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1 that provides validated documentation 

2 from an independent evaluator that the eli3 gible entity has met or exceeded the min4 imum thresholds for each of the author5 izer’s performance metrics for at least 1 

6 year but less than 3 consecutive years and 

7 has been determined by such authorizer to 

8 have a strong evidence basis for continuing 

9 to annually meet such minimum thresholds 

10 for each performance metric shall be eligi11 ble for a pay for performance contract with 

12 the following terms: 

13 ‘‘(I) The eligible entity shall be 

14 eligible to receive up to 25 percent of 

15 the amount of Federal Pell Grant 

16 funding that each enrolled student is 

17 eligible to receive, subject to the cap 

18 described in subparagraph (B). 

19 ‘‘(II) The eligible entity shall 

20 provide— 

21 ‘‘(aa) a bond for 25 percent 

22 of the amount of Federal Pell 

23 Grant funding that each enrolled 

24 student is otherwise eligible to re25 ceive; and 


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1 ‘‘(bb) a bond or matching 

2 funds for the remaining 75 per3 cent of the amount of Federal 

4 Pell Grant funding that each en5 rolled student is otherwise eligi6 ble to receive. 

7 ‘‘(III) If the eligible entity meets 

8 the minimum thresholds for each of 

9 the authorizer’s performance metrics 

10 for 2 consecutive years after the date 

11 of the pay for performance contract, 

12 the Secretary shall reimburse the eli13 gible entity for an amount equal to 

14 the amount that the eligible entity 

15 provided under subclause (II)(bb) for 

16 each enrolled student, except that 

17 such amount may not exceed the re18 maining cost of tuition and fees for 

19 each student— 

20 ‘‘(aa) for whom the eligible 

21 entity provided matching funds 

22 as described in subclause 

23 (II)(bb); and 

24 ‘‘(bb) who successfully com25 pletes the educational program. 


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1 ‘‘(IV) If the eligible entity fails to 

2 meet the minimum thresholds for each 

3 of the authorizer’s performance cri4 teria for 2 consecutive years after the 

5 date of the contract, the eligible entity 

6 shall reimburse the Federal Govern7 ment in an amount equal to the 

8 amount described in subclause (I). 

9 ‘‘(iv) 100-PERCENT REIMBURSEMENT

10 FEDERAL PELL GRANT.—An eligible entity 

11 that has no track record of meeting, ex12 ceeding, or failing to meet the minimum 

13 thresholds for each of the authorizer’s per14 formance metrics, and that has been deter15 mined by an innovation authorizer to have 

16 a strong and rigorous evidence base dem17 onstrating an ability to consistently and 

18 annually meet or exceed the minimum 

19 thresholds for each of the performance 

20 metrics of that innovation authorizer shall 

21 be eligible for a pay for performance con22 tract with the following terms: 

23 ‘‘(I) The eligible entity shall pro24 vide funds equal to 100 percent of the 

25 amount of Federal Pell Grant funding 


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•S 4138 IS

1 that each enrolled student is otherwise 

2 eligible to receive. 

3 ‘‘(II) If the eligible entity meets 

4 the minimum thresholds for each of 

5 the authorizer’s performance metrics 

6 for 2 consecutive years after the date 

7 of the pay for performance contract, 

8 the Secretary shall reimburse the eli9 gible entity for an amount equal to 

10 the amount that the eligible entity 

11 provided under subclause (I) for each 

12 enrolled student, except that such 

13 amount may not exceed the remaining 

14 cost of tuition and fees for each stu15 dent— 

16 ‘‘(aa) for whom the eligible 

17 entity provided funds as de18 scribed in subclause (I); and 

19 ‘‘(bb) who successfully com20 pletes the educational program. 

21 ‘‘(D) FEDERAL PELL GRANT AMOUNT

22 TREATED AS PAYMENT.—Notwithstanding the 

23 actual amount of Federal Pell Grant funding 

24 that an eligible entity receives (which, in ac25 cordance with subparagraphs (B) and (C), may 


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•S 4138 IS

1 not be the full amount of Federal Pell Grant 

2 funding that each enrolled student who is eligi3 ble for a Federal Pell Grant is eligible to re4 ceive), an eligible entity— 

5 ‘‘(i) shall treat each student as having 

6 paid the total amount of Federal Pell 

7 Grant funding for which the student is eli8 gible; 

9 ‘‘(ii) shall not charge students addi10 tional tuition or fees to compensate for any 

11 amount of Federal Pell Grant funding for 

12 which the eligible entity— 

13 ‘‘(I) must provide a bond or 

14 matching funds or for which the eligi15 ble entity otherwise must wait for re16 imbursement under subparagraph (C); 

17 or 

18 ‘‘(II) may fail to receive due to a 

19 cap described under subparagraph 

20 (B); and 

21 ‘‘(iii) shall not charge a higher 

22 amount of tuition or fees to a student who 

23 is eligible for a Federal Pell Grant. 

24 ‘‘(E) RULE OF CONSTRUCTION.—Nothing 

25 in subparagraph (D) shall be construed as proVerDate Sep 11 2014 03:54 Apr 26, 2024 Jkt 049200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S4138.IS S4138

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1 hibiting an eligible entity from reducing the 

2 amount of tuition and fees the eligible entity 

3 charges to a student who is eligible for a Fed4 eral Pell Grant based on student need. 

5 ‘‘(F) STUDENTS EXCEEDING CAP.—An eli6 gible entity may elect to enroll students whose 

7 collective eligibility for Federal Pell Grants 

8 would otherwise result in the eligible entity ex9 ceeding the cap under subparagraph (B) but 

10 such eligible entity shall comply with subpara11 graph (D). 

12 ‘‘(3) FEDERAL PELL GRANT ELIGIBILITY FOR

13 STUDENTS.— 

14 ‘‘(A) IN GENERAL.—A student may receive 

15 a Federal Pell Grant and use funding from 

16 such grant to attend an eligible entity or a pro17 gram of an eligible entity that is authorized by 

18 an innovation authorizer under this subpart if 

19 the student meets the other requirements for 

20 receiving a Federal Pell Grant, as described in 

21 section 401. 

22 ‘‘(B) ELIGIBILITY PERIOD.—For the pur23 pose of calculating a student’s remaining period 

24 of eligibility for Federal Pell Grant funding 

25 under section 401, the Secretary shall consider 


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1 only Federal Pell Grant funding actually paid 

2 to an eligible entity on behalf of the student, in 

3 accordance with subparagraphs (B) and (C) of 

4 paragraph (2). 

5 ‘‘(g) ACCESS TO TITLE IV FUNDING.— 

6 ‘‘(1) CONTINUATION OF TITLE IV ELIGI7 BILITY.—An institution of higher education that was 

8 eligible to participate in, and receive funding under, 

9 this title prior to seeking and gaining authorization 

10 under this section may petition the Secretary to con11 tinue to be eligible to receive loans made under this 

12 title if the institution is an eligible entity described 

13 under clause (i) or (ii) of subsection (f)(2)(C). 

14 ‘‘(2) RECOMMENDATIONS.—Not later than 2 

15 years after the date of enactment of this subpart, 

16 the Secretary, in consultation with innovation au17 thorizers, eligible entities, and stakeholders, shall 

18 make recommendations to Congress regarding a 

19 process for providing all eligible entities with access 

20 to loans made under this title. 

21 ‘‘(h) REPORTS.— 

22 ‘‘(1) REPORTS FROM AUTHORIZED ELIGIBLE

23 ENTITIES TO INNOVATION AUTHORIZERS.—Each eli24 gible entity that is authorized by an innovation au25 thorizer shall prepare and submit an annual report 


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1 to the innovation authorizer containing such infor2 mation as that innovation authorizer may require. 

3 ‘‘(2) REPORTS FROM INNOVATION AUTHOR4 IZERS TO THE SECRETARY.—Each innovation au5 thorizer shall prepare and submit an annual report 

6 to the Secretary containing such information as the 

7 Secretary may require.’’. 

8 SEC. 3. TERMINATION OF APPROPRIATIONS. 

9 No funds shall be authorized to carry out this Act, 

10 including the amendments made by this Act, 5 years after 

11 the date of enactment of this Act. 

12 SEC. 4. TERMINATION OF AUTHORIZATION. 

13 Subpart 4 of part H of title IV of the Higher Edu14 cation Act of 1965, as added by section 2, shall expire 

15 on the date that is 5 years after the date of enactment 

16 of this Act. 

Æ 


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