I 

113TH CONGRESS 

1ST SESSION H. R. 3496 

To amend the Higher Education Act of 1965 regarding proprietary 

institutions of higher education in order to protect students and taxpayers. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 14, 2013 

Mr. COHEN (for himself, Mr. CONYERS, and Mr. GRIJALVA) introduced the 

following bill; which was referred to the Committee on Education and the 

Workforce 

A BILL 

To amend the Higher Education Act of 1965 regarding 

proprietary institutions of higher education in order to 

protect students and taxpayers. 

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 ‘‘Protecting Our Stu5 dents and Taxpayers Act of 2013’’ or ‘‘POST Act of 

6 2013’’. 

7 SEC. 2. 85/15 RULE. 

8 (a) IN GENERAL.—Section 102(b) of the Higher 

9 Education Act of 1965 (20 U.S.C. 1002(b)) is amended— 


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1 (1) in paragraph (1)— 

2 (A) in subparagraph (D), by striking 

3 ‘‘and’’ after the semicolon; 

4 (B) in subparagraph (E), by striking the 

5 period and inserting ‘‘; and’’; and 

6 (C) by adding at the end the following: 

7 ‘‘(F) meets the requirements of paragraph 

8 (2).’’; 

9 (2) by redesignating paragraph (2) as para10 graph (3); and 

11 (3) by inserting after paragraph (1) the fol12 lowing: 

13 ‘‘(2) REVENUE SOURCES.— 

14 ‘‘(A) IN GENERAL.—In order to qualify as 

15 a proprietary institution of higher education 

16 under this subsection, an institution shall derive 

17 not less than 15 percent of the institution’s rev18 enues from sources other than Federal funds, 

19 as calculated in accordance with subparagraphs 

20 (B) and (C). 

21 ‘‘(B) FEDERAL FUNDS.—In this para22 graph, the term ‘Federal funds’ means any 

23 Federal financial assistance provided, under 

24 this Act or any other Federal law, through a 

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1 ance, or other means to a proprietary institu2 tion, including Federal financial assistance that 

3 is disbursed or delivered to an institution or on 

4 behalf of a student or to a student to be used 

5 to attend the institution, except that such term 

6 shall not include any monthly housing stipend 

7 provided under the Post-9/11 Veterans Edu8 cational Assistance Program under chapter 33 

9 of title 38, United States Code. 

10 ‘‘(C) IMPLEMENTATION OF NON-FEDERAL

11 REVENUE REQUIREMENT.—In making calcula12 tions under subparagraph (A), an institution of 

13 higher education shall— 

14 ‘‘(i) use the cash basis of accounting; 

15 ‘‘(ii) consider as revenue only those 

16 funds generated by the institution from— 

17 ‘‘(I) tuition, fees, and other insti18 tutional charges for students enrolled 

19 in programs eligible for assistance 

20 under title IV; 

21 ‘‘(II) activities conducted by the 

22 institution that are necessary for the 

23 education and training of the institu24 tion’s students, if such activities are— 


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1 ‘‘(aa) conducted on campus 

2 or at a facility under the control 

3 of the institution; 

4 ‘‘(bb) performed under the 

5 supervision of a member of the 

6 institution’s faculty; and 

7 ‘‘(cc) required to be per8 formed by all students in a spe9 cific educational program at the 

10 institution; and 

11 ‘‘(III) a contractual arrangement 

12 with a Federal agency for the purpose 

13 of providing job training to low-in14 come individuals who are in need of 

15 such training; 

16 ‘‘(iii) presume that any Federal funds 

17 that are disbursed or delivered to an insti18 tution on behalf of a student or directly to 

19 a student will be used to pay the student’s 

20 tuition, fees, or other institutional charges, 

21 regardless of whether the institution cred22 its such funds to the student’s account or 

23 pays such funds directly to the student, ex24 cept to the extent that the student’s tuiVerDate Mar 15 2010 22:04 Nov 19, 2013 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3496.IH H3496

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1 tion, fees, or other institutional charges are 

2 satisfied by— 

3 ‘‘(I) grant funds provided by an 

4 outside source that— 

5 ‘‘(aa) has no affiliation with 

6 the institution; and 

7 ‘‘(bb) shares no employees 

8 with the institution; and 

9 ‘‘(II) institutional scholarships 

10 described in clause (v); 

11 ‘‘(iv) include no loans made by an in12 stitution of higher education as revenue to 

13 the school, except for payments made by 

14 students on such loans; 

15 ‘‘(v) include a scholarship provided by 

16 the institution— 

17 ‘‘(I) only if the scholarship is in 

18 the form of monetary aid based upon 

19 the academic achievements or finan20 cial need of students, disbursed to 

21 qualified student recipients during 

22 each fiscal year from an established 

23 restricted account; and 

24 ‘‘(II) only to the extent that 

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1 ignated funds, or income earned on 

2 such funds, from an outside source 

3 that— 

4 ‘‘(aa) has no affiliation with 

5 the institution; and 

6 ‘‘(bb) shares no employees 

7 with the institution; and 

8 ‘‘(vi) exclude from revenues— 

9 ‘‘(I) the amount of funds the in10 stitution received under part C of title 

11 IV, unless the institution used those 

12 funds to pay a student’s institutional 

13 charges; 

14 ‘‘(II) the amount of funds the in15 stitution received under subpart 4 of 

16 part A of title IV; 

17 ‘‘(III) the amount of funds pro18 vided by the institution as matching 

19 funds for any Federal program; 

20 ‘‘(IV) the amount of Federal 

21 funds provided to the institution to 

22 pay institutional charges for a student 

23 that were refunded or returned; and 

24 ‘‘(V) the amount charged for 

25 books, supplies, and equipment, unless 


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1 the institution includes that amount 

2 as tuition, fees, or other institutional 

3 charges. 

4 ‘‘(D) REPORT TO CONGRESS.—Not later 

5 than July 1, 2014, and by July 1 of each suc6 ceeding year, the Secretary shall submit to the 

7 authorizing committees a report that contains, 

8 for each proprietary institution of higher edu9 cation that receives assistance under title IV 

10 and as provided in the audited financial state11 ments submitted to the Secretary by each insti12 tution pursuant to the requirements of section 

13 487(c)— 

14 ‘‘(i) the amount and percentage of 

15 such institution’s revenues received from 

16 Federal funds; and 

17 ‘‘(ii) the amount and percentage of 

18 such institution’s revenues received from 

19 other sources.’’. 

20 (b) REPEAL OF EXISTING REQUIREMENTS.—Section 

21 487 of the Higher Education Act of 1965 (20 U.S.C. 

22 1094) is amended— 

23 (1) in subsection (a)— 

24 (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 (c) CONFORMING AMENDMENTS.—The Higher Edu21 cation Act of 1965 (20 U.S.C. 1001 et seq.) is amended— 

22 (1) in section 152 (20 U.S.C. 1019a)— 

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

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


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

2 section 487’’; and 

3 (B) in subsection (b)(1)(B)(i)(I), by strik4 ing ‘‘section 487(e)’’ and inserting ‘‘section 

5 487(d)’’; 

6 (2) in section 153(c)(3) (20 U.S.C. 

7 1019b(c)(3)), by striking ‘‘section 487(a)(25)’’ each 

8 place the term appears and inserting ‘‘section 

9 487(a)(24)’’; 

10 (3) in section 496(c)(3)(A) (20 U.S.C. 

11 1099b(c)(3)(A)), by striking ‘‘section 487(f)’’ and 

12 inserting ‘‘section 487(e)’’; and 

13 (4) in section 498(k)(1) (20 U.S.C. 

14 1099c(k)(1)), by striking ‘‘section 487(f)’’ and in15 serting ‘‘section 487(e)’’. 

Æ 


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