II 

115TH CONGRESS 

1ST SESSION S. 2228 

To amend the Higher Education Act of 1965 to provide for accreditation 

reform, to require institutions of higher education to publish information 

regarding student success, to provide for fiscal accountability, and to 

provide for school accountability for student loans. 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 13, 2017 

Mr. LEE introduced the following bill; which was read twice and referred to 

the Committee on Health, Education, Labor, and Pensions 

A BILL 

To amend the Higher Education Act of 1965 to provide 

for accreditation reform, to require institutions of higher 

education to publish information regarding student success, to provide for fiscal accountability, and to provide 

for school accountability for student loans. 

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 Re5 form and Opportunity Act of 2017’’. 


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1 TITLE I—ACCREDITATION 

2 REFORM 

3 SEC. 101. ACCREDITATION REFORM. 

4 (a) DEFINITION OF INSTITUTION OF HIGHER EDU5 CATION.—Section 102(a) of the Higher Education Act of 

6 1965 (20 U.S.C. 1002(a)) is amended— 

7 (1) by redesignating paragraphs (5) and (6) as 

8 paragraphs (6) and (7), respectively; 

9 (2) in paragraph (1), in the matter preceding 

10 subparagraph (A), by striking ‘‘Subject to para11 graphs (2) through (4)’’ and inserting ‘‘Subject to 

12 paragraphs (2) through (5)’’; 

13 (3) in paragraph (1)— 

14 (A) by redesignating subparagraphs (B) 

15 and (C) as subparagraphs (C) and (D), respec16 tively; and 

17 (B) by inserting after subparagraph (A) 

18 the following: 

19 ‘‘(B) if accredited by an authorized accred20 itation authority in a State that has an alter21 native accreditation agreement with the Sec22 retary, as described in paragraph (5)— 

23 ‘‘(i) an institution that provides post24 secondary education; 


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1 ‘‘(ii) a postsecondary apprenticeship 

2 program; or 

3 ‘‘(iii) a postsecondary education 

4 course or program provided by an institu5 tion of postsecondary education, a non6 profit organization, or a for-profit organi7 zation or business;’’; and 

8 (4) by inserting after paragraph (4), the fol9 lowing: 

10 ‘‘(5) STATE ALTERNATIVE ACCREDITATION.— 

11 ‘‘(A) IN GENERAL.—Notwithstanding any 

12 other provision of law, a State may establish an 

13 alternative accreditation system for the purpose 

14 of establishing institutions that provide postsec15 ondary education and postsecondary education 

16 courses or programs as eligible for funding 

17 under title IV if the State enters into an agree18 ment with the Secretary for the establishment 

19 of the alternative accreditation system. Such in20 stitutions, courses, or programs may include— 

21 ‘‘(i) institutions that provide postsec22 ondary education; 

23 ‘‘(ii) postsecondary apprenticeship 

24 programs; 


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1 ‘‘(iii) any other postsecondary edu2 cation course or program offered at an in3 stitution of postsecondary education, a 

4 nonprofit organization, or a for-profit orga5 nization or business; and 

6 ‘‘(iv) any of the entities described in 

7 clauses (i) through (iii) that do not award 

8 a postsecondary certification, credential, or 

9 degree, provided that such entity provides 

10 credit that will apply toward a postsec11 ondary certification, credential, or degree. 

12 ‘‘(B) ALTERNATIVE ACCREDITATION

13 AGREEMENT.—The alternative accreditation 

14 agreement described in subparagraph (A) shall 

15 include the following: 

16 ‘‘(i) The designation of one or more 

17 authorized accrediting entities within the 

18 State, such as the State Department of 

19 Education, another State agency, an indus20 try-specific accrediting agency, or another 

21 entity, and an explanation of the process 

22 through which the State will select such 

23 authorized accrediting entities. 

24 ‘‘(ii) The standards or criteria that an 

25 institution that provides postsecondary 


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1 education and a postsecondary education 

2 course or program must meet in order to— 

3 ‘‘(I) receive an initial accredita4 tion as part of the alternative accredi5 tation system; and 

6 ‘‘(II) maintain such accredita7 tion. 

8 ‘‘(iii) A description of the appeals 

9 process through which an institution that 

10 provides postsecondary education and a 

11 postsecondary education course or program 

12 may appeal to an authorized accrediting 

13 entity if such institution, course, or pro14 gram is denied accreditation under the 

15 State alternative accreditation system. 

16 ‘‘(iv) Whether credit received from a 

17 postsecondary education course or program 

18 that is accredited as part of the alternative 

19 accreditation system is transferable— 

20 ‘‘(I) to other courses or programs 

21 accredited as part of an alternative 

22 accreditation system; or 

23 ‘‘(II) to other postsecondary cer24 tification, credential, or degree 

25 courses or programs at an educational 


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1 institution that is eligible to partici2 pate in a program under title IV but 

3 is not accredited as part of an alter4 native accreditation system. 

5 ‘‘(v) The Secretary’s reporting re6 quirements for the State regarding the 

7 State alternative accreditation system, in8 cluding— 

9 ‘‘(I) the contents of reports that 

10 must be submitted to the Secretary, 

11 which may include information such 

12 as— 

13 ‘‘(aa) in the case of a post14 secondary education course or 

15 program that is accredited 

16 through the State alternative ac17 creditation system— 

18 ‘‘(AA) the number and 

19 percentage of students who 

20 successfully complete each 

21 such postsecondary edu22 cation course or program; 

23 and 

24 ‘‘(BB) the number and 

25 percentage of students who 


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1 successfully obtain a post2 secondary certification, cre3 dential, or degree using 

4 credit obtained from each 

5 such postsecondary edu6 cation course or program; 

7 and 

8 ‘‘(bb) in the case of an insti9 tution that provides postsec10 ondary education that is accred11 ited through the State alternative 

12 accreditation system— 

13 ‘‘(AA) the number and 

14 percentage of students who 

15 successfully obtain a post16 secondary certification, cre17 dential, or degree from such 

18 institution; and 

19 ‘‘(BB) the number and 

20 percentage of students who 

21 do not successfully obtain a 

22 postsecondary certification, 

23 credential, or degree from 

24 such institution but do ob25 tain credit from such instiVerDate Sep 11 2014 03:34 Dec 15, 2017 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2228.IS S2228

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1 tution toward a postsec2 ondary degree, credential, or 

3 certification; 

4 ‘‘(II) the frequency with which 

5 such reports must be submitted to the 

6 Secretary; and 

7 ‘‘(III) any requirements for third 

8 party verification of information con9 tained in such reports. 

10 ‘‘(vi) The State policy regarding pub11 lic accessibility to certain information re12 lating to institutions that provide postsec13 ondary education and postsecondary edu14 cation courses and programs accredited 

15 under the State alternative accreditation 

16 system, including— 

17 ‘‘(I) the information described in 

18 clause (v)(I); and 

19 ‘‘(II) information about the rates 

20 of job placement for individuals that 

21 have graduated from an institution or 

22 completed a course or program that is 

23 accredited under the State alternative 

24 accreditation system, if available. 


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1 ‘‘(vii) An assurance by the State that 

2 under the State alternative accreditation 

3 system, only institutions that provide post4 secondary education and postsecondary 

5 education courses or programs that provide 

6 credits toward a postsecondary certifi7 cation, credential, or degree (as defined by 

8 the State in accordance with clause (viii)) 

9 will be accredited. 

10 ‘‘(viii) The State’s definition of a 

11 postsecondary certification, credential, or 

12 degree, as such term applies to the require13 ment described in clause (vii). 

14 ‘‘(ix) A description of the agreements 

15 that the State will enter into with institu16 tions that provide postsecondary education 

17 and postsecondary education courses or 

18 programs that are accredited under the al19 ternative accreditation system to enable 

20 such institutions, courses, or programs to 

21 be eligible under a program authorized 

22 under title IV, for participation in the di23 rect student loan program, and for the 

24 origination of loans under part D of title 

25 IV, and how such agreements will operate 


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1 in lieu of the agreements described in sec2 tions 487 and 454. 

3 ‘‘(x) A description of how the State 

4 will select institutions that provide postsec5 ondary education and postsecondary edu6 cation courses or programs that are ac7 credited under the alternative accreditation 

8 system, in lieu of the selection process de9 scribed in section 453, for— 

10 ‘‘(I) participation in the direct 

11 student loan program under part D of 

12 title IV; and 

13 ‘‘(II) approval allowing such in14 stitution, program, or course to origi15 nate direct loans under part D of title 

16 IV. 

17 ‘‘(xi) A description of how the State 

18 will administer title IV funds for institu19 tions that provide postsecondary education, 

20 postsecondary apprenticeship programs, 

21 and postsecondary education courses or 

22 programs provided by an institution of 

23 postsecondary education, a nonprofit orga24 nization, or a for-profit organization or 


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1 business that are accredited through the 

2 alternative accreditation system. 

3 ‘‘(C) REVIEW AND APPROVAL.—Not later 

4 than 30 days after the Secretary receives an ap5 plication from a State to enter into an alter6 native accreditation agreement, the Secretary 

7 shall— 

8 ‘‘(i) approve the application and enter 

9 into the agreement; and 

10 ‘‘(ii) submit to the State and Con11 gress, and make publicly available, a re12 sponse to the application. 

13 ‘‘(D) TIME LIMIT.—Each agreement the 

14 Secretary enters into for the establishment of 

15 an alternative accreditation system in a State 

16 shall be for a period of 10 years.’’. 

17 (b) TITLE IV ELIGIBILITY REQUIREMENTS.—Part G 

18 of title IV of the Higher Education Act of 1965 (20 U.S.C. 

19 1088 et seq.) is amended by adding at the end the fol20 lowing: 

21 ‘‘SEC. 493E. STATE ACCREDITED INSTITUTIONS, PRO22 GRAMS, OR COURSES. 

23 ‘‘Notwithstanding any other provision of law, an in24 stitution, program, or course that is eligible for funds 

25 under this title in accordance with section 102(a)(1)(B) 


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1 and meets the requirements of section 102(a)(5) shall not 

2 be required to meet any other requirements of this title. 

3 For purposes of this title, such an institution, program, 

4 or course shall be deemed to be an eligible institution that 

5 meets the requirements of section 487.’’. 

6 TITLE II—TRANSPARENCY IN 

7 HIGHER EDUCATION 

8 SEC. 201. TIME FOR TRANSPARENCY IN HIGHER EDU9 CATION. 

10 (a) IN GENERAL.—Title IV of the Higher Education 

11 Act of 1965 (20 U.S.C. 1070 et seq.) is amended— 

12 (1) in section 487(a), by adding at the end the 

13 following: 

14 ‘‘(30) The institution will publish information 

15 in compliance with section 493E.’’; and 

16 (2) in part G, by adding at the end the fol17 lowing: 

18 ‘‘SEC. 493E. INSTITUTIONAL PUBLICATION OF INFORMA19 TION. 

20 ‘‘(a) PUBLICATION OF INFORMATION.— 

21 ‘‘(1) IN GENERAL.—Each institution of higher 

22 education participating in a program under this title 

23 shall publish, on an annual basis and in a readily ac24 cessible format (including online and in an alterVerDate Sep 11 2014 03:34 Dec 15, 2017 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2228.IS S2228

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1 native format), the information described in para2 graphs (2) and (3). 

3 ‘‘(2) INFORMATION.—Each institution of higher 

4 education described in paragraph (1) shall publish, 

5 with respect to the institution as a whole and with 

6 respect to each program of study offered by the in7 stitution, the following information for the most re8 cent fiscal year for which the information is avail9 able: 

10 ‘‘(A) For each of the following, the per11 centage and number of students enrolled at the 

12 institution or in the program of study, as appli13 cable, who receive the following: 

14 ‘‘(i) Federal grant aid, including Fed15 eral Pell Grants under subpart 1 of part 

16 A, Federal Supplemental Educational Op17 portunity Grants under subpart 3 of part 

18 A, or any other Federal postsecondary edu19 cation grant aid or subsidy. 

20 ‘‘(ii) Federal student loans, including 

21 Federal Direct Stafford Loans, Federal 

22 Direct Unsubsidized Stafford Loans, Fed23 eral Direct PLUS Loans, and Federal Per24 kins Loans. 

25 ‘‘(iii) State grant aid. 


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1 ‘‘(iv) Institutional grants. 

2 ‘‘(v) A student loan from a State. 

3 ‘‘(vi) A student loan from another 

4 source. 

5 ‘‘(B) Student body enrollment status, in6 cluding as a— 

7 ‘‘(i) first-time, full-time student; 

8 ‘‘(ii) first-time, part-time student; 

9 ‘‘(iii) non-first-time, full-time student; 

10 and 

11 ‘‘(iv) non-first-time, part-time student. 

12 ‘‘(C) An alumni report that includes the 

13 following: 

14 ‘‘(i) The percentage of students who 

15 do not complete the program of study the 

16 student initially started upon enrollment. 

17 ‘‘(ii) The percentage of students who 

18 transfer. 

19 ‘‘(iii) The percentage of students who 

20 complete the program of study the student 

21 initially started upon enrollment. 

22 ‘‘(iv) The average length of time for a 

23 student to complete the program of study. 

24 ‘‘(v) The percentage of alumni who 

25 continue on to higher levels of education. 


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1 ‘‘(vi) The percentage of alumni who 

2 are employed, disaggregated by program of 

3 study. 

4 ‘‘(vii) The average salary for alumni, 

5 disaggregated by program of study. 

6 ‘‘(viii) The number and percentage of 

7 alumni contacted for such report. 

8 ‘‘(ix) The response rate of alumni con9 tacted for such report. 

10 ‘‘(3) PUBLICATION OF DEFAULT AND NON-RE11 PAYMENT RATES.—In addition to the information 

12 described in paragraph (2), each institution of high13 er education described in paragraph (1) shall pub14 lish, with respect to the institution as a whole and 

15 with respect to each program of study offered by the 

16 institution, the following information for the most 

17 recent fiscal year for which the information is avail18 able: 

19 ‘‘(A) The average amount of total Federal 

20 student loan debt accrued upon graduation. 

21 ‘‘(B) The average amount of total Federal 

22 student loan debt accrued by students who 

23 leave the institution without having graduated. 

24 ‘‘(C) Federal student loan default rate. 


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1 ‘‘(D) Federal student loan non-repayment 

2 rate. 

3 ‘‘(E) Default and non-repayment rate, in4 cluding as a— 

5 ‘‘(i) first-time, full-time student; 

6 ‘‘(ii) first-time, part-time student; 

7 ‘‘(iii) non-first-time, full-time student; 

8 and 

9 ‘‘(iv) non-first-time, part-time student. 

10 ‘‘(F) Default and non-repayment rate, of— 

11 ‘‘(i) students who complete a program 

12 of study; 

13 ‘‘(ii) students who transfer; and 

14 ‘‘(iii) students who do not complete a 

15 program of study. 

16 ‘‘(b) PRIVACY.— 

17 ‘‘(1) COMPLIANCE WITH FERPA.—In carrying 

18 out this section, an institution of higher education 

19 and any personnel of the institution shall not share 

20 any personally identifiable information and shall act 

21 in accordance with section 444 of the General Edu22 cation Provisions Act (20 U.S.C. 1232g, commonly 

23 known as the ‘Family Educational Rights and Pri24 vacy Act of 1974’). 


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1 ‘‘(2) PROHIBITION ON USE OF INFORMATION.— 

2 Information published pursuant to this section shall 

3 not be used— 

4 ‘‘(A) by a Federal employee, agency, or of5 ficer, or an institution of higher education to 

6 take action against an individual; and 

7 ‘‘(B) in legal processes or admitted as evi8 dence in any judicial or administrative pro9 ceeding. 

10 ‘‘(3) PENALTIES.—The Secretary shall establish 

11 penalties for a violation of paragraph (1) or (2) that 

12 includes both a monetary fine and up to 5 years in 

13 prison. 

14 ‘‘(4) AUDITS.—In carrying out this section, the 

15 State in which the institution of higher education is 

16 located shall contract with an independent third 

17 party to conduct audits of the publication of infor18 mation described in subsection (a)(1) to ensure qual19 ity, validity, reliability, and compliance with all Fed20 eral standards of data quality and individual privacy. 

21 ‘‘(c) RULE OF CONSTRUCTION.—Nothing in this sec22 tion shall be construed to authorize or permit the Sec23 retary or any employee or contractor of the Department 

24 to mandate, direct, or control the selection of practices or 

25 curriculum by an institution of higher education.’’. 


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1 (b) GAO REPORT.— 

2 (1) STUDY.—The Comptroller General of the 

3 United States shall conduct a study that compiles all 

4 the institutional publication of information pursuant 

5 to section 493F of the Higher Education Act of 

6 1965. 

7 (2) REPORT.—Not later than October 1 of the 

8 fourth fiscal year after the date of enactment of this 

9 Act, the Comptroller General of the United States 

10 shall submit a report containing the results of the 

11 study under paragraph (1) to the appropriate com12 mittees of Congress. 

13 TITLE III—FISCAL 

14 ACCOUNTABILITY 

15 SEC. 301. SIMPLIFICATION OF FEDERAL STUDENT LOANS. 

16 Part D of title IV of the Higher Education Act of 

17 1965 (20 U.S.C. 1087a et seq.) is amended by adding at 

18 the end the following: 

19 ‘‘SEC. 461. FEDERAL DIRECT SIMPLIFICATION LOANS. 

20 ‘‘(a) TERMINATION OF AUTHORITY TO MAKE LOANS

21 UNDER THIS PART.— 

22 ‘‘(1) IN GENERAL.—Subject to paragraph (2) 

23 and notwithstanding any other provision of this part, 

24 for any period of instruction beginning on or after 

25 6 months after the date of enactment of the Higher 


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1 Education Reform and Opportunity Act of 2017, the 

2 Secretary may not make loans under this part ex3 cept as provided under this section. 

4 ‘‘(2) EXCEPTION.— 

5 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

6 not apply to an individual, or on behalf of an 

7 individual, who received a loan under this part 

8 for any period of instruction before July 1, 

9 2017. 

10 ‘‘(B) SUNSET.—A loan may not be made 

11 to an individual, or on behalf of an individual, 

12 who received a loan under this part for any pe13 riod of instruction before July 1, 2017, under 

14 this part, other than as provided under this sec15 tion, on or after July 1, 2019. 

16 ‘‘(b) FEDERAL DIRECT SIMPLIFICATION LOANS.— 

17 The Secretary shall make loans to borrowers under this 

18 section in accordance with the following: 

19 ‘‘(1) The applicable rate of interest on a loan 

20 made under this section shall, for loans disbursed 

21 during any 12-month period beginning on July 1 

22 and ending on June 30, be determined on the pre23 ceding June 1 and be equal to— 


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1 ‘‘(A) a rate equal to the high yield of the 

2 10-year Treasury note auctioned at the final 

3 auction held prior to such June 1, plus 

4 ‘‘(B) 3.6 percent. 

5 ‘‘(2) Interest on a loan made under this section 

6 shall begin to accrue on the date the loan is dis7 bursed. 

8 ‘‘(3) The maximum— 

9 ‘‘(A) annual amount of loans under this 

10 section an undergraduate student may borrow 

11 in any academic year (as defined in section 

12 481(a)(2)) or its equivalent shall be equal to 

13 $7,500; and 

14 ‘‘(B) aggregate amount of loans under this 

15 section an undergraduate student may borrow 

16 shall be equal to $30,000. 

17 ‘‘(4) The maximum— 

18 ‘‘(A) annual amount of loans under this 

19 section a graduate or professional student may 

20 borrow in any academic year (as defined in sec21 tion 481(a)(2)) or its equivalent shall be equal 

22 to $13,500; and 

23 ‘‘(B) aggregate amount of loans under this 

24 section a graduate or professional student may 

25 borrow shall be equal to $40,000. 


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1 ‘‘(5) The length of repayment— 

2 ‘‘(A) for a loan borrowed by an under3 graduate student shall be 15 years; and 

4 ‘‘(B) for a loan borrowed by a graduate or 

5 professional student shall be 25 years. 

6 ‘‘(6) Repayment on a loan made under this sec7 tion shall begin— 

8 ‘‘(A) after 125 percent of the normal time 

9 for completion of the program of study for 

10 which the borrower receives the loan under this 

11 section; or 

12 ‘‘(B) if the borrower withdraws from the 

13 program of study before the borrower completes 

14 the program, 6 months after the date the bor15 rower withdraws. 

16 ‘‘(c) AUTHORIZATION TO LIMIT LOAN AMOUNTS.— 

17 An institution of higher education that is required under 

18 State law to enroll all eligible applicants for an academic 

19 year may limit the amount of loans under this section that 

20 a student may borrow for such academic year to not more 

21 than the tuition and fees at such institution for such aca22 demic year. 

23 ‘‘(d) ADDITIONAL CHARGES.—The Secretary may 

24 not charge the borrower of a loan made under this section 


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1 any fee for administrative costs that is not described under 

2 this section. 

3 ‘‘(e) REPAYMENT.—A borrower of a loan made under 

4 this section may accelerate without penalty repayment of 

5 the whole or any part of the loan.’’. 

6 SEC. 302. PHASING OUT LOAN FORGIVENESS. 

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

8 et seq.) is amended— 

9 (1) in section 455— 

10 (A) in subsection (d), by adding at the end 

11 the following: 

12 ‘‘(6) ELIMINATION OF LOAN FORGIVENESS.— 

13 Notwithstanding any other provision of this Act, 

14 with respect to any loan made on or after 6 months 

15 after the date of enactment of the Higher Education 

16 Reform and Opportunity Act of 2017, the Secretary 

17 may not repay or cancel any outstanding balance of 

18 principal and interest due on the loan for the bor19 rower of the loan pursuant to this subsection.’’; 

20 (B) in subsection (e), by adding at the end 

21 the following: 

22 ‘‘(8) ELIMINATION OF LOAN FORGIVENESS.— 

23 Notwithstanding any other provision of this Act, 

24 with respect to any loan made on or after 6 months 

25 after the date of enactment of the Higher Education 


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1 Reform and Opportunity Act of 2017, the Secretary 

2 may not repay or cancel any outstanding balance of 

3 principal and interest due on the loan for the bor4 rower of the loan pursuant to this subsection.’’; and 

5 (C) in subsection (m), by adding at the 

6 end the following: 

7 ‘‘(5) ELIMINATION OF LOAN FORGIVENESS.— 

8 Notwithstanding any other provision of this Act, 

9 with respect to any loan made on or after 6 months 

10 after the date of enactment of the Higher Education 

11 Reform and Opportunity Act of 2017, the Secretary 

12 may not cancel any outstanding balance of principal 

13 and interest due on the loan for the borrower of the 

14 loan pursuant to this subsection.’’; and 

15 (2) in section 493C, by adding at the end the 

16 following: 

17 ‘‘(f) ELIMINATION OF LOAN FORGIVENESS.—Not18 withstanding any other provision of this Act, with respect 

19 to any loan made on or after 6 months after the date of 

20 enactment of the Higher Education Reform and Oppor21 tunity Act of 2017, the Secretary may not repay or cancel 

22 any outstanding balance of principal and interest due on 

23 the loan for the borrower of the loan pursuant to this sec24 tion.’’. 


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1 TITLE IV—SCHOOL ACCOUNT2 ABILITY FOR STUDENT 

3 LOANS 

4 SEC. 401. SCHOOL ACCOUNTABILITY FOR STUDENT LOANS. 

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

6 U.S.C. 1094), as amended by section 201, is further 

7 amended— 

8 (1) in subsection (a), by adding at the end the 

9 following: 

10 ‘‘(31) The institution will pay a default rate 

11 fine that is determined pursuant to subsection (k).’’; 

12 and 

13 (2) by adding at the end the following: 

14 ‘‘(k) DEFAULT RATE FINE.— 

15 ‘‘(1) IN GENERAL.—Each institution described 

16 in paragraph (2) shall pay to the Secretary a default 

17 rate fine in accordance with this subsection. 

18 ‘‘(2) APPLICABLE INSTITUTIONS.—An institu19 tion shall pay a default rate fine under this sub20 section for a fiscal year based on the cohort default 

21 rate on loans made, insured, or guaranteed under 

22 this title for such fiscal year. 

23 ‘‘(3) FINE.— 

24 ‘‘(A) IN GENERAL.—Each institution de25 scribed in paragraph (2) shall pay a default 


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1 rate fine for a fiscal year that is equal to 10 

2 percent of the applicable amount determined 

3 under subparagraph (B)(i) for such fiscal year. 

4 ‘‘(B) APPLICABLE AMOUNT.— 

5 ‘‘(i) IN GENERAL.—The applicable 

6 amount for a fiscal year with respect to an 

7 institution shall be an amount equal to the 

8 product of the amount of loans made, in9 sured, or guaranteed under this title for 

10 such fiscal year, and the applicable rate 

11 determined in clause (ii). If the applicable 

12 rate is equal to or less than zero percent 

13 then the applicable amount shall be equal 

14 to zero. 

15 ‘‘(ii) APPLICABLE RATE.—The appli16 cable rate for a fiscal year with respect to 

17 an institution shall be the rate that is 

18 equal to the difference between the default 

19 rate on loans made, insured, or guaranteed 

20 under this title for such fiscal year and the 

21 average rate of total unemployment in the 

22 United States for such fiscal year, as de23 termined by the Secretary of Labor. 

24 ‘‘(4) CREDIT FOR CERTAIN INSTITUTIONS.— 

25 Each institution that is described in paragraph (2) 


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1 shall receive a $400 credit for the fiscal year for 

2 each graduate of the institution during such fiscal 

3 year who received a Federal Pell Grant while en4 rolled at the institution. 

5 ‘‘(5) FLEXIBILITY IN COUNSEL AND ADVICE.— 

6 Notwithstanding any other provision of the Act, the 

7 Secretary shall grant institutions of higher education 

8 flexibility under this Act to counsel and advise stu9 dents on Federal financial aid, including granting 

10 flexibility for institutions to award less than the 

11 maximum amount of Federal student aid for which 

12 an individual is eligible if the cost of tuition, room, 

13 and board at the institution is less than such max14 imum amount.’’. 

Æ 


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