II

106TH CONGRESS

2D SESSION S. 3143

To improve the integrity of the Federal student loan programs under title

IV of the Higher Education Act of 1965 with respect to students at

foreign institutions.

IN THE SENATE OF THE UNITED STATES

OCTOBER 2 (legislative day, SEPTEMBER 22), 2000

Mr. SESSIONS (for himself, Mr. JEFFORDS, Mr. BROWNBACK, Ms. COLLINS,

Mr. HUTCHINSON, and Mr. STEVENS) introduced the following bill; which

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

Labor, and Pensions

A BILL

To improve the integrity of the Federal student loan programs under title IV of the Higher Education Act of

1965 with respect to students at foreign institutions.

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 ‘‘Foreign University

5 Loan Security Act’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—Congress makes the following find8 ings:
2

•S 3143 IS

1 (1) The number of students applying for loans

2 and claiming to attend foreign institutions has risen

3 from 4,594 students in 1993 to over 12,000 stu4 dents in the 1998–1999 school year.

5 (2) Since 1995 there have been 25 convictions

6 of students who fraudulently claimed they were at7 tending a foreign institution, then cashed the check

8 issued directly to them, and did not attend the for9 eign institution.

10 (3) Tighter disbursement controls are necessary

11 to reduce the number of students fraudulently apply12 ing for loans under title IV of the Higher Education

13 Act of 1965 and claiming they are going to attend

14 foreign institutions. Funds should not be disbursed

15 for attendance at a foreign institution unless the for16 eign institution can verify that the student is attend17 ing the institution.

18 (b) PURPOSES.—The purposes of this Act are as fol19 lows:

20 (1) To enhance controls on the loans under title

21 IV of the Higher Education Act of 1965 in relation

22 to attendance at foreign institutions.

23 (2) To reduce the number of students who ob24 tain loans under title IV of the Higher Education
3

•S 3143 IS

1 Act of 1965 for attendance at a foreign institution

2 and do not attend the foreign institution.

3 (3) To tighten restrictions on loans under title

4 IV of the Higher Education Act of 1965 for a stu5 dent claiming to attend a foreign institution by re6 quiring verification that the student is attending the

7 foreign institution.

8 SEC. 3. PILOT PROGRAM REQUIRED.

9 (a) IN GENERAL.—The Secretary of Education, not

10 later than 2 months after the date of enactment of this

11 Act, shall carry out a 12-month fraud control pilot pro12 gram to reduce the incidence of fraud in the student loan

13 programs under title IV of the Higher Education Act of

14 1965 with respect to students at foreign institutions. Such

15 program shall involve guaranty agencies, lenders, and a

16 representative group of foreign institutions.

17 (b) CONSIDERATIONS.—In developing the fraud con18 trol pilot program, the Secretary of Education shall con19 sider a variety of methods to reduce fraud with respect

20 to students at foreign institutions that may include—

21 (1) predisbursement confirmation of enrollment

22 by the guaranty agency;

23 (2) postdisbursement confirmation of registra24 tion by the foreign institution; and

25 (3) dual endorsement.
4

•S 3143 IS

1 SEC. 4. RECOMMENDATIONS AND FINDINGS.

2 (a) IN GENERAL.—Not later than 12 months after

3 initiation of the fraud control pilot program, the Secretary

4 of Education shall transmit to the Committee on Health,

5 Education, Labor, and Pensions of the Senate, the Com6 mittee on Education and the Workforce of the House of

7 Representatives, and the Comptroller General the results

8 of the pilot program and steps the Secretary will take to

9 implement the findings from the pilot program across the

10 student loan programs under title IV of the Higher Edu11 cation Act of 1965.

12 (b) RECOMMENDATIONS FOR LEGISLATIVE AC13 TIONS.—The report shall include recommendations for

14 legislative changes, if any, that are required to ensure the

15 integrity of such student loan programs.

16 SEC. 5. EVALUATION BY GAO.

17 Not later than 2 months after the Secretary of Edu18 cation transmits the report described in section 4 to Con19 gress, the Comptroller General shall evaluate the fraud

20 control pilot program and the report, and shall transmit

21 to the Committee on Health, Education, Labor, and Pen22 sions of the Senate and the Committee on Education and

23 the Workforce of the House of Representatives the results

24 of the evaluation.

Æ