II 

114TH CONGRESS 

1ST SESSION S. 1939 

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

ineligibility based on low cohort repayment rates and to require risk 

sharing payments of institutions of higher education. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 5, 2015 

Mrs. SHAHEEN (for herself and Mr. HATCH) 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 institutional ineligibility based on low cohort repayment rates and to require risk sharing payments of 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 ‘‘Student Protection and 

5 Success Act’’. 


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1 SEC. 2. INSTITUTIONAL INELIGIBILITY BASED ON LOW CO2 HORT REPAYMENT RATE. 

3 (a) IN GENERAL.—Section 455 of the Higher Edu4 cation Act of 1965 (20 U.S.C. 1087e) is amended by add5 ing at the end the following: 

6 ‘‘(r) INELIGIBILITY DUE TO LOW COHORT REPAY7 MENT RATE.— 

8 ‘‘(1) IN GENERAL.—Beginning with the first 

9 fiscal year for which data is available after the date 

10 of enactment of the Student Protection and Success 

11 Act and each succeeding fiscal year, an institution 

12 that has a cohort repayment rate that is equal to or 

13 less than the cut-off rate, as determined under para14 graph (2), shall not be eligible to participate in a 

15 program under this part for such fiscal year and for 

16 the 2 succeeding fiscal years. 

17 ‘‘(2) CUT-OFF RATE.— 

18 ‘‘(A) FIRST YEAR.—For the first fiscal 

19 year for which data is available after the date 

20 of enactment of the Student Protection and 

21 Success Act, the cut-off rate for purposes of 

22 paragraph (1) shall be equal to 45 percent. 

23 ‘‘(B) SUBSEQUENT YEARS.—For each fis24 cal year after the first fiscal year for which 

25 data is available after the date of enactment of 

26 the Student Protection and Success Act, the 


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1 cut-off rate for purposes of paragraph (1) for 

2 an institution shall be the previous fiscal year’s 

3 cut-off rate or 10 percentage points lower than 

4 the average cohort repayment rate determined 

5 under subparagraph (C) for the same type of 

6 institution for the previous fiscal year, which7 ever rate is higher, but not equal to or more 

8 than 70 percent. 

9 ‘‘(C) AVERAGE RATES.—Beginning with 

10 the first fiscal year for which data is available 

11 after the date of enactment of the Student Pro12 tection and Success Act and each succeeding 

13 fiscal year, the Secretary shall determine the 

14 average cohort repayment rate for each of 2- 

15 year institutions of higher education and 4-year 

16 institutions of higher education in the United 

17 States for the fiscal year and for the previous 

18 fiscal year. 

19 ‘‘(3) APPEALS.— 

20 ‘‘(A) IN GENERAL.—An institution may 

21 appeal the loss of eligibility under this sub22 section to the Secretary within 30 days of re23 ceiving notification from the Secretary of the 

24 loss of eligibility under this subsection. 


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1 ‘‘(B) CONTINUED PARTICIPATION.—Dur2 ing an appeal under subparagraph (A), the Sec3 retary may permit the institution to continue to 

4 participate in a program under this part if the 

5 institution demonstrates to the satisfaction of 

6 the Secretary that the Secretary’s calculation of 

7 its cohort repayment rate is not accurate, and 

8 that recalculation would increase its cohort re9 payment rate above the cut-off rate applicable 

10 to such institution. 

11 ‘‘(C) REQUIRED PAYMENT.—If an institu12 tion continues to participate in a program 

13 under this part, and the institution’s appeal of 

14 the loss of eligibility is unsuccessful, the institu15 tion shall be required to pay to the Secretary an 

16 amount equal to the amount of loans made by 

17 the Secretary under this part to borrowers at18 tending, or planning to attend, that institution 

19 during the pendency of such appeal and the in20 terest, special allowance, reinsurance, and any 

21 related payments made by the Secretary (or 

22 which the Secretary is obligated to make) with 

23 respect to such loans. 

24 ‘‘(4) COHORT REPAYMENT RATE.— 


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1 ‘‘(A) IN GENERAL.—In this subsection, the 

2 term ‘cohort repayment rate’ means, for any 

3 fiscal year beginning with fiscal year 2016, in 

4 which 30 or more borrowers at the institution 

5 enter repayment on Federal Direct Stafford 

6 Loans, Federal Direct Unsubsidized Stafford 

7 Loans, or Federal Direct Consolidation Loans, 

8 received for attendance at the institution, the 

9 percentage of those borrowers who are not in 

10 default and who make at least a one dollar re11 duction on their initial student loan principal 

12 balance before the end of the second fiscal year 

13 following the fiscal year in which the borrowers 

14 entered repayment, except as provided in sub15 paragraph (B). 

16 ‘‘(B) EXCEPTION.—The ‘cohort repayment 

17 rate’ calculation under subparagraph (A) shall 

18 not include in the calculation a borrower who 

19 is— 

20 ‘‘(i) in deferment on repayment of a 

21 loan described in subparagraph (A) due to 

22 study in an approved graduate fellowship 

23 program or in an approved rehabilitation 

24 training program for the disabled; 


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1 ‘‘(ii) in deferment on repayment of a 

2 loan described in subparagraph (A) during 

3 a period of at least half-time enrollment in 

4 college or a career school; 

5 ‘‘(iii) in deferment on repayment of a 

6 loan described in subparagraph (A) during 

7 a period of service qualifying for loan dis8 charge or cancellation under part E; 

9 ‘‘(iv) in deferment on repayment of a 

10 loan described in subparagraph (A) due to 

11 active duty military service of the borrower 

12 during a war, military operation, or na13 tional emergency; 

14 ‘‘(v) in deferment on repayment of a 

15 loan described in subparagraph (A) during 

16 the 13 months following the conclusion of 

17 qualifying active duty military service by 

18 the borrower, or until the borrower returns 

19 to enrollment on at least a half-time basis, 

20 whichever is earlier, if the borrower is a 

21 member of the National Guard or other re22 serve component of the Armed Forces and 

23 was called or ordered to active duty while 

24 enrolled at least half-time at an eligible 


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1 school or within 6 months of having been 

2 enrolled at least half-time; 

3 ‘‘(vi) in mandatory forbearance on re4 payment of a loan described in subpara5 graph (A) for the full fiscal year; or 

6 ‘‘(vii) serving as a volunteer under the 

7 Peace Corps Act (22 U.S.C. 2501 et seq.) 

8 or the Domestic Volunteer Service Act of 

9 1973 (42 U.S.C. 4950 et seq.). 

10 ‘‘(C) PUBLICATION OF REPAYMENT

11 RATES.—The Secretary shall publish the cohort 

12 repayment rates for institutions determined 

13 under this subsection.’’. 

14 (b) INELIGIBILITY IN OTHER PROGRAMS.— 

15 (1) PELL GRANTS.—Section 401(j) of the High16 er Education Act of 1965 (20 U.S.C. 1070a(j)) is 

17 amended— 

18 (A) in the heading, by striking ‘‘BASED ON

19 DEFAULT RATES’’; 

20 (B) in paragraph (1), by inserting ‘‘until 

21 the first fiscal year for which data is available, 

22 as determined under section 455(r)(1)’’ after 

23 ‘‘succeeding fiscal year’’; 


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1 (C) in paragraph (2), by inserting ‘‘or co2 hort repayment rate determination’’ after ‘‘de3 fault rate determination’’; and 

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

5 ‘‘(3) INELIGIBILITY BASED ON LOW COHORT

6 REPAYMENT RATES.—No institution of higher edu7 cation shall be an eligible institution for purposes of 

8 this subpart if such institution of higher education 

9 is ineligible to participate in a program under part 

10 D due to a low cohort repayment rate, as deter11 mined under section 455(r).’’. 

12 (2) STUDENT LOAN INSURANCE PROGRAM.— 

13 Section 435(a) of the Higher Education Act of 1965 

14 (20 U.S.C. 1085(a)) is amended— 

15 (A) in paragraph (2)— 

16 (i) in the heading, by striking ‘‘BASED

17 ON HIGH DEFAULT RATES’’; 

18 (ii) in subparagraph (A), by striking 

19 ‘‘An institution’’ and inserting ‘‘Until the 

20 first fiscal year for which data is available, 

21 as determined under section 455(r)(1), an 

22 institution’’; and 

23 (iii) by adding at the end the fol24 lowing: 


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1 ‘‘(E) No institution of higher education shall be 

2 an eligible institution for purposes of this part if 

3 such institution of higher education is ineligible to 

4 participate in a program under part D due to a low 

5 cohort repayment rate, as determined under section 

6 455(r).’’; and 

7 (B) in paragraph (6)(A), by inserting ‘‘and 

8 until the first fiscal year for which data is avail9 able, as determined under section 455(r)(1),’’ 

10 after ‘‘July 1, 1999,’’. 

11 (3) FEDERAL PERKINS LOANS.—Section 462 of 

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

13 1087bb) is amended— 

14 (A) in subsection (a)— 

15 (i) in paragraph (1), by inserting ‘‘or 

16 the institution is ineligible to participate in 

17 a program under part D due to a low co18 hort repayment rate, as determined under 

19 section 455(r)’’ after ‘‘subsection (f)’’; and 

20 (ii) in paragraph (2)(D), by inserting 

21 ‘‘or the institution is ineligible to partici22 pate in a program under part D due to a 

23 low cohort repayment rate, as determined 

24 under section 455(r)’’ after ‘‘subsection 

25 (f)’’; 


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1 (B) in subsection (b)— 

2 (i) in paragraph (2), by inserting ‘‘or 

3 the institution is ineligible to participate in 

4 a program under part D due to a low co5 hort repayment rate, as determined under 

6 section 455(r)’’ after ‘‘subsection (f)’’; and 

7 (ii) in paragraph (3), by inserting ‘‘or 

8 the institution is ineligible to participate in 

9 a program under part D due to a low co10 hort repayment rate, as determined under 

11 section 455(r)’’ after ‘‘subsection (f)’’; 

12 (C) in subsection (e)— 

13 (i) in paragraph (2), by inserting 

14 ‘‘until the first fiscal year for which data 

15 is available, as determined under section 

16 455(r)(1),’’ after ‘‘succeeding fiscal year’’; 

17 and 

18 (ii) in paragraph (3)— 

19 (I) in subparagraph (A), by in20 serting ‘‘until the first fiscal year for 

21 which data is available, as determined 

22 under section 455(r)(1),’’ after ‘‘any 

23 succeeding fiscal year’’; and 

24 (II) by adding at the end the fol25 lowing: 


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1 ‘‘(F) LOW COHORT REPAYMENT RATES.— 

2 An institution that is ineligible to participate in 

3 a program under part D due to a low cohort re4 payment rate, as determined under section 

5 455(r), shall not be eligible to participate in a 

6 program under this part.’’; and 

7 (D) in subsection (f)(2), by inserting ‘‘until 

8 the first fiscal year for which data is available, 

9 as determined under section 455(r)(1),’’ after 

10 ‘‘subsequent years’’. 

11 SEC. 3. COLLEGE OPPORTUNITY BONUS PROGRAM. 

12 Subpart 1 of part A of title IV of the Higher Edu13 cation Act of 1965 (20 U.S.C. 1070a et seq.) is amended 

14 by adding at the end the following: 

15 ‘‘SEC. 401B. COLLEGE OPPORTUNITY BONUS PROGRAM. 

16 ‘‘(a) PROGRAM AUTHORITY.—The Secretary shall 

17 award grants to eligible institutions of higher education 

18 that are distributed under a formula determined by the 

19 Secretary that includes enrollment of and completion by 

20 students who are eligible to receive a Federal Pell Grant, 

21 as well as enrollment of and completion by transfer stu22 dents who are eligible to receive a Federal Pell Grant. 

23 ‘‘(b) GRANTS.—The Secretary shall award grants to 

24 eligible institutions of higher education that the Secretary 

25 determines have a strong record of making college more 


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1 affordable and increasing college access and success for 

2 low-income and moderate-income students. 

3 ‘‘(c) USES OF FUNDS.—Each eligible institution of 

4 higher education that receives a grant under this section 

5 may use the grant funds to support reforms to further 

6 increase college access and success for low- and moderate7 income students, by making key investments and adopting 

8 best practices, such as— 

9 ‘‘(1) awarding additional need-based financial 

10 aid to students enrolled at the institution who are el11 igible to receive a Federal Pell Grant; 

12 ‘‘(2) enhancing academic and student support 

13 services; and 

14 ‘‘(3) establishing or expanding accelerated 

15 learning opportunities. 

16 ‘‘(d) AMOUNT OF GRANT FUNDS.—Each eligible in17 stitution of higher education that receives a grant under 

18 this section shall receive annual grant funds based on a 

19 formula determined by the Secretary that includes— 

20 ‘‘(1) the number of students enrolled at the in21 stitution who are eligible to receive a Federal Pell 

22 Grant; 

23 ‘‘(2) a per-student base amount, which shall be 

24 based on the amounts of Federal Pell Grants re25 ceived by students enrolled at the institution; and 


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1 ‘‘(3) the number of students enrolled at the in2 stitution who are eligible to receive a Federal Pell 

3 Grant who transferred into the institution. 

4 ‘‘(e) SUPPLEMENT NOT SUPPLANT.—Funds made 

5 available under this section shall be used to supplement, 

6 and not supplant— 

7 ‘‘(1) other State funds that States would other8 wise expend to carry out activities under this section 

9 to improve college affordability and graduate addi10 tional low- and moderate-income students; and 

11 ‘‘(2) institutional funds that eligible institutions 

12 of higher education receiving a grant under this sec13 tion would otherwise expend to carry out activities 

14 under this section to improve college affordability 

15 and graduate additional low- and moderate-income 

16 students. 

17 ‘‘(f) FUNDING.—The grant program under this sec18 tion shall be funded only with risk-sharing payments re19 ceived by the Secretary under section 454(d).’’. 

20 SEC. 4. RISK-SHARING PAYMENTS. 

21 Section 454 of the Higher Education Act of 1964 (20 

22 U.S.C. 1087d) is amended— 

23 (1) in subsection (a)— 

24 (A) in paragraph (5), by striking ‘‘and’’; 


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1 (B) in paragraph (6), by striking the pe2 riod at the end and inserting ‘‘; and’’; and 

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

4 ‘‘(7) provide that the institution accepts the in5 stitutional risk-sharing requirements under sub6 section (d), if applicable.’’; and 

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

8 ‘‘(d) INSTITUTIONAL RISK-SHARING BASED ON CO9 HORT NONREPAYMENT LOAN BALANCES.— 

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

11 education participating in the direct student loan 

12 program under this part for a fiscal year shall remit 

13 to the Secretary, at such times as the Secretary may 

14 specify, a risk-sharing payment based on the cohort 

15 nonrepayment loan balance of the institution, as de16 termined under paragraph (2). 

17 ‘‘(2) DETERMINATION OF RISK-SHARING PAY18 MENTS.— 

19 ‘‘(A) DETERMINATION OF COHORT LOAN

20 BALANCE.—The cohort loan balance of an insti21 tution for a fiscal year equals the total principal 

22 amount of all loans made under this part (ex23 cept Federal Direct PLUS Loans) to attend 

24 such institution for the cohort of borrowers who 

25 entered repayment, deferment, or forbearance 


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1 on such loans in the third preceding fiscal year 

2 for which the determination is made. 

3 ‘‘(B) DETERMINATION OF COHORT NON4 REPAYMENT LOAN BALANCE.— 

5 ‘‘(i) IN GENERAL.—The cohort non6 repayment loan balance of an institution 

7 for a fiscal year equals, from the total 

8 amount of the loans described in subpara9 graph (A), the total loan balance of those 

10 borrowers who have not made at least a 1 

11 dollar reduction in their principal balance 

12 in the 3 consecutive fiscal years since their 

13 loans entered repayment, deferment, or 

14 forbearance. 

15 ‘‘(ii) EXCEPTION.—The cohort non16 repayment loan balance calculation under 

17 clause (i) shall not take into consideration 

18 a borrower who was— 

19 ‘‘(I) in deferment on repayment 

20 of a loan described in subparagraph 

21 (A) in the 3 consecutive fiscal years 

22 described in clause (i) due to study in 

23 an approved graduate fellowship pro24 gram or in an approved rehabilitation 

25 training program for the disabled; 


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1 ‘‘(II) in deferment on repayment 

2 of a loan described in subparagraph 

3 (A) in the 3 consecutive fiscal years 

4 described in clause (i) during which 

5 time the borrower was in a period of 

6 at least half-time enrollment in college 

7 or a career school; 

8 ‘‘(III) in deferment on repayment 

9 of a loan described in subparagraph 

10 (A) in the 3 consecutive fiscal years 

11 described in clause (i) during which 

12 time the borrower was in a period of 

13 service qualifying for loan discharge 

14 or cancellation under part E; 

15 ‘‘(IV) in deferment on repayment 

16 of a loan described in subparagraph 

17 (A) in the 3 consecutive fiscal years 

18 described in clause (i) during which 

19 time the borrower was on active duty 

20 military service during a war, military 

21 operation, or national emergency; 

22 ‘‘(V) in mandatory forbearance 

23 on repayment of a loan described in 

24 subparagraph (A) for the full fiscal 

25 year; or 


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1 ‘‘(VI) serving as a volunteer 

2 under the Peace Corps Act (22 U.S.C. 

3 2501 et seq.) or the Domestic Volun4 teer Service Act of 1973 (42 U.S.C. 

5 4950 et seq.), during the 3 consecu6 tive fiscal years described in clause 

7 (i). 

8 ‘‘(C) DETERMINATION OF PAYMENT.— 

9 ‘‘(i) IN GENERAL.—The risk-sharing 

10 payment of an institution for a fiscal year 

11 equals 20 percent of the amount deter12 mined under clause (ii). 

13 ‘‘(ii) AMOUNT BASED ON COHORT

14 NONREPAYMENT LOAN BALANCE AND UN15 EMPLOYMENT RATE.— 

16 ‘‘(I) IN GENERAL.—The amount 

17 under this clause is determined by 

18 subtracting the amount determined 

19 under subclause (II) from the cohort 

20 nonrepayment loan balance deter21 mined under subparagraph (B). 

22 ‘‘(II) AMOUNT BASED ON UNEM23 PLOYMENT RATE.—The amount under 

24 this subclause is determined by multi25 plying the average national unemployVerDate Sep 11 2014 22:49 Aug 11, 2015 Jkt 049200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\S1939.IS S1939

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1 ment rate, as defined by the Bureau 

2 of Labor Statistics, for the 3 previous 

3 fiscal years from the date of the de4 termination by the cohort loan balance 

5 determined under subparagraph (A).’’. 

Æ 


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