II 

114TH CONGRESS 

1ST SESSION S. 2111 

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 

SEPTEMBER 30, 2015 

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) 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 

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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 demonstrate proficiency 

2 in a set of marketable skills or com3 petencies; 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. Accrediting agencies currently rec20 ognized by the Secretary and entities not currently 

21 recognized by the Secretary may apply to be ap22 proved as innovation authorizers. 

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

24 that desires to be approved by the Secretary as an 

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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 monitoring au13 thorized eligible entities, ensuring that 

14 each eligible entity continues to meet the 

15 criteria for authorization, (including the 

16 threshold for each applicable performance 

17 metric as described in clause (ii)), and for 

18 ensuring the accuracy and validity of data. 

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

20 educational or subject matter focus, if applica21 ble. 

22 ‘‘(F) The composition or membership of 

23 the entity that seeks to become an innovation 

24 authorizer, and the entity’s relationship or work 

25 with applicable industries and businesses. 


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1 ‘‘(G) A demonstration that the entity 

2 has— 

3 ‘‘(i) clear and effective controls to pro4 tect against conflicts of interest, or the ap5 pearance of conflicts of interest, between 

6 the entity that wishes to be an innovation 

7 authorizer and eligible entities (including 

8 controls regarding potential conflicts of in9 terest between board members, commis10 sioners, evaluation team members, consult11 ants, administrative staff, and other rep12 resentatives of the entity that wishes to be 

13 an authorizer and eligible entities); and 

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

15 an authorizer, the entity, the entity’s staff, 

16 and entity representatives will be separate 

17 and independent (as defined in section 

18 496(b)), both administratively and finan19 cially, from any eligible entities and will re20 ceive no benefit, financial or otherwise, 

21 from authorizing an eligible entity. 

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

23 make applicable authorization data, documents, 

24 and determinations publicly available. 


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

2 the purpose of determining minimum thresholds for 

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

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

5 ‘‘(A) disseminate to innovation authorizers, 

6 on an annual basis, information about 60th-per7 centile student outcomes on the performance 

8 criteria described under subsection (d); 

9 ‘‘(B) provide such information for students 

10 as a whole and disaggregated by student income 

11 quartile and field of study; and 

12 ‘‘(C) also provide the information described 

13 in subparagraphs (A) and (B) to an innovation 

14 authorizer or an entity that wishes to apply to 

15 become an innovation authorizer upon request. 

16 ‘‘(5) LIMITATION, SUSPENSION, OR TERMI17 NATION OF AUTHORIZER APPROVAL.— 

18 ‘‘(A) NOTICE AND OPPORTUNITY FOR COR19 RECTION.—If the Secretary determines that an 

20 innovation authorizer has failed to apply and ef21 fectively enforce the performance criteria, in22 cluding the minimum thresholds for such cri23 teria, specified in the innovation authorizer’s 

24 application under paragraph (3) in awarding, 

25 monitoring, and revoking authorization status 


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1 for eligible entities, the Secretary shall provide 

2 notice to the innovation authorizer and give the 

3 innovation authorizer a 6-month period to apply 

4 and enforce the performance criteria and min5 imum thresholds described in the innovation au6 thorizer’s application under paragraph (3). 

7 ‘‘(B) LIMITATION, SUSPENSION, OR TERMI8 NATION.—If, after the 6-month period de9 scribed in subparagraph (A), the Secretary de10 termines that an innovation authorizer has still 

11 failed to effectively enforce the performance cri12 teria and minimum thresholds specified in that 

13 innovation authorizer’s application under para14 graph (3), the Secretary shall limit, suspend, or 

15 terminate the recognition of that innovation au16 thorizer. 

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

18 case of an eligible entity authorized by an innovation 

19 authorizer whose recognition has been limited, sus20 pended, or terminated by the Secretary— 

21 ‘‘(A) if the eligible entity successfully dem22 onstrates to the Secretary that the eligible enti23 ty meets the performance criteria and minimum 

24 thresholds that such authorizer specified in its 

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1 tity shall have 6 months to apply for accredita2 tion by another accrediting agency or authoriza3 tion by another innovation authorizer; or 

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

5 teach-out plan that meets the Secretary’s regu6 lations for teach-out plans and shall submit 

7 such plan to the Secretary. 

8 ‘‘(7) AUTHORIZER RISK SHARING.—Each inno9 vation authorizer shall enter into an agreement with 

10 the Secretary whereby the innovation authorizer 

11 agrees to pay the Secretary an amount equal to not 

12 less than 25 percent of the amount of Federal stu13 dent loans that are held by current and former stu14 dents of any eligible entity authorized by the innova15 tion authorizer under subsection (d) and that are in 

16 default each fiscal year. 

17 ‘‘(c) ELIGIBILITY FOR FEDERAL PELL GRANT

18 FUNDING.—Eligible entities that are authorized by an in19 novation authorizer shall be eligible to receive Federal Pell 

20 Grant funding in accordance with subsection (f). 

21 ‘‘(d) AUTHORIZATION BY AN INNOVATION AUTHOR22 IZER.— 

23 ‘‘(1) AUTHORIZATION PROCESS.— 

24 ‘‘(A) IN GENERAL.—An innovation author25 izer may authorize an eligible entity, if— 


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1 ‘‘(i) that eligible entity meets the cri2 teria under subsection (a)(2); and 

3 ‘‘(ii) in the case of— 

4 ‘‘(I) an eligible entity that has 

5 not carried out an educational pro6 gram for more than 2 years, the eligi7 ble entity agrees to, and describes a 

8 high-quality, evidence-based plan to, 

9 meet within 2 years the specific per10 formance metrics and minimum 

11 thresholds required by the innovation 

12 authorizer in accordance with sub13 section (b)(3)(D); and 

14 ‘‘(II) an eligible entity that has 

15 carried out an educational program 

16 for more than 2 years, the eligible en17 tity demonstrates that the eligible en18 tity meets the specific performance 

19 metrics and minimum thresholds re20 quired by the innovation authorizer in 

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

22 ‘‘(B) PERFORMANCE METRICS.— 

23 ‘‘(i) IN GENERAL.—In accordance 

24 with subparagraph (C), each innovation 

25 authorizer shall— 


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1 ‘‘(I) use, in order to determine 

2 whether to award authorization to an 

3 eligible entity, not less than— 

4 ‘‘(aa) 1 performance metric 

5 relating to student learning, as 

6 described in clause (ii); 

7 ‘‘(bb) the performance met8 ric relating to completion, as de9 scribed in clause (iii); and 

10 ‘‘(cc) 2 performance metrics 

11 relating to the benefit to the stu12 dent and affordability, as de13 scribed in clause (iv); 

14 ‘‘(II) establish the minimum 

15 thresholds for each performance met16 ric that the eligible entity must meet 

17 or exceed in order to be authorized by 

18 the authorizer in accordance with sub19 section (b)(3)(D)(ii), ensuring that 

20 each minimum threshold meets or ex21 ceeds the 60th-percentile student out22 come for the performance metric; and 

23 ‘‘(III) in the determination about 

24 whether an eligible entity meets the 

25 required threshold for authorization 


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1 for each performance metric, include 

2 data from all students who enroll in 

3 the eligible entity. 

4 ‘‘(ii) STUDENT LEARNING.—The per5 formance metrics relating to student learn6 ing are the following: 

7 ‘‘(I) A nationally defined, dem8 onstrated, objective, and verifiable 

9 measure of student learning, including 

10 a measure of the knowledge or skills 

11 gained by the student from the edu12 cational program or institution. 

13 ‘‘(II) Demonstrated quality based 

14 on an evaluation conducted by an 

15 independent evaluator that uses eval16 uation criteria approved by the What 

17 Works Clearinghouse of the Institute 

18 of Education Sciences and shows sta19 tistically significant increases in stu20 dent learning. 

21 ‘‘(III) Pass rates and overall 

22 scores on qualifying or licensing 

23 exams. 

24 ‘‘(iii) COMPLETION.— 


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1 ‘‘(I) IN GENERAL.—The perform2 ance metric relating to completion is 

3 the percentage of all students who 

4 complete the educational program and 

5 each program of study in— 

6 ‘‘(aa) 100 percent of the 

7 normal time for completion of 

8 each program of study; 

9 ‘‘(bb) 150 percent of the 

10 normal time for completion of 

11 each program of study; and 

12 ‘‘(cc) 200 percent of the 

13 normal time for completion of 

14 each program of study. 

15 ‘‘(II) TRANSFER STUDENTS.—In 

16 determining the percentage under 

17 subclause (I), an eligible entity may 

18 include the students in each program 

19 of study who transfer and successfully 

20 complete a program of study. 

21 ‘‘(iv) BENEFIT TO STUDENT AND AF22 FORDABILITY.—The performance metrics 

23 relating to benefit to the student and af24 fordability are the following: 


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1 ‘‘(I) Rates of employment or en2 rollment in and completion of grad3 uate or professional school. 

4 ‘‘(II) Increases in income for stu5 dents. 

6 ‘‘(III) The cost of tuition and 

7 fees, the net price disaggregated by 

8 income quintile and educational pro9 gram, and the median total loan debt 

10 accrued by students who were enrolled 

11 in the eligible entity. 

12 ‘‘(IV) Student loan repayment 

13 rates for Federal and private student 

14 loans, if applicable. 

15 ‘‘(V) Median income of students 

16 who were enrolled in the eligible enti17 ty. 

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

19 authorizer uses data about income or employ20 ment, as described in subparagraph (B)(iv), the 

21 following provisions shall apply: 

22 ‘‘(i) The innovation authorizer shall 

23 use wage data gathered in accordance with 

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

25 such data, (except that such 


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1 disaggregation shall not be required in a 

2 case in which the results would reveal per3 sonally identifiable information about an 

4 individual student) by— 

5 ‘‘(I) educational program based 

6 on CIP code; 

7 ‘‘(II) credential received; 

8 ‘‘(III) noncompleters; 

9 ‘‘(IV) eligible entity; and 

10 ‘‘(V) State and region of employ11 ment. 

12 ‘‘(ii) The innovation authorizer shall 

13 include data for— 

14 ‘‘(I) 1 year after educational pro15 gram completion; 

16 ‘‘(II) 3 years after educational 

17 program completion; and 

18 ‘‘(III) 5 years after educational 

19 program completion. 

20 ‘‘(iii) Notwithstanding any other pro21 vision of law, the Secretary, in cooperation 

22 with the Commissioner of Social Security, 

23 and each eligible entity whose wage data 

24 will be evaluated in accordance with sub25 paragraph (B)(iv) shall establish a system 


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1 through which relevant data may be re2 trieved from the Social Security Adminis3 tration, including data on median annual 

4 earnings and employment metrics. 

5 ‘‘(iv) The Secretary, innovation au6 thorizers, and eligible entities shall not 

7 share personally identifiable information of 

8 a student in carrying out this subpara9 graph, except as necessary to enable indi10 viduals who are employed by the Depart11 ment to meet the reporting requirements 

12 and data dissemination purposes and re13 quirements under this Act. 

14 ‘‘(D) TRANSPARENCY.—Notwithstanding 

15 the specific performance metrics used by any 

16 specific authorizer, each authorized eligible enti17 ty shall make public and disaggregate informa18 tion on all of the metrics described under sub19 paragraph (B) for the eligible entity as a whole 

20 and for each educational program of the eligible 

21 entity, as applicable. 

22 ‘‘(2) RENEWING AUTHORIZATION.—An innova23 tion authorizer shall require each eligible entity that 

24 has been authorized by the innovation authorizer to 

25 have the eligible entity’s authorization renewed not 


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1 later than 2 years after the eligible entity is first au2 thorized, and not later than every 5 years thereafter. 

3 ‘‘(3) LOSS OF AUTHORIZATION.— 

4 ‘‘(A) IN GENERAL.—An innovation author5 izer shall remove an eligible entity from author6 ized status if, for 2 consecutive calendar years, 

7 that eligible entity falls below the minimum 

8 threshold for any performance metric required 

9 for authorization by the innovation authorizer 

10 in accordance with the subsection (b)(3)(D). 

11 ‘‘(B) PETITION TO REGAIN AUTHORIZA12 TION.—An eligible entity that is removed from 

13 authorized status may petition an innovation 

14 authorizer to regain authorization by dem15 onstrating to the innovation authorizer that the 

16 eligible entity is ensuring quality and student 

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

18 the minimum thresholds for each performance 

19 metric required for authorization by the innova20 tion authorizer in accordance with the sub21 section (b)(3)(D). 

22 ‘‘(4) ACCREDITATION DEEMED.—Authorization 

23 by an innovation authorizer approved by the Sec24 retary under this section shall be deemed recognized 

25 accreditation for purposes of title IV. 


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1 ‘‘(e) ACCREDITATION AND AUTHORIZATION; CHANG2 ING ACCREDITORS OR AUTHORIZERS.— 

3 ‘‘(1) ACCREDITATION AND AUTHORIZATION.— 

4 An eligible entity that otherwise meets the require5 ments for authorization by an innovation authorizer 

6 and the requirements for accreditation by a recog7 nized accrediting agency may hold accreditation and 

8 authorization from both entities. 

9 ‘‘(2) CHANGING ACCREDITORS OR AUTHOR10 IZERS.—An eligible entity that otherwise meets the 

11 relevant requirements for accreditation or authoriza12 tion may notify the Secretary and change accredita13 tion or authorization status— 

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

15 recognized accrediting agency; or 

16 ‘‘(B) from a recognized accrediting agency 

17 to an innovation authorizer. 

18 ‘‘(f) ELIGIBILITY FOR FEDERAL PELL GRANT FUND19 ING.— 

20 ‘‘(1) AUTHORIZER FEDERAL PELL GRANT

21 FUNDING REQUIREMENTS.— 

22 ‘‘(A) AGGREGATE INNOVATION AUTHOR23 IZER FEDERAL PELL GRANT CAP.— 

24 ‘‘(i) INDIVIDUAL AUTHORIZER CAP.— 

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1 ance with subparagraph (B) for each 

2 award year and for each innovation au3 thorizer, the total maximum amount of 

4 Federal Pell Grant funds that all eligible 

5 entities that are authorized by a given in6 novation authorizer may receive through 

7 tuition and fee payments from enrolled 

8 students who receive a Federal Pell Grant. 

9 ‘‘(ii) AGGREGATE AUTHORIZER CAP.— 

10 The Secretary shall determine each innova11 tion authorizer Federal Pell Grant cap, as 

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

13 ensures that the aggregate amount of Fed14 eral Pell Grant funds that all eligible enti15 ties authorized by all innovation author16 izers receive each year does not exceed 0.5 

17 percent of total Federal Pell Grant funding 

18 for the previous award year. 

19 ‘‘(B) INDIVIDUAL INNOVATION AUTHOR20 IZER FEDERAL PELL GRANT CAP.—The Sec21 retary shall determine each innovation author22 izer’s cap under subparagraph (A)(i) based 

23 on— 


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

2 track record of awarding authorization to 

3 eligible entities; and 

4 ‘‘(ii) the performance criteria and 

5 minimum thresholds that the authorizer 

6 uses in determining whether to award au7 thorization to eligible entities, as specified 

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

9 ‘‘(2) ELIGIBLE ENTITY FEDERAL PELL GRANT

10 FUNDING REQUIREMENTS.— 

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

12 is authorized by an innovation authorizer in ac13 cordance with this section is eligible to receive 

14 Federal Pell Grant funds in accordance with 

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

16 ‘‘(B) ELIGIBLE ENTITY TOTAL CAP ON

17 FEDERAL PELL GRANT FUNDING.—Each award 

18 year, an eligible entity described in subpara19 graph (A) will be eligible to receive (through 

20 tuition and fee payments from enrolled stu21 dents) a maximum total amount of Federal Pell 

22 Grant funding that— 

23 ‘‘(i) shall be determined by the inno24 vation authorizer; 


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

2 so as to ensure that the innovation author3 izer does not exceed the innovation author4 izer’s Federal Pell Grant cap; 

5 ‘‘(iii) shall be based on the eligible en6 tity’s history and track record of meeting 

7 or exceeding the relevant performance 

8 metrics minimum thresholds; and 

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

10 total Federal Pell Grant funding for eligi11 ble entities authorized by the innovation 

12 authorizer for the previous award year. 

13 ‘‘(C) FEDERAL PELL GRANT ALLOCA14 TIONS.— 

15 ‘‘(i) FULL FEDERAL PELL GRANT.— 

16 An eligible entity authorized by an innova17 tion authorizer that provides validated doc18 umentation from an independent evaluator 

19 that the eligible entity has met or exceeded 

20 the minimum thresholds for each of the 

21 authorizer’s performance metrics for at 

22 least 5 consecutive years shall be eligible to 

23 receive up to the full amount of Federal 

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1 dent is eligible to receive, subject to the 

2 cap described in subparagraph (B). 

3 ‘‘(ii) 50-PERCENT REIMBURSEMENT

4 FEDERAL PELL GRANT.—An eligible entity 

5 authorized by an innovation authorizer 

6 that provides validated documentation 

7 from an independent evaluator that the eli8 gible entity has met or exceeded the min9 imum thresholds for each of the author10 izer’s performance metrics for at least 3 

11 consecutive years but less than 5 consecu12 tive years and has been determined by 

13 such authorizer to have a strong evidence 

14 basis for continuing to annually meet such 

15 minimum thresholds for each performance 

16 metric shall be eligible for a pay for per17 formance contract with the following 

18 terms: 

19 ‘‘(I) The eligible entity shall be 

20 eligible to receive up to 50 percent of 

21 the amount of Federal Pell Grant 

22 funding that each enrolled student is 

23 eligible to receive, subject to the cap 

24 described in subparagraph (B). 


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1 ‘‘(II) The eligible entity shall 

2 provide a bond or matching funds to 

3 pay for the remaining 50 percent of 

4 the amount of Federal Pell Grant 

5 funding that each enrolled student is 

6 otherwise eligible to receive. 

7 ‘‘(III) The Secretary shall reim8 burse the eligible entity for an amount 

9 equal to the amount that the eligible 

10 entity provided under subclause (II) 

11 for each enrolled student, except that 

12 such amount may not exceed the re13 maining cost of tuition and fees for 

14 each student— 

15 ‘‘(aa) for whom the eligible 

16 entity provided matching funds 

17 as described in subclause (II); 

18 and 

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

21 ‘‘(iii) 75-PERCENT REIMBURSEMENT

22 FEDERAL PELL GRANT.—An eligible entity 

23 authorized by an innovation authorizer 

24 that provides validated documentation 

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1 gible entity has met or exceeded the min2 imum thresholds for each of the author3 izer’s performance metrics for at least 1 

4 year but less than 3 consecutive years and 

5 has been determined by such authorizer to 

6 have a strong evidence basis for continuing 

7 to annually meet such minimum thresholds 

8 for each performance metric shall be eligi9 ble for a pay for performance contract with 

10 the following terms: 

11 ‘‘(I) The eligible entity shall be 

12 eligible to receive up to 25 percent of 

13 the amount of Federal Pell Grant 

14 funding that each enrolled student is 

15 eligible to receive, subject to the cap 

16 described in subparagraph (B). 

17 ‘‘(II) The eligible entity shall 

18 provide— 

19 ‘‘(aa) a bond for 25 percent 

20 of the amount of Federal Pell 

21 Grant funding that each enrolled 

22 student is otherwise eligible to re23 ceive; and 

24 ‘‘(bb) a bond or matching 

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1 cent of the amount of Federal 

2 Pell Grant funding that each en3 rolled student is otherwise eligi4 ble to receive. 

5 ‘‘(III) If the eligible entity meets 

6 the minimum thresholds for each of 

7 the authorizer’s performance metrics 

8 for 2 consecutive years after the date 

9 of the pay for performance contract, 

10 the Secretary shall reimburse the eli11 gible entity for an amount equal to 

12 the amount that the eligible entity 

13 provided under subclause (II)(bb) for 

14 each enrolled student, except that 

15 such amount may not exceed the re16 maining cost of tuition and fees for 

17 each student— 

18 ‘‘(aa) for whom the eligible 

19 entity provided matching funds 

20 as described in subclause 

21 (II)(bb); and 

22 ‘‘(bb) who successfully com23 pletes the educational program. 

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

25 meet the minimum thresholds for each 


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1 of the authorizer’s performance cri2 teria for 2 consecutive years after the 

3 date of the contract, the eligible entity 

4 shall reimburse the Federal Govern5 ment in an amount equal to the 

6 amount described in subclause (I). 

7 ‘‘(iv) 100-PERCENT REIMBURSEMENT

8 FEDERAL PELL GRANT.—An eligible entity 

9 that has no track record of meeting, ex10 ceeding, or failing to meet the minimum 

11 thresholds for each of the authorizer’s per12 formance metrics, and that has been deter13 mined by an innovation authorizer to have 

14 a strong and rigorous evidence base dem15 onstrating an ability to consistently and 

16 annually meet or exceed the minimum 

17 thresholds for each of the performance 

18 metrics of that innovation authorizer shall 

19 be eligible for a pay for performance con20 tract with the following terms: 

21 ‘‘(I) The eligible entity shall pro22 vide funds equal to 100 percent of the 

23 amount of Federal Pell Grant funding 

24 that each enrolled student is otherwise 

25 eligible to receive. 


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1 ‘‘(II) If the eligible entity meets 

2 the minimum thresholds for each of 

3 the authorizer’s performance metrics 

4 for 2 consecutive years after the date 

5 of the pay for performance contract, 

6 the Secretary shall reimburse the eli7 gible entity for an amount equal to 

8 the amount that the eligible entity 

9 provided under subclause (I) for each 

10 enrolled student, except that such 

11 amount may not exceed the remaining 

12 cost of tuition and fees for each stu13 dent— 

14 ‘‘(aa) for whom the eligible 

15 entity provided funds as de16 scribed in subclause (I); and 

17 ‘‘(bb) who successfully com18 pletes the educational program. 

19 ‘‘(D) FEDERAL PELL GRANT AMOUNT

20 TREATED AS PAYMENT.—Notwithstanding the 

21 actual amount of Federal Pell Grant funding 

22 that an eligible entity receives, (which, in ac23 cordance with subparagraphs (B) and (C), may 

24 not be the full amount of Federal Pell Grant 

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1 ble for a Federal Pell Grant is eligible to re2 ceive), an eligible entity— 

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

4 paid the total amount of Federal Pell 

5 Grant funding for which the student is eli6 gible; 

7 ‘‘(ii) shall not charge students addi8 tional tuition or fees to compensate for any 

9 amount of Federal Pell Grant funding for 

10 which the eligible entity— 

11 ‘‘(I) must provide a bond or 

12 matching funds or for which the eligi13 ble entity otherwise must wait for re14 imbursement under subparagraph (C); 

15 or 

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

17 cap described under subparagraph 

18 (B); and 

19 ‘‘(iii) shall not charge a higher 

20 amount of tuition or fees to a student who 

21 is eligible for a Federal Pell Grant. 

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

23 in subparagraph (D) shall be construed as pro24 hibiting an eligible entity from reducing the 

25 amount of tuition and fees the eligible entity 


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1 charges to a student who is eligible for a Fed2 eral Pell Grant based on student need. 

3 ‘‘(F) STUDENTS EXCEEDING CAP.—An eli4 gible entity may elect to enroll students whose 

5 collective eligibility for Federal Pell Grants 

6 would otherwise result in the eligible entity ex7 ceeding the cap under subparagraph (B) but 

8 such eligible entity shall comply with subpara9 graph (D). 

10 ‘‘(3) FEDERAL PELL GRANT ELIGIBILITY FOR

11 STUDENTS.— 

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

13 a Federal Pell Grant and use funding from 

14 such grant to attend an eligible entity or a pro15 gram of an eligible entity that is authorized by 

16 an innovation authorizer under this subpart if 

17 the student meets the other requirements for 

18 receiving a Federal Pell Grant, as described in 

19 section 401. 

20 ‘‘(B) ELIGIBILITY PERIOD.—For the pur21 pose of calculating a student’s remaining period 

22 of eligibility for Federal Pell Grant funding 

23 under section 401(c), the Secretary shall con24 sider only Federal Pell Grant funding actually 

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1 dent, in accordance with paragraph (2)(B) and 

2 (2)(C). 

3 ‘‘(g) ACCESS TO TITLE IV FUNDING.— 

4 ‘‘(1) CONTINUATION OF TITLE IV ELIGI5 BILITY.—An institution of higher education that was 

6 eligible to participate in, and receive funding under, 

7 this title prior to seeking and gaining authorization 

8 under this section may petition the Secretary to con9 tinue to be eligible to receive loans made under this 

10 title if the institution is an eligible entity described 

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

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

13 years after the date of enactment of this section, the 

14 Secretary, in consultation with innovation author15 izers, eligible entities, and stakeholders, shall make 

16 recommendations to Congress regarding a process 

17 for providing all eligible entities with access to loans 

18 made under this title. 

19 ‘‘(h) REPORTS.— 

20 ‘‘(1) REPORTS FROM AUTHORIZED ELIGIBLE

21 ENTITIES TO INNOVATION AUTHORIZERS.—Each eli22 gible entity that is authorized by an innovation au23 thorizer shall prepare and submit an annual report 

24 to the innovation authorizer containing such infor25 mation as that innovation authorizer may require. 


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1 ‘‘(2) REPORTS FROM INNOVATION AUTHOR2 IZERS TO THE SECRETARY.—Each innovation au3 thorizer shall prepare and submit an annual report 

4 to the Secretary containing such information as the 

5 Secretary may require.’’. 

6 SEC. 3. TERMINATION OF APPROPRIATIONS. 

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

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

9 the date of enactment of this Act. 

10 SEC. 4. TERMINATION OF AUTHORIZATION. 

11 Subpart 4 of part H of title IV of the Higher Edu12 cation Act of 1965, as added by section 2 of this Act, shall 

13 expire on the date that is 5 years after the date of enact14 ment of this Act. 

Æ 


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