I 

116TH CONGRESS 

1ST SESSION H. R. 3512 

To protect students of institutions of higher education and the taxpayer 

investment in institutions of higher education by improving oversight 

and accountability of institutions of higher education, particularly forprofit colleges, improving protections for students and borrowers, and 

ensuring the integrity of postsecondary education programs, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 26, 2019 

Mrs. LEE of Nevada (for herself, Ms. DELAURO, Mr. HORSFORD, Mrs. 

TRAHAN, Mr. PAPPAS, Mr. CISNEROS, Ms. SCANLON, Mr. COHEN, and 

Ms. PORTER) introduced the following bill; which was referred to the 

Committee on Education and Labor, and in addition to the Committee 

on the Judiciary, for a period to be subsequently determined by the 

Speaker, in each case for consideration of such provisions as fall within 

the jurisdiction of the committee concerned 

A BILL 

To protect students of institutions of higher education and 

the taxpayer investment in institutions of higher education by improving oversight and accountability of institutions of higher education, particularly for-profit colleges, improving protections for students and borrowers, 

and ensuring the integrity of postsecondary education 

programs, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Preventing Risky Operations from Threatening the Edu4 cation and Career Trajectories of Students Act of 2019’’ 

5 or the ‘‘PROTECT Students Act of 2019’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. References. 

Sec. 3. Effective date. 

Sec. 4. Definitions. 

TITLE I—FOR-PROFIT INSTITUTIONS 

Sec. 101. Closing the GI Bill loophole and restoring the 85/15 rule for for-profit institutions. 

Sec. 102. Process for for-profit institutions to convert to nonprofit or public 

status. 

Sec. 103. For-Profit Education Oversight Coordination Committee. 

TITLE II—STUDENT AND BORROWER PROTECTIONS 

Sec. 201. Gainful employment programs. 

Sec. 202. Prohibition on institutions limiting student legal action. 

Sec. 203. Enforcement unit established in the Office of Federal Student Aid. 

Sec. 204. Establishment and maintenance of complaint resolution and tracking 

system. 

Sec. 205. Borrower defense to repayment. 

TITLE III—ENSURING INTEGRITY AT INSTITUTIONS OF HIGHER 

EDUCATION 

Sec. 301. Restrictions on sources of funds for recruiting and marketing activities. 

Sec. 302. Strengthening the incentive compensation ban. 

Sec. 303. Definition of nonprofit institution of higher education. 

Sec. 304. Definition of public institution of higher education. 

Sec. 305. Enhanced civil penalties, State enforcement, and private right of action. 

Sec. 306. Substantial misrepresentation prohibited. 

8 SEC. 2. REFERENCES. 

9 Except as otherwise expressly provided, whenever in 

10 this Act an amendment or repeal is expressed in terms 

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1 sion, the reference shall be considered to be made to a 

2 section or other provision of the Higher Education Act of 

3 1965 (20 U.S.C. 1001 et seq.). 

4 SEC. 3. EFFECTIVE DATE. 

5 Except as otherwise specified, this Act, and the 

6 amendments made by this Act, shall take effect beginning 

7 on July 1, 2020. 

8 SEC. 4. DEFINITIONS. 

9 (a) IN GENERAL.—Section 103 (20 U.S.C. 1003) is 

10 amended— 

11 (1) by redesignating paragraphs (15) through 

12 (22), (23), and (24) as paragraphs (17) through 

13 (24), (26), and (27); 

14 (2) by inserting after paragraph (14) the fol15 lowing: 

16 ‘‘(16) REVENUE SHARING ARRANGEMENTS.— 

17 The term ‘revenue sharing arrangement’ means an 

18 arrangement between an institution of higher edu19 cation and a third party contractor under which— 

20 ‘‘(A) the third party contractor provides, 

21 exclusively or nonexclusively, educational prod22 ucts or services to prospective students or stu23 dents attending the institution of higher edu24 cation; and 


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1 ‘‘(B) the third party contractor or institu2 tion of higher education pays a fee or provides 

3 other material benefits, including revenue- or 

4 profit-sharing, to the institution of higher edu5 cation or third party contractor in connection 

6 with the educational products or services pro7 vided to prospective students or students at8 tending the institution of higher education.’’; 

9 and 

10 (3) by inserting after paragraph (24), as redes11 ignated by paragraph (1), the following: 

12 ‘‘(25) THIRD PARTY CONTRACTOR.—The term 

13 ‘third party contractor’ means any State, person, or 

14 entity that enters into a contract or agreement, in15 cluding a revenue sharing arrangement, with an eli16 gible institution of higher education to act on the in17 stitution’s behalf, including any entity that— 

18 ‘‘(A) sells the names of prospective stu19 dents (also known as a ‘lead generator’); or 

20 ‘‘(B) offers services including recruiting, fi21 nancial aid packaging, curriculum development, 

22 facilities management, hiring and oversight of 

23 faculty, and the provision of student services 

24 representatives, job placement counselors, or 


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1 other employees (also known as an ‘online pro2 gram manager’).’’. 

3 (b) RENAMING PROPRIETARY INSTITUTIONS FOR4 PROFIT INSTITUTIONS.— 

5 (1) IN GENERAL.—Section 102 (20 U.S.C. 

6 1002) is amended— 

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

8 ‘‘proprietary institution’’ and inserting ‘‘for9 profit institution’’; and 

10 (B) in subsection (b)— 

11 (i) in the subsection heading, by strik12 ing ‘‘PROPRIETARY’’ and inserting ‘‘FOR13 PROFIT’’; 

14 (ii) in the matter preceding subpara15 graph (A) of paragraph (1), by striking 

16 ‘‘proprietary’’ and inserting ‘‘for-profit’’; 

17 and 

18 (iii) in paragraph (2), by striking 

19 ‘‘proprietary’’ each place the term appears 

20 and inserting ‘‘for-profit’’. 

21 (2) CONFORMING AMENDMENTS.— 

22 (A) DEPARTMENT OF EDUCATION ORGANI23 ZATION ACT.—The Department of Education 

24 Organization Act (20 U.S.C. 3401 et seq.) is 

25 amended— 


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1 (i) in section 219 (20 U.S.C. 3426)— 

2 (I) in the section heading, by 

3 striking ‘‘PROPRIETARY’’ and insert4 ing ‘‘FOR-PROFIT’’; 

5 (II) by striking ‘‘Proprietary’’ 

6 each place the term appears and in7 serting ‘‘For-Profit’’; and 

8 (III) by striking ‘‘proprietary’’ 

9 each place the term appears and in10 serting ‘‘for-profit’’; and 

11 (ii) in section 1, by striking the item 

12 relating to section 219 in the table of con13 tents and inserting the following: 

‘‘219. Liaison for For-Profit Institutions of Higher Education.’’. 

14 (B) HIGHER EDUCATION ACT OF 1965.— 

15 The Act (20 U.S.C. 1001 et seq.) is amended— 

16 (i) in each of sections 435 and 

17 443(b)(8), by striking ‘‘proprietary’’ each 

18 place the term appears and inserting ‘‘for19 profit’’; and 

20 (ii) in section 807(d)(1)(A)(iii), by 

21 striking ‘‘proprietary’’ and inserting ‘‘for22 profit’’. 

23 (C) SCIENTIFIC AND ADVANCED-TECH24 NOLOGY ACT OF 1992.—Section 3(j)(2)(B) of 

25 the Scientific and Advanced-Technology Act of 


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1 1992 (20 U.S.C. 1862i(j)(2)(B)) is amended by 

2 striking ‘‘proprietary institution’’ and inserting 

3 ‘‘for-profit institution’’. 

4 (3) REFERENCES.— 

5 (A) PROPRIETARY INSTITUTION.—Any ref6 erence to a proprietary institution, as defined in 

7 section 102(b) of the Higher Education Act of 

8 1965 (20 U.S.C. 1002) on the day before the 

9 date of enactment of this Act, in any law, rule, 

10 regulation, certificate, directive, instruction, or 

11 other official paper in force on the date of en12 actment of this Act shall be considered to refer 

13 and apply to a for-profit institution, as defined 

14 in section 102(b) of the Higher Education Act 

15 of 1965 (20 U.S.C. 1002(b)), as amended by 

16 this Act. 

17 (B) LIAISON.—Any reference to the Liai18 son for Proprietary Institutions of Higher Edu19 cation in any law, rule, regulation, certificate, 

20 directive, instruction, or other official paper in 

21 force on the date of enactment of this Act shall 

22 be considered to refer and apply to the Liaison 

23 for For-Profit Institutions of Higher Education 

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1 ment of Education Organization Act (20 U.S.C. 

2 3401), as amended by this Act. 

3 TITLE I—FOR-PROFIT 

4 INSTITUTIONS 

5 SEC. 101. CLOSING THE GI BILL LOOPHOLE AND RESTOR6 ING THE 85/15 RULE FOR FOR-PROFIT INSTI7 TUTIONS. 

8 (a) IN GENERAL.—Section 102(b) (20 U.S.C. 1002), 

9 as amended by section 4(b), is further amended— 

10 (1) in paragraph (1)— 

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

12 ‘‘and’’ after the semicolon; 

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

14 period at the end and inserting ‘‘; and’’; and 

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

16 ‘‘(F) meets the requirements of paragraph 

17 (2).’’; 

18 (2) by redesignating paragraph (2) as para19 graph (3); and 

20 (3) by inserting after paragraph (1) the fol21 lowing: 

22 ‘‘(2) REVENUE SOURCES.— 

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

24 a for-profit institution of higher education 

25 under this subsection, an institution shall derive 


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1 not less than 15 percent of the institution’s rev2 enues from sources other than Federal edu3 cation assistance funds, as calculated in accord4 ance with subparagraphs (B) and (C). 

5 ‘‘(B) FEDERAL EDUCATION ASSISTANCE

6 FUNDS.—In this paragraph, the term ‘Federal 

7 education assistance funds’ means any Federal 

8 financial assistance provided, under this Act or 

9 any other Federal law, through a grant, con10 tract, subsidy, loan, guarantee, insurance, or 

11 other means to an institution of higher edu12 cation, including Federal financial assistance 

13 that is disbursed or delivered to an institution 

14 or on behalf of a student or to a student to be 

15 used to attend the institution, except that such 

16 term shall not include any monthly housing sti17 pend provided under the Post-9/11 Veterans 

18 Educational Assistance Program under chapter 

19 33 of title 38, United States Code. 

20 ‘‘(C) IMPLEMENTATION OF NON-FEDERAL

21 REVENUE REQUIREMENT.—In making calcula22 tions under subparagraph (A), an institution of 

23 higher education shall— 

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


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1 ‘‘(ii) consider as revenue only those 

2 funds generated by the institution from— 

3 ‘‘(I) tuition, fees, and other insti4 tutional charges for students enrolled 

5 in programs eligible for assistance 

6 under title IV; 

7 ‘‘(II) activities conducted by the 

8 institution that are necessary for the 

9 education and training of the institu10 tion’s students, if such activities are— 

11 ‘‘(aa) conducted on campus 

12 or at a facility under the control 

13 of the institution; 

14 ‘‘(bb) performed under the 

15 supervision of a member of the 

16 institution’s faculty; and 

17 ‘‘(cc) required to be per18 formed by all students in a spe19 cific educational program at the 

20 institution; and 

21 ‘‘(III) a contractual arrangement 

22 with a Federal agency for the purpose 

23 of providing job training to low-in24 come individuals who are in need of 

25 such training; 


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1 ‘‘(iii) presume that any Federal edu2 cation assistance funds that are disbursed 

3 or delivered to an institution on behalf of 

4 a student or directly to a student will be 

5 used to pay the student’s tuition, fees, or 

6 other institutional charges, regardless of 

7 whether the institution credits such funds 

8 to the student’s account or pays such 

9 funds directly to the student, except to the 

10 extent that the student’s tuition, fees, or 

11 other institutional charges are satisfied 

12 by— 

13 ‘‘(I) grant funds provided by an 

14 outside source that— 

15 ‘‘(aa) has no affiliation with 

16 the institution; and 

17 ‘‘(bb) shares no employees, 

18 executives, or board members 

19 with the institution; 

20 ‘‘(II) funds provided under a con21 tractual arrangement with a Federal, 

22 State, or local government agency for 

23 the purpose of providing job training 

24 to low-income individuals who are in 

25 need of that training; or 


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1 ‘‘(III) institutional scholarships 

2 described in clause (v); 

3 ‘‘(iv) include no loans made by an in4 stitution of higher education as revenue to 

5 the school, except for payments made by 

6 students on such loans; 

7 ‘‘(v) include a scholarship provided by 

8 the institution— 

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

10 the form of monetary aid based upon 

11 the academic achievements or finan12 cial need of students, disbursed to 

13 qualified student recipients during 

14 each fiscal year from an established 

15 restricted account; and 

16 ‘‘(II) only to the extent that 

17 funds in that account represent des18 ignated funds, or income earned on 

19 such funds, from an outside source 

20 that— 

21 ‘‘(aa) has no affiliation with 

22 the institution; and 

23 ‘‘(bb) shares no employees, 

24 executives, or board members 

25 with the institution; and 


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1 ‘‘(vi) exclude from revenues— 

2 ‘‘(I) the amount of funds the in3 stitution received under part C of title 

4 IV, unless the institution used those 

5 funds to pay a student’s institutional 

6 charges; 

7 ‘‘(II) the amount of funds the in8 stitution received under subpart 4 of 

9 part A of title IV; 

10 ‘‘(III) the amount of funds pro11 vided by the institution as matching 

12 funds for any Federal program; 

13 ‘‘(IV) the amount of Federal edu14 cation assistance funds provided to 

15 the institution to pay institutional 

16 charges for a student that were re17 funded or returned; and 

18 ‘‘(V) the amount charged for 

19 books, supplies, and equipment, unless 

20 the institution includes that amount 

21 as tuition, fees, or other institutional 

22 charges. 

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

24 than July 1, 2020, and by July 1 of each suc25 ceeding year, the Secretary shall submit to the 


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1 authorizing committees a report that contains, 

2 for each for-profit institution of higher edu3 cation that receives assistance under title IV 

4 and as provided in the audited financial state5 ments submitted to the Secretary by each insti6 tution pursuant to the requirements of section 

7 487(c)— 

8 ‘‘(i) the amount and percentage of 

9 such institution’s revenues received from 

10 Federal education assistance funds; and 

11 ‘‘(ii) the amount and percentage of 

12 such institution’s revenues received from 

13 other sources.’’. 

14 (b) REPEAL OF EXISTING REQUIREMENTS.—Section 

15 487 (20 U.S.C. 1094) is amended— 

16 (1) in subsection (a)— 

17 (A) by striking paragraph (24); 

18 (B) by redesignating paragraphs (25) 

19 through (29) as paragraphs (24) through (28), 

20 respectively; 

21 (C) in paragraph (24)(A)(ii) (as redesig22 nated by subparagraph (B)), by striking ‘‘sub23 section (e)’’ and inserting ‘‘subsection (d)’’; and 


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1 (D) in paragraph (26) (as redesignated by 

2 subparagraph (B)), by striking ‘‘subsection (h)’’ 

3 and inserting ‘‘subsection (g)’’; 

4 (2) by striking subsection (d); 

5 (3) by redesignating subsections (e) through (j) 

6 as subsections (d) through (i), respectively; 

7 (4) in subsection (d) (as redesignated by para8 graph (3)), by striking ‘‘(a)(25)’’ and inserting 

9 ‘‘(a)(24)’’; 

10 (5) in subsection (f)(1) (as redesignated by 

11 paragraph (3)), by striking ‘‘subsection (e)(2)’’ and 

12 inserting ‘‘subsection (d)(2)’’; and 

13 (6) in subsection (g)(1) (as redesignated by 

14 paragraph (3)), by striking ‘‘subsection (a)(27)’’ in 

15 the matter preceding subparagraph (A) and insert16 ing ‘‘subsection (a)(26)’’. 

17 (c) CONFORMING AMENDMENTS.—The Act (20 

18 U.S.C. 1001 et seq.) is amended— 

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

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

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

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

23 section 487’’; and 


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1 (B) in subsection (b)(1)(B)(i)(I), by strik2 ing ‘‘section 487(e)’’ and inserting ‘‘section 

3 487(d)’’; 

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

5 1019b(c)(3)), by striking ‘‘section 487(a)(25)’’ each 

6 place the term appears and inserting ‘‘section 

7 487(a)(24)’’; 

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

9 1099b(c)(3)(A)), by striking ‘‘section 487(f)’’ and 

10 inserting ‘‘section 487(e)’’; and 

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

12 1099c(k)(1)), by striking ‘‘section 487(f)’’ and in13 serting ‘‘section 487(e)’’. 

14 SEC. 102. PROCESS FOR FOR-PROFIT INSTITUTIONS TO 

15 CONVERT TO NONPROFIT OR PUBLIC STA16 TUS. 

17 (a) CONVERSION PROCESS.—Part B of title I (20 

18 U.S.C. 1011 et seq.) is further amended by adding at the 

19 end the following: 

20 ‘‘SEC. 124. PROCESS FOR FOR-PROFIT INSTITUTIONS TO 

21 CONVERT TO NONPROFIT OR PUBLIC STA22 TUS. 

23 ‘‘(a) DETERMINATION.— 

24 ‘‘(1) IN GENERAL.—In any case where the Sec25 retary determines that a for-profit institution of 


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1 higher education, as defined in section 102(b), meets 

2 the applicable requirements of subsection (b), the 

3 Secretary shall approve the conversion of the institu4 tion of higher education to a nonprofit or public in5 stitution of higher education for not more than a 5- 

6 year period. 

7 ‘‘(2) PERIODIC REVIEW.—For each for-profit 

8 institution that is converted under this section to a 

9 nonprofit or public institution of higher education, 

10 the Secretary shall— 

11 ‘‘(A) review the determination not less 

12 than once every 5 years; and 

13 ‘‘(B) at the conclusion of a review de14 scribed in subparagraph (A)— 

15 ‘‘(i) in a case where the Secretary de16 termines the institution continues to meet 

17 the requirements of this section, approve 

18 the institution’s status as a nonprofit insti19 tution of higher education or public insti20 tution of higher education for an additional 

21 period not to exceed 5 years; and 

22 ‘‘(ii) in a case where the Secretary de23 termines the institution no longer meets 

24 the requirements, classify the institution as 

25 a for-profit institution. 


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1 ‘‘(b) REQUIREMENTS.—To be eligible to convert to 

2 a nonprofit or public institution of higher education, a for3 profit institution of higher education shall submit an ap4 plication to the Secretary that demonstrates that— 

5 ‘‘(1) the institution, as of the date of the appli6 cation, meets the definition of a nonprofit or public 

7 institution of higher education; 

8 ‘‘(2) the institution has not acquired any other 

9 institution of higher education (as defined in section 

10 102), or a significant portion of the assets of such 

11 other institution, for more than the value of such 

12 other institution or such assets, respectively, as de13 termined in accordance with subsection (d); and 

14 ‘‘(3) in the case of an institution that has been 

15 acquired by another party, such institution is not 

16 controlled by such party. 

17 ‘‘(c) TRANSITION PERIOD.—A for-profit institution 

18 of higher education approved for conversion under sub19 section (a) shall be subject to any rules and regulations 

20 that apply to for-profit institutions of higher education, 

21 as defined in section 102(b), for a minimum 5-year period 

22 after conversion, which may be extended by the Secretary 

23 if the Secretary identifies a reason for concern relating 

24 to the institution’s converted status. 


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1 ‘‘(d) VALUE.—The term ‘value’, with respect to an 

2 acquisition under subsection (b)(2)— 

3 ‘‘(1) includes the value of any ongoing relation4 ship (including any contract, agreement, lease, or 

5 other arrangement between the acquiring institution 

6 and the acquired institution) between affiliates, as 

7 defined in section 180.905 of title 2, Code of Fed8 eral Regulations, as in effect on the date of enact9 ment of the PROTECT Students Act of 2019; and 

10 ‘‘(2) may be demonstrated through— 

11 ‘‘(A) third-party valuation; 

12 ‘‘(B) independent financing of the acquisi13 tion based upon the assets acquired; or 

14 ‘‘(C) full and open competition in the ac15 quisition, as such term is defined in section 

16 2.101(b) of title 48, Code of Federal Regula17 tions, as in effect on the date of the enactment 

18 of the PROTECT Students Act of 2019, of 

19 services or assets. 

20 ‘‘(e) PUBLICATION.— 

21 ‘‘(1) APPLICATION.—Before the Secretary may 

22 approve the conversion of an institution of higher 

23 education under subsection (a), the Secretary shall 

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1 eral Register with a notice and comment period of 

2 not less than 60 days. 

3 ‘‘(2) DETERMINATION.—The Secretary shall 

4 publish each determination on an application for 

5 conversion under this section, and the reasons for 

6 such determination, in the Federal Register. 

7 ‘‘(f) TAX EXEMPT STATUS.—In carrying out this sec8 tion, the Secretary may consider the nonprofit corporation 

9 status under State law or the tax exempt status of an in10 stitution of higher education under section 501(c)(3) of 

11 the Internal Revenue Code of 1986, but shall not use such 

12 statuses as the sole determining factor for approval under 

13 subsection (a). 

14 ‘‘(g) PUBLIC REPRESENTATION AND MARKETING OF

15 NONPROFIT STATUS.—A for-profit institution of higher 

16 education that receives assistance under title IV that is 

17 seeking to convert under this section shall not promote 

18 or market itself, in any manner, as a nonprofit institution 

19 of higher education until— 

20 ‘‘(1) the Secretary has approved the conversion 

21 of the institution to a nonprofit institution under 

22 this section; 

23 ‘‘(2) the Commissioner of Internal Revenue has 

24 approved the institution as tax exempt for purposes 

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1 tution is an organization described in clause (ii) or 

2 (vi) of section 170(b)(1)(A) of such Code; and 

3 ‘‘(3) a nationally recognized accrediting agency 

4 or association recognized by the Secretary pursuant 

5 to section 496 has approved the nonprofit status of 

6 the institution.’’. 

7 (b) REVIEW AND ENFORCEMENT PROCESS.— 

8 (1) IN GENERAL.—Section 487(c)(1) of the Act 

9 (20 U.S.C. 1094(c)(1)) is amended— 

10 (A) by redesignating subparagraphs (B) 

11 through (I) as subparagraphs (C) through (J), 

12 respectively; and 

13 (B) by inserting after subparagraph (A) 

14 the following: 

15 ‘‘(B)(i) a requirement that an institution 

16 of higher education shall use the same qualified, 

17 independent organization or person, in accord18 ance with standards established by the Comp19 troller General for the audit of governmental 

20 organizations, programs, and functions, and as 

21 prescribed in regulations of the Secretary, for 

22 both the financial and compliance audits re23 quired for a given year under subparagraph 

24 (A); 


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1 ‘‘(ii) a requirement that the qualified, inde2 pendent organization or person chosen to con3 duct the annual financial and compliance audits 

4 under subparagraph (A) shall document, in the 

5 audit, any transactions or relationships that 

6 may conflict with an institution’s status as a 

7 nonprofit institution of higher education or pub8 lic institution of higher education; and 

9 ‘‘(iii) in accordance with section 489A, in 

10 any case where the Secretary determines, after 

11 providing an institution with reasonable notice 

12 and an opportunity for a hearing, that the insti13 tution is classified as a public institution of 

14 higher education or a nonprofit institution for 

15 purposes of this Act but is in violation of, or 

16 has failed to carry out, any requirements relat17 ing to such nonprofit or public status in accord18 ance with paragraphs (13) and (15) of section 

19 103 or section 124, a process through which the 

20 Secretary may— 

21 ‘‘(I) limit, suspend, or terminate the 

22 institution’s participation in any program 

23 under this title under section 489A(b)(1); 

24 ‘‘(II) impose a civil penalty under sec25 tion 489A(c); or 


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1 ‘‘(III) take an emergency action under 

2 section 498A(d) against an institution.’’. 

3 (2) CONFORMING AMENDMENTS.—Section 

4 487(i) (20 U.S.C. 1094(i)), as redesignated by sec5 tion 101(b)(3), is further amended— 

6 (A) by striking ‘‘subsection (c)(1)(D),’’; 

7 and 

8 (B) by inserting ‘‘or subsection (b)(1) or 

9 (c) of section 489A’’ after ‘‘of this section’’. 

10 SEC. 103. FOR-PROFIT EDUCATION OVERSIGHT COORDINA11 TION COMMITTEE. 

12 Part B of title I (20 U.S.C. 1011 et seq.), as amend13 ed by section 102, is further amended by adding at the 

14 end the following: 

15 ‘‘SEC. 125. FOR-PROFIT EDUCATION OVERSIGHT COORDINA16 TION COMMITTEE. 

17 ‘‘(a) DEFINITIONS.—In this section: 

18 ‘‘(1) EXECUTIVE OFFICER.—The term ‘execu19 tive officer’, with respect to a for-profit institution 

20 that is a publicly traded corporation, means— 

21 ‘‘(A) the president of such corporation; 

22 ‘‘(B) a vice president of such corporation 

23 who is in charge of a principal business unit, di24 vision, or function of such corporation, such as 

25 sales, administration, or finance; or 


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1 ‘‘(C) any other officer or person who per2 forms a policy-making function for such cor3 poration. 

4 ‘‘(2) FEDERAL EDUCATION ASSISTANCE

5 FUNDS.—The term ‘Federal education assistance 

6 funds’ has the meaning given the term in section 

7 102(b)(2)(B). 

8 ‘‘(3) FOR-PROFIT INSTITUTION.—The term 

9 ‘for-profit institution’— 

10 ‘‘(A) means a for-profit institution of high11 er education as defined in section 102(b)(2); 

12 and 

13 ‘‘(B) includes a former for-profit institu14 tion of higher education that has been approved 

15 for conversion under section 124 but is still in 

16 the transition period required under section 

17 124(c). 

18 ‘‘(4) PRIVATE EDUCATION LOAN.—The term 

19 ‘private education loan’— 

20 ‘‘(A) means a loan provided by a private 

21 educational lender (as defined in section 140(a) 

22 of the Truth in Lending Act (15 U.S.C. 

23 1650(a))) that— 

24 ‘‘(i) is not made, insured, or guaran25 teed under title IV; 


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1 ‘‘(ii) is issued expressly for postsec2 ondary educational expenses to a borrower, 

3 regardless of whether the loan is provided 

4 through the educational institution that 

5 the subject student attends or directly to 

6 the borrower from the private educational 

7 lender; and 

8 ‘‘(iii) is not made, insured, or guaran9 teed under title VII or title VIII of the 

10 Public Health Service Act (42 U.S.C. 292 

11 et seq. and 296 et seq.); and 

12 ‘‘(B) does not include an extension of cred13 it under an open end consumer credit plan, a 

14 reverse mortgage transaction, a residential 

15 mortgage transaction, or any other loan that is 

16 secured by real property or a dwelling. 

17 ‘‘(5) RECRUITING AND MARKETING ACTIVI18 TIES.—The term ‘recruiting and marketing activi19 ties’ means the recruiting and marketing activities 

20 described in section 126(d)(2). 

21 ‘‘(6) STATE APPROVAL AGENCY.—The term 

22 ‘State approval agency’ means any State agency that 

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1 vide a program of education beyond secondary edu2 cation. 

3 ‘‘(7) VETERANS SERVICE ORGANIZATION.—The 

4 term ‘veterans service organization’ means an orga5 nization recognized by the Secretary of Veterans Af6 fairs for the representation of veterans under section 

7 5902 of title 38, United States Code. 

8 ‘‘(b) ESTABLISHMENT OF COMMITTEE.— 

9 ‘‘(1) ESTABLISHMENT.—There is established in 

10 the executive branch a committee to be known as the 

11 ‘For-Profit Education Oversight Coordination Com12 mittee’ (referred to in this section as the ‘Com13 mittee’) and to be composed of the head (or the des14 ignee of such head) of each of the following Federal 

15 entities: 

16 ‘‘(A) The Department of Education. 

17 ‘‘(B) The Bureau of Consumer Financial 

18 Protection. 

19 ‘‘(C) The Department of Justice. 

20 ‘‘(D) The Securities and Exchange Com21 mission. 

22 ‘‘(E) The Department of Defense. 

23 ‘‘(F) The Department of Veterans Affairs. 

24 ‘‘(G) The Federal Trade Commission. 

25 ‘‘(H) The Department of Labor. 


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1 ‘‘(I) The Internal Revenue Service. 

2 ‘‘(J) The enforcement unit of the Perform3 ance-Based Organization established under sec4 tion 141(g). 

5 ‘‘(K) At the discretion of the Chairperson 

6 of the Committee, any other relevant Federal 

7 agency or department. 

8 ‘‘(2) PURPOSES.—The Committee shall have 

9 the following purposes: 

10 ‘‘(A) Coordinate Federal oversight of for11 profit institutions to— 

12 ‘‘(i) improve enforcement of applicable 

13 Federal laws and regulations; 

14 ‘‘(ii) increase accountability of for15 profit institutions to students and tax16 payers; and 

17 ‘‘(iii) ensure the promotion of quality 

18 education programs. 

19 ‘‘(B) Coordinate Federal activities to pro20 tect students from unfair, deceptive, abusive, 

21 unethical, fraudulent, or predatory practices, 

22 policies, or procedures of for-profit institutions. 

23 ‘‘(C) Encourage information sharing 

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1 plaints, financial statements, and other infor2 mation relevant to the oversight of for-profit in3 stitutions. 

4 ‘‘(D) Develop binding memoranda of un5 derstanding that the Federal entities rep6 resented on the committee will use regarding 

7 the sharing of information to exercise the over8 sight described in this section. 

9 ‘‘(E) Increase coordination and cooperation 

10 between Federal and State agencies, including 

11 State Attorneys General and State approval 

12 agencies, with respect to improving oversight 

13 and accountability of for-profit institutions. 

14 ‘‘(F) Develop best practices and consist15 ency among Federal and State agencies in the 

16 dissemination of consumer information regard17 ing for-profit institutions to ensure that stu18 dents, parents, and other stakeholders have 

19 easy access to such information. 

20 ‘‘(3) MEMBERSHIP.— 

21 ‘‘(A) DESIGNEES.—For any designee de22 scribed in paragraph (1), the head of the mem23 ber entity shall appoint a high-level official who 

24 exercises significant decision-making authority 

25 for the oversight or investigatory activities and 


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1 responsibilities related to for-profit institutions 

2 of the respective member entity. 

3 ‘‘(B) CHAIRPERSON.—The Secretary of 

4 Education or the designee of such Secretary 

5 shall serve as the Chairperson of the Com6 mittee. 

7 ‘‘(C) COMMITTEE SUPPORT.—The head of 

8 each entity described in paragraph (1) shall en9 sure appropriate staff and officials of such enti10 ty are available to support the Committee-re11 lated work of such entity. 

12 ‘‘(c) MEETINGS.— 

13 ‘‘(1) COMMITTEE MEETINGS.—The members of 

14 the Committee shall meet regularly, but not less 

15 than once during each quarter of each fiscal year, to 

16 carry out the purposes described in subsection 

17 (b)(2). 

18 ‘‘(2) MEETINGS WITH STATE AGENCIES AND

19 STAKEHOLDERS.—The Committee shall meet not 

20 less than once each fiscal year, and shall otherwise 

21 interact regularly, with State Attorneys General, 

22 State approval agencies, veterans service organiza23 tions, and consumer advocates to carry out the pur24 poses described in subsection (b)(2). 


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1 ‘‘(d) DIRECTOR.—The Chairperson shall appoint a 

2 full-time executive director to support the Committee and 

3 may appoint and fix the pay of additional staff as the 

4 Chairperson considers appropriate. 

5 ‘‘(e) REPORT.— 

6 ‘‘(1) IN GENERAL.—The Committee shall sub7 mit a report each year to the authorizing committees 

8 and any other committee of Congress that the Com9 mittee determines appropriate. 

10 ‘‘(2) PUBLIC ACCESS.—The report described in 

11 paragraph (1) shall be made available to the public 

12 in a manner that is easily accessible to parents, stu13 dents, and other stakeholders, in accordance with 

14 the best practices developed under subsection 

15 (b)(2)(F). 

16 ‘‘(3) CONTENTS.— 

17 ‘‘(A) IN GENERAL.—The report shall in18 clude— 

19 ‘‘(i) an accounting of any action (as 

20 defined in subparagraph (C)) taken by the 

21 Federal Government, any member entity of 

22 the Committee, or a State— 

23 ‘‘(I) to enforce Federal or State 

24 laws and regulations applicable to for25 profit institutions; 


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1 ‘‘(II) to hold for-profit institu2 tions accountable to students and tax3 payers; and 

4 ‘‘(III) to promote quality edu5 cation programs; 

6 ‘‘(ii) a summary of complaints against 

7 each for-profit institution received by any 

8 member entity of the Committee; 

9 ‘‘(iii) the data described in subpara10 graph (B) and any other data relevant to 

11 for-profit institutions that the Committee 

12 determines appropriate; and 

13 ‘‘(iv) recommendations of the Com14 mittee for such legislative and administra15 tive actions as the Committee determines 

16 are necessary to— 

17 ‘‘(I) improve enforcement of ap18 plicable Federal laws; 

19 ‘‘(II) increase accountability of 

20 for-profit institutions to students and 

21 taxpayers; and 

22 ‘‘(III) ensure the promotion of 

23 quality education programs. 

24 ‘‘(B) DATA.— 


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1 ‘‘(i) INDUSTRY-WIDE AND INSTITU2 TION-LEVEL DATA.—The report shall in3 clude data on all for-profit institutions, in4 cluding the following: 

5 ‘‘(I) The following data, in the 

6 aggregate for all for-profit institutions 

7 and disaggregated for each individual 

8 for-profit institution: 

9 ‘‘(aa) The total amount of 

10 Federal education assistance 

11 funds that for-profit institutions 

12 received for the previous aca13 demic year, and the percentage 

14 of the total amount of Federal 

15 education assistance funds pro16 vided to institutions of higher 

17 education (as defined in section 

18 102) for such previous academic 

19 year that reflects such total 

20 amount of Federal education as21 sistance funds provided to for22 profit institutions for such pre23 vious academic year. 

24 ‘‘(bb) The total amount of 

25 Federal education assistance 


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1 funds that for-profit institutions 

2 received for the previous aca3 demic year, disaggregated by 

4 whether the funds were pro5 vided— 

6 ‘‘(AA) in the form of a 

7 loan under title IV; 

8 ‘‘(BB) in the form of a 

9 grant under such title; 

10 ‘‘(CC) under chapter 33 

11 of title 38, United States 

12 Code; 

13 ‘‘(DD) for tuition and 

14 expenses under section 2007 

15 of title 10, United States 

16 Code; 

17 ‘‘(EE) under section 

18 1784a of title 10, United 

19 States Code; and 

20 ‘‘(FF) in a manner not 

21 described in subitems (AA) 

22 through (EE). 

23 ‘‘(cc) The percentage of the 

24 total amount of Federal edu25 cation assistance funds provided 


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1 to institutions of higher edu2 cation (as defined in section 102) 

3 for such previous academic year 

4 for each of the programs de5 scribed in subitems (AA) through 

6 (EE) of item (bb) that reflects 

7 such total amount of Federal 

8 education assistance funds pro9 vided to for-profit institutions for 

10 such previous academic year for 

11 each of such programs. 

12 ‘‘(dd) Expenses by classifica13 tion, including separate classi14 fications for— 

15 ‘‘(AA) pre-enrollment 

16 recruiting and marketing ac17 tivities; 

18 ‘‘(BB) student instruc19 tion; and 

20 ‘‘(CC) student support 

21 services. 

22 ‘‘(ee) Net income and other 

23 changes in equity. 


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1 ‘‘(ff) Executive compensa2 tion for the 10 highest-paid for3 profit institution executives. 

4 ‘‘(gg) The average retention 

5 and graduation rates for students 

6 pursuing a certificate or a degree 

7 at for-profit institutions. 

8 ‘‘(hh) The average cohort 

9 default rate (as defined in section 

10 435(m)). 

11 ‘‘(ii) With respect to all ca12 reers requiring the passage of a 

13 licensing examination, and disag14 gregated by each such career— 

15 ‘‘(AA) the average pas16 sage rate of individuals who 

17 attended a for-profit institu18 tion taking such examina19 tion to pursue such a career; 

20 ‘‘(BB) the average pas21 sage rate of all individuals 

22 taking such exam to pursue 

23 such a career; and 

24 ‘‘(CC) the percentage of 

25 all individuals taking such 


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1 exam who attended a for2 profit institution. 

3 ‘‘(jj) Information regarding 

4 the use of private education loans 

5 at for-profit institutions that in6 cludes— 

7 ‘‘(AA) an estimate of 

8 the total number of such 

9 loans; and 

10 ‘‘(BB) information on 

11 the average debt, default 

12 rate, and interest rate of 

13 such loans. 

14 ‘‘(II) The financial composite 

15 scores, in accordance with section 

16 498, for each for-profit institution, 

17 the name and dollar amount of any 

18 letters of credit required under sub19 part L of part 668 of title 34, Code 

20 of Federal Regulations (or any suc21 cessor regulation), and the name of 

22 each institution placed under the 

23 heightened cash monitoring payment 

24 method, as established under section 

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1 eral Regulations (or any successor 

2 regulation). 

3 ‘‘(ii) DATA ON CORPORATIONS.— 

4 ‘‘(I) IN GENERAL.—The report 

5 shall include data on for-profit institu6 tions that are publicly traded corpora7 tions, consisting of information on— 

8 ‘‘(aa) any pre-tax profit of 

9 such for-profit institutions— 

10 ‘‘(AA) reported as a 

11 total amount and as the av12 erage percentage of revenue 

13 for all such for-profit insti14 tutions; and 

15 ‘‘(BB) reported as a 

16 total amount and as the av17 erage percentage of revenue 

18 for each such for-profit in19 stitution; 

20 ‘‘(bb) spending on pre-en21 rollment recruiting and mar22 keting activities, student instruc23 tion, and student support serv24 ices, and for each of the 3 cat25 egories separately reported— 


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1 ‘‘(AA) as a total 

2 amount and the average per3 centage of revenue for all 

4 such for-profit institutions; 

5 and 

6 ‘‘(BB) for each such 

7 for-profit institution; 

8 ‘‘(cc) total compensation 

9 packages of the executive officers 

10 of each such for-profit institu11 tion; 

12 ‘‘(dd) a list of institutional 

13 loan programs offered by each 

14 such for-profit institution that in15 cludes information on the default 

16 and interest rates of such pro17 grams; and 

18 ‘‘(ee) the data described in 

19 subclauses (II) and (III). 

20 ‘‘(II) DISAGGREGATED BY OWN21 ERSHIP.—The report shall include 

22 data on for-profit institutions that are 

23 corporations, disaggregated by cor24 porate or parent entity, brand name, 

25 and campus, consisting of— 


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1 ‘‘(aa) the total cost of at2 tendance for each program at 

3 each such for-profit institution; 

4 ‘‘(bb) total enrollment, dis5 aggregated by— 

6 ‘‘(AA) individuals en7 rolled in programs taken ex8 clusively online; 

9 ‘‘(BB) individuals en10 rolled in programs that are 

11 exclusively in person; and 

12 ‘‘(CC) individuals en13 rolled in programs that are 

14 a mix of online and in per15 son; 

16 ‘‘(cc) the retention and 

17 graduation rates for students 

18 pursuing a degree at such for19 profit institutions, including the 

20 number of students who enroll 

21 each year and withdraw in less 

22 than one year; 

23 ‘‘(dd) the percentage of stu24 dents enrolled in such for-profit 

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1 gram of such an institution with2 in— 

3 ‘‘(AA) the standard pe4 riod of completion for such 

5 program; and 

6 ‘‘(BB) a period that is 

7 150 percent of such stand8 ard period of completion; 

9 ‘‘(ee) the average cohort de10 fault rate, as defined in section 

11 435(m), for such for-profit insti12 tutions, and an annual list of co13 hort default rates (as so defined) 

14 for all for-profit institutions; 

15 ‘‘(ff) the median educational 

16 debt incurred by students who 

17 complete a program at such a 

18 for-profit institution of higher 

19 education; 

20 ‘‘(gg) the median edu21 cational debt incurred by stu22 dents who start but do not com23 plete a program at such a for24 profit institution of higher edu25 cation; 


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1 ‘‘(hh) the job placement rate 

2 for students who complete a pro3 gram at such a for-profit institu4 tion of higher education and the 

5 type of employment obtained by 

6 such students; 

7 ‘‘(ii) for careers requiring 

8 the passage of a licensing exam9 ination, the rate of individuals 

10 who attended such a for-profit in11 stitution and passed such an ex12 amination; and 

13 ‘‘(jj) the number of com14 plaints from students enrolled in 

15 such for-profit institutions that 

16 have been submitted to any mem17 ber entity of the Committee. 

18 ‘‘(III) DEPARTMENT OF DE19 FENSE AND VETERANS AFFAIRS AS20 SISTANCE.— 

21 ‘‘(aa) IN GENERAL.—To the 

22 extent practicable, the report 

23 shall provide information on the 

24 data described in subclause (II) 

25 for individuals who pay for the 


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1 costs of attending a for-profit in2 stitution of higher education that 

3 is a corporation by using Federal 

4 education assistance provided 

5 under— 

6 ‘‘(AA) chapter 33 of 

7 title 38, United States Code; 

8 ‘‘(BB) section 2007 of 

9 title 10, United States Code; 

10 and 

11 ‘‘(CC) section 1784a of 

12 title 10, United States Code. 

13 ‘‘(bb) REVENUE.—The re14 port shall provide information on 

15 the revenue of such for-profit in16 stitutions that is derived from 

17 the Federal education assistance 

18 described in item (aa). 

19 ‘‘(iii) COMPARISON DATA.—The report 

20 shall provide information comparing, in the 

21 aggregate and disaggregated by State, 

22 each of the data elements described in 

23 clause (ii) for for-profit institutions that 

24 are publicly traded corporations, for-profit 

25 institutions that are not owned or operated 


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1 by a publicly traded company, nonprofit in2 stitutions, and public institutions. 

3 ‘‘(iv) INFORMATION REGARDING OWN4 ERSHIP INTERESTS.—The report shall, for 

5 each for-profit institution of higher edu6 cation that is not a publicly traded cor7 poration, report the name of any indi8 vidual, partnership, or corporation that 

9 holds an ownership interest of 5 percent or 

10 greater of the for-profit institution of high11 er education. 

12 ‘‘(C) ACCOUNTING OF ANY ACTION.—For 

13 the purposes of subparagraph (A)(i), the term 

14 ‘any action’ shall include— 

15 ‘‘(i) a complaint filed by a Federal or 

16 State agency in a local, State, Federal, or 

17 Tribal court; 

18 ‘‘(ii) an administrative proceeding by 

19 a Federal or State agency involving non20 compliance of any applicable law or regula21 tion; 

22 ‘‘(iii) any other review, audit, or ad23 ministrative process by any Federal or 

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1 pension, or termination from any Federal 

2 or State program; or 

3 ‘‘(iv) a negative or adverse action 

4 taken by an accrediting agency or associa5 tion recognized by the Secretary pursuant 

6 to section 496 with respect to an approved 

7 institution or program. 

8 ‘‘(f) FOR-PROFIT COLLEGE WARNING LIST FOR

9 PARENTS AND STUDENTS.— 

10 ‘‘(1) IN GENERAL.—Each academic year, the 

11 Committee shall publish a list to be known as the 

12 ‘For-Profit College Warning List for Parents and 

13 Students’ to be comprised of for-profit institutions— 

14 ‘‘(A) that have engaged in illegal activity 

15 during the previous academic year as deter16 mined by a Federal or State court; 

17 ‘‘(B) that have entered into a settlement 

18 with a Federal or State entity resulting in a 

19 monetary payment; 

20 ‘‘(C) that have had any higher education 

21 program limited, withdrawn, or suspended by 

22 an external entity (such as a Federal or State 

23 entity or an accrediting agency or association 

24 recognized by the Secretary pursuant to section 

25 496); and 


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1 ‘‘(D) for which the Committee has suffi2 cient evidence of widespread or systemic unfair, 

3 deceptive, abusive, unethical, fraudulent, or 

4 predatory practices, policies, or procedures that 

5 pose a threat to the academic success, financial 

6 security, or general best interest of students. 

7 ‘‘(2) DETERMINATIONS.—In making a deter8 mination pursuant to paragraph (1)(D), the Com9 mittee may consider evidence that includes the fol10 lowing: 

11 ‘‘(A) Any consumer complaint collected by 

12 any member entity of the Committee. 

13 ‘‘(B) Any complaint filed by a Federal or 

14 State entity in a Federal, State, local, or Tribal 

15 court. 

16 ‘‘(C) Any administrative proceeding by a 

17 Federal or State entity involving noncompliance 

18 of any applicable law or regulation. 

19 ‘‘(D) Any other review, audit, or adminis20 trative process by any Federal or State entity 

21 that results in a penalty, suspension, or termi22 nation from any Federal or State program. 

23 ‘‘(E) Data or information submitted by a 

24 for-profit institution to any accrediting agency 

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1 suant to section 496 or the findings or adverse 

2 actions of any such accrediting agency or asso3 ciation. 

4 ‘‘(F) Information submitted by a for-profit 

5 institution to any member entity of the Com6 mittee. 

7 ‘‘(G) Any other evidence that the Com8 mittee determines relevant in making such de9 termination. 

10 ‘‘(3) PUBLICATION.—Not later than July 1 of 

11 each fiscal year, the Committee shall publish the list 

12 under paragraph (1) prominently and in a manner 

13 that is easily accessible to parents, students, and 

14 other stakeholders, in accordance with any best 

15 practices developed under subsection (b)(2)(F).’’. 

16 TITLE II—STUDENT AND 

17 BORROWER PROTECTIONS 

18 SEC. 201. GAINFUL EMPLOYMENT PROGRAMS. 

19 (a) IN GENERAL.—Section 102 (20 U.S.C. 1002), as 

20 amended by sections 4(b) and 101, is further amended— 

21 (1) in subsection (b)(1)(A)— 

22 (A) by striking clause (ii); 

23 (B) by striking ‘‘(i) provides’’ and insert24 ing ‘‘provides’’; and 


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1 (C) by striking ‘‘recognized occupation; or’’ 

2 and inserting ‘‘recognized occupation, as de3 scribed in subsection (e);’’; 

4 (2) in subsection (c)(1)(A), by inserting ‘‘, as 

5 described in subsection (e)’’ after ‘‘recognized occu6 pation’’; and 

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

8 ‘‘(e) GAINFUL EMPLOYMENT IN A RECOGNIZED OC9 CUPATION.— 

10 ‘‘(1) DEFINITIONS.—In this subsection: 

11 ‘‘(A) DEBT-TO-EARNINGS RATES.—The 

12 term ‘debt-to-earnings rates’ means the discre13 tionary income rate and the annual earnings 

14 rate, as determined under the gainful employ15 ment rules. 

16 ‘‘(B) ELIGIBLE TRAINING PROGRAM.—The 

17 term ‘eligible training program’ means a pro18 gram of training that— 

19 ‘‘(i) in order to qualify for assistance 

20 under title IV, is required under subsection 

21 (b)(1)(A)(i) or (c)(1)(A), or section 

22 101(b)(1), to satisfy the gainful employ23 ment requirements of this subsection; and 

24 ‘‘(ii) is offered by an institution eligi25 ble to receive assistance under such title. 


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1 ‘‘(C) GAINFUL EMPLOYMENT RULES.—The 

2 term ‘gainful employment rules’ means the 

3 rules issued under subpart Q of title 34, Code 

4 of Federal Regulations, as published on October 

5 31, 2014, relating to gainful employment in a 

6 recognized occupation. 

7 ‘‘(2) IN GENERAL.—An eligible training pro8 gram prepares students for gainful employment in a 

9 recognized occupation if the eligible training pro10 gram complies with all requirements of the gainful 

11 employment rules (including any modifications made 

12 by this subsection), including— 

13 ‘‘(A) the provisions relating to the calcula14 tion of debt-to-earnings rates for the eligible 

15 training program, using actual annual earnings 

16 data of students who completed the eligible 

17 training program; 

18 ‘‘(B) the provisions relating to the deter19 mination of outcomes for an eligible training 

20 program based on the debt-to-earnings rates, 

21 including whether an eligible training program 

22 is a ‘passing’, ‘failing’, or ‘zone’ program; 

23 ‘‘(C) the provisions relating to the associ24 ated consequences for an eligible training pro25 gram that is not passing the debt-to-earnings 


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1 rates, including a student warning and ultimate 

2 loss of eligibility for assistance under title IV; 

3 ‘‘(D) the requirements relating to disclo4 sure, reporting, and certification; and 

5 ‘‘(E) the calculation of completion rates, 

6 withdrawal rates, repayment rates, program co7 hort default rates, and median loan debt for the 

8 eligible training program. 

9 ‘‘(3) ANNUAL CALCULATIONS AND

10 VERIFICATIONS.—The Secretary shall carry out all 

11 of the following: 

12 ‘‘(A) On an annual calendar year basis 

13 (notwithstanding section 668.403(c)(5) of the 

14 gainful employment rules) and for each eligible 

15 training program, calculate for each award year 

16 both of the debt-to-earnings rates for the eligi17 ble training program, issue a notice of deter18 mination, and enforce restrictions based on 

19 those determinations. In order to carry out the 

20 preceding sentence, the Secretary shall— 

21 ‘‘(i) create a list of students who com22 pleted the eligible training program during 

23 the cohort period identified by the Sec24 retary; 


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1 ‘‘(ii) provide the list to the institution 

2 offering the eligible training program and 

3 allow the institution a 45-day period begin4 ning the day after the date that the Sec5 retary provides the list to the institution, 

6 to submit any corrections to the list; 

7 ‘‘(iii) after resolving any corrections, 

8 provide the institution with the final list 

9 and submit the final list of students who 

10 completed the eligible training program to 

11 the Social Security Administration, the In12 ternal Revenue Service, or any other Fed13 eral agency that administers a database 

14 that contains earnings information that 

15 can be matched to the individuals named 

16 in the final list, and retrieve the mean and 

17 median annual earnings of students on the 

18 lists, in aggregate and not in individual 

19 form, within 10 business days after sub20 mission; 

21 ‘‘(iv) calculate and send the debt-to22 earnings rates to the institution offering 

23 the eligible training program and allow the 

24 institution a 45-day period, beginning after 

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1 tion of the debt-to-earnings rates, to chal2 lenge the accuracy of information used to 

3 calculate the eligible training program’s 

4 median loan debt; 

5 ‘‘(v) subject to the resolution of any 

6 challenge, issue a notice of determination 

7 informing the institution— 

8 ‘‘(I) of the final debt-to-earnings 

9 rates of each eligible training program 

10 to the institution offering the pro11 gram; 

12 ‘‘(II) of the final determination 

13 regarding whether the program is a 

14 passing, failing, or zone program, or 

15 is ineligible, and the consequences of 

16 that determination; 

17 ‘‘(III) whether the program could 

18 become ineligible based on its final 

19 debt-to-earnings rates for the next 

20 award year; 

21 ‘‘(IV) whether the institution is 

22 required to provide warnings to en23 rolled students and prospective stu24 dents; and 


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1 ‘‘(V) if the program is deter2 mined to be a failing or zone program 

3 due to the final debt-to-earnings rates, 

4 how the program may make an alter5 nate earnings appeal, in accordance 

6 with paragraph (4); 

7 ‘‘(vi) with respect to an institution 

8 that receives a notification from the Sec9 retary under clause (v)(III) and that does 

10 not submit an intent to appeal in accord11 ance with paragraph (4) or for which the 

12 appeal is denied, require the institution, 

13 not later than 30 days after receiving the 

14 notification of the determination or denial, 

15 to— 

16 ‘‘(I) issue warnings to enrolled 

17 students and prospective students; 

18 and 

19 ‘‘(II) update the disclosure tem20 plate, as required by the gainful em21 ployment rules, as modified by para22 graph (5); and 

23 ‘‘(vii) enforce restrictions whereby— 

24 ‘‘(I) an institution may not dis25 burse program funds under title IV to 


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1 students enrolled in an ineligible pro2 gram; and 

3 ‘‘(II) an institution may not seek 

4 to reestablish the eligibility of a fail5 ing or zone program that it discon6 tinued voluntarily, reestablish the eli7 gibility of a program that is ineligible 

8 under the debt-to-earnings rates, or 

9 establish the eligibility of a program 

10 that is substantially similar to the dis11 continued or ineligible program, until 

12 3 years following the date specified in 

13 the notice of determination informing 

14 the institution of the program’s ineli15 gibility or the date the institution dis16 continued the failing or zone program; 

17 and 

18 ‘‘(B) develop processes to verify, on an an19 nual calendar year basis, that— 

20 ‘‘(i) required warnings under the gain21 ful employment rules are delivered to en22 rolled students and prospective students 

23 and are published on the eligible training 

24 program’s disclosure template, in accord25 ance with subparagraph (A)(vii); and 


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1 ‘‘(ii) each eligible training program is 

2 publishing the disclosure template on the 

3 website of the eligible training program, as 

4 required by the gainful employment rules, 

5 as modified by paragraph (5). 

6 ‘‘(4) ALTERNATE EARNINGS APPEALS PROC7 ESS.—The Secretary shall establish and enforce an 

8 appeals process for any institution of higher edu9 cation that wish to file an alternate earnings appeal 

10 for an eligible training program that is a failing or 

11 zone program under the debt-to-earnings rates. The 

12 appeals process shall be carried out in accordance 

13 with the gainful employment rules, except that the 

14 appeals process shall also— 

15 ‘‘(A) allow an institution to file an alter16 nate earnings appeal, in accordance with the 

17 gainful employment rules, to request the recal18 culation of a gainful employment program’s 

19 most recent final debt-to-earnings rates issued 

20 by the Secretary, except that— 

21 ‘‘(i) any institution that elects to sub22 mit alternate earnings from an institu23 tional survey shall, in addition to the other 

24 requirements in the gainful employment 

25 rules— 


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1 ‘‘(I) include a test for non-re2 sponse bias; 

3 ‘‘(II) allow for an exception to 

4 issues of bias due to sample sizes 

5 below 10; and 

6 ‘‘(III) subject the institutional 

7 survey instrument and survey re8 sponses to an audit by the Inspector 

9 General of the Department; and 

10 ‘‘(ii) the Inspector General of the De11 partment shall— 

12 ‘‘(I) audit the institutional survey 

13 instrument, and the survey responses, 

14 submitted by an institution under 

15 clause (i); and 

16 ‘‘(II) furnish data showing the 

17 Inspector General verified the accu18 racy of student survey responses; and 

19 ‘‘(B) require the Secretary to accept the 

20 alternate earnings estimate from an institu21 tional survey if the test for non-response bias 

22 includes a response rate that guarantees that 

23 the lower bound of the 95 percent confidence 

24 interval of the alternate earnings estimate is at 

25 or above the earnings level retrieved from the 


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1 Social Security Administration, the Internal 

2 Revenue Service, or any other Federal agency 

3 with a database containing individual-level earn4 ings data. 

5 ‘‘(5) GAINFUL EMPLOYMENT DISCLOSURE RE6 QUIREMENTS.—Notwithstanding section 668.412(a) 

7 of the gainful employment rules, the Secretary shall 

8 include in the disclosure template all the information 

9 listed in paragraphs (1) through (16) of section 

10 668.412(a) of the gainful employment rules, unless 

11 the Secretary— 

12 ‘‘(A) determines that consumer testing 

13 supports the noninclusion of the information 

14 listed in any such paragraph; and 

15 ‘‘(B) publishes the Secretary’s determina16 tion, and the consumer testing supporting the 

17 determination, on the public website of the De18 partment. 

19 ‘‘(6) ROLE OF SOCIAL SECURITY ADMINISTRA20 TION, THE INTERNAL REVENUE SERVICE, AND

21 OTHER FEDERAL AGENCIES.—The Commissioner of 

22 Social Security, the Commissioner of Internal Rev23 enue, and the head of any other Federal agency that 

24 administers the database of individual-level earnings 

25 data shall, in coordination with the Secretary, timely 


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1 provide the Secretary with the earnings information 

2 as required in accordance with paragraph (3)(A)(iii) 

3 and the gainful employment rules.’’. 

4 (b) CONFORMING AMENDMENT.—Section 101(b)(1) 

5 (20 U.S.C. 1001(b)(1)) is amended by inserting ‘‘, as de6 scribed in section 102(e),’’ after ‘‘recognized occupation’’. 

7 (c) EFFECTIVE DATE.—Notwithstanding section 3, 

8 this section shall take effect on the date of enactment of 

9 this Act. 

10 SEC. 202. PROHIBITION ON INSTITUTIONS LIMITING STU11 DENT LEGAL ACTION. 

12 (a) ENFORCEMENT OF ARBITRATION AGREE13 MENTS.— 

14 (1) IN GENERAL.—Chapter 1 of title 9, United 

15 States Code (relating to the enforcement of arbitra16 tion agreements), shall not apply to an enrollment 

17 agreement made between a student and an institu18 tion of higher education. 

19 (2) DEFINITION.—In this section, the term ‘‘in20 stitution of higher education’’ has the meaning given 

21 such term in section 102 of the Higher Education 

22 Act of 1965 (20 U.S.C. 1002), as amended by sec23 tion 101 of this Act. 

24 (b) PROHIBITION ON LIMITATIONS ON ABILITY OF

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1 TUTIONS OF HIGHER EDUCATION.—Section 487(a) (20 

2 U.S.C. 1094(a)), as amended by section 101, is further 

3 amended by adding at the end the following: 

4 ‘‘(29) The institution will not require any stu5 dent to agree to, and will not enforce, any limitation 

6 or restriction (including a limitation or restriction on 

7 any available choice of applicable law, a jury trial, 

8 or venue) on the ability of a student to pursue a 

9 claim, individually or with others, against an institu10 tion in court.’’. 

11 (c) EFFECTIVE DATE.—Notwithstanding section 3, 

12 this section shall take effect on the date of enactment of 

13 this Act. 

14 SEC. 203. ENFORCEMENT UNIT ESTABLISHED IN THE OF15 FICE OF FEDERAL STUDENT AID. 

16 Section 141 (20 U.S.C. 1018) is amended— 

17 (1) by redesignating subsections (g) through (i) 

18 as subsections (h) through (j), respectively; and 

19 (2) by inserting after subsection (f) the fol20 lowing: 

21 ‘‘(g) ENFORCEMENT UNIT.— 

22 ‘‘(1) IN GENERAL.—The Chief Operating Offi23 cer, in consultation with the Secretary, shall estab24 lish an enforcement unit within the PBO (referred 

25 to in this section as the ‘enforcement unit’). 


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1 ‘‘(2) APPOINTMENT.— 

2 ‘‘(A) CHIEF ENFORCEMENT OFFICER.— 

3 The Chief Operating Officer, in consultation 

4 with the Secretary, shall appoint a Chief En5 forcement Officer as a senior manager, in ac6 cordance with subsection (e), to perform the 

7 functions described in this subsection. The 

8 Chief Enforcement Officer shall report solely 

9 and directly to the Chief Operating Officer. 

10 ‘‘(B) BONUS.—Notwithstanding subsection 

11 (e), the Chief Enforcement Officer may receive 

12 a bonus, separately determined from the meth13 odology which applies to the calculation of bo14 nuses for other senior managers, based upon 

15 the Chief Operating Officer’s evaluation of the 

16 Chief Enforcement Officer’s performance in re17 lation to the goals set forth in a performance 

18 agreement related to the specific duties of the 

19 enforcement unit. 

20 ‘‘(3) DUTIES.—The enforcement unit shall— 

21 ‘‘(A) receive, process, and analyze allega22 tions and complaints regarding the potential 

23 violation of Federal or State law (including civil 

24 and criminal law) or other unfair, deceptive, or 

25 abusive acts or practices, by institutions of 


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1 higher education, third party servicers that con2 tract with such institutions, and third party 

3 contractors; 

4 ‘‘(B) investigate and coordinate investiga5 tions of potential or actual misconduct of insti6 tutions of higher education, third party 

7 servicers that contract with such institutions, 

8 and third party contractors; and 

9 ‘‘(C) enforce compliance with laws gov10 erning Federal student financial assistance pro11 grams under title IV, including through the use 

12 of an emergency action in accordance to section 

13 489A, the limitation, suspension, or termination 

14 of the participation of an eligible institution in 

15 a program under title IV, or the imposition of 

16 a civil penalty in accordance with section 489A. 

17 ‘‘(4) COORDINATION AND STAFFING.—The en18 forcement unit shall— 

19 ‘‘(A) coordinate with relevant Federal and 

20 State agencies and oversight bodies, including 

21 the For-Profit Education Oversight Coordina22 tion Committee established under section 125; 

23 and 

24 ‘‘(B) hire staff, (including by appointing 

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1 cepted service, as described in subsection 

2 (h)(3)) with such expertise as is necessary to 

3 conduct investigations, respond to allegations 

4 and complaints, and enforce compliance with 

5 laws governing Federal student financial assist6 ance programs under title IV. 

7 ‘‘(5) DIVISIONS.— 

8 ‘‘(A) IN GENERAL.—The enforcement unit 

9 shall have separate divisions with the following 

10 focus areas: 

11 ‘‘(i) An investigations division to in12 vestigate potential or actual misconduct at 

13 institutions of higher education, third 

14 party servicers that contract with such in15 stitutions, and third party contractors. 

16 ‘‘(ii) A division focused on evaluating 

17 the claims of borrowers who assert a de18 fense to repayment of Federal student 

19 loans, or groups of borrowers who qualify 

20 to assert such a defense to repayment, 

21 under section 455(h). 

22 ‘‘(iii) A division focused on oversight 

23 of the Jeanne Clery Disclosure of Campus 

24 Security Policy and Campus Crime Statis25 tics Act, the reporting of crime and fire 


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1 statistics by institutions of higher edu2 cation, and the oversight and enforcement 

3 of section 120 (relating to drug and alco4 hol abuse prevention). 

5 ‘‘(iv) A division to administer the Sec6 retary’s authority to fine, limit, suspend, 

7 terminate, or take action against institu8 tions of higher education, third party 

9 servicers that contract with such institu10 tions, and third party contractors, partici11 pating in the Federal student financial as12 sistance programs under title IV. 

13 ‘‘(v) A division that administers a pro14 gram of compliance monitoring and over15 sight of institutions of higher education, 

16 third party servicers that contract with 

17 such institutions, and third party contrac18 tors, including systems and procedures to 

19 support the eligibility, certification, and 

20 oversight of program participants, for all 

21 institutions of higher education partici22 pating in the Federal student financial as23 sistance programs under title IV. 

24 ‘‘(vi) Any other division that the Chief 

25 Enforcement Officer, in coordination with 


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1 the Chief Operating Officer and the Sec2 retary, determines is necessary. 

3 ‘‘(B) REPORTING.—The staff of each divi4 sion described in subparagraph (A) shall report 

5 to the Chief Enforcement Officer. 

6 ‘‘(6) ACTIONS RECOMMENDED.—The Chief En7 forcement Officer may recommend, as appropriate to 

8 the particular circumstance, that the Chief Oper9 ating Officer— 

10 ‘‘(A) terminate, suspend, or limit an insti11 tution of higher education, a third party 

12 servicer that contracts with such institution, or 

13 a third party contractor, from participation in 

14 one or more programs under title IV (in accord15 ance with section 489A), or provisionally certify 

16 such participation (in accordance to section 

17 498(h)); 

18 ‘‘(B) impose a civil penalty in accordance 

19 with section 489A; 

20 ‘‘(C) make a recommendation to the Sec21 retary about whether to approve or deny the 

22 claims of borrowers, including groups of bor23 rowers, who assert a defense to repayment in 

24 accordance with section 455(h); or 


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1 ‘‘(D) carry out any other enforcement ac2 tivity applicable to the Department under sec3 tion 489A. 

4 ‘‘(7) DEFINITIONS.—In this subsection— 

5 ‘‘(A) the term ‘institution of higher edu6 cation’ has the meaning given that term in sec7 tion 102; and 

8 ‘‘(B) the term ‘third party servicer’ has the 

9 meaning given that term in section 481(c).’’. 

10 SEC. 204. ESTABLISHMENT AND MAINTENANCE OF COM11 PLAINT RESOLUTION AND TRACKING SYS12 TEM. 

13 Title I (20 U.S.C. 1001 et seq.) is amended by adding 

14 at the end the following new part: 

15 ‘‘PART F—COMPLAINT TRACKING SYSTEM 

16 ‘‘SEC. 161. COMPLAINT TRACKING SYSTEM. 

17 ‘‘(a) IN GENERAL.— 

18 ‘‘(1) IN GENERAL.—The Secretary shall main19 tain a complaint tracking system that includes a sin20 gle, toll-free telephone number and a website to fa21 cilitate the centralized collection of, monitoring of, 

22 and response to complaints and reports (including 

23 evidence, as available) of suspicious activity (such as 

24 unfair, deceptive, or abusive acts or practices) re25 garding— 


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1 ‘‘(A) Federal student financial aid and the 

2 servicing of postsecondary education loans by 

3 loan servicers; 

4 ‘‘(B) educational practices and services of 

5 institutions of higher education; and 

6 ‘‘(C) the recruiting and marketing prac7 tices of institutions of higher education. 

8 ‘‘(2) DEFINITIONS.—In this section— 

9 ‘‘(A) the term ‘institution of higher edu10 cation’ has the meaning given that term in sec11 tion 102; and 

12 ‘‘(B) the term ‘recruiting and marketing 

13 activities’ means activities described in section 

14 126(d)(2) (as added by section 301 of the Pre15 venting Risky Operations from Threatening the 

16 Education and Career Trajectories of Students 

17 Act of 2019). 

18 ‘‘(b) COMPLAINTS.—Complaints and reports of sus19 picious activity submitted to the tracking system by stu20 dents, borrowers of student loans, staff, or the general 

21 public— 

22 ‘‘(1) may remain anonymous, if the complain23 ant so chooses; and 


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1 ‘‘(2) may describe problems that are systematic 

2 in nature and not associated with a particular stu3 dent. 

4 ‘‘(c) ESTABLISHMENT OF COMPLAINT TRACKING OF5 FICE.—The Secretary shall establish within the Depart6 ment an office whose functions shall include establishing 

7 and administering the complaint tracking system, and 

8 widely disseminating information about the complaint 

9 tracking system, established under this subsection. The 

10 Secretary shall— 

11 ‘‘(1) to the extent necessary, combine and con12 solidate the other offices and functions of the De13 partment to ensure that the office established under 

14 this subsection is the single point of contact for stu15 dents and borrowers with complaints or reports of 

16 suspicious activity regarding Federal student finan17 cial aid, student loan servicers, educational practices 

18 and services of institutions of higher education, and 

19 recruiting and marketing activities of institutions of 

20 higher education; and 

21 ‘‘(2) to the extent practicable, ensure that the 

22 office established under this subsection will work 

23 with the Student Loan Ombudsman appointed in ac24 cordance with section 141(f) and the Student Loan 

25 Ombudsman of the Bureau of Consumer Financial 


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1 Protection to assist borrowers of Federal student 

2 loans that submit complaints or reports of suspicious 

3 activity to the complaint tracking system. 

4 ‘‘(d) HANDLING OF COMPLAINTS.— 

5 ‘‘(1) TIMELY RESPONSE TO COMPLAINTS.—The 

6 Secretary shall establish, in consultation with the 

7 heads of appropriate agencies (including the Direc8 tor of the Bureau of Consumer Financial Protec9 tion), reasonable procedures to provide a response to 

10 complainants not more than 90 days after receiving 

11 a complaint in the complaint tracking system, in 

12 writing where appropriate. Each response shall in13 clude a description of— 

14 ‘‘(A) the steps that have been taken by the 

15 Secretary in response to the complaint or report 

16 of suspicious activity; 

17 ‘‘(B) any responses received by the Sec18 retary from the institution of higher education 

19 or from a servicer; and 

20 ‘‘(C) any additional actions that the Sec21 retary has taken, or plans to take, in response 

22 to the complaint or report of suspicious activity. 

23 ‘‘(2) TIMELY RESPONSE TO SECRETARY BY IN24 STITUTION OF HIGHER EDUCATION OR LOAN

25 SERVICER.—If the Secretary determines that it is 


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1 necessary, the Secretary shall notify an institution of 

2 higher education or loan servicer that is the subject 

3 of a complaint or report of suspicious activity 

4 through the complaint tracking system under this 

5 subsection regarding the complaint or report and di6 rectly address and resolve the complaint or report in 

7 the system. Not later than 60 days after receiving 

8 such notice, such institution or loan servicer shall 

9 provide a response to the Secretary concerning the 

10 complaint or report, including— 

11 ‘‘(A) the steps that have been taken by the 

12 institution or loan servicer to respond to the 

13 complaint or report; 

14 ‘‘(B) all responses received by the institu15 tion or loan servicer from the complainant; and 

16 ‘‘(C) any additional actions that the insti17 tution or loan servicer has taken, or plans to 

18 take, in response to the complaint or report. 

19 ‘‘(3) FURTHER INVESTIGATION.—The Secretary 

20 may, in the event that the complaint is not ade21 quately resolved or addressed by the responses of the 

22 institution of higher education or loan servicer under 

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1 tion from or action by the institution or loan 

2 servicer. 

3 ‘‘(4) PROVISION OF INFORMATION.— 

4 ‘‘(A) IN GENERAL.—An institution of high5 er education or loan servicer shall, in a timely 

6 manner, comply with a request by the Secretary 

7 for information in the control or possession of 

8 such institution or loan servicer concerning a 

9 complaint or report of suspicious activity re10 ceived by the Secretary under this subsection, 

11 including supporting written documentation, 

12 subject to subparagraph (B). 

13 ‘‘(B) EXCEPTIONS.—An institution of 

14 higher education or loan servicer shall not be 

15 required to make available under this sub16 section— 

17 ‘‘(i) any nonpublic or confidential in18 formation, including any confidential com19 mercial information; 

20 ‘‘(ii) any information collected by the 

21 institution for the purpose of preventing 

22 fraud or detecting or making any report 

23 regarding other unlawful or potentially un24 lawful conduct; or 


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1 ‘‘(iii) any information required to be 

2 kept confidential by any other provision of 

3 law. 

4 ‘‘(5) COMPLIANCE.—An institution of higher 

5 education or loan servicer shall comply with the re6 quirements to provide responses and information, in 

7 accordance with this subsection, as a condition of re8 ceiving funds under title IV or as a condition of the 

9 contract with the Department, as applicable. 

10 ‘‘(e) TRANSPARENCY.— 

11 ‘‘(1) COLLECTING AND SHARING INFORMATION

12 WITH FEDERAL, STATE, AND NATIONALLY RECOG13 NIZED ACCREDITING AGENCIES.—In accordance with 

14 section 444 of the General Education Provisions Act 

15 (20 U.S.C. 1232g) (commonly referred to as the 

16 ‘Family Educational Rights and Privacy Act of 

17 1974’) and other laws, the Secretary shall coordinate 

18 with the heads of relevant Federal or State agencies 

19 or entities, and nationally recognized accrediting 

20 agencies or associations recognized by the Secretary 

21 pursuant to section 496 to— 

22 ‘‘(A) collect any complaints and reports of 

23 suspicious activity described in subsection 

24 (a)(1) from such agencies, entities, or associa25 tions; and 


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1 ‘‘(B) route complaints and reports received 

2 by the complaint tracking system under this 

3 section and complaints and reports collected in 

4 accordance with subparagraph (A) to the De5 partment, the Department of Justice, the De6 partment of Defense, the Department of Vet7 erans Affairs, the Federal Trade Commission 

8 Consumer Sentinel Network, the Bureau of 

9 Consumer Financial Protection, any equivalent 

10 State agency, or the relevant nationally recog11 nized accrediting agency or association. 

12 ‘‘(2) INTERACTION WITH EXISTING COMPLAINT

13 SYSTEMS.—To the extent practicable, all procedures 

14 established under this section, and all coordination 

15 carried out under paragraph (1), shall be established 

16 and carried out in accordance with the complaint 

17 tracking systems established under Executive Order 

18 13607 (77 Fed. Reg. 25861; relating to establishing 

19 principles of excellence for educational institutions 

20 serving servicemembers, veterans, spouses, and other 

21 family members). 

22 ‘‘(3) PUBLIC INFORMATION.— 

23 ‘‘(A) IN GENERAL.—The Secretary shall, 

24 on an annual basis, publish on the website of 

25 the Department information on the complaints 


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1 and reports of suspicious activity received for 

2 each institution of higher education or loan 

3 servicer under this subsection, including— 

4 ‘‘(i) the number of complaints and re5 ports received; 

6 ‘‘(ii) the types of complaints and re7 ports received; and 

8 ‘‘(iii) where applicable, information 

9 about the resolution of the complaints and 

10 reports. 

11 ‘‘(B) DATA PRIVACY.—In carrying out sub12 paragraph (A), the Secretary shall— 

13 ‘‘(i) comply with applicable data pri14 vacy laws and regulations; and 

15 ‘‘(ii) ensure that personally identifi16 able information is not shared. 

17 ‘‘(4) REPORTS.—Each year, the Secretary shall 

18 prepare and submit to Congress a report describ19 ing— 

20 ‘‘(A) the types and nature of complaints or 

21 reports the Secretary has received under this 

22 section; 

23 ‘‘(B) the extent to which complainants are 

24 receiving adequate resolution pursuant to this 

25 section; 


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1 ‘‘(C) whether particular types of com2 plaints or reports are more common in a given 

3 sector of institutions of higher education or 

4 with particular loan servicers; 

5 ‘‘(D) any legislative recommendations that 

6 the Secretary determines are necessary to bet7 ter assist students and families regarding the 

8 activities described in subsection (a)(1); and 

9 ‘‘(E) the institutions of higher education 

10 and loan servicers with the highest volume of 

11 complaints and reports, as determined by the 

12 Secretary.’’. 

13 SEC. 205. BORROWER DEFENSE TO REPAYMENT. 

14 Section 455(h) (20 U.S.C. 1087e) is amended to read 

15 as follows: 

16 ‘‘(h) BORROWER DEFENSES.— 

17 ‘‘(1) APPLICATION.— 

18 ‘‘(A) IN GENERAL.—A borrower of a loan 

19 under this part or part B may submit an appli20 cation to the Secretary claiming a defense to re21 payment of the loan (as described in paragraph 

22 (7)) (referred to in this subsection as a ‘bor23 rower defense’), at any time and regardless of 

24 the current payment status of the loan. The ap25 plication shall— 


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1 ‘‘(i) certify that the borrower received 

2 the proceeds of a loan or loans issued 

3 under this part or part B to attend an eli4 gible institution of higher education; 

5 ‘‘(ii) provide evidence that supports 

6 the borrower defense; 

7 ‘‘(iii) indicate whether the borrower 

8 has made a claim with respect to the infor9 mation underlying the borrower defense 

10 with any third party, such as the holder of 

11 a performance bond or a tuition recovery 

12 program, and, if so, the amount of any 

13 payment received by the borrower or cred14 ited to the borrower’s loan obligation; and 

15 ‘‘(iv) provide any other information or 

16 supporting documentation reasonably re17 quested by the Secretary. 

18 ‘‘(B) BORROWER DEFENSE FOR A

19 GROUP.— 

20 ‘‘(i) IN GENERAL.— 

21 ‘‘(I) GROUP DEFENSE.—The Sec22 retary may initiate and carry out a 

23 process to determine whether a group 

24 of borrowers, identified by the Sec25 retary, has a borrower defense. 


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1 ‘‘(II) IDENTIFICATION OF

2 GROUP.—The Secretary may— 

3 ‘‘(aa) identify members of 

4 such a group from individually 

5 filed applications submitted 

6 under subparagraph (A); or 

7 ‘‘(bb) if the Secretary deter8 mines that there are common 

9 facts and claims that apply to 

10 borrowers who have not filed an 

11 application under subparagraph 

12 (A), identify such members based 

13 on information in the possession 

14 of the Secretary. 

15 ‘‘(III) REPRESENTATIVE.—In the 

16 case of a group identified by the Sec17 retary under this clause, the Secretary 

18 shall designate a Department official 

19 to present the group’s claim in the 

20 process described under paragraph 

21 (2). 

22 ‘‘(ii) APPLICATION FOR A GROUP.—A 

23 State attorney general or nonprofit legal 

24 assistance organization that represents 

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1 scribed in subparagraph (A) on behalf of a 

2 group of borrowers whose claims are simi3 lar or identical, without requiring an appli4 cation from each individual borrower in 

5 that group or class. 

6 ‘‘(iii) NOTIFICATION.— 

7 ‘‘(I) Upon initiation of the proc8 ess under clause (i) or receipt of an 

9 application under clause (ii), the Sec10 retary shall provide the borrowers who 

11 may be members of a group borrower 

12 defense claim with a written notice of 

13 such initiation or receipt, as the case 

14 may be, and an option to opt out of 

15 the proceeding under this subsection 

16 for that group. 

17 ‘‘(II) Upon receipt of an applica18 tion on behalf of a group of borrowers 

19 under clause (ii), the Secretary shall 

20 provide the entity submitting that ap21 plication with a written determination, 

22 not later than 120 days after receipt 

23 of the application, stating— 

24 ‘‘(aa) whether the Secretary 

25 will forgo the review of claims for 


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1 individual borrowers and instead 

2 will review the claims for the 

3 group described in that applica4 tion (or for a subset of borrowers 

5 in that group, if applicable); 

6 ‘‘(bb) if the Secretary deter7 mines not to evaluate the applica8 tion for that group (or not to 

9 evaluate the application for all 

10 the requested members of that 

11 group), the reasons for the deter12 mination; and 

13 ‘‘(cc) that the Secretary may 

14 reconsider the determination in 

15 item (bb) if presented with new 

16 evidence that would allow for the 

17 consideration of claims for the 

18 group described in the applica19 tion. 

20 ‘‘(iv) RELIEF.—If the Secretary ap21 proves a group application for relief under 

22 this subsection, all borrowers in the group 

23 who have not affirmatively opted out are 

24 entitled to relief, regardless of whether an 

25 individual borrower filed an application. 


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1 ‘‘(2) PROCESS.— 

2 ‘‘(A) IN GENERAL.—Upon receipt of an 

3 application from an individual borrower or upon 

4 receipt of an application from a group of bor5 rowers or initiation of a claim on behalf of a 

6 group of borrowers, as described in paragraph 

7 (1)(B), the Secretary shall carry out the fol8 lowing activities: 

9 ‘‘(i) With regard to the borrower’s 

10 payment status (including each borrower 

11 in such group who does not opt out under 

12 paragraph (1)(B)(iii)(I)), the Secretary 

13 shall— 

14 ‘‘(I) grant an administrative for15 bearance without requiring docu16 mentation from the borrower, includ17 ing a forbearance for any period nec18 essary for the Secretary to determine 

19 the borrower’s eligibility for discharge; 

20 ‘‘(II) notify the borrower of the 

21 option to decline that forbearance and 

22 continue making payments on the 

23 loan; 


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1 ‘‘(III) provide the borrower with 

2 information about the availability of 

3 an income-based repayment plan; and 

4 ‘‘(IV) if the borrower’s loan is in 

5 default— 

6 ‘‘(aa) suspend collection ac7 tivity on the loan, including any 

8 garnishments or offsets, until a 

9 decision on the borrower’s claim 

10 is issued; 

11 ‘‘(bb) notify the borrower of 

12 the suspension of collection activ13 ity; 

14 ‘‘(cc) notify the borrower 

15 that if the Secretary determines 

16 the borrower does not qualify for 

17 a discharge of the loan, collection 

18 activity will resume unless the 

19 borrower chooses to make pay20 ments under any repayment plan, 

21 including income-based repay22 ment described under section 

23 493C; and 

24 ‘‘(dd) notify the borrower 

25 that if the Secretary determines 


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1 the borrower does not qualify for 

2 a discharge of the loan, and if 

3 the borrower makes payments 

4 under any repayment plan, in5 cluding an income-based repay6 ment, as described in item (cc), 

7 the Secretary shall submit a re8 port to the consumer reporting 

9 agencies to which the Secretary 

10 previously made adverse credit 

11 reports with regard to the bor12 rower’s loan under this part or 

13 part B to remove the borrower’s 

14 record of default and the Sec15 retary shall refund any collection 

16 costs paid by the borrower subse17 quent to the borrower submitting 

18 an application under paragraph 

19 (1), but prior to the suspension 

20 of the collection activity, as de21 scribed in item (aa). 

22 ‘‘(ii) With regard to the fact-finding 

23 process, the Secretary shall designate a 

24 Department official (which shall not be an 

25 official designated under paragraph 


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1 (1)(B)(i)(III) and shall be a staff member 

2 in the enforcement unit, in accordance 

3 with section 141(g)) to— 

4 ‘‘(I) notify the institution of 

5 higher education of the borrower de6 fense application or the initiation of 

7 the borrower defense claim; 

8 ‘‘(II) determine whether the bor9 rower has established a borrower de10 fense, which shall include— 

11 ‘‘(aa) consideration of evi12 dence or argument presented by 

13 the borrower; and 

14 ‘‘(bb) consideration of addi15 tional information, including— 

16 ‘‘(AA) Department 

17 records; 

18 ‘‘(BB) any response or 

19 submission from the institu20 tion; and 

21 ‘‘(CC) any additional 

22 information; and 

23 ‘‘(III) upon the borrower’s rea24 sonable request, identify and provide 

25 to the borrower any records the SecVerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00081 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512

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1 retary is considering as part of the 

2 borrower’s claim. 

3 ‘‘(iii) Not later than 18 months after 

4 the date of receipt of an application under 

5 paragraph (1)(A) or (1)(B)(ii), or the initi6 ation of a claim under paragraph (1)(B)(i), 

7 as the case may be, the Secretary shall de8 termine if a borrower or group of bor9 rowers has a successful borrower defense 

10 claim. If the Secretary fails to issue a de11 termination by the date that is 18 months 

12 after the date of receipt of such application 

13 or initiation, the loan underlying the bor14 rower defense claim shall be automatically 

15 discharged. 

16 ‘‘(B) INSTITUTION’S RESPONSE.—An insti17 tution shall provide information to the Sec18 retary, not later than 30 days after the date of 

19 a request by the Secretary, and as directed by 

20 the Secretary, regarding any response or sub21 mission that is requested from the Secretary re22 lating to a borrower defense claim. 

23 ‘‘(3) STANDARD OF EVIDENCE.—A borrower de24 fense claim shall be approved under this subsection, 

25 if the Secretary finds that a preponderance of the 


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1 evidence shows that the borrower has established a 

2 borrower defense that meets the requirements of this 

3 subsection. 

4 ‘‘(4) SUCCESSFUL BORROWER DEFENSE

5 CLAIM.— 

6 ‘‘(A) BORROWER RELIEF.—If a borrower 

7 is determined to have a borrower defense in ac8 cordance with this subsection, the Secretary 

9 shall— 

10 ‘‘(i) discharge the borrower of the bor11 rower’s obligation to repay the loan (in12 cluding associated interest, costs, and fees 

13 that the borrower would otherwise be obli14 gated to pay) in regards to which there is 

15 a borrower defense; 

16 ‘‘(ii) notify the borrower of the dis17 charge described in clause (i) and the other 

18 information described in subparagraph (C); 

19 ‘‘(iii) retroactively waive any interest 

20 that accrued after the borrower submitted 

21 an application under this subsection; 

22 ‘‘(iv) provide the borrower such fur23 ther relief as the Secretary determines is 

24 appropriate under the circumstances, 

25 which shall include— 


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1 ‘‘(I) reimbursing the borrower for 

2 amounts paid toward the loan volun3 tarily or through enforced collection; 

4 and 

5 ‘‘(II) determining that the bor6 rower is not in default on the loan 

7 and is eligible to receive assistance 

8 under title IV; and 

9 ‘‘(v) not later than 30 days after the 

10 date of such determination, submit new re11 ports to consumer reporting agencies to 

12 which the Secretary previously made ad13 verse credit reports with regard to the bor14 rower’s loan under this part or part B. 

15 ‘‘(B) AMOUNT OF LOAN DISCHARGE.— 

16 ‘‘(i) IN GENERAL.—There shall be a 

17 presumption that on the finding of a suc18 cessful borrower defense claim, the full 

19 amount of the borrower’s loan shall be dis20 charged as described in subparagraph (A). 

21 If the Secretary determines that discharge 

22 of the full amount of the loan is not appro23 priate in a particular case, the Secretary 

24 shall provide the borrower with— 


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1 ‘‘(I) a written explanation as to 

2 why partial relief is appropriate; and 

3 ‘‘(II) if the borrower defense is a 

4 defense based on State law and de5 scribed in paragraph (7)(B)(i) or is a 

6 defense described in paragraph 

7 (7)(B)(ii) or (7)(B)(iii), include an as8 surance that the amount of relief is 

9 not less than the amount of relief that 

10 would be afforded under State law. 

11 ‘‘(ii) SUBSTANTIAL MISREPRESENTA12 TION.—Notwithstanding clause (i), in the 

13 case of a determination that a borrower 

14 defense based on paragraph (7)(B)(iv) has 

15 been established, the full amount of the 

16 borrower’s loan shall be discharged. 

17 ‘‘(iii) LIMITATION.—The total amount 

18 of relief granted with respect to a borrower 

19 defense regarding a loan under this part or 

20 part B shall not exceed the amount of the 

21 loan under this part or part B, as the case 

22 may be, and any associated interest, costs, 

23 and fees. Such amount will be reduced by 

24 the amount of any refund, reimbursement, 

25 indemnification, restitution, compensatory 


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1 damages, settlement, debt forgiveness, dis2 charge, cancellation, compromise, or any 

3 other financial benefit received by, or on 

4 behalf of, the borrower that was related to 

5 the borrower defense and that reduced the 

6 borrower’s debt for the loan under this 

7 part or part B. 

8 ‘‘(iv) RELIEF FOR A NON-FEDERAL

9 LOAN OR OUT-OF-POCKET EXPENSES.— 

10 Any relief provided to a borrower, such as 

11 relief for an education loan that is not a 

12 Federal loan or refunds from a State tui13 tion recovery fund for out-of-pocket ex14 penses, shall not decrease the amount of 

15 relief that the borrower shall be entitled to 

16 for a loan under this part or part B based 

17 on a borrower defense. 

18 ‘‘(v) MINIMUM AMOUNT OF RELIEF.— 

19 A borrower that has a borrower defense 

20 based on State law and described in para21 graph (7)(B)(i) or a defense described in 

22 paragraph (7)(B)(ii) or (7)(B)(iii) shall 

23 not receive an amount of relief that is less 

24 than the relief the borrower would receive 

25 under the applicable State law. 


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1 ‘‘(C) NOTIFICATION.—If a borrower de2 fense is successful the Secretary shall notify the 

3 borrower (or the entity that submitted the ap4 plication, in the case of an application described 

5 in paragraph (1)(B)(ii)) in writing— 

6 ‘‘(i) of the reasons for the approval 

7 and the evidence that was relied upon; 

8 ‘‘(ii) that the borrower is relieved of 

9 the obligation to repay the loan (or a por10 tion of the loan, as described in subpara11 graph (B)) and associated costs and fees 

12 that the borrower would otherwise be obli13 gated to pay; 

14 ‘‘(iii) in the event the Secretary does 

15 not grant a discharge of the full amount of 

16 the loan, an explanation of the reason why 

17 partial relief is granted, and (if applicable) 

18 an assurance described in subparagraph 

19 (B)(i)(II); 

20 ‘‘(iv) that the borrower will be reim21 bursed for some or all of the amounts paid 

22 toward the loan voluntarily or through en23 forced collection, if applicable; 


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1 ‘‘(v) of the amount of any portion of 

2 the loan that is due and payable to the 

3 Secretary; 

4 ‘‘(vi) that if any balance remains on 

5 the loan, the loan will return to the status 

6 prior to the borrower’s submission of the 

7 application, except that in the case of a 

8 loan that was in default prior to such ap9 plication, the borrower shall first be re10 moved from default status and given the 

11 opportunity to enter repayment, including 

12 income-based repayment described under 

13 section 493C, before the loan will be sent 

14 to collections; 

15 ‘‘(vii) that if the borrower chooses to 

16 make payments, including payments under 

17 income-based repayment as described in 

18 clause (vi), the Secretary shall— 

19 ‘‘(I) submit a report to the con20 sumer reporting agencies to which the 

21 Secretary previously made adverse 

22 credit reports with regard to the bor23 rower’s loan under this part or part B 

24 to remove the record of default; and 


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1 ‘‘(II) refund any collection costs 

2 paid with regard to that loan by the 

3 borrower subsequent to the borrower 

4 submitting an application under para5 graph (1); 

6 ‘‘(viii) that if only some of the loan 

7 will be discharged, the borrower will have 

8 the opportunity for reconsideration of the 

9 borrower’s claim as described in paragraph 

10 (6); 

11 ‘‘(ix) that the borrower is eligible to 

12 receive assistance under title IV, if applica13 ble; and 

14 ‘‘(x) that reports to consumer report15 ing agencies to which the Secretary pre16 viously made adverse credit reports with 

17 regard to the borrower’s loan shall be up18 dated not later than 30 days from the date 

19 the determination under this paragraph 

20 was made. 

21 ‘‘(5) DENIAL OF BORROWER DEFENSE

22 CLAIM.—If the Secretary denies a borrower defense, 

23 the Secretary shall retroactively waive a portion of 

24 interest that accrued during the forbearance period 


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1 (as described in subparagraph (B)) and notify the 

2 borrower— 

3 ‘‘(A) of the reasons for the denial and the 

4 evidence that was relied upon; 

5 ‘‘(B) that the interest accruing on the rel6 evant loan after the first 12-month period of 

7 forbearance that occurred from the time the 

8 borrower’s application was submitted under this 

9 subsection will be retroactively waived; 

10 ‘‘(C) of the amount of any portion of the 

11 loan that is due and payable to the Secretary; 

12 ‘‘(D) whether the Secretary will reimburse 

13 any amounts previously collected prior to the 

14 suspension of the collection activity, as de15 scribed in paragraph (2)(A)(i)(IV)(aa); 

16 ‘‘(E) that if any balance remains on the 

17 loan, the loan will return to the status prior to 

18 the borrower’s submission of the application, 

19 except that in the case of a loan that was in de20 fault prior to such application, the borrower 

21 shall first be removed from default status and 

22 given the opportunity to enter repayment, in23 cluding income-based repayment described 

24 under section 493C, before the loan will be sent 

25 to collections; and 


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1 ‘‘(F) that the borrower shall have the op2 portunity for reconsideration of the borrower’s 

3 claim as described in paragraph (6). 

4 ‘‘(6) RECONSIDERATION.— 

5 ‘‘(A) IN GENERAL.—The decision of the 

6 Secretary and any relief that may be granted 

7 on the claim shall be considered the final agen8 cy action that shall be subject to appeal in dis9 trict court, except that— 

10 ‘‘(i) if the borrower defense is denied 

11 in full or in part, the borrower may re12 quest that the Secretary reconsider the 

13 borrower defense upon the identification of 

14 new evidence in support of the borrower’s 

15 claim; and 

16 ‘‘(ii) the Secretary may reopen a bor17 rower defense application at any time to 

18 consider evidence that was not considered 

19 in making the previous decision on that ap20 plication. 

21 ‘‘(B) PROHIBITION ON RESCINDING RE22 LIEF.—The Secretary shall not reduce the 

23 amount of any relief that was previously grant24 ed to a borrower under this section, or reinstate 


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1 any amounts owed on a previously discharged 

2 loan. 

3 ‘‘(7) BORROWER DEFENSE CLAIMS AND ESTAB4 LISHING A BORROWER DEFENSE.— 

5 ‘‘(A) CLAIMS.— 

6 ‘‘(i) IN GENERAL.—Notwithstanding 

7 any other provision of State or Federal 

8 law, a borrower may claim as a defense to 

9 repayment of a loan made under this part 

10 or part B any borrower defense established 

11 under subparagraph (B). Such a borrower 

12 defense claim may include— 

13 ‘‘(I) a defense to repayment of 

14 amounts owed to the Secretary on a 

15 loan under this part or part B, in 

16 whole or in part; and 

17 ‘‘(II) a right to recover amounts 

18 previously collected by the Secretary 

19 on such loan, in whole or in part. 

20 ‘‘(ii) CONSOLIDATION LOAN.—In the 

21 case of a Direct Consolidation Loan— 

22 ‘‘(I) the Secretary shall consider 

23 a borrower defense claim to such loan 

24 by determining whether a borrower 

25 defense described in subparagraph (B) 


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1 has been established with regard to a 

2 loan made under this part or part B 

3 that was paid off by the Direct Con4 solidation Loan; 

5 ‘‘(II) the Secretary shall dis6 charge the appropriate portion of the 

7 Direct Consolidation Loan if the bor8 rower is determined to have a bor9 rower defense with respect to a loan 

10 made under this part or part B that 

11 was paid off by the Direct Consolida12 tion Loan; and 

13 ‘‘(III) the Secretary shall return 

14 to the borrower any payments made 

15 by the borrower or otherwise recov16 ered on the Direct Consolidation Loan 

17 or the loans that were paid off by the 

18 Direct Consolidation Loan that exceed 

19 the amount owed on that portion of 

20 the Direct Consolidation Loan that 

21 was not discharged, if— 

22 ‘‘(aa) the borrower is deter23 mined to have a borrower defense 

24 with respect to a loan made 

25 under this part or part B that 


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1 was paid off by the Direct Con2 solidation Loan; and 

3 ‘‘(bb) the payment was 

4 made directly to the Secretary on 

5 the loan. 

6 ‘‘(iii) PLUS LOAN.—In the case of a 

7 Direct PLUS Loan made on behalf of a 

8 student, the Secretary shall consider a bor9 rower defense claim related to the student 

10 on whose behalf the Direct PLUS Loan 

11 was borrowed. Any amounts discharged 

12 will be applied to the parent or borrower of 

13 the Direct PLUS Loan. 

14 ‘‘(B) ESTABLISHING A BORROWER DE15 FENSE.—A borrower has established a borrower 

16 defense if— 

17 ‘‘(i) the borrower (whether as an indi18 vidual or as a member of a group or class) 

19 or a government agency, has obtained 

20 against the institution of higher education 

21 a judgment relating to the borrower’s 

22 claim based on State or Federal law in a 

23 court or administrative tribunal of com24 petent jurisdiction; 


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1 ‘‘(ii) the institution of higher edu2 cation that the borrower attended using a 

3 loan under this part failed to perform the 

4 institution’s obligations under the terms of 

5 a contract with the borrower; 

6 ‘‘(iii) the borrower was subject to any 

7 act or omission of the institution related to 

8 the making of the loan for enrollment at 

9 the institution or the provision of edu10 cational services for which the loan was 

11 provided that would give rise to a cause of 

12 action against the institution under appli13 cable State law; 

14 ‘‘(iv) the institution of higher edu15 cation, a third servicer that contracts with 

16 such institution, or third party contractor 

17 made a substantial misrepresentation; or 

18 ‘‘(v) the institution has made any 

19 other act or omission that the Secretary, 

20 through regulations, or any Federal law, 

21 has established is an act or omission that 

22 constitutes a borrower defense under this 

23 subsection. 

24 ‘‘(C) LIMITATION.—A violation by an insti25 tution of a requirement in this Act (including 


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1 implementing regulations) is not a basis for a 

2 borrower defense under this subsection unless 

3 the violation would otherwise constitute a basis 

4 for a borrower defense, as described in this 

5 paragraph. 

6 ‘‘(8) FINDING OF SUBSTANTIAL MISREPRESEN7 TATION.—An eligible institution is deemed to have 

8 engaged in a substantial misrepresentation for pur9 poses of this subsection when an eligible institution, 

10 third party servicer that contracts with such institu11 tion, or third party contractor, commits a substan12 tial misrepresentation, as defined in section 489A. A 

13 sworn statement or attestation from the borrower 

14 shall be considered as evidence, and, in the Sec15 retary’s discretion, may be sufficient evidence for the 

16 Secretary to find that a substantial misrepresenta17 tion was made to a borrower. If the Secretary deter18 mines that an eligible institution, third party 

19 servicer that contracts with such institution, or third 

20 party contractor, has engaged in a substantial mis21 representation, the Secretary shall, in addition to 

22 finding a borrower defense under this section, take 

23 enforcement action against the institution, third 

24 party servicer that contracts with such institution, 


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1 or third party contractor, in accordance with section 

2 489A. 

3 ‘‘(9) ACTION AGAINST THE INSTITUTION.—If a 

4 borrower is determined to have established a bor5 rower defense in accordance with this subsection, the 

6 Secretary shall initiate an appropriate proceeding to 

7 require the institution whose act or omission re8 sulted in the borrower defense to repay to the Sec9 retary the amount discharged under paragraph 

10 (7)(A) whether by offset, claim on a letter of credit, 

11 or other protection provided by the institution. 

12 ‘‘(10) REPORTING.—Not less than once every 3 

13 months, the Secretary shall publish on a website, 

14 and report to Congress, data— 

15 ‘‘(A) for each institution, on— 

16 ‘‘(i) the number of claims considered 

17 under this subsection; 

18 ‘‘(ii) the number of those claims pend19 ing and the date of receipt of the applica20 tion, or the date of the initiation of the 

21 claim by the Secretary, of those claims; 

22 and 

23 ‘‘(iii) the number of claims under this 

24 subsection for which a determination has 


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1 been made and the results of each such de2 termination; and 

3 ‘‘(B) in the aggregate, and disaggregated 

4 by State, on— 

5 ‘‘(i) the total number of claims pend6 ing under this subsection; 

7 ‘‘(ii) the number of those claims that 

8 are approved borrower defense claims and 

9 total dollar amount of relief; 

10 ‘‘(iii) the percentage of those total ap11 proved claims receiving partial relief and 

12 the median student loan debt remaining 

13 for borrowers receiving partial relief; and 

14 ‘‘(iv) the number of those claims that 

15 are denied borrower defense claims.’’. 

16 TITLE III—ENSURING INTEG17 RITY AT INSTITUTIONS OF 

18 HIGHER EDUCATION 

19 SEC. 301. RESTRICTIONS ON SOURCES OF FUNDS FOR RE20 CRUITING AND MARKETING ACTIVITIES. 

21 (a) REPEAL.—Section 119 of the Higher Education 

22 Opportunity Act (20 U.S.C. 1011m) is repealed. 

23 (b) AMENDMENT TO THE HIGHER EDUCATION ACT

24 OF 1965.—Part B of title I of the Act (20 U.S.C. 1011 


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1 et seq.), as amended by title I, is further amended by add2 ing at the end the following: 

3 ‘‘SEC. 126. USE OF FEDERAL FUNDS; RESTRICTIONS ON 

4 SOURCES OF FUNDS FOR RECRUITING AND 

5 MARKETING ACTIVITIES. 

6 ‘‘(a) PROHIBITION.— 

7 ‘‘(1) IN GENERAL.—No Federal student aid 

8 funding under this Act received by an institution of 

9 higher education may be used to pay any person for 

10 influencing or attempting to influence an officer or 

11 employee of any agency, a Member of Congress, an 

12 officer or employee of Congress, or an employee of 

13 a Member of Congress in connection with any Fed14 eral action described in paragraph (2). 

15 ‘‘(2) APPLICABILITY.—The prohibition in para16 graph (1) applies with respect to the following Fed17 eral actions: 

18 ‘‘(A) The awarding of any Federal con19 tract. 

20 ‘‘(B) The making of any Federal grant. 

21 ‘‘(C) The making of any Federal loan. 

22 ‘‘(D) The entering into of any Federal co23 operative agreement. 


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1 ‘‘(E) The extension, continuation, renewal, 

2 amendment, or modification of any Federal con3 tract, grant, loan, or cooperative agreement. 

4 ‘‘(b) LOBBYING AND EARMARKS.—No Federal stu5 dent aid funding under this Act may be used to hire a 

6 registered lobbyist or pay any person or entity for securing 

7 an earmark. 

8 ‘‘(c) RESTRICTIONS ON SOURCES OF FUNDS FOR RE9 CRUITING AND MARKETING ACTIVITIES.— 

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

11 education may not use revenues derived from Fed12 eral education assistance funds for recruiting or 

13 marketing activities described in paragraph (2). 

14 ‘‘(2) COVERED ACTIVITIES.— 

15 ‘‘(A) IN GENERAL.—Except as provided in 

16 subparagraph (B), the recruiting and marketing 

17 activities subject to paragraph (1) shall include 

18 the following: 

19 ‘‘(i) Advertising and promotion activi20 ties, including paid announcements in 

21 newspapers, magazines, radio, television, 

22 billboards, electronic media, naming rights, 

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1 motions at job fairs, military installations, 

2 or college recruiting events. 

3 ‘‘(ii) Efforts to identify and attract 

4 prospective students, either directly or 

5 through a third party contractor, including 

6 contact concerning a prospective student’s 

7 potential enrollment or application for 

8 grant, loan, or work assistance under title 

9 IV or participation in preadmission or ad10 vising activities, including— 

11 ‘‘(I) paying employees responsible 

12 for overseeing enrollment and for con13 tacting potential students in-person, 

14 by phone, by email, or by other Inter15 net communications regarding enroll16 ment; and 

17 ‘‘(II) soliciting an individual to 

18 provide contact information to an in19 stitution of higher education, includ20 ing websites established for such pur21 pose and funds paid to third parties 

22 for such purpose. 

23 ‘‘(iii) Such other activities as the Sec24 retary may prescribe, including paying for 


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1 promotion or sponsorship of education or 

2 military-related associations. 

3 ‘‘(B) EXCEPTIONS.—Any activity that is 

4 required as a condition of receipt of funds by 

5 an institution under title IV, is specifically au6 thorized under such title, or is otherwise speci7 fied by the Secretary, shall not be considered to 

8 be a covered activity under this paragraph. 

9 ‘‘(3) RULE OF CONSTRUCTION.—Nothing in 

10 this subsection shall be construed as a limitation on 

11 the use by an institution of revenues derived from 

12 sources other than Federal education assistance 

13 funds. 

14 ‘‘(4) REPORTS.—Each institution of higher 

15 education, that derives 65 percent or more of reve16 nues from Federal education assistance funds shall 

17 report annually to the Secretary and to Congress 

18 and shall include in such report— 

19 ‘‘(A) the institution’s expenditures on ad20 vertising, marketing, and recruiting; 

21 ‘‘(B) a verification from an independent 

22 auditor that the institution is in compliance 

23 with the requirements of this subsection; and 


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1 ‘‘(C) a certification from the institution 

2 that the institution is in compliance with the re3 quirements of this subsection. 

4 ‘‘(5) FEDERAL EDUCATION ASSISTANCE

5 FUNDS.—In this subsection, the term ‘Federal edu6 cation assistance funds’ has the meaning given that 

7 term in section 102(b)(2)(B) (as added by section 

8 101 of the Preventing Risky Operations from 

9 Threatening the Education and Career Trajectories 

10 of Students Act of 2019). 

11 ‘‘(d) CERTIFICATION.—Each institution of higher 

12 education receiving Federal funding under this Act, as a 

13 condition for receiving such funding, shall annually certify 

14 to the Secretary that the requirements of this section have 

15 been met. 

16 ‘‘(e) ACTIONS TO IMPLEMENT AND ENFORCE.—The 

17 Secretary shall take such actions as are necessary to en18 sure that the provisions of this section are implemented 

19 and enforced.’’. 

20 SEC. 302. STRENGTHENING THE INCENTIVE COMPENSA21 TION BAN. 

22 (a) SENSE OF CONGRESS REGARDING INCENTIVE

23 COMPENSATION.—It is the sense of Congress that— 

24 (1) the use of commission-paid sales practices, 

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1 ly aggressive, manipulative, and often misleading 

2 tactics in advertising, recruiting, and counseling stu3 dents; 

4 (2) such practices are inappropriate at any in5 stitution benefitting from Federal funding and an 

6 implied Federal endorsement through participation 

7 in programs under title IV of the Higher Education 

8 Act of 1965 (20 U.S.C. 1070 et seq.); 

9 (3) previous investigations by the Federal 

10 Trade Commission, as well as by Congress, including 

11 the Permanent Subcommittee on Investigations of 

12 the Senate (referred to as the ‘‘Nunn Commission’’) 

13 in 1991 and the Committee on Health, Education, 

14 Labor, and Pensions of the Senate in 2012, found 

15 that incentive compensation schemes frequently con16 tribute to high-pressure sales and other predatory 

17 abuses at federally supported schools; 

18 (4) the ban on incentive compensation under 

19 section 487(a)(20) of the Higher Education Act of 

20 1965 (20 U.S.C. 1094(a)(20)), as amended by sub21 section (b), is intended to preclude the use of such 

22 abusive practices at any point in the process of re23 cruiting or enrolling students, or assisting students 

24 in securing employment; and 


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1 (5) an institution that receives assistance under 

2 title IV of such Act remains responsible for the ac3 tions of any entity that performs functions and tasks 

4 on the institution’s behalf, and these responsibilities 

5 include ensuring that employees, third party 

6 servicers that contract with such institutions, and 

7 third party contractors are not paid for services that 

8 would convert these payments into prohibited incen9 tive compensation because of the activities in which 

10 the employees, third party servicers that contract 

11 with such institutions, or third party contractors en12 gage. 

13 (b) AMENDMENTS.—Section 487 (20 U.S.C. 1094) is 

14 amended— 

15 (1) in subsection (a), by striking paragraph 

16 (20) and inserting the following: 

17 ‘‘(20) The institution, any third party servicer 

18 that contracts with such institution, and any third 

19 party contractor will comply with the ban on prohib20 ited incentive compensation ban under subsection 

21 (j).’’; and 

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

23 ‘‘(j) INCENTIVE COMPENSATION BAN.— 

24 ‘‘(1) DEFINITIONS.—In this subsection: 

25 ‘‘(A) COVERED ACTIVITY.— 


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1 ‘‘(i) IN GENERAL.—The term ‘covered 

2 activity’ means any of the following activi3 ties: 

4 ‘‘(I) Securing enrollment of stu5 dents into the institution of higher 

6 education, which includes— 

7 ‘‘(aa) activities that an indi8 vidual or entity engages in at any 

9 point in time during an edu10 cational program for the purpose 

11 of the admission or matriculation 

12 of students for any period of 

13 time, including contact in any 

14 form with a prospective student, 

15 such as contact through pread16 mission or advising activities, 

17 scheduling an appointment to 

18 visit the enrollment office or any 

19 other office of the institution, at20 tendance at such an appoint21 ment, or involvement in a pro22 spective student’s signing of an 

23 enrollment agreement or financial 

24 aid application; and 


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1 ‘‘(bb) other recruitment and 

2 marketing activities. 

3 ‘‘(II) Securing or awarding finan4 cial aid to students for attendance at 

5 the institution, including— 

6 ‘‘(aa) any involvement in a 

7 prospective student’s signing of a 

8 financial aid application; and 

9 ‘‘(bb) completing financial 

10 aid applications on behalf of a 

11 prospective applicant (including 

12 activities authorized by the De13 partment, such as the FAA Ac14 cess tool, which can be used to 

15 enter, correct, verify, or analyze 

16 financial aid application data). 

17 ‘‘(III) Improving job placement 

18 activities for students attending, or 

19 who have attended, the institution. 

20 ‘‘(IV) Reducing the number of 

21 students who default on their student 

22 loans. 

23 ‘‘(ii) EXCLUSION.—The term ‘covered 

24 activity’ does not include— 


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1 ‘‘(I) the provision of student con2 tact information for prospective stu3 dents, if any payment for such service 

4 is not based on— 

5 ‘‘(aa) any additional conduct 

6 or action by the third party 

7 servicer that contracts with such 

8 institutions or third party con9 tractor or the prospective stu10 dent, such as participation in 

11 preadmission or advising activi12 ties, scheduling an appointment 

13 to visit the enrollment office or 

14 any other office of the institution 

15 or attendance at such an ap16 pointment, or the signing, or 

17 being involved in the signing, of a 

18 prospective student’s enrollment 

19 agreement or financial aid appli20 cation; or 

21 ‘‘(bb) the number of stu22 dents (calculated at any point in 

23 time of an educational program) 

24 who apply for enrollment, are 

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1 rolled for any period of time, in2 cluding through completion of an 

3 educational program; or 

4 ‘‘(II) student support services not 

5 included in the covered activities 

6 under clause (i). 

7 ‘‘(B) PROHIBITED INCENTIVE COMPENSA8 TION.— 

9 ‘‘(i) IN GENERAL.—The term ‘prohib10 ited incentive compensation’ includes— 

11 ‘‘(I) any commission, bonus, or 

12 other incentive payment, of a sum of 

13 money or other item of value, paid to 

14 or given to a person or an entity that 

15 is not a fixed salary or wages and that 

16 is paid or given for meeting a certain 

17 quota or numerical target, or avoiding 

18 penalties for a benchmark set in Fed19 eral law, relating to covered activities; 

20 ‘‘(II) other direct or indirect 

21 forms of payment for meeting a cer22 tain quota or numerical target, or 

23 avoiding penalties for a benchmark set 

24 in Federal law, relating to covered ac25 tivities, including— 


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1 ‘‘(aa) tuition sharing as a 

2 measure of compensation when 

3 based on a formula that relates 

4 the amount payable to the entity 

5 to meeting a certain quota or nu6 merical target, or avoiding pen7 alties for a benchmark set in 

8 Federal law, as a result of the 

9 covered activity of the entity; 

10 ‘‘(bb) profit-sharing plans 

11 from which distributions are 

12 made to individuals based on 

13 meeting a certain quota or nu14 merical target, or avoiding pen15 alties for a benchmark set in 

16 Federal law, as a result of cov17 ered activities by the recipient; 

18 ‘‘(cc) salary adjustments 

19 that take the form of incentive 

20 payments based directly or indi21 rectly on meeting a quota or nu22 merical target, or avoiding pen23 alties for a benchmark set in 

24 Federal law, with respect to a 

25 covered activity; 


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1 ‘‘(dd) payments based on 

2 meeting a certain quota or nu3 merical target, or avoiding pen4 alties for a benchmark set in 

5 Federal law, relating to covered 

6 activities; and 

7 ‘‘(ee) bonuses or other pay8 ments based on meeting a certain 

9 quota or numerical target, or 

10 avoiding penalties for a bench11 mark set in Federal law, relating 

12 to covered activities; 

13 ‘‘(III) a decrease or removal of a 

14 payment or benefit described in sub15 clause (I) or (II) (and not excluded 

16 under clause (ii)), if that decrease or 

17 removal is based directly or indirectly 

18 on meeting a certain quota or numer19 ical target, or avoiding penalties for a 

20 benchmark set in Federal law, relat21 ing to covered activities; and 

22 ‘‘(IV) a change in employment 

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1 get, or avoiding penalties for a bench2 mark set in Federal law, relating to 

3 covered activities. 

4 ‘‘(ii) EXCLUSIONS.—The following 

5 payments or benefits shall not be consid6 ered prohibited incentive compensation, if 

7 the payment or benefit is determined in a 

8 way that is not related to the role the re9 cipient plays in any covered activity: 

10 ‘‘(I) A profit sharing plan, in11 cluding a qualified cash or deferred 

12 arrangement (as defined in section 

13 401(k)(2) of the Internal Revenue 

14 Code of 1986) offered to all employees 

15 on a basis that is neutral with respect 

16 to the role the recipient plays in any 

17 covered activity. 

18 ‘‘(II) An employee benefits plan 

19 offered to all employees on a basis 

20 that is neutral with respect to the role 

21 the recipient plays in any covered ac22 tivity. 

23 ‘‘(III) A cost of living adjust24 ment. 


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1 ‘‘(IV) A payment to a senior ex2 ecutive with responsibility for the de3 velopment of policies that affect mar4 keting and recruitment, enrollment, fi5 nancial aid, or student support serv6 ices, including job placement services. 

7 ‘‘(C) RECRUITMENT AND MARKETING AC8 TIVITY.—The term ‘recruitment and marketing 

9 activity’ means— 

10 ‘‘(i) broad information dissemination 

11 and disseminating targeted information to 

12 individuals; 

13 ‘‘(ii) soliciting individuals regarding 

14 an institution; 

15 ‘‘(iii) advertising a program that dis16 seminates information to potential stu17 dents; 

18 ‘‘(iv) collecting contact information; 

19 ‘‘(v) contacting potential applicants 

20 for the admission or matriculation of a 

21 student into an institution; 

22 ‘‘(vi) screening pre-enrollment infor23 mation to determine whether a prospective 

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1 stitution has established for enrollment in 

2 an academic program; 

3 ‘‘(vii) aiding individuals in filling out 

4 any information relating to an application 

5 for admission or matriculation into an in6 stitution; 

7 ‘‘(viii) determining whether an enroll8 ment application is materially complete, as 

9 long as the enrollment decision remains 

10 with the institution; or 

11 ‘‘(ix) any other activity described in 

12 section 126(d)(2). 

13 ‘‘(D) STUDENT SUPPORT SERVICES.—The 

14 term ‘student support services’ means any of 

15 the following services: 

16 ‘‘(i) Counseling or other nonacademic 

17 support activities provided to students that 

18 is not a covered activity. 

19 ‘‘(ii) Institutional services provided to 

20 students, such as information technology 

21 assistance, food service, or housing, that is 

22 not a covered activity. 

23 ‘‘(iii) Other services involved in the 

24 administration of support for students that 

25 is not a covered activity. 


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1 ‘‘(2) INCENTIVE COMPENSATION BAN.— 

2 ‘‘(A) IN GENERAL.—The institution, any 

3 third party servicer that contracts with such in4 stitution, and any third party contractor shall 

5 not provide any prohibited incentive compensa6 tion to any person or entity. 

7 ‘‘(B) APPLICABILITY.—The ban on prohib8 ited incentive compensation under this sub9 section applies to any entity or individual en10 gaged in any covered activity, including— 

11 ‘‘(i) with respect to an entity engaged 

12 in any student recruitment or admission 

13 activity or in making decisions about the 

14 award of financial aid, any institution or 

15 entity that undertakes the recruiting or the 

16 admitting of students or that makes deci17 sions about and awards program funds 

18 under this title; and 

19 ‘‘(ii) with respect to an individual en20 gaged in any student recruitment or ad21 mission activity or in making decisions 

22 about the award of financial aid— 

23 ‘‘(I) any employee who under24 takes recruiting or admitting of stu25 dents or who makes decisions about 


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1 and awards program funds under this 

2 title; and 

3 ‘‘(II) any higher-level employee 

4 with responsibility for recruitment or 

5 admission of students, or making deci6 sions about awarding program funds 

7 under this title. 

8 ‘‘(C) EXCLUSION OF CERTAIN EMPLOY9 EES.—The ban on prohibited incentive com10 pensation under this subsection shall not apply 

11 to any senior manager or executive level em12 ployee who— 

13 ‘‘(i) is involved only in the develop14 ment of policy related to the manner in 

15 which marketing and recruitment, enroll16 ment, financial aid, or student support 

17 services will be pursued or provided; and 

18 ‘‘(ii) does not engage in individual 

19 student contact or other covered activities. 

20 ‘‘(D) INDIVIDUAL WITH MULTIPLE AD21 JUSTMENTS TO COMPENSATION.—An employee 

22 of an institution, a third party servicer that 

23 contracts with such institution, or a third party 

24 contractor, who receives multiple adjustments 

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1 gaged in a covered activity shall be considered 

2 to be engaged in prohibited incentive compensa3 tion if the adjustments create compensation 

4 that is based in any part, directly or indirectly, 

5 upon meeting certain quotas or numerical tar6 gets, or avoiding penalties for a benchmark set 

7 in Federal law, regarding those covered activi8 ties. 

9 ‘‘(3) NOTICE OF INCENTIVE COMPENSATION

10 BAN.— 

11 ‘‘(A) NOTICE TO SERVICER AND CON12 TRACTOR.—The institution shall provide notice 

13 of the ban on prohibited incentive compensation 

14 under this subsection at least once a year to 

15 each third party servicer and third party con16 tractor that contracts with the institution. 

17 ‘‘(B) NOTICE TO EMPLOYEES.—The insti18 tution, and any third party contractor or third 

19 party servicer that contracts with such institu20 tion, shall— 

21 ‘‘(i) provide notice of the ban on pro22 hibited incentive compensation under this 

23 subsection at least once a year to employ24 ees; and 


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1 ‘‘(ii) publish a clear statement in all 

2 internal recruitment materials, including 

3 guides or manuals, acknowledging the ban 

4 on prohibited incentive compensation under 

5 this subsection. 

6 ‘‘(4) CONSEQUENCES FOR INCENTIVE COM7 PENSATION VIOLATION.— 

8 ‘‘(A) IN GENERAL.—The Secretary, in co9 ordination with the Office of the Inspector Gen10 eral of the Department of Education, shall de11 velop a written policy for the enforcement of the 

12 ban on prohibited incentive compensation under 

13 this subsection, and shall update that policy as 

14 needed. 

15 ‘‘(B) CONTENTS OF POLICY.—The policy 

16 developed under subparagraph (A)— 

17 ‘‘(i) shall require that compliance re18 view occur on an annual basis; 

19 ‘‘(ii) may include automatic triggers 

20 for inquiries by the Department or regular 

21 ‘secret shopper’ or audit-based investiga22 tions to ensure that institutions of higher 

23 education remain in compliance with the 

24 ban; and 


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1 ‘‘(iii) shall explain the range of sanc2 tions, as described in section 489A, that 

3 the Secretary may carry out to enforce this 

4 subsection. 

5 ‘‘(C) REPORT.—The Department shall 

6 publish an annual report, and shall submit that 

7 report to the authorizing committees and the 

8 For-Profit Education Oversight Coordination 

9 Committee established under section 125, which 

10 shall include— 

11 ‘‘(i) a description of the status of any 

12 investigations conducted under this sub13 section; 

14 ‘‘(ii) the names of institutions found 

15 to be not in compliance with this sub16 section; 

17 ‘‘(iii) the sanctions the non-compliant 

18 institution of higher education faced; and 

19 ‘‘(iv) in the case of an institution sub20 ject to liability for funds under this title 

21 pursuant to subparagraph (B)(iii), the 

22 amount of such liability.’’. 


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1 SEC. 303. DEFINITION OF NONPROFIT INSTITUTION OF 

2 HIGHER EDUCATION. 

3 Section 103 (20 U.S.C. 1003) is amended by striking 

4 paragraph (13) and inserting the following: 

5 ‘‘(13) NONPROFIT.— 

6 ‘‘(A) IN GENERAL.—The term ‘non7 profit’— 

8 ‘‘(i) as applied to a school, agency, or9 ganization, or institution, means a school, 

10 agency, organization, or institution con11 trolled, owned, and operated by one or 

12 more nonprofit corporations or associa13 tions, no part of the net earnings of which 

14 inures, or may lawfully inure, to the ben15 efit of any private shareholder or indi16 vidual; and 

17 ‘‘(ii) as applied to an institution of 

18 higher education, means an institution— 

19 ‘‘(I) that meets the requirements 

20 of subparagraph (A); 

21 ‘‘(II) that is an organization de22 scribed in section 170(b)(1)(A)(ii) or 

23 (vi) of the Internal Revenue Code of 

24 1986; and 

25 ‘‘(III) with respect to which— 


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1 ‘‘(aa) no member of the gov2 erning board of the institution 

3 (other than any ex officio mem4 ber serving at the pleasure of the 

5 remainder of the governing board 

6 and receiving a fixed salary) re7 ceives any substantial direct or 

8 indirect economic benefit (includ9 ing a lease, promissory note, or 

10 other contract) from the institu11 tion; and 

12 ‘‘(bb) no person with the 

13 power to appoint or remove mem14 bers of the governing board re15 ceives any such substantial direct 

16 or indirect economic benefit (in17 cluding a lease, promissory note, 

18 or other contract) from the insti19 tution. 

20 ‘‘(B) EXCLUSIONS.— 

21 ‘‘(i) IN GENERAL.—An institution of 

22 higher education shall not be considered a 

23 nonprofit institution of higher education, 

24 as defined in this paragraph, if— 


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1 ‘‘(I) one or more core functions 

2 are under the control of, or subject to 

3 significant direction from an entity 

4 that is not a public institution of 

5 higher education or is not formed as 

6 a nonprofit corporation; or 

7 ‘‘(II) a substantial share of the 

8 assets of the institution are committed 

9 to a joint venture with a person or en10 tity that is not a public institution of 

11 higher education and is not a non12 profit corporation, and the core func13 tions of the venture are conducted by, 

14 under the control of, or subject to sig15 nificant direction from that person or 

16 entity. 

17 ‘‘(ii) PRESUMPTION OF SIGNIFICANT

18 DIRECTION.—There shall be a conclusive 

19 presumption that an entity exercises sig20 nificant direction if one or more of the en21 tity’s employees or owners serves as an of22 ficer, member of the board, or person hold23 ing similar authority for the institution of 

24 higher education.’’. 


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1 SEC. 304. DEFINITION OF PUBLIC INSTITUTION OF HIGHER 

2 EDUCATION. 

3 Section 103 (20 U.S.C. 1003), as amended by section 

4 4, is further amended— 

5 (1) by inserting after paragraph (14) the fol6 lowing: 

7 ‘‘(15) PUBLIC INSTITUTION OF HIGHER EDU8 CATION.— 

9 ‘‘(A) IN GENERAL.—The term ‘public’, 

10 when used with respect to an institution of 

11 higher education, means an institution of higher 

12 education— 

13 ‘‘(i)(I) operated by— 

14 ‘‘(aa) the Federal Government; 

15 ‘‘(bb) a State, as defined in sec16 tion 3306(j)(1) of the Internal Rev17 enue Code of 1986; 

18 ‘‘(cc) a local government, as de19 fined in section 1393(a)(5) of such 

20 Code; or 

21 ‘‘(dd) an Indian tribal govern22 ment, as defined in section 

23 7701(a)(40) of such Code; 

24 ‘‘(II) for which all obligations of the 

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1 tions of the State, local government, or In2 dian tribal government; and 

3 ‘‘(III) for which the full faith and 

4 credit of such State, local government, or 

5 Indian tribal government is pledged for the 

6 timely payment of such obligations; or 

7 ‘‘(ii) that is an instrumentality of a 

8 State or local government (as such terms 

9 are defined in subparagraph (A)). 

10 ‘‘(B) INSTRUMENTALITY OF A STATE OR

11 LOCAL GOVERNMENT.—An institution shall be 

12 considered an instrumentality of a State or 

13 local government for purposes of this paragraph 

14 if the institution meets all of the following re15 quirements: 

16 ‘‘(i) The employees of the institution 

17 are employees of the State or local govern18 ment. 

19 ‘‘(ii) Any liability of the institution is 

20 payable to the same degree as if the liabil21 ity was a liability of the State or local gov22 ernment, in the State or local government 

23 jurisdiction where the institution is formed. 

24 ‘‘(iii) The institution is subject to the 

25 same financial oversight and open public 


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1 records laws as the State or local govern2 ment, in the State or local government ju3 risdiction where the institution is formed.’’. 

4 SEC. 305. ENHANCED CIVIL PENALTIES, STATE ENFORCE5 MENT, AND PRIVATE RIGHT OF ACTION. 

6 (a) IN GENERAL.—Part G of title IV (20 U.S.C. 

7 1088 et seq.) is amended by inserting after section 489 

8 the following: 

9 ‘‘SEC. 489A. ENHANCED CIVIL PENALTIES, STATE ENFORCE10 MENT, AND PRIVATE RIGHT OF ACTION. 

11 ‘‘(a) DEFINITIONS.—In this section: 

12 ‘‘(1) MISREPRESENTATION.—The term ‘mis13 representation’ means any false, erroneous, or mis14 leading statement an eligible institution of higher 

15 education, a third party servicer that contracts with 

16 such institution, or a third party contractor makes 

17 directly or indirectly to a student, prospective stu18 dent, or any member of the public, or to an accred19 iting agency or association, State approval agency, 

20 or the Secretary. A misrepresentation includes— 

21 ‘‘(A) the making of a statement that has 

22 the likelihood or tendency to deceive; or 

23 ‘‘(B) the omission of any material facts 

24 necessary in order to make any statements 

25 made, in light of the circumstances under which 


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1 they were made, not false, deceptive, unfair, er2 roneous, or misleading. 

3 ‘‘(2) OFFICER OF AN INSTITUTION OF HIGHER

4 EDUCATION.—The term ‘officer of an institution of 

5 higher education’ including at any nonprofit, for6 profit, or public institution of higher education, in7 cludes the president, chief executive officer, and 

8 chief financial officer of an institution of higher edu9 cation as well as all officers charged with overseeing 

10 a principal business unit, division, or function, such 

11 as sales, administration, or finance. 

12 ‘‘(3) PROSPECTIVE STUDENT.—The term ‘pro13 spective student’ means any individual who has con14 tacted an institution of higher education for the pur15 pose of requesting information about enrolling at the 

16 institution of higher education or who has been con17 tacted directly or indirectly by the institution of 

18 higher education or a third party contractor through 

19 advertising about enrolling at the institution. 

20 ‘‘(4) STATE APPROVAL AGENCY.—The term 

21 ‘State approval agency’ means any State agency that 

22 determines whether an institution of higher edu23 cation is legally authorized within such State to pro24 vide a program of education beyond secondary edu25 cation. 


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1 ‘‘(5) SUBSTANTIAL MISREPRESENTATION.—The 

2 term ‘substantial misrepresentation’ means any mis3 representation on which the person to whom it was 

4 made could reasonably be expected to rely, or has 

5 reasonably relied, to that person’s detriment. 

6 ‘‘(b) LIMITATION, SUSPENSION, OR TERMINATION OF

7 ELIGIBILITY STATUS.— 

8 ‘‘(1) IN GENERAL.—Upon determination, after 

9 reasonable notice and opportunity for a hearing, that 

10 an eligible institution, a third party servicer that 

11 contracts with such institution, or a third party con12 tractor has violated or failed to carry out any provi13 sion of this title, any regulation prescribed under 

14 this title, or any applicable special arrangement, 

15 agreement, or limitation, the Secretary may limit, 

16 suspend, or terminate the participation of that insti17 tution in any program under this title, or the eligi18 bility of that third party contractor or third party 

19 servicer to contract with any institution, subject to 

20 the requirements of paragraph (2). 

21 ‘‘(2) SUSPENSION PROCEDURES.—No period of 

22 suspension under this section shall exceed 60 days 

23 unless the institution and the Secretary agree to an 

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1 ceedings are initiated by the Secretary within that 

2 period of time. 

3 ‘‘(3) SUBSTANTIAL MISREPRESENTATION.— 

4 Upon determination, after reasonable notice and op5 portunity for a hearing, that an eligible institution, 

6 a third party servicer that contracts with such insti7 tution, or a third party contractor has engaged in 

8 substantial misrepresentation, including a misrepre9 sentation relating to the nature of an educational 

10 program, financial charges, the space availability in 

11 a program of the institution for which a student is 

12 considering enrollment, admission requirements, the 

13 transferability of credits, whether one of that institu14 tion’s programs meets necessary State standards to 

15 obtain certification or sit for licensing examinations, 

16 the passage rates of students in obtaining certifi17 cations or sitting for licensing examinations, or the 

18 employability or earnings of graduates, the Secretary 

19 may suspend, limit, or terminate the eligibility sta20 tus for any or all programs under this title of any 

21 otherwise eligible institution, or of any third party 

22 contractor or third party servicer to contract with 

23 any institution, in accordance with procedures speci24 fied in paragraph (1), until the Secretary finds that 

25 such practices have been corrected. 


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1 ‘‘(c) CIVIL PENALTIES.— 

2 ‘‘(1) IN GENERAL.—The Secretary shall impose 

3 a civil penalty upon an eligible institution, a third 

4 party servicer that contracts with such institution, 

5 or a third party contractor, upon making a deter6 mination, after reasonable notice and opportunity 

7 for a hearing, that an eligible institution, a third 

8 party servicer that contracts with such institution, 

9 or a third party contractor has— 

10 ‘‘(A) violated or failed to carry out any 

11 provision of this title or any regulation pre12 scribed under this title; or 

13 ‘‘(B) engaged in a substantial misrepresen14 tation, including a substantial misrepresenta15 tion described in subsection (b)(3). 

16 ‘‘(2) AMOUNT OF CIVIL PENALTIES.— 

17 ‘‘(A) A civil penalty imposed for a violation 

18 or failure described under paragraph (1)(A) 

19 shall not exceed $100,000 (subject to such ad20 justments for inflation as may be prescribed in 

21 regulation) for each such violation. 

22 ‘‘(B) A civil penalty imposed for a violation 

23 described under paragraph (1)(B) shall be in an 

24 amount not to exceed the greater of— 


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1 ‘‘(i) $100,000 (subject to such adjust2 ments for inflation as may be prescribed in 

3 regulation) for each such violation; or 

4 ‘‘(ii)(I) in the case of an institution, 

5 1.0 percent of the amount of funds the in6 stitution received through this title in the 

7 most recent award year prior to the deter8 mination for each such violation; and 

9 ‘‘(II) in the case of a third party 

10 servicer that contracts with such institu11 tion or a third party contractor, the 

12 amount of the contract with the institu13 tion. 

14 ‘‘(3) TREATMENT OF MULTIPLE INSTITU15 TIONS.—For the purpose of determining the amount 

16 of civil penalties under this subsection, any violation 

17 by a particular institution will accrue against all 

18 identification codes used by the Office of Postsec19 ondary Education to designate campuses and insti20 tutions affiliated with the institution, and within the 

21 period of participation for the institution as defined 

22 in section 668.13(b) of title 34, Code of Federal 

23 Regulations, or any successor regulation. 

24 ‘‘(d) EMERGENCY ACTION.—The Secretary may take 

25 an emergency action against an institution, a third party 


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1 servicer that contracts with such institution, or a third 

2 party contractor, under which the Secretary shall, effective 

3 on the date on which a notice and statement of the basis 

4 of the action is mailed to the institution, third party 

5 servicer that contracts with such institution, or third party 

6 contractor (by registered mail, return receipt requested), 

7 withhold funds from the institution or its students, or 

8 from the third party servicer that contracts with such in9 stitution or third party contractor, and withdraw the insti10 tution’s authority to obligate funds under this title, or the 

11 authority of the third party servicer that contracts with 

12 such institution or third party contractor to act on behalf 

13 of an institution under any program under this title, if 

14 the Secretary— 

15 ‘‘(1) receives information, determined by the 

16 Secretary to be reliable, that the institution, or third 

17 party servicer that contracts with such institution, 

18 or third party contractor is violating any provision 

19 of this title, any regulation prescribed under this 

20 title, or any applicable special arrangement, agree21 ment, or limitation; 

22 ‘‘(2) determines that immediate action is nec23 essary to prevent misuse of Federal funds; and 

24 ‘‘(3) determines that the likelihood of loss out25 weighs the importance of the procedures prescribed 


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1 in subsection (b) for limitation, suspension, or termi2 nation, 

3 except that an emergency action shall not exceed 30 days 

4 unless the limitation, suspension, or termination pro5 ceedings are initiated by the Secretary against the indi6 vidual or organization within that period of time, and ex7 cept that the Secretary shall provide the individual or or8 ganization an opportunity to show cause, if it so requests, 

9 that the emergency action is unwarranted. 

10 ‘‘(e) INDIVIDUAL OR ORGANIZATION WITH SUBSTAN11 TIAL CONTROL.—If an individual who, or entity that, ex12 ercises substantial control, as determined by the Secretary 

13 in accordance with the definition of substantial control in 

14 subpart 3 of part H, over one or more institutions partici15 pating in any program under this title, or, for purposes 

16 of this section over one or more organizations that con17 tract with an institution to administer any aspect of the 

18 institution’s student assistance program under this title, 

19 is determined to have committed one or more violations 

20 of the requirements of any program under this title, or 

21 has been suspended or debarred in accordance with the 

22 regulations of the Secretary, the Secretary may use such 

23 determination, suspension, or debarment as the basis for 

24 imposing an emergency action on, or limiting, suspending, 

25 or terminating, in a single proceeding, the participation 


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1 of any or all institutions under the substantial control of 

2 that individual or entity. 

3 ‘‘(f) DISPOSITION OF AMOUNTS RECOVERED.— 

4 ‘‘(1) USE FOR STUDENT RELIEF FUND.—For 

5 each fiscal year, an amount equal to 100 percent of 

6 the amounts recovered or collected under this section 

7 shall be deposited into the Student Relief Fund es8 tablished under subsection (g). 

9 ‘‘(2) REPORT.—The Secretary shall regularly 

10 publish, on the website of the Department, a de11 tailed accounting of the funds in the Student Relief 

12 Fund, including the amount of funds that were col13 lected and deposited into the Student Relief Fund 

14 under paragraph (1), and how those funds were 

15 used, pursuant to subsection (g)(1). 

16 ‘‘(g) STUDENT RELIEF FUND.— 

17 ‘‘(1) ESTABLISHMENT.—The Secretary shall es18 tablish a Student Relief Fund (referred to in this 

19 subsection as the ‘Fund’) that shall be used, subject 

20 to the availability of funds, to provide financial relief 

21 to any student that is enrolled in an institution of 

22 higher education that— 

23 ‘‘(A) has failed to comply with an eligi24 bility requirement under section 101 or 102 or 

25 an obligation incurred under the terms of the 


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1 program participation agreement under section 

2 487; or 

3 ‘‘(B) has been sanctioned under subsection 

4 (b) or (c). 

5 ‘‘(2) TREATMENT AND AVAILABILITY OF

6 FUNDS.— 

7 ‘‘(A) FUNDS THAT ARE NOT GOVERNMENT

8 FUNDS.—Funds obtained by or transferred to 

9 the Fund shall not be construed to be Govern10 ment funds, appropriated monies, or Federal 

11 education assistance funds, as defined in sec12 tion 102(b)(2)(B) (as added by section 101 of 

13 the Preventing Risky Operations from Threat14 ening the Education and Career Trajectories of 

15 Students Act of 2019). 

16 ‘‘(B) AMOUNTS NOT SUBJECT TO APPOR17 TIONMENT.—Notwithstanding any other provi18 sion of law, amounts in the Fund shall not be 

19 subject to apportionment for purposes of chap20 ter 15 of title 31, United States Code, or under 

21 any other authority. 

22 ‘‘(C) NO FISCAL YEAR LIMITATION.—Sums 

23 deposited in the Fund shall remain in the Fund 

24 and be available for expenditure under this sub25 section without fiscal year limitation. 


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1 ‘‘(h) STATE ENFORCEMENT.— 

2 ‘‘(1) IN GENERAL.— 

3 ‘‘(A) STATE CAUSE OF ACTION.—A viola4 tion described in subparagraph (B) shall be a 

5 cause of action enforceable by a State, through 

6 the attorney general (or the equivalent thereof) 

7 of such State, in any district court of the 

8 United States in that State or in a State court 

9 that is located in that State and that has juris10 diction over the defendant. The State may seek 

11 any relief provided under paragraph (3) for 

12 such violation, including a civil penalty under 

13 subsection (c), or any remedies otherwise avail14 able under law. 

15 ‘‘(B) VIOLATIONS.—A violation described 

16 in this subparagraph is: 

17 ‘‘(i) A substantial misrepresentation. 

18 ‘‘(ii) A violation of section 487(a)(20). 

19 ‘‘(iii) A violation of the default manip20 ulation regulations promulgated by the 

21 Secretary under section 435(m)(3). 

22 ‘‘(iv) A violation of the program integ23 rity regulations promulgated by the Sec24 retary under this Act, including regulations 


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1 promulgated in section 102, section 455, 

2 and part H. 

3 ‘‘(v) In accordance with section 

4 455(h), any act or omission of the institu5 tion, third party servicer that contracts 

6 with such institution, or third party con7 tractor, related to the making of the loan 

8 for enrollment at the institution or the pro9 vision of educational services for which the 

10 loan was provided that would give rise to 

11 a cause of action against the institution 

12 under applicable State law. 

13 ‘‘(2) NOTICE REQUIRED.— 

14 ‘‘(A) IN GENERAL.—Except as provided in 

15 subparagraph (B), before initiating any action 

16 in a court or other administrative or regulatory 

17 proceeding against any institution of higher 

18 education, third party servicer that contracts 

19 with such institution, or third party contractor, 

20 as authorized by paragraph (1), a State attor21 ney general or the equivalent thereof shall time22 ly provide to the Secretary a copy of the com23 plete complaint to be filed and written notice 

24 describing such action or proceeding. 


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1 ‘‘(B) WAIVER OF PRIOR NOTICE.—If prior 

2 notice is not practicable under subparagraph 

3 (A), the State attorney general or equivalent 

4 thereof shall provide to the Secretary a copy of 

5 the complete complaint and the notice described 

6 in subparagraph (A) immediately upon insti7 tuting the action or proceeding. 

8 ‘‘(C) CONTENTS OF NOTICE.—The notifi9 cation required under this paragraph shall, at a 

10 minimum, describe— 

11 ‘‘(i) the identity of the parties; 

12 ‘‘(ii) the alleged facts underlying the 

13 proceeding; and 

14 ‘‘(iii) whether there may be a need to 

15 coordinate the prosecution of the pro16 ceeding so as not to interfere with any ac17 tion, including any rulemaking, undertaken 

18 by the Secretary or another Federal agen19 cy. 

20 ‘‘(3) PRESERVATION OF STATE AUTHORITY.— 

21 ‘‘(A) STATE CLAIMS.—Nothing in this sub22 section shall be construed as altering, limiting, 

23 or affecting the authority of a State attorney 

24 general or any other regulatory or enforcement 

25 agency or authority to bring an action or other 


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1 regulatory proceeding arising solely under the 

2 law in effect in that State. 

3 ‘‘(B) RELIEF.— 

4 ‘‘(i) IN GENERAL.—Except as pro5 vided in clause (ii), relief under this sub6 section may include, without limitation— 

7 ‘‘(I) rescission or reformation of 

8 contracts; 

9 ‘‘(II) refund of moneys or return 

10 of real property; 

11 ‘‘(III) restitution; 

12 ‘‘(IV) disgorgement or compensa13 tion for unjust enrichment; 

14 ‘‘(V) payment of damages or 

15 other monetary relief; 

16 ‘‘(VI) public notification regard17 ing the violation, including the costs 

18 of notification; or 

19 ‘‘(VII) limits on the activities or 

20 functions of involved persons, institu21 tions, third party servicers that con22 tract with institutions, or third party 

23 contractors. 

24 ‘‘(ii) EXCLUSION.—Relief under this 

25 subsection shall not include the ability to 


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1 suspend or terminate the eligibility status 

2 of an institution of higher education for 

3 programs under this title or withdrawal of 

4 the authority of the third party servicer or 

5 third party contractor to act on behalf of 

6 an institution or contract with an institu7 tion. 

8 ‘‘(i) PRIVATE RIGHT OF ACTION.— 

9 ‘‘(1) IN GENERAL.— 

10 ‘‘(A) PRIVATE RIGHT OF ACTION.—A viola11 tion described in subparagraph (B) shall be 

12 subject to a private right of action enforceable 

13 by a student or former student of an institution 

14 of higher education, on behalf of such individual 

15 or such individual and a class, in an appro16 priate district court of the United States or any 

17 other court of competent jurisdiction that also 

18 has jurisdiction over the defendant. The student 

19 or former student may seek any relief provided 

20 under subsection (h)(3)(B) for such violation, 

21 or any remedies otherwise available to the indi22 vidual under law and equity. 

23 ‘‘(B) VIOLATIONS.—A violation described 

24 in this subparagraph is: 

25 ‘‘(i) A substantial misrepresentation. 


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1 ‘‘(ii) A violation of section 487(a)(20). 

2 ‘‘(iii) A violation of the default manip3 ulation regulations promulgated by the 

4 Secretary under section 435(m)(3). 

5 ‘‘(iv) A violation of the program integ6 rity regulations promulgated by the Sec7 retary under this Act, including regulations 

8 promulgated in section 102, section 455, 

9 and part H. 

10 ‘‘(2) AMOUNT OF DAMAGES.— 

11 ‘‘(A) IN GENERAL.—Any institution of 

12 higher education, third party servicer that con13 tracts with such institution, or third party con14 tractor, that commits a substantial misrepre15 sentation may be held liable to a student or 

16 former student of that institution in an amount 

17 equal to the sum of— 

18 ‘‘(i) any actual damage sustained by 

19 such individual as a result of each substan20 tial misrepresentation; 

21 ‘‘(ii) any additional damages as the 

22 court may allow; and 

23 ‘‘(iii) in the case of any successful ac24 tion to enforce the foregoing liability, the 

25 costs of the action, together with a reasonVerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00140 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512

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1 able attorney’s fee as determined by the 

2 court. 

3 ‘‘(B) ABILITY TO ASSESS PUNITIVE DAM4 AGES.— 

5 ‘‘(i) IN GENERAL.—On a finding by 

6 the court that the institution of higher 

7 education, third party servicer that con8 tracts with such institution, or third party 

9 contractor, has committed a violation de10 scribed in paragraph (1)(B) with actual or 

11 constructive knowledge or reckless dis12 regard for such violation, the court may 

13 assess punitive damages not to exceed 

14 threefold the sum of actual damages sus15 tained by the plaintiff or class, including 

16 court costs and a reasonable attorney’s fee. 

17 ‘‘(ii) FACTORS CONSIDERED BY

18 COURT.—In determining the amount of li19 ability in any action under clause (i), the 

20 court shall consider, among other relevant 

21 factors— 

22 ‘‘(I) in any individual action 

23 under this subsection, the frequency 

24 and persistence of noncompliance by 

25 the institution of higher education, 


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1 third party servicer that contracts 

2 with such institution, or third party 

3 contractor and the nature of such 

4 noncompliance; or 

5 ‘‘(II) in any class action under 

6 this subsection, in addition to the fac7 tors listed in clause (i), the financial 

8 resources of the institution of higher 

9 education, third party servicer that 

10 contracts with such institution, or 

11 third party contractor and the number 

12 of persons adversely affected. 

13 ‘‘(3) JURISDICTION.—An action to enforce any 

14 liability created by this subsection may be brought 

15 in any appropriate United States district court with16 out regard to the amount in controversy, or in any 

17 other court of competent jurisdiction.’’. 

18 (b) CONFORMING AMENDMENTS.—Section 487(c), as 

19 amended by section 102(b), is further amended— 

20 (1) in paragraph (1), by striking subparagraphs 

21 (G) through (J); 

22 (2) by striking paragraphs (2) and (3); and 

23 (3) by redesignating paragraphs (4) through 

24 (7), as paragraphs (2) through (5), respectively. 


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1 SEC. 306. SUBSTANTIAL MISREPRESENTATION PROHIB2 ITED. 

3 Section 487(a) (20 U.S.C. 1094(a)), as amended by 

4 section 202(b), is further amended by adding at the end 

5 the following: 

6 ‘‘(30) The institution will not make a substan7 tial misrepresentation, as defined in section 489A.’’. 

Æ 


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