II 

112TH CONGRESS 

2D SESSION S. 3550 

To amend the Higher Education Act of 1965 to protect students from 

deceptive practices and high-pressure sales by institutions of higher education, to provide a waiting period for students to make enrollment 

decisions, to guard against misrepresentation, to standardize and elevate 

institutional disclosures, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 13, 2012 

Mr. BLUMENTHAL (for himself and Mr. HARKIN) introduced the following bill; 

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

A BILL 

To amend the Higher Education Act of 1965 to protect 

students from deceptive practices and high-pressure sales 

by institutions of higher education, to provide a waiting 

period for students to make enrollment decisions, to 

guard against misrepresentation, to standardize and elevate institutional disclosures, 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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Advancing College 

5 Choice and Ethics to Protect Taxpayers Act of 2012’’. 


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1 SEC. 2. STRENGTHENING THE HIGHER EDUCATION ACT OF 

2 1965 BAN ON INCENTIVE COMPENSATION. 

3 Section 487(a) of the Higher Education Act of 1965 

4 (20 U.S.C. 1094(a)) is amended by striking paragraph 

5 (20) and inserting the following: 

6 ‘‘(20)(A) The institution will not provide any 

7 commission, bonus, or other incentive payment based 

8 directly or indirectly on success in securing enroll9 ments or financial aid to any persons or entities en10 gaged in any student recruiting or admission activi11 ties or in making decisions regarding the award of 

12 student financial assistance, except that this sub13 paragraph shall not apply to the recruitment of for14 eign students residing in foreign countries who are 

15 not eligible to receive Federal student assistance. 

16 ‘‘(B) The Secretary shall not promulgate regu17 lations related to subparagraph (A) other than such 

18 regulations promulgated in section 668.14(b)(22) of 

19 title 34, Code of Federal Regulations (as in effect on 

20 July 1, 2011).’’. 

21 SEC. 3. PROHIBITION OF DECEPTIVE PRACTICES AND PRO22 TECTION FROM HIGH PRESSURE SALES. 

23 Section 487(a) of the Higher Education Act of 1965 

24 (20 U.S.C. 1094(a)) is amended by adding at the end the 

25 following: 


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1 ‘‘(30) The institution will not engage in decep2 tive practices, defined as a practice that— 

3 ‘‘(A) is likely to mislead consumers acting 

4 reasonably under the circumstance; and 

5 ‘‘(B) is material, that is, likely to affect 

6 consumers’ conduct or decisions with respect to 

7 the product at issue. 

8 ‘‘(31)(A) If the institution has a Student De9 fault Risk Index for a year (calculated by the De10 partment and defined as the institution’s 3-year co11 hort default rate, as defined in section 435(m), for 

12 the most recent year available, multiplied by the per13 centage of students borrowing at the institution for 

14 the most recent year available) of 0.1 or greater, the 

15 institution will, for such year— 

16 ‘‘(i) provide individuals accepted to enroll 

17 at the institution with a waiting period of not 

18 less than 2 weeks to consider and compare 

19 among postsecondary options, program costs at 

20 the institution, and employment prospects upon 

21 completion of a program of study; 

22 ‘‘(ii) ensure that the receipt of financial 

23 aid, incentives, or other benefits is not made 

24 contingent on a student confirming enrollment 


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1 before the end of the student’s waiting period; 

2 and 

3 ‘‘(iii) notify students accepted to enroll at 

4 the institution of financial aid determinations 

5 not less than 1 week before the enrollment con6 firmation deadline, provided that all requested 

7 application forms are received on time. 

8 ‘‘(B) If an institution described in subpara9 graph (A) fails to meet the requirements of this 

10 paragraph, the institution shall be subject to a civil 

11 penalty in accordance with subsection 

12 (c)(3)(B)(i)(I).’’. 

13 SEC. 4. GUARDING AGAINST MISREPRESENTATION. 

14 Section 487(c)(3) of the Higher Education Act of 

15 1965 (20 U.S.C. 1094(c)(3)) is amended— 

16 (1) in subparagraph (A), by inserting ‘‘the 

17 space availability in a program for which a student 

18 is considering enrollment, its admission require19 ments, the transferability of credits, whether the 

20 program meets the necessary standards to qualify 

21 students to sit for licensing examinations or obtain 

22 certification required as a precondition for employ23 ment, the passage rates of students in obtaining cer24 tification requirements, the passage rates of students 


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1 who sit for licensing examinations,’’ after ‘‘its finan2 cial charges,’’; and 

3 (2) by striking subparagraph (B)(i) and insert4 ing the following: 

5 ‘‘(B)(i)(I) Upon determination, after rea6 sonable notice and opportunity for a hearing, 

7 that an eligible institution has failed to meet 

8 the requirements described under paragraph 

9 (31) of subsection (a), if applicable to the eligi10 ble institution, or has engaged in substantial 

11 misrepresentation of the nature of its edu12 cational program, its financial charges, the 

13 space availability in a program for which a stu14 dent is considering enrollment, its admission re15 quirements, the transferability of credits, 

16 whether the program meets the necessary 

17 standards to qualify students to sit for licensing 

18 examinations or obtain certification required as 

19 a precondition for employment, the passage 

20 rates of students in obtaining certification re21 quirements, the passage rates of students who 

22 sit for licensing examinations, or the employ23 ability of its graduates, the Secretary may im24 pose a civil penalty upon an eligible institution 

25 of not less than— 


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1 ‘‘(aa) in the case of a first violation, 

2 the minimum amount of a civil penalty 

3 pursuant to clause (ii) or an amount equal 

4 to $1,000,000 multiplied by the institu5 tion’s Student Default Risk Index de6 scribed in subsection (a)(31), whichever is 

7 larger; 

8 ‘‘(bb) in the case of a second viola9 tion, the minimum amount of a civil pen10 alty pursuant to clause (ii) or an amount 

11 equal to $2,000,000 multiplied by the in12 stitution’s Student Default Risk Index de13 scribed in subsection (a)(31), whichever is 

14 larger; and 

15 ‘‘(cc) in the case of a third or subse16 quent violation, the minimum amount of a 

17 civil penalty pursuant to clause (ii) or an 

18 amount equal to $3,000,000 multiplied by 

19 the institution’s Student Default Risk 

20 Index described in subsection (a)(31), 

21 whichever is larger. 

22 ‘‘(II) For the purpose of subclause (I), any 

23 violation by a particular institution will accrue 

24 against all Office of Postsecondary Education 

25 Identifications (OPE ID) for such institution 


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1 and within the period of participation for the 

2 institution, as defined in section 668.13(b) of 

3 title 34, Code of Federal Regulations. 

4 ‘‘(ii) Upon determination, after reasonable 

5 notice and opportunity for a hearing, that an 

6 eligible institution has violated or failed to carry 

7 out any other provision of this title, the Sec8 retary may impose a civil penalty upon such in9 stitution of not more than $27,500 (subject to 

10 such adjustments for inflation as may be pre11 scribed in regulation) for each such violation or 

12 failure to carry out a provision of this title. 

13 ‘‘(iii) Any civil penalty under this subpara14 graph may be compromised by the Secretary. In 

15 determining the amount of such penalty, or the 

16 amount agreed upon in compromise, the appro17 priateness of the penalty to the size of the insti18 tution of higher education subject to the deter19 mination, and the gravity of the violation, fail20 ure, or misrepresentation shall be considered. 

21 The amount of such penalty or the amount 

22 agreed upon in compromise may be deducted 

23 from any sums owing by the United States to 

24 the institution charged.’’. 


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1 SEC. 5. STANDARDIZED DISCLOSURE SHEET. 

2 Section 485 of the Higher Education Act of 1965 (20 

3 U.S.C. 1092) is amended by adding at the end the fol4 lowing: 

5 ‘‘(n) STANDARDIZED DISCLOSURE SHEET.— 

6 ‘‘(1) DUTIES OF THE SECRETARY.— 

7 ‘‘(A) IN GENERAL.—Not later than 6 

8 months after the date of enactment of the Ad9 vancing College Choice and Ethics to Protect 

10 Taxpayers Act of 2012, the Secretary shall de11 velop, in coordination with the Director of the 

12 Consumer Financial Protection Bureau, a dis13 closure sheet template to disclose information, 

14 including the information required under para15 graph (3), in a format that is easily under16 standable by students, families, institutions, 

17 and institution-affiliated organizations. 

18 ‘‘(B) CALCULATE AVERAGES, PRODUCE

19 AND MAKE AVAILABLE DISCLOSURE SHEETS, 

20 AND ESTABLISH REQUIREMENTS FOR DISTRIBU21 TION.—Not later than 6 months after the date 

22 of enactment of the Advancing College Choice 

23 and Ethics to Protect Taxpayers Act of 2012, 

24 the Secretary shall— 


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1 ‘‘(i) calculate the State and national 

2 averages for the information described in 

3 paragraph (3); 

4 ‘‘(ii) produce complete disclosure 

5 sheets for each eligible institution, includ6 ing the information described in paragraph 

7 (3) based on the latest information avail8 able; 

9 ‘‘(iii) make the completed disclosure 

10 sheets described in clause (ii) available on11 line to institutions and the public; and 

12 ‘‘(iv) establish requirements for insti13 tutional distribution of the disclosure 

14 sheets to each enrolled student and student 

15 accepted to enroll, as required under para16 graph (2). 

17 ‘‘(C) PROVISION OF SHEETS AND DATA.— 

18 The Secretary shall annually produce and make 

19 available to institutions and the public disclo20 sure sheets with institutional data, and State, 

21 institutional category, and national averages. 

22 ‘‘(D) CONSULTATION AND CONTENT AND

23 FORMAT OF DISCLOSURE SHEET.— 

24 ‘‘(i) IN GENERAL.—In carrying out 

25 this subsection, the Secretary shall consult 


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1 with students, the families of such stu2 dents, representatives of eligible institu3 tions participating in any program under 

4 this title (including financial aid adminis5 trators, admission officers, and business 

6 officers), representatives of institution-af7 filiated organizations, secondary school 

8 guidance counselors, and consumer advo9 cacy groups to— 

10 ‘‘(I) develop the layout and de11 sign for the disclosure sheets de12 scribed in this paragraph; and 

13 ‘‘(II) consider the merits of re14 quiring additional information in in15 stitutional disclosure sheets, as au16 thorized under paragraph (3)(Q). 

17 ‘‘(ii) CONSUMER TESTING.—The Sec18 retary shall carry out consumer testing of 

19 the disclosure sheets, targeted to low-in20 come students, first-generation students, 

21 and students of color, and their families. 

22 ‘‘(2) DUTIES OF INSTITUTIONS.— 

23 ‘‘(A) IN GENERAL.—Each eligible institu24 tion participating in any program under this 

25 title shall disclose to each student enrolled and 


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1 accepted to enroll in the institution in a manner 

2 that allows for the student or the family of the 

3 student to take such information into account 

4 before enrolling, regardless of whether the in5 formation was requested or not, and through 

6 appropriate publications, mailings, or electronic 

7 media, the information described in paragraph 

8 (3). 

9 ‘‘(B) USE OF DISCLOSURE SHEETS.—In 

10 carrying out the requirement of subparagraph 

11 (A), an eligible institution shall use the disclo12 sure sheet produced in accordance with para13 graph (1)(B)(ii). 

14 ‘‘(C) TIMING OF DISCLOSURE.—An institu15 tion that is required under section 487(a)(31) 

16 to provide a student accepted for enrollment 

17 with a waiting period of not less than 2 weeks 

18 to consider postsecondary options, shall disclose 

19 to the student the information described in 

20 paragraph (3) at or before the start of such 

21 waiting period. 

22 ‘‘(3) CONTENT OF THE DISCLOSURE SHEETS.— 

23 Each disclosure sheet produced in accordance with 

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1 formation based on the latest information available, 

2 for the most recent year available: 

3 ‘‘(A) The category of the institution as 

4 public, nonprofit, or for-profit, and the level of 

5 the institution as less than 2-year, 2-year, or 4- 

6 year, as defined by the most common degree or 

7 credential awarded by the institution. 

8 ‘‘(B) The information described in sub9 section (a)(1)(E), and the average cost of at10 tendance for institutions at the same level as 

11 the institution in the State in which the institu12 tion is located and for institutions at the same 

13 level as the institution throughout the United 

14 States. 

15 ‘‘(C) The average net price (as defined in 

16 section 132) of the institution, and the average 

17 net price (as defined in section 132) for institu18 tions at the same level as the institution in the 

19 State in which the institution is located and for 

20 institutions at the same level as the institution 

21 throughout the United States. 

22 ‘‘(D) The average net price (as defined in 

23 section 132) of the institution for students en24 rolled at the institution who receive assistance 


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1 under this title, for each of the following family 

2 income categories: 

3 ‘‘(i) $0 to $30,000. 

4 ‘‘(ii) $30,001 to $48,000. 

5 ‘‘(iii) $48,001 to $75,000. 

6 ‘‘(iv) $75,001 to $110,000. 

7 ‘‘(v) $110,001 or more. 

8 ‘‘(E) The percentage of students receiving 

9 grant aid at the institution, and the average 

10 percentage of students receiving grant aid for 

11 institutions at the same level as the institution 

12 in the State in which the institution is located 

13 and for institutions at the same level as the in14 stitution throughout the United States. 

15 ‘‘(F) The web address for the net price cal16 culator of the institution. 

17 ‘‘(G) The cohort default rate, as described 

18 in section 435(m), of the institution, and the 

19 average cohort default rate for institutions at 

20 the same level as the institution in the State in 

21 which the institution is located and for institu22 tions at the same level as the institution 

23 throughout the United States. 

24 ‘‘(H) The percentage of graduates who 

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1 uating for the most recent year available, and 

2 the average percentage of graduates who bor3 rowed Federal student loans prior to grad4 uating for institutions at the same level as the 

5 institution in the State in which the institution 

6 is located and for institutions at the same level 

7 as the institution throughout the United States. 

8 ‘‘(I) The average Federal student loan debt 

9 of Federal student loan borrowers after grad10 uating from the institution in the most recent 

11 year available, and the average Federal student 

12 loan debt of Federal student loan borrowers 

13 after graduating from institutions at the same 

14 level as the institution in the State in which the 

15 institution is located and for institutions at the 

16 same level as the institution throughout the 

17 United States. 

18 ‘‘(J) For an institution that determines 

19 that its mission includes providing substantial 

20 preparation for students to enroll in another eli21 gible institution, the transfer-out rate for the 

22 most recent year available. 

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1 other eligible institution, the retention rate as 

2 described in subsection (a)(1)(U). 

3 ‘‘(L) The information described in sub4 section (a)(1)(L), and the average completion 

5 or graduation rate for institutions at the same 

6 level as the institution in the State in which the 

7 institution is located and for institutions at the 

8 same level as the institution throughout the 

9 United States. 

10 ‘‘(M) A statement acknowledging the pro11 hibition on incentive compensation under sec12 tion 487(a)(20). 

13 ‘‘(N) A statement informing the student of 

14 the institution’s obligation to provide a waiting 

15 period of not less than 2 weeks between accept16 ance and enrollment, if applicable, as described 

17 in section 487(a)(31)(A). 

18 ‘‘(O) Federal resources available to stu19 dents to enable the students to compare pro20 grams of study and costs, such as the College 

21 Navigator System, including the web address 

22 for College Navigator. 

23 ‘‘(P) Additional relevant information as de24 termined appropriate by the Secretary through 


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1 the process described in paragraph 

2 (1)(D)(i)(II).’’. 

3 SEC. 6. ELEVATING KEY INSTITUTIONAL DISCLOSURES. 

4 Section 485 of the Higher Education Act of 1965 (20 

5 U.S.C. 1092), as amended by section 4, is further amend6 ed— 

7 (1) in subsection (a)(1)— 

8 (A) by striking ‘‘The information required 

9 by this section’’ and inserting ‘‘Except as other10 wise provided under subsection (o), the infor11 mation required by this section’’; 

12 (B) in the matter preceding subparagraph 

13 (A), by inserting ‘‘and prospective students’’ 

14 after ‘‘provide to all enrolled students’’; and 

15 (C) by striking subparagraph (J) and in16 serting the following: 

17 ‘‘(J) the names of the associations, agen18 cies, or governmental bodies that accredit, ap19 prove, license, or certify the institution and its 

20 programs, and the procedures under which any 

21 current or prospective student may obtain or 

22 review upon request a copy of the documents 

23 describing the institution’s accreditation, ap24 proval, licensing, certification, and the process 

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1 iting or licensure body, and the web address of, 

2 or a link to, the Department’s Accreditation in 

3 the United States online resource;’’; and 

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

5 ‘‘(o) REQUIRED FRONT-END INFORMATION DISCLO6 SURE.—Notwithstanding subsection (a), each eligible in7 stitution participating in any program under this title 

8 shall directly disclose to each student accepted to enroll 

9 in a manner that allows for the students or the families 

10 to take such information into account before enrolling, re11 gardless of whether the information was requested or not, 

12 the following information: 

13 ‘‘(1) The information described in subsection 

14 (a)(1)(D). 

15 ‘‘(2) A good-faith estimate of the cost of at16 tendance for the duration of the program of instruc17 tion in which the student is considering enrolling, 

18 based on the latest information available. 

19 ‘‘(3) A statement of the requirements and pro20 cedures for officially withdrawing from the institu21 tion, including policies and procedures for reim22 bursement, and a statement outlining the period 

23 during which students may withdraw from the insti24 tution without incurring expenses or loan debt, as 

25 described in section 485(a)(1)(F). 


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1 ‘‘(4) A description of the procedures by which 

2 a student may submit complaints regarding edu3 cational institutions to applicable Federal and State 

4 agencies, including State approving agencies and ac5 crediting agencies or associations and such contact 

6 information as may be necessary to submit such 

7 complaints. 

8 ‘‘(5) The information described in subsection 

9 (a)(1)(G). 

10 ‘‘(6) The information described in subsection 

11 (a)(1)(I). 

12 ‘‘(7) The information described in subsection 

13 (a)(1)(J). 

14 ‘‘(8) The information described in subsection 

15 (a)(1)(M). 

16 ‘‘(9) The information described in subsection 

17 (a)(1)(R). 

18 ‘‘(10) Accurate information about space avail19 ability in the program for which the student is con20 sidering enrollment for the current term, a calendar 

21 of registration and financial aid deadlines for the 

22 current term, and the frequency with which the pro23 gram begins in a calendar year. 


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1 ‘‘(11) Any articulation agreements the institu2 tion may have with any other educational institu3 tions. 

4 ‘‘(12) The policies established by the institution 

5 regarding transfer of course credit, including the fol6 lowing: 

7 ‘‘(A) Any established criteria the institu8 tion uses regarding the transfer of course credit 

9 earned at another institution. 

10 ‘‘(B) Any changes by the institution in 

11 such policies and established criteria that first 

12 took effect in the 1-year period preceding the 

13 date of such determination. 

14 ‘‘(13) To the degree practicable to determine, 

15 the median amount of private student loans, Federal 

16 student loans, and total student loans, held by stu17 dents at the institution upon completion of a pro18 gram of education at the institution. 

19 ‘‘(14) A general overview of Federal student aid 

20 programs, the implications of incurring student loan 

21 debt (including from private sources), and the con22 sequences of defaulting on a loan, including adverse 

23 credit reports, delinquent debt collection procedures 

24 under Federal law, and litigation. 


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1 ‘‘(15) The percentage of students who enroll in 

2 the first term of a program of education at the insti3 tution who, on the date that is 1 year after the date 

4 of enrolling, are not enrolled in any program of edu5 cation at the institution and have not completed a 

6 degree or certificate at the institution.’’. 

Æ 


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