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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 3550 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Advancing College Choice and Ethics 
to Protect Taxpayers Act of 2012''.

SEC. 2. STRENGTHENING THE HIGHER EDUCATION ACT OF 1965 BAN ON INCENTIVE 
              COMPENSATION.

    Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 
1094(a)) is amended by striking paragraph (20) and inserting the 
following:
            ``(20)(A) The institution will not provide any commission, 
        bonus, or other incentive payment based directly or indirectly 
        on success in securing enrollments or financial aid to any 
        persons or entities engaged in any student recruiting or 
        admission activities or in making decisions regarding the award 
        of student financial assistance, except that this subparagraph 
        shall not apply to the recruitment of foreign students residing 
        in foreign countries who are not eligible to receive Federal 
        student assistance.
            ``(B) The Secretary shall not promulgate regulations 
        related to subparagraph (A) other than such regulations 
        promulgated in section 668.14(b)(22) of title 34, Code of 
        Federal Regulations (as in effect on July 1, 2011).''.

SEC. 3. PROHIBITION OF DECEPTIVE PRACTICES AND PROTECTION FROM HIGH 
              PRESSURE SALES.

    Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 
1094(a)) is amended by adding at the end the following:
            ``(30) The institution will not engage in deceptive 
        practices, defined as a practice that--
                    ``(A) is likely to mislead consumers acting 
                reasonably under the circumstance; and
                    ``(B) is material, that is, likely to affect 
                consumers' conduct or decisions with respect to the 
                product at issue.
            ``(31)(A) If the institution has a Student Default Risk 
        Index for a year (calculated by the Department and defined as 
        the institution's 3-year cohort default rate, as defined in 
        section 435(m), for the most recent year available, multiplied 
        by the percentage of students borrowing at the institution for 
        the most recent year available) of 0.1 or greater, the 
        institution will, for such year--
                    ``(i) provide individuals accepted to enroll at the 
                institution with a waiting period of not less than 2 
                weeks to consider and compare among postsecondary 
                options, program costs at the institution, and 
                employment prospects upon completion of a program of 
                study;
                    ``(ii) ensure that the receipt of financial aid, 
                incentives, or other benefits is not made contingent on 
                a student confirming enrollment before the end of the 
                student's waiting period; and
                    ``(iii) notify students accepted to enroll at the 
                institution of financial aid determinations not less 
                than 1 week before the enrollment confirmation 
                deadline, provided that all requested application forms 
                are received on time.
            ``(B) If an institution described in subparagraph (A) fails 
        to meet the requirements of this paragraph, the institution 
        shall be subject to a civil penalty in accordance with 
        subsection (c)(3)(B)(i)(I).''.

SEC. 4. GUARDING AGAINST MISREPRESENTATION.

    Section 487(c)(3) of the Higher Education Act of 1965 (20 U.S.C. 
1094(c)(3)) is amended--
            (1) in subparagraph (A), by inserting ``the space 
        availability in a program for which a student is considering 
        enrollment, its admission requirements, the transferability of 
        credits, whether the program meets the necessary standards to 
        qualify students to sit for licensing examinations or obtain 
        certification required as a precondition for employment, the 
        passage rates of students in obtaining certification 
        requirements, the passage rates of students who sit for 
        licensing examinations,'' after ``its financial charges,''; and
            (2) by striking subparagraph (B)(i) and inserting the 
        following:
                    ``(B)(i)(I) Upon determination, after reasonable 
                notice and opportunity for a hearing, that an eligible 
                institution has failed to meet the requirements 
                described under paragraph (31) of subsection (a), if 
                applicable to the eligible institution, or has engaged 
                in substantial misrepresentation of the nature of its 
                educational program, its financial charges, the space 
                availability in a program for which a student is 
                considering enrollment, its admission requirements, the 
                transferability of credits, whether the program meets 
                the necessary standards to qualify students to sit for 
                licensing examinations or obtain certification required 
                as a precondition for employment, the passage rates of 
                students in obtaining certification requirements, the 
                passage rates of students who sit for licensing 
                examinations, or the employability of its graduates, 
                the Secretary may impose a civil penalty upon an 
                eligible institution of not less than--
                            ``(aa) in the case of a first violation, 
                        the minimum amount of a civil penalty pursuant 
                        to clause (ii) or an amount equal to $1,000,000 
                        multiplied by the institution's Student Default 
                        Risk Index described in subsection (a)(31), 
                        whichever is larger;
                            ``(bb) in the case of a second violation, 
                        the minimum amount of a civil penalty pursuant 
                        to clause (ii) or an amount equal to $2,000,000 
                        multiplied by the institution's Student Default 
                        Risk Index described in subsection (a)(31), 
                        whichever is larger; and
                            ``(cc) in the case of a third or subsequent 
                        violation, the minimum amount of a civil 
                        penalty pursuant to clause (ii) or an amount 
                        equal to $3,000,000 multiplied by the 
                        institution's Student Default Risk Index 
                        described in subsection (a)(31), whichever is 
                        larger.
                    ``(II) For the purpose of subclause (I), any 
                violation by a particular institution will accrue 
                against all Office of Postsecondary Education 
                Identifications (OPE ID) for such institution and 
                within the period of participation for the institution, 
                as defined in section 668.13(b) of title 34, Code of 
                Federal Regulations.
                    ``(ii) Upon determination, after reasonable notice 
                and opportunity for a hearing, that an eligible 
                institution has violated or failed to carry out any 
                other provision of this title, the Secretary may impose 
                a civil penalty upon such institution of not more than 
                $27,500 (subject to such adjustments for inflation as 
                may be prescribed in regulation) for each such 
                violation or failure to carry out a provision of this 
                title.
                    ``(iii) Any civil penalty under this subparagraph 
                may be compromised by the Secretary. In determining the 
                amount of such penalty, or the amount agreed upon in 
                compromise, the appropriateness of the penalty to the 
                size of the institution of higher education subject to 
                the determination, and the gravity of the violation, 
                failure, or misrepresentation shall be considered. The 
                amount of such penalty or the amount agreed upon in 
                compromise may be deducted from any sums owing by the 
                United States to the institution charged.''.

SEC. 5. STANDARDIZED DISCLOSURE SHEET.

    Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is 
amended by adding at the end the following:
    ``(n) Standardized Disclosure Sheet.--
            ``(1) Duties of the secretary.--
                    ``(A) In general.--Not later than 6 months after 
                the date of enactment of the Advancing College Choice 
                and Ethics to Protect Taxpayers Act of 2012, the 
                Secretary shall develop, in coordination with the 
                Director of the Consumer Financial Protection Bureau, a 
                disclosure sheet template to disclose information, 
                including the information required under paragraph (3), 
                in a format that is easily understandable by students, 
                families, institutions, and institution-affiliated 
                organizations.
                    ``(B) Calculate averages, produce and make 
                available disclosure sheets, and establish requirements 
                for distribution.--Not later than 6 months after the 
                date of enactment of the Advancing College Choice and 
                Ethics to Protect Taxpayers Act of 2012, the Secretary 
                shall--
                            ``(i) calculate the State and national 
                        averages for the information described in 
                        paragraph (3);
                            ``(ii) produce complete disclosure sheets 
                        for each eligible institution, including the 
                        information described in paragraph (3) based on 
                        the latest information available;
                            ``(iii) make the completed disclosure 
                        sheets described in clause (ii) available 
                        online to institutions and the public; and
                            ``(iv) establish requirements for 
                        institutional distribution of the disclosure 
                        sheets to each enrolled student and student 
                        accepted to enroll, as required under paragraph 
                        (2).
                    ``(C) Provision of sheets and data.--The Secretary 
                shall annually produce and make available to 
                institutions and the public disclosure sheets with 
                institutional data, and State, institutional category, 
                and national averages.
                    ``(D) Consultation and content and format of 
                disclosure sheet.--
                            ``(i) In general.--In carrying out this 
                        subsection, the Secretary shall consult with 
                        students, the families of such students, 
                        representatives of eligible institutions 
                        participating in any program under this title 
                        (including financial aid administrators, 
                        admission officers, and business officers), 
                        representatives of institution-affiliated 
                        organizations, secondary school guidance 
                        counselors, and consumer advocacy groups to--
                                    ``(I) develop the layout and design 
                                for the disclosure sheets described in 
                                this paragraph; and
                                    ``(II) consider the merits of 
                                requiring additional information in 
                                institutional disclosure sheets, as 
                                authorized under paragraph (3)(Q).
                            ``(ii) Consumer testing.--The Secretary 
                        shall carry out consumer testing of the 
                        disclosure sheets, targeted to low-income 
                        students, first-generation students, and 
                        students of color, and their families.
            ``(2) Duties of institutions.--
                    ``(A) In general.--Each eligible institution 
                participating in any program under this title shall 
                disclose to each student enrolled and accepted to 
                enroll in the institution in a manner that allows for 
                the student or the family of the student to take such 
                information into account before enrolling, regardless 
                of whether the information was requested or not, and 
                through appropriate publications, mailings, or 
                electronic media, the information described in 
                paragraph (3).
                    ``(B) Use of disclosure sheets.--In carrying out 
                the requirement of subparagraph (A), an eligible 
                institution shall use the disclosure sheet produced in 
                accordance with paragraph (1)(B)(ii).
                    ``(C) Timing of disclosure.--An institution that is 
                required under section 487(a)(31) to provide a student 
                accepted for enrollment with a waiting period of not 
                less than 2 weeks to consider postsecondary options, 
                shall disclose to the student the information described 
                in paragraph (3) at or before the start of such waiting 
                period.
            ``(3) Content of the disclosure sheets.--Each disclosure 
        sheet produced in accordance with paragraph (1)(B)(ii) shall 
        include the following information based on the latest 
        information available, for the most recent year available:
                    ``(A) The category of the institution as public, 
                nonprofit, or for-profit, and the level of the 
                institution as less than 2-year, 2-year, or 4-year, as 
                defined by the most common degree or credential awarded 
                by the institution.
                    ``(B) The information described in subsection 
                (a)(1)(E), and the average cost of attendance for 
                institutions at the same level as the institution in 
                the State in which the institution is located and for 
                institutions at the same level as the institution 
                throughout the United States.
                    ``(C) The average net price (as defined in section 
                132) of the institution, and the average net price (as 
                defined in section 132) for institutions at the same 
                level as the institution in the State in which the 
                institution is located and for institutions at the same 
                level as the institution throughout the United States.
                    ``(D) The average net price (as defined in section 
                132) of the institution for students enrolled at the 
                institution who receive assistance under this title, 
                for each of the following family income categories:
                            ``(i) $0 to $30,000.
                            ``(ii) $30,001 to $48,000.
                            ``(iii) $48,001 to $75,000.
                            ``(iv) $75,001 to $110,000.
                            ``(v) $110,001 or more.
                    ``(E) The percentage of students receiving grant 
                aid at the institution, and the average percentage of 
                students receiving grant aid for institutions at the 
                same level as the institution in the State in which the 
                institution is located and for institutions at the same 
                level as the institution throughout the United States.
                    ``(F) The web address for the net price calculator 
                of the institution.
                    ``(G) The cohort default rate, as described in 
                section 435(m), of the institution, and the average 
                cohort default rate for institutions at the same level 
                as the institution in the State in which the 
                institution is located and for institutions at the same 
                level as the institution throughout the United States.
                    ``(H) The percentage of graduates who borrowed 
                Federal student loans prior to graduating for the most 
                recent year available, and the average percentage of 
                graduates who borrowed Federal student loans prior to 
                graduating for institutions at the same level as the 
                institution in the State in which the institution is 
                located and for institutions at the same level as the 
                institution throughout the United States.
                    ``(I) The average Federal student loan debt of 
                Federal student loan borrowers after graduating from 
                the institution in the most recent year available, and 
                the average Federal student loan debt of Federal 
                student loan borrowers after graduating from 
                institutions at the same level as the institution in 
                the State in which the institution is located and for 
                institutions at the same level as the institution 
                throughout the United States.
                    ``(J) For an institution that determines that its 
                mission includes providing substantial preparation for 
                students to enroll in another eligible institution, the 
                transfer-out rate for the most recent year available.
                    ``(K) For an institution that does not determine 
                that its mission includes providing substantial 
                preparation for students to enroll in another eligible 
                institution, the retention rate as described in 
                subsection (a)(1)(U).
                    ``(L) The information described in subsection 
                (a)(1)(L), and the average completion or graduation 
                rate for institutions at the same level as the 
                institution in the State in which the institution is 
                located and for institutions at the same level as the 
                institution throughout the United States.
                    ``(M) A statement acknowledging the prohibition on 
                incentive compensation under section 487(a)(20).
                    ``(N) A statement informing the student of the 
                institution's obligation to provide a waiting period of 
                not less than 2 weeks between acceptance and 
                enrollment, if applicable, as described in section 
                487(a)(31)(A).
                    ``(O) Federal resources available to students to 
                enable the students to compare programs of study and 
                costs, such as the College Navigator System, including 
                the web address for College Navigator.
                    ``(P) Additional relevant information as determined 
                appropriate by the Secretary through the process 
                described in paragraph (1)(D)(i)(II).''.

SEC. 6. ELEVATING KEY INSTITUTIONAL DISCLOSURES.

    Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092), 
as amended by section 4, is further amended--
            (1) in subsection (a)(1)--
                    (A) by striking ``The information required by this 
                section'' and inserting ``Except as otherwise provided 
                under subsection (o), the information required by this 
                section'';
                    (B) in the matter preceding subparagraph (A), by 
                inserting ``and prospective students'' after ``provide 
                to all enrolled students''; and
                    (C) by striking subparagraph (J) and inserting the 
                following:
                    ``(J) the names of the associations, agencies, or 
                governmental bodies that accredit, approve, license, or 
                certify the institution and its programs, and the 
                procedures under which any current or prospective 
                student may obtain or review upon request a copy of the 
                documents describing the institution's accreditation, 
                approval, licensing, certification, and the process for 
                registering a complaint within any accrediting or 
                licensure body, and the web address of, or a link to, 
                the Department's Accreditation in the United States 
                online resource;''; and
            (2) by adding at the end the following:
    ``(o) Required Front-End Information Disclosure.--Notwithstanding 
subsection (a), each eligible institution participating in any program 
under this title shall directly disclose to each student accepted to 
enroll in a manner that allows for the students or the families to take 
such information into account before enrolling, regardless of whether 
the information was requested or not, the following information:
            ``(1) The information described in subsection (a)(1)(D).
            ``(2) A good-faith estimate of the cost of attendance for 
        the duration of the program of instruction in which the student 
        is considering enrolling, based on the latest information 
        available.
            ``(3) A statement of the requirements and procedures for 
        officially withdrawing from the institution, including policies 
        and procedures for reimbursement, and a statement outlining the 
        period during which students may withdraw from the institution 
        without incurring expenses or loan debt, as described in 
        section 485(a)(1)(F).
            ``(4) A description of the procedures by which a student 
        may submit complaints regarding educational institutions to 
        applicable Federal and State agencies, including State 
        approving agencies and accrediting agencies or associations and 
        such contact information as may be necessary to submit such 
        complaints.
            ``(5) The information described in subsection (a)(1)(G).
            ``(6) The information described in subsection (a)(1)(I).
            ``(7) The information described in subsection (a)(1)(J).
            ``(8) The information described in subsection (a)(1)(M).
            ``(9) The information described in subsection (a)(1)(R).
            ``(10) Accurate information about space availability in the 
        program for which the student is considering enrollment for the 
        current term, a calendar of registration and financial aid 
        deadlines for the current term, and the frequency with which 
        the program begins in a calendar year.
            ``(11) Any articulation agreements the institution may have 
        with any other educational institutions.
            ``(12) The policies established by the institution 
        regarding transfer of course credit, including the following:
                    ``(A) Any established criteria the institution uses 
                regarding the transfer of course credit earned at 
                another institution.
                    ``(B) Any changes by the institution in such 
                policies and established criteria that first took 
                effect in the 1-year period preceding the date of such 
                determination.
            ``(13) To the degree practicable to determine, the median 
        amount of private student loans, Federal student loans, and 
        total student loans, held by students at the institution upon 
        completion of a program of education at the institution.
            ``(14) A general overview of Federal student aid programs, 
        the implications of incurring student loan debt (including from 
        private sources), and the consequences of defaulting on a loan, 
        including adverse credit reports, delinquent debt collection 
        procedures under Federal law, and litigation.
            ``(15) The percentage of students who enroll in the first 
        term of a program of education at the institution who, on the 
        date that is 1 year after the date of enrolling, are not 
        enrolled in any program of education at the institution and 
        have not completed a degree or certificate at the 
        institution.''.
                                 <all>
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