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[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1525 Introduced in Senate (IS)]

<DOC>

116th CONGRESS
  1st Session
                                S. 1525

To amend the Higher Education Act of 1965 to provide for institutional 
 ineligibility based on low cohort repayment rates and to require risk-
         sharing payments of institutions of higher education.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                              May 16, 2019

Mrs. Shaheen (for herself and Mr. Young) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL

 
To amend the Higher Education Act of 1965 to provide for institutional 
 ineligibility based on low cohort repayment rates and to require risk-
         sharing payments of institutions of higher education.

    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 ``Student Protection and Success 
Act''.

SEC. 2. INSTITUTIONAL INELIGIBILITY BASED ON LOW COHORT REPAYMENT RATE.

    (a) In General.--Section 455 of the Higher Education Act of 1965 
(20 U.S.C. 1087e) is amended by adding at the end the following:
    ``(r) Ineligibility Due to Low Cohort Repayment Rate.--
            ``(1) In general.--Beginning with fiscal year 2022 and each 
        succeeding fiscal year, an institution that has a cohort 
        repayment rate that is equal to or less than 15 percent shall 
        not be eligible to participate in a program under this part for 
        such fiscal year and for the 2 succeeding fiscal years.
            ``(2) Appeals.--
                    ``(A) In general.--An institution may appeal the 
                loss of eligibility under this subsection to the 
                Secretary within 30 days of receiving notification from 
                the Secretary of the loss of eligibility under this 
                subsection.
                    ``(B) Continued participation.--During an appeal 
                under subparagraph (A), the Secretary may permit the 
                institution to continue to participate in a program 
                under this part if the institution demonstrates to the 
                satisfaction of the Secretary that the Secretary's 
                calculation of its cohort repayment rate is not 
                accurate, and that recalculation would increase its 
                cohort repayment rate to be more than 15 percent.
                    ``(C) Required payment.--If an institution 
                continues to participate in a program under this part, 
                and the institution's appeal of the loss of eligibility 
                is unsuccessful, the institution shall be required to 
                pay to the Secretary an amount equal to the amount of 
                loans made by the Secretary under this part to 
                borrowers attending, or planning to attend, that 
                institution during the pendency of such appeal and the 
                interest, special allowance, reinsurance, and any 
                related payments made by the Secretary (or which the 
                Secretary is obligated to make) with respect to such 
                loans.
            ``(3) Cohort repayment rate.--
                    ``(A) In general.--In this subsection, the term 
                `cohort repayment rate' means, for any fiscal year 
                beginning with fiscal year 2022--
                            ``(i) in the case in which 30 or more 
                        borrowers at the institution enter repayment on 
                        Federal Direct Stafford Loans, Federal Direct 
                        Unsubsidized Stafford Loans, Federal Direct 
                        PLUS Loans, or Federal Direct Consolidation 
                        Loans, received for attendance at the 
                        institution, the percentage of those borrowers 
                        who are not in default and who make at least a 
                        one dollar reduction on their initial student 
                        loan principal balance before the end of the 
                        second fiscal year following the fiscal year in 
                        which the borrowers entered repayment, except 
                        as provided in subparagraph (B); and
                            ``(ii) in the case in which less than 30 
                        borrowers at the institution enter repayment on 
                        Federal Direct Stafford Loans, Federal Direct 
                        Unsubsidized Stafford Loans, Federal Direct 
                        PLUS Loans, or Federal Direct Consolidation 
                        Loans, received for attendance at the 
                        institution, the percentage of those borrowers 
                        plus all of the borrowers at the institution 
                        who entered repayment on such loans (or on the 
                        portion of a loan made under section 428C that 
                        is used to repay any such loans) in the 3 
                        fiscal years preceding the fiscal year for 
                        which the determination is made, who are not in 
                        default and who make at least a one dollar 
                        reduction on their initial student loan 
                        principal balance before the end of the second 
                        fiscal year following the year in which the 
                        borrowers entered repayment, except as provided 
                        in subparagraph (B).
                    ``(B) Exception.--The `cohort repayment rate' 
                calculation under subparagraph (A) shall not include in 
                the calculation a borrower who is--
                            ``(i) in deferment on repayment of a loan 
                        described in subparagraph (A) due to study in 
                        an approved graduate fellowship program or in 
                        an approved rehabilitation training program for 
                        the disabled;
                            ``(ii) in deferment on repayment of a loan 
                        described in subparagraph (A) during a period 
                        of at least half-time enrollment in college or 
                        a career school;
                            ``(iii) in deferment on repayment of a loan 
                        described in subparagraph (A) during a period 
                        of service qualifying for loan discharge or 
                        cancellation under part E;
                            ``(iv) in deferment on repayment of a loan 
                        described in subparagraph (A) due to active 
                        duty military service of the borrower during a 
                        war, military operation, or national emergency;
                            ``(v) in deferment on repayment of a loan 
                        described in subparagraph (A) during the 13 
                        months following the conclusion of qualifying 
                        active duty military service by the borrower, 
                        or until the borrower returns to enrollment on 
                        at least a half-time basis, whichever is 
                        earlier, if the borrower is a member of the 
                        National Guard or other reserve component of 
                        the Armed Forces and was called or ordered to 
                        active duty while enrolled at least half-time 
                        at an eligible school or within 6 months of 
                        having been enrolled at least half-time;
                            ``(vi) in mandatory forbearance on 
                        repayment of a loan described in subparagraph 
                        (A) for the full fiscal year; or
                            ``(vii) serving as a volunteer under the 
                        Peace Corps Act (22 U.S.C. 2501 et seq.) or the 
                        Domestic Volunteer Service Act of 1973 (42 
                        U.S.C. 4950 et seq.).
                    ``(C) Publication of repayment rates.--The 
                Secretary shall publish the cohort repayment rates for 
                institutions determined under this subsection.
            ``(4) Notification.--Beginning with the first fiscal year 
        for which data are available after the date of enactment of the 
        Student Protection and Success Act and each succeeding fiscal 
        year until fiscal year 2022, the Secretary shall notify each 
        institution that has a cohort repayment rate that is equal to 
        or less than 15 percent that the institution risks losing 
        eligibility to participate in a program under this part.''.
    (b) Ineligibility in Other Programs.--
            (1) Pell grants.--Section 401(j) of the Higher Education 
        Act of 1965 (20 U.S.C. 1070a(j)) is amended--
                    (A) in the heading, by striking ``Based on Default 
                Rates'';
                    (B) in paragraph (1), by inserting ``until fiscal 
                year 2022'' after ``succeeding fiscal year'';
                    (C) in paragraph (2), by inserting ``or cohort 
                repayment rate determination'' after ``default rate 
                determination''; and
                    (D) by adding at the end the following:
            ``(3) Ineligibility based on low cohort repayment rates.--
        No institution of higher education shall be an eligible 
        institution for purposes of this subpart if such institution of 
        higher education is ineligible to participate in a program 
        under part D due to a low cohort repayment rate, as determined 
        under section 455(r).''.
            (2) Student loan insurance program.--Section 435(a) of the 
        Higher Education Act of 1965 (20 U.S.C. 1085(a)) is amended--
                    (A) in paragraph (2)--
                            (i) in the heading, by striking ``based on 
                        high default rates'';
                            (ii) in subparagraph (A), by striking ``An 
                        institution'' and inserting ``Until fiscal year 
                        2022, an institution''; and
                            (iii) by adding at the end the following:
            ``(E) No institution of higher education shall be an 
        eligible institution for purposes of this part if such 
        institution of higher education is ineligible to participate in 
        a program under part D due to a low cohort repayment rate, as 
        determined under section 455(r).''; and
                    (B) in paragraph (6)(A), by inserting ``and until 
                fiscal year 2022,'' after ``July 1, 1999,''.
            (3) Federal perkins loans.--Section 462 of the Higher 
        Education Act of 1965 (20 U.S.C. 1087bb) is amended--
                    (A) in subsection (a)--
                            (i) in paragraph (1), by inserting ``or the 
                        institution is ineligible to participate in a 
                        program under part D due to a low cohort 
                        repayment rate, as determined under section 
                        455(r)'' after ``subsection (f)''; and
                            (ii) in paragraph (2)(D), by inserting ``or 
                        the institution is ineligible to participate in 
                        a program under part D due to a low cohort 
                        repayment rate, as determined under section 
                        455(r)'' after ``subsection (f)'';
                    (B) in subsection (b)--
                            (i) in paragraph (2), by inserting ``or the 
                        institution is ineligible to participate in a 
                        program under part D due to a low cohort 
                        repayment rate, as determined under section 
                        455(r)'' after ``subsection (f)''; and
                            (ii) in paragraph (3), by inserting ``or 
                        the institution is ineligible to participate in 
                        a program under part D due to a low cohort 
                        repayment rate, as determined under section 
                        455(r)'' after ``subsection (f)'';
                    (C) in subsection (e)--
                            (i) in paragraph (2), by inserting ``until 
                        fiscal year 2022,'' after ``succeeding fiscal 
                        year''; and
                            (ii) in paragraph (3)--
                                    (I) in subparagraph (A), by 
                                inserting ``until fiscal year 2022,'' 
                                after ``any succeeding fiscal year''; 
                                and
                                    (II) by adding at the end the 
                                following:
                    ``(F) Low cohort repayment rates.--An institution 
                that is ineligible to participate in a program under 
                part D due to a low cohort repayment rate, as 
                determined under section 455(r), shall not be eligible 
                to participate in a program under this part.''; and
                    (D) in subsection (f)(2), by inserting ``until 
                fiscal year 2022,'' after ``subsequent years''.

SEC. 3. COLLEGE OPPORTUNITY BONUS PROGRAM.

    Subpart 1 of part A of title IV of the Higher Education Act of 1965 
(20 U.S.C. 1070a et seq.) is amended by adding at the end the 
following:

``SEC. 401B. COLLEGE OPPORTUNITY BONUS PROGRAM.

    ``(a) Program Authority.--
            ``(1) In general.--Beginning with fiscal year 2022 and each 
        succeeding fiscal year, the Secretary shall award grants to 
        eligible institutions of higher education that are distributed 
        under a formula determined by the Secretary under subsection 
        (d).
            ``(2) Eligible institution.--In this section, the term 
        `eligible institution of higher education' means an institution 
        of higher education that has a cohort repayment rate (as 
        defined in section 455(r)(3)) that is greater than 25 percent.
    ``(b) Grants.--The Secretary shall award grants to eligible 
institutions of higher education that the Secretary determines have a 
strong record of making college more affordable and increasing college 
access and success for low-income and moderate-income students.
    ``(c) Uses of Funds.--Each eligible institution of higher education 
that receives a grant under this section may use the grant funds to 
support reforms to further increase college access and success for low- 
and moderate-income students, by making key investments and adopting 
best practices, including by considering best practices reported under 
section 5 of the Student Protection and Success Act, and by--
            ``(1) awarding additional need-based financial aid to 
        students enrolled at the institution who are eligible to 
        receive a Federal Pell Grant;
            ``(2) enhancing academic and student support services; and
            ``(3) establishing or expanding accelerated learning 
        opportunities.
    ``(d) Amount of Grant Funds.--
            ``(1) In general.--Each eligible institution of higher 
        education that receives a grant under this section shall 
        receive annual grant funds based on a formula determined by the 
        Secretary that equally considers--
                    ``(A) the number and percentage of students 
                enrolled at the institution who are eligible to receive 
                a Federal Pell Grant;
                    ``(B) the cohort repayment rate (as defined in 
                section 455(r)(3)) of students enrolled at the 
                institution who are eligible to receive a Federal Pell 
                Grant; and
                    ``(C) the institution's student service 
                expenditures as a percentage of the institution's 
                student service resources.
            ``(2) Cap.--Each eligible institution of higher education 
        that receives a grant under this section shall receive grant 
        funds for a fiscal year in an amount that is not more than 2.5 
        percent of the amount equal to the eligible institution's total 
        annual revenues and investment returns less auxiliary 
        enterprise revenues and hospital revenues, as defined in the 
        IPEDS Finance Survey, for the most recent fiscal year upon 
        which the eligible institution's audited financial reports are 
        available.
    ``(e) Supplement Not Supplant.--Funds made available under this 
section shall be used to supplement, and not supplant--
            ``(1) other State funds that States would otherwise expend 
        to carry out activities under this section to improve college 
        affordability and graduate additional low- and moderate-income 
        students; and
            ``(2) institutional funds that eligible institutions of 
        higher education receiving a grant under this section would 
        otherwise expend to carry out activities under this section to 
        improve college affordability and graduate additional low- and 
        moderate-income students.
    ``(f) Funding.--The grant program under this section shall be 
funded only with risk-sharing payments received by the Secretary under 
section 454(d).''.

SEC. 4. RISK-SHARING PAYMENTS.

    Section 454 of the Higher Education Act of 1964 (20 U.S.C. 1087d) 
is amended--
            (1) in subsection (a)--
                    (A) in paragraph (5), by striking ``and'';
                    (B) in paragraph (6), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(7) provide that the institution accepts the 
        institutional risk-sharing requirements under subsection (d), 
        if applicable.''; and
            (2) by adding at the end the following:
    ``(d) Institutional Risk-Sharing Based on Cohort Nonrepayment Loan 
Balances.--
            ``(1) In general.--Beginning with fiscal year 2022 and each 
        succeeding fiscal year, each institution of higher education 
        participating in the direct student loan program under this 
        part shall remit to the Secretary, at such times as the 
        Secretary may specify, a risk-sharing payment based on the 
        cohort nonrepayment loan balance of the institution, as 
        determined under paragraph (2).
            ``(2) Determination of risk-sharing payments.--
                    ``(A) Determination of cohort loan balance.--The 
                cohort loan balance of an institution for a fiscal year 
                equals the total principal amount of all loans made 
                under this part to attend such institution for the 
                cohort of borrowers who entered repayment, deferment, 
                or forbearance on such loans in the third preceding 
                fiscal year for which the determination is made.
                    ``(B) Determination of cohort nonrepayment loan 
                balance.--
                            ``(i) In general.--The cohort nonrepayment 
                        loan balance of an institution for a fiscal 
                        year equals, from the total amount of the loans 
                        described in subparagraph (A), the total loan 
                        balance of those borrowers who have not made at 
                        least a 1 dollar reduction in their principal 
                        balance in the 3 consecutive fiscal years since 
                        their loans entered repayment, deferment, or 
                        forbearance.
                            ``(ii) Exception.--The cohort nonrepayment 
                        loan balance calculation under clause (i) shall 
                        not take into consideration a borrower who 
                        was--
                                    ``(I) in deferment on repayment of 
                                a loan described in subparagraph (A) in 
                                the 3 consecutive fiscal years 
                                described in clause (i) due to study in 
                                an approved graduate fellowship program 
                                or in an approved rehabilitation 
                                training program for the disabled;
                                    ``(II) in deferment on repayment of 
                                a loan described in subparagraph (A) in 
                                the 3 consecutive fiscal years 
                                described in clause (i) during which 
                                time the borrower was in a period of at 
                                least half-time enrollment in college 
                                or a career school;
                                    ``(III) in deferment on repayment 
                                of a loan described in subparagraph (A) 
                                in the 3 consecutive fiscal years 
                                described in clause (i) during which 
                                time the borrower was in a period of 
                                service qualifying for loan discharge 
                                or cancellation under part E;
                                    ``(IV) in deferment on repayment of 
                                a loan described in subparagraph (A) in 
                                the 3 consecutive fiscal years 
                                described in clause (i) during which 
                                time the borrower was on active duty 
                                military service during a war, military 
                                operation, or national emergency;
                                    ``(V) in mandatory forbearance on 
                                repayment of a loan described in 
                                subparagraph (A) for the full fiscal 
                                year; or
                                    ``(VI) serving as a volunteer under 
                                the Peace Corps Act (22 U.S.C. 2501 et 
                                seq.) or the Domestic Volunteer Service 
                                Act of 1973 (42 U.S.C. 4950 et seq.), 
                                during the 3 consecutive fiscal years 
                                described in clause (i).
                    ``(C) Determination of payment.--
                            ``(i) In general.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), the risk-
                                sharing payment of an institution for a 
                                fiscal year equals 2 percent of the 
                                amount determined under clause (ii).
                                    ``(II) Cap.--The risk-sharing 
                                payment of an institution for a fiscal 
                                year shall not be more than 2.5 percent 
                                of the amount equal to the 
                                institution's total annual revenues and 
                                investment returns less auxiliary 
                                enterprise revenues and hospital 
                                revenues, as defined in the IPEDS 
                                Finance Survey, for the most recent 
                                fiscal year upon which the 
                                institution's audited financial reports 
                                are available.
                            ``(ii) Amount based on cohort nonrepayment 
                        loan balance and unemployment rate.--
                                    ``(I) In general.--The amount under 
                                this clause is determined by 
                                subtracting the amount determined under 
                                subclause (II) from the cohort 
                                nonrepayment loan balance determined 
                                under subparagraph (B).
                                    ``(II) Amount based on unemployment 
                                rate.--The amount under this subclause 
                                is determined by multiplying the 
                                average national unemployment rate, as 
                                defined by the Bureau of Labor 
                                Statistics, for the 3 previous fiscal 
                                years from the date of the 
                                determination by the cohort loan 
                                balance determined under subparagraph 
                                (A).
            ``(3) Notification.--Beginning with the first fiscal year 
        for which data are available after the date of enactment of the 
        Student Protection and Success Act and each succeeding fiscal 
        year until fiscal year 2022, the Secretary shall notify each 
        institution of higher education participating in the direct 
        student loan program under this part of what the risk-sharing 
        payment based on the cohort nonrepayment loan balance of the 
        institution, as determined under paragraph (2), would be for 
        such institution if such provision were in effect.''.

SEC. 5. REPORT.

    Not later than 6 months after the date of enactment of the Student 
Protection and Success Act, the Secretary of Education shall submit to 
Congress a report--
            (1) on best practices for institutions of higher education 
        to improve repayment rates; and
            (2) that makes recommendations on how institutions of 
        higher education can improve repayment rates, with a particular 
        emphasis on institutions that serve a high proportion of low-
        income students.

SEC. 6. STUDENT SERVICE EXPENDITURES AND RESOURCES.

    Section 153(a)(1)(I) of the Education Sciences Reform Act of 2002 
(20 U.S.C. 9543(a)(1)(I)) is amended to read as follows:
                    ``(I) the financing and management of education, 
                including data on revenues and expenditures, and 
                information regarding--
                            ``(i) student service expenditures, that--
                                    ``(I) includes instruction, 
                                information technology, and other 
                                activities whose primary purpose is to 
                                contribute to students' emotional and 
                                physical well-being and to their 
                                intellectual, cultural, and social 
                                development inside and outside the 
                                context of the formal instructional 
                                program; and
                                    ``(II) does not include 
                                expenditures on marketing, recruitment, 
                                or intercollegiate athletic programs;
                            ``(ii) student service resources, which is 
                        a measure of an institution's resources that 
                        could reasonably be allocated towards student 
                        service expenditures, including net tuition 
                        revenues, State and local appropriations, 
                        endowment income, and revenues related to 
                        student housing and food services less 
                        expenditures on student housing, food services, 
                        and the operations and maintenance of a plant; 
                        and
                            ``(iii) recruitment and marketing 
                        expenditures;''.
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