II 

116TH CONGRESS 

1ST SESSION S. 2339 

To amend the Higher Education Act of 1965 to provide for accreditation 

reform, to require institutions of higher education to publish information 

regarding student success, to provide for fiscal accountability, and to 

provide for school accountability for student loans. 

IN THE SENATE OF THE UNITED STATES 

JULY 30, 2019 

Mr. LEE (for himself and Mrs. BLACKBURN) 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 accreditation reform, to require institutions of higher 

education to publish information regarding student success, to provide for fiscal accountability, and to provide 

for school accountability for student loans. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Higher Education Re5 form and Opportunity Act of 2019’’. 


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1 TITLE I—ACCREDITATION 

2 REFORM 

3 SEC. 101. ACCREDITATION REFORM. 

4 (a) DEFINITION OF INSTITUTION OF HIGHER EDU5 CATION.—Section 102(a)(1) of the Higher Education Act 

6 of 1965 (20 U.S.C. 1002(a)(1)) is amended— 

7 (1) by redesignating subparagraphs (B) and 

8 (C) as subparagraphs (C) and (D), respectively; and 

9 (2) by inserting after subparagraph (A) the fol10 lowing: 

11 ‘‘(B) if accredited by an authorized accred12 itation authority in a State that has an alter13 native accreditation agreement with the Sec14 retary, as described in section 498C— 

15 ‘‘(i) an institution that provides post16 secondary education; 

17 ‘‘(ii) a postsecondary apprenticeship 

18 program; or 

19 ‘‘(iii) a postsecondary education 

20 course or program provided by an institu21 tion of postsecondary education, a non22 profit organization, or a for-profit organi23 zation or business;’’. 

24 (b) STATE ALTERNATIVE ACCREDITATION.—Part H 

25 of title IV of the Higher Education Act of 1965 (20 U.S.C. 


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1 1099a et seq.) is amended by adding at the end the fol2 lowing: 

3 ‘‘Subpart 4—State Alternative Accreditation 

4 ‘‘SEC. 498C. STATE ALTERNATIVE ACCREDITATION. 

5 ‘‘(a) IN GENERAL.—Notwithstanding any other pro6 vision of law, a State may establish an alternative accredi7 tation system for the purpose of establishing institutions 

8 that provide postsecondary education and postsecondary 

9 education courses or programs as eligible for funding 

10 under title IV if the State submits a plan to the Secretary 

11 for the establishment of the alternative accreditation sys12 tem. Such institutions, courses, or programs may in13 clude— 

14 ‘‘(1) institutions that provide postsecondary 

15 education that culminates in a certification, creden16 tial, or degree; 

17 ‘‘(2) postsecondary apprenticeship programs 

18 that culminate in a certification, credential, or de19 gree; 

20 ‘‘(3) any other postsecondary education course 

21 or program offered at an institution of postsec22 ondary education, a nonprofit organization, or a for23 profit organization or business, that culminates in a 

24 certification, credential, or degree; and 


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1 ‘‘(4) any of the entities described in paragraphs 

2 (1) through (3) that do not award a postsecondary 

3 certification, credential, or degree, provided that 

4 such entity provides credit that will be accepted to5 ward a postsecondary certification, credential, or de6 gree at one or more of the entities described in para7 graphs (1) through (3). 

8 ‘‘(b) ALTERNATIVE ACCREDITATION NOTIFICA9 TION.—The alternative accreditation plan described in 

10 subsection (a) shall include the following: 

11 ‘‘(1) The State’s plan for designating one or 

12 more authorized accrediting entities within the 

13 State, such as the State Department of Education, 

14 another State agency, an industry-specific accred15 iting agency, or another entity, and an explanation 

16 of the process through which the State will select 

17 such authorized accrediting entities. 

18 ‘‘(2) The standards or criteria that an institu19 tion that provides postsecondary education and a 

20 postsecondary education course or program must 

21 meet in order to— 

22 ‘‘(A) receive an initial accreditation as part 

23 of the alternative accreditation system; and 

24 ‘‘(B) maintain such accreditation. 


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1 ‘‘(3) A description of the appeals process 

2 through which an institution that provides postsec3 ondary education or a postsecondary education 

4 course or program may appeal to an authorized ac5 crediting entity if such institution, course, or pro6 gram is denied accreditation under the State alter7 native accreditation system. 

8 ‘‘(4) Any State policy regarding public accessi9 bility to certain information relating to institutions 

10 that provide postsecondary education and postsec11 ondary education courses and programs accredited 

12 under the State alternative accreditation system, in13 cluding— 

14 ‘‘(A) the information described in sub15 section (e)(1); and 

16 ‘‘(B) information about the rates of job 

17 placement for individuals that have graduated 

18 from an institution or completed a course or 

19 program that is accredited under the State al20 ternative accreditation system, if available. 

21 ‘‘(5) An assurance by the State that under the 

22 State alternative accreditation system, only institu23 tions that provide postsecondary education and post24 secondary education courses or programs that pro25 vide a postsecondary certification, credential, or deVerDate Sep 11 2014 23:33 Aug 05, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2339.IS S2339

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1 gree, or credits toward a postsecondary certification, 

2 credential, or degree (as defined by the State in ac3 cordance with paragraph (6)) will be accredited. 

4 ‘‘(6) The State’s definition of a postsecondary 

5 certification, credential, or degree, as such term ap6 plies to the requirement described in paragraph (5). 

7 ‘‘(7) A description of the agreements that the 

8 State will enter into with institutions that provide 

9 postsecondary education and postsecondary edu10 cation courses or programs that are accredited 

11 under the alternative accreditation system for pur12 poses of accreditation regarding requirements for in13 structional time, in lieu of the requirements de14 scribed under section 481(a)(2). 

15 ‘‘(8) A description of the agreements that the 

16 State will enter into with institutions that provide 

17 postsecondary education and postsecondary edu18 cation courses or programs that are accredited 

19 under the alternative accreditation system regarding 

20 requirements for credit hours or clock hours, or 

21 other measures of student learning, in lieu of the re22 quirements described under section 481(b). 

23 ‘‘(c) REVIEW AND APPROVAL.—Not later than 30 

24 days after the Secretary receives a plan from a State re25 garding an alternative accreditation system, the Secretary 


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1 shall submit to the State and Congress, and make publicly 

2 available, a response to the State’s plan. The Secretary 

3 shall approve the plan and allow the State to establish the 

4 alternative accreditation system if the plan meets the re5 quirements described in subsection (b). 

6 ‘‘(d) TIME LIMIT.—Each plan approved under sub7 section (c) shall allow a State to carry out an alternative 

8 accreditation system in the State for a period of 5 years. 

9 ‘‘(e) REPORTING REQUIREMENTS.—States that es10 tablish an alternative accreditation system shall submit a 

11 report to the Secretary every 3 years following the imple12 mentation of the alternative accreditation system. The re13 port shall include— 

14 ‘‘(1) in the case of a postsecondary education 

15 course or program that is accredited through the 

16 State alternative accreditation system— 

17 ‘‘(A) the number and percentage of stu18 dents who successfully complete each such post19 secondary education course or program; and 

20 ‘‘(B) for postsecondary education courses 

21 or programs that lead to a certification, creden22 tial, or degree, the number of students in such 

23 course or program; and 


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1 ‘‘(2) in the case of an institution that provides 

2 postsecondary education that is accredited through 

3 the State alternative accreditation system— 

4 ‘‘(A) the number and percentage of stu5 dents who successfully obtain a postsecondary 

6 certification, credential, or degree from such in7 stitution; and 

8 ‘‘(B) the number and percentage of stu9 dents who do not successfully obtain a postsec10 ondary certification, credential, or degree from 

11 such institution but do obtain credit from such 

12 institution toward a postsecondary degree, cre13 dential, or certification; and 

14 ‘‘(3) a description of any requirements for 

15 third-party verification of information contained in 

16 the report.’’. 

17 (c) TITLE IV ELIGIBILITY REQUIREMENTS.—Part G 

18 of title IV of the Higher Education Act of 1965 (20 U.S.C. 

19 1088 et seq.) is amended by adding at the end the fol20 lowing: 

21 ‘‘SEC. 493E. STATE ACCREDITED INSTITUTIONS, PRO22 GRAMS, OR COURSES. 

23 ‘‘Notwithstanding any other provision of law, an in24 stitution, program, or course that is eligible for funds 


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1 under this title in accordance with section 102(a)(1)(B) 

2 and meets the requirements of section 498C— 

3 ‘‘(1) shall not be required to meet the require4 ments of section 496; and 

5 ‘‘(2) shall not be required to meet the require6 ments described in subsections (a)(2) and (b) of sec7 tion 481.’’. 

8 TITLE II—TRANSPARENCY IN 

9 HIGHER EDUCATION 

10 SEC. 201. TIME FOR TRANSPARENCY IN HIGHER EDU11 CATION. 

12 (a) IN GENERAL.—Title IV of the Higher Education 

13 Act of 1965 (20 U.S.C. 1070 et seq.) is amended— 

14 (1) in section 487(a), by adding at the end the 

15 following: 

16 ‘‘(30) The institution will publish information 

17 in compliance with section 493E.’’; and 

18 (2) in part G, by adding at the end the fol19 lowing: 

20 ‘‘SEC. 493E. INSTITUTIONAL PUBLICATION OF INFORMA21 TION. 

22 ‘‘(a) PUBLICATION OF INFORMATION.— 

23 ‘‘(1) IN GENERAL.—Each institution of higher 

24 education participating in a program under this title 

25 shall publish on the institution’s website and in an 


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1 alternative format, on an annual basis, the informa2 tion described in paragraphs (2) and (3). To the ex3 tent that such data is available, an institution may 

4 use data that the institution is already collecting in 

5 accordance with other Federal requirements. 

6 ‘‘(2) INFORMATION.—Each institution of higher 

7 education described in paragraph (1) shall publish, 

8 with respect to the institution as a whole and with 

9 respect to each program of study offered by the in10 stitution, the following information for the most re11 cent fiscal year for which the information is avail12 able: 

13 ‘‘(A) For each of the following, the per14 centage and number of students enrolled at the 

15 institution or in the program of study, as appli16 cable, who receive the following: 

17 ‘‘(i) Federal grant aid, including Fed18 eral Pell Grants under subpart 1 of part 

19 A, Federal Supplemental Educational Op20 portunity Grants under subpart 3 of part 

21 A, or any other Federal postsecondary edu22 cation grant aid or subsidy. 

23 ‘‘(ii) Federal student loans, including 

24 Federal loans under part D. 

25 ‘‘(iii) State grant aid. 


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1 ‘‘(iv) Institutional grants. 

2 ‘‘(v) A student loan from a State. 

3 ‘‘(B) Student body enrollment status, in4 cluding as a— 

5 ‘‘(i) first-time, full-time student; 

6 ‘‘(ii) first-time, part-time student; 

7 ‘‘(iii) non-first-time, full-time student; 

8 and 

9 ‘‘(iv) non-first-time, part-time student. 

10 ‘‘(C) Information about students that in11 cludes the following: 

12 ‘‘(i) The percentage of students who 

13 do not complete the program of study the 

14 student initially started upon enrollment. 

15 ‘‘(ii) The percentage of students who 

16 transfer. 

17 ‘‘(iii) The percentage of students who 

18 complete the program of study the student 

19 initially started upon enrollment. 

20 ‘‘(iv) The average length of time for a 

21 student to complete the program of study. 

22 ‘‘(v) The percentage of students who 

23 continue on to higher levels of education. 

24 ‘‘(vi) The percentage of former stu25 dents who received financial aid who are 


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1 employed at 2, 4, and 6 years after grad2 uating, disaggregated by program of study. 

3 ‘‘(vii) The median earnings of former 

4 students who earned a degree or credential 

5 and received financial aid on the date that 

6 is 10 years after the date the students first 

7 enrolled in a program of study at the insti8 tution, disaggregated by program of study. 

9 ‘‘(viii) The median earnings of former 

10 students who received financial aid on the 

11 date that is 10 years after the date the 

12 students first enrolled in a program of 

13 study at the institution, disaggregated by 

14 program of study. 

15 ‘‘(3) PUBLICATION OF DEFAULT AND NON-RE16 PAYMENT RATES.—In addition to the information 

17 described in paragraph (2), each institution of high18 er education described in paragraph (1) shall pub19 lish, with respect to the institution as a whole and 

20 with respect to each program of study offered by the 

21 institution, the following information for the most 

22 recent fiscal year for which the information is avail23 able: 

24 ‘‘(A) The average amount of total Federal 

25 student loan debt accrued upon graduation. 


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1 ‘‘(B) The average amount of total Federal 

2 student loan debt accrued by students who 

3 leave the institution without having graduated. 

4 ‘‘(C) Federal student loan default rate. 

5 ‘‘(D) Federal student loan non-repayment 

6 rate. 

7 ‘‘(E) Default and non-repayment rate, in8 cluding as a— 

9 ‘‘(i) first-time, full-time student; 

10 ‘‘(ii) first-time, part-time student; 

11 ‘‘(iii) non-first-time, full-time student; 

12 and 

13 ‘‘(iv) non-first-time, part-time student. 

14 ‘‘(F) Default and non-repayment rate, of— 

15 ‘‘(i) students who complete a program 

16 of study; 

17 ‘‘(ii) students who transfer; and 

18 ‘‘(iii) students who do not complete a 

19 program of study. 

20 ‘‘(b) PRIVACY.— 

21 ‘‘(1) COMPLIANCE WITH FERPA.—In carrying 

22 out this section, an institution of higher education 

23 and any personnel of the institution shall not share 

24 any personally identifiable information and shall act 

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1 cation Provisions Act (20 U.S.C. 1232g, commonly 

2 known as the ‘Family Educational Rights and Pri3 vacy Act of 1974’). 

4 ‘‘(2) PROHIBITION ON USE OF INFORMATION.— 

5 Information published pursuant to this section shall 

6 not be used by a Federal employee, agency, or offi7 cer, or an institution of higher education to take ac8 tion against an individual. 

9 ‘‘(3) PENALTIES.—The Secretary shall establish 

10 penalties for a violation of paragraph (1) or (2) that 

11 includes both a monetary fine and up to 5 years in 

12 prison. 

13 ‘‘(c) RULE OF CONSTRUCTION.—Nothing in this sec14 tion shall be construed to authorize or permit the Sec15 retary or any employee or contractor of the Department 

16 to mandate, direct, or control the selection of practices or 

17 curriculum by an institution of higher education.’’. 

18 (b) GAO REPORT.— 

19 (1) STUDY.—The Comptroller General of the 

20 United States shall conduct a study that compiles all 

21 the institutional publication of information pursuant 

22 to section 493E of the Higher Education Act of 

23 1965, as added by subsection (a) of this Act. 

24 (2) REPORT.—Not later than October 1 of the 

25 fourth fiscal year after the date of enactment of this 


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1 Act, the Comptroller General of the United States 

2 shall submit a report containing the results of the 

3 study under paragraph (1) to the appropriate com4 mittees of Congress. 

5 TITLE III—FISCAL 

6 ACCOUNTABILITY 

7 SEC. 301. SIMPLIFICATION OF FEDERAL STUDENT LOANS. 

8 (a) TERMINATION.—Section 451 of the Higher Edu9 cation Act of 1965 (20 U.S.C. 1087a) is amended— 

10 (1) in subsection (a), by adding at the end the 

11 following: ‘‘No sums may be expended after Sep12 tember 30, 2026, with respect to loans under this 

13 part for which the first disbursement is after such 

14 date, except Federal Direct simplification loans 

15 under section 460A.’’; and 

16 (2) by adding at the end, the following: 

17 ‘‘(c) TERMINATION OF AUTHORITY TO MAKE NEW

18 LOANS.—Notwithstanding subsection (a) or any other 

19 provision of law— 

20 ‘‘(1) no new loans may be made under this part 

21 after September 30, 2026, except Federal Direct 

22 simplification loans under section 460A; and 

23 ‘‘(2) no funds are authorized to be appro24 priated, or may be expended, under this Act, or any 

25 other Act to make loans under this part for which 


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1 the first disbursement is after September 30, 2026, 

2 except Federal Direct simplification loans under sec3 tion 460A, or as expressly authorized by an Act of 

4 Congress enacted after the date of enactment of 

5 Higher Education Reform and Opportunity Act of 

6 2019. 

7 ‘‘(d) STUDENT ELIGIBILITY BEGINNING WITH

8 AWARD YEAR 2022.— 

9 ‘‘(1) NEW BORROWERS.—No loan may be made 

10 under this part to a new borrower for which the first 

11 disbursement is after June 30, 2022, except Federal 

12 Direct simplification loans under section 460A. 

13 ‘‘(2) BORROWERS WITH OUTSTANDING BAL14 ANCES.—Subject to paragraph (3), with respect to a 

15 borrower who, as of July 1, 2022, has an out16 standing balance of principal or interest owing on a 

17 loan made under this part that is not a Federal Di18 rect simplification loan under section 460A, such 

19 borrower may— 

20 ‘‘(A) in the case of such a loan made to 

21 the borrower for enrollment in a program of un22 dergraduate education, borrow loans made 

23 under this part that are not Federal Direct 

24 simplification loans under section 460A for any 


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1 program of undergraduate education through 

2 the close of September 30, 2026; 

3 ‘‘(B) in the case of such a loan made to 

4 the borrower for enrollment in a program of 

5 graduate or professional education, borrow 

6 loans made under this part that are not Federal 

7 Direct simplification loans under section 460A 

8 for any program of graduate or professional 

9 education through the close of September 30, 

10 2026; and 

11 ‘‘(C) in the case of such a loan made to 

12 the borrower on behalf of a dependent student 

13 for the student’s enrollment in a program of 

14 undergraduate education, borrow loans made 

15 under this part that are not Federal Direct 

16 simplification loans under section 460A on be17 half of such student through the close of Sep18 tember 30, 2026. 

19 ‘‘(3) LOSS OF ELIGIBILITY.—A borrower de20 scribed in paragraph (2) who borrows a Federal Di21 rect simplification loan made under section 460A for 

22 which the first disbursement is made before Sep23 tember 30, 2026, shall lose the borrower’s eligibility 

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1 eral Direct simplification loan under section 460A in 

2 accordance with paragraph (2).’’. 

3 (b) FEDERAL DIRECT SIMPLIFICATION LOANS.— 

4 Part D of title IV of the Higher Education Act of 1965 

5 (20 U.S.C. 1087a et seq.) is amended by adding at the 

6 end the following: 

7 ‘‘SEC. 460A. FEDERAL DIRECT SIMPLIFICATION LOANS. 

8 ‘‘(a) IN GENERAL.—Beginning on July 1, 2022, ex9 cept as provided in section 451(d), the Secretary shall 

10 make loans to borrowers under this section. Loans made 

11 under this section shall be known as Federal Direct sim12 plification loans. 

13 ‘‘(b) FEDERAL DIRECT SIMPLIFICATION LOANS.— 

14 The provisions of this part shall apply with respect to Fed15 eral Direct simplification loans, except that Federal Direct 

16 simplification loans shall be made in accordance with the 

17 following: 

18 ‘‘(1) The applicable rate of interest on a loan 

19 made under this section shall, for loans disbursed 

20 during any 12-month period beginning on July 1 

21 and ending on June 30, be determined on the pre22 ceding June 1 and be equal to— 

23 ‘‘(A) a rate equal to the high yield of the 

24 10-year Treasury note auctioned at the final 

25 auction held prior to such June 1; plus 


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1 ‘‘(B) 3.6 percent. 

2 ‘‘(2) Interest on a loan made under this section 

3 shall begin to accrue on the date the loan is dis4 bursed. 

5 ‘‘(3) The maximum— 

6 ‘‘(A) annual amount of loans under this 

7 section an undergraduate student may borrow 

8 in any academic year (as defined in section 

9 481(a)(2)) or its equivalent shall be equal to 

10 $7,500; and 

11 ‘‘(B) aggregate amount of loans under this 

12 section an undergraduate student may borrow 

13 shall be equal to $30,000. 

14 ‘‘(4) The maximum— 

15 ‘‘(A) annual amount of loans under this 

16 section a graduate or professional student may 

17 borrow in any academic year (as defined in sec18 tion 481(a)(2)) or its equivalent shall be equal 

19 to $12,500; and 

20 ‘‘(B) aggregate amount of loans under this 

21 section a graduate or professional student may 

22 borrow shall be equal to $50,000. 

23 ‘‘(5) The only length of repayment— 

24 ‘‘(A) for a loan borrowed by an under25 graduate student shall be 15 years; and 


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1 ‘‘(B) for a loan borrowed by a graduate or 

2 professional student shall be 25 years. 

3 ‘‘(6) Repayment on a loan made under this sec4 tion shall begin— 

5 ‘‘(A) after 125 percent of the normal time 

6 for completion of the program of study for 

7 which the borrower receives the loan under this 

8 section; or 

9 ‘‘(B) if the borrower withdraws from the 

10 program of study before the borrower completes 

11 the program, 6 months after the date the bor12 rower withdraws. 

13 ‘‘(7) The Secretary shall not repay or cancel 

14 any outstanding balance of principal or interest due 

15 on a Federal Direct simplification loan as part of a 

16 student loan forgiveness program, including such a 

17 program under section 455(m) and section 493C. 

18 ‘‘(c) AUTHORIZATION TO LIMIT LOAN AMOUNTS.— 

19 An institution of higher education that is required under 

20 State law to enroll all eligible applicants for an academic 

21 year may limit the amount of loans under this section that 

22 a student may borrow for such academic year to not more 

23 than the tuition and fees at such institution for such aca24 demic year. 


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1 ‘‘(d) LOAN FEE.—The Secretary shall not charge the 

2 borrower of a loan made under this part an origination 

3 fee. 

4 ‘‘(e) REPAYMENT.—A borrower of a loan made under 

5 this section may accelerate without penalty repayment of 

6 the whole or any part of the loan.’’. 

7 SEC. 302. PHASING OUT LOAN FORGIVENESS. 

8 The Higher Education Act of 1965 (20 U.S.C. 1001 

9 et seq.) is amended— 

10 (1) in section 455— 

11 (A) in subsection (d)(1), in the matter pre12 ceding subparagraph (A), by inserting ‘‘(except 

13 a Federal Direct simplification loan)’’ after 

14 ‘‘borrower of a loan made under this part’’; 

15 (B) in subsection (e), by adding at the end 

16 the following: 

17 ‘‘(8) FEDERAL DIRECT SIMPLIFICATION

18 LOANS.—Income contingent repayment shall not be 

19 available for a Federal Direct simplification loan.’’; 

20 and 

21 (C) in subsection (m), by adding at the 

22 end the following: 

23 ‘‘(5) ELIMINATION OF LOAN FORGIVENESS.— 

24 ‘‘(A) IN GENERAL.—Notwithstanding any 

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1 paragraph (B), with respect to any loan made 

2 on or after July 1, 2022, the Secretary may not 

3 cancel any outstanding balance of principal and 

4 interest due on the loan for the borrower of the 

5 loan pursuant to this subsection. 

6 ‘‘(B) LOANS FOR CONTINUING PROGRAM

7 OF STUDY.—In the case of a borrower whose 

8 first loan for a program of study is made prior 

9 to July 1, 2022, the Secretary may repay or 

10 cancel any outstanding balance of principal and 

11 interest due on the subsequent loans for that 

12 borrower for the same program of study pursu13 ant to this subsection for— 

14 ‘‘(i) loans made during the time it 

15 takes to complete that program of study; 

16 or 

17 ‘‘(ii) loans made before July 1, 2026; 

18 whichever occurs earlier.’’; and 

19 (2) in section 493C, by adding at the end the 

20 following: 

21 ‘‘(f) ELIMINATION OF LOAN FORGIVENESS.— 

22 ‘‘(1) IN GENERAL.—Notwithstanding any other 

23 provision of this Act and subject to paragraph (2), 

24 with respect to any loan made on or after July 1, 

25 2022, the Secretary may not repay or cancel any 


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1 outstanding balance of principal and interest due on 

2 the loan for the borrower of the loan pursuant to 

3 this section. 

4 ‘‘(2) LOANS FOR CONTINUING PROGRAM OF

5 STUDY.—In the case of a borrower whose first loan 

6 for a program of study is made prior to July 1, 

7 2022, the Secretary may repay or cancel any out8 standing balance of principal and interest due on the 

9 subsequent loans for that borrower for the same pro10 gram of study pursuant to this section for— 

11 ‘‘(A) loans made during the time it takes 

12 to complete that program of study; or 

13 ‘‘(B) loans made before July 1, 2026; 

14 whichever occurs earlier.’’. 

15 TITLE IV—SCHOOL ACCOUNT16 ABILITY FOR STUDENT 

17 LOANS 

18 SEC. 401. SCHOOL ACCOUNTABILITY FOR STUDENT LOANS. 

19 (a) DEFAULT RATE FINE.—Section 487 of the High20 er Education Act of 1965 (20 U.S.C. 1094), as amended 

21 by section 201, is further amended— 

22 (1) in subsection (a), by adding at the end the 

23 following: 


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1 ‘‘(31) The institution will pay a default rate 

2 fine that is determined pursuant to subsection (k).’’; 

3 and 

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

5 ‘‘(k) DEFAULT RATE FINE.— 

6 ‘‘(1) IN GENERAL.—Each institution described 

7 in paragraph (2) shall pay to the Secretary an an8 nual default rate fine in accordance with this sub9 section. 

10 ‘‘(2) APPLICABLE INSTITUTIONS.—An institu11 tion shall pay a default rate fine under this sub12 section for a fiscal year based on the cohort default 

13 rate (as defined in section 435(m)) on loans made 

14 under this title for such fiscal year. 

15 ‘‘(3) FINE.— 

16 ‘‘(A) IN GENERAL.—Each institution de17 scribed in paragraph (2) shall pay a default 

18 rate fine for a fiscal year that is equal to 10 

19 percent of the applicable amount determined 

20 under subparagraph (B)(i) for such fiscal year. 

21 ‘‘(B) APPLICABLE AMOUNT.— 

22 ‘‘(i) IN GENERAL.—The applicable 

23 amount for a fiscal year with respect to an 

24 institution shall be an amount equal to the 

25 product of the amount of loans made 


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1 under this title for such fiscal year, and 

2 the applicable rate determined in clause 

3 (ii). If the applicable rate is equal to or 

4 less than zero percent then the applicable 

5 amount shall be equal to zero. 

6 ‘‘(ii) APPLICABLE RATE.—The appli7 cable rate for a fiscal year with respect to 

8 an institution shall be the rate that is 

9 equal to the difference between the cohort 

10 default rate on loans made under this title 

11 (as defined in section 435(m)) for such fis12 cal year and the average rate of total un13 employment in the United States for the 3- 

14 year period covered by that cohort default 

15 rate (as defined in section 435(m)), as de16 termined by the Secretary of Labor. 

17 ‘‘(4) CREDIT FOR CERTAIN INSTITUTIONS.— 

18 Each institution that is described in paragraph (2) 

19 shall receive a $400 credit for the fiscal year for 

20 each graduate of the institution during such fiscal 

21 year who received a Federal Pell Grant while en22 rolled at the institution. 

23 ‘‘(5) FLEXIBILITY IN COUNSEL AND ADVICE.— 

24 Notwithstanding any other provision of the Act, the 

25 Secretary shall grant institutions of higher education 


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1 flexibility under this Act to counsel and advise stu2 dents on Federal financial aid, including granting 

3 flexibility for institutions to award less than the 

4 maximum amount of Federal student aid for which 

5 an individual is eligible if the cost of tuition, room, 

6 and board at the institution is less than such max7 imum amount.’’. 

8 (b) FLEXIBILITY IN COUNSELING AND ADVICE.— 

9 Section 485(l) of the Higher Education Act of 1965 (20 

10 U.S.C. 1092(l)) is amended by adding at the end the fol11 lowing: 

12 ‘‘(3) FLEXIBILITY IN COUNSELING AND AD13 VICE.—In addition to the entrance counseling under 

14 paragraph (1), an eligible institution may require 

15 any borrower, at or prior to the time of a disburse16 ment to the borrower of a loan made under part D, 

17 to receive the information described in paragraph 

18 (2) with respect to such loan, or any other financial 

19 counseling, including financial literacy counseling.’’. 

Æ 


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