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Union Calendar No. 137

107TH CONGRESS

1ST SESSION H. R. 1992

[Report No. 107–225]

To amend the Higher Education Act of 1965 to expand the opportunities

for higher education via telecommunications.

IN THE HOUSE OF REPRESENTATIVES

MAY 24, 2001

Mr. ISAKSON (for himself, Mr. BOEHNER, Mr. MCKEON, Mr. CASTLE, and

Mr. GOODLATTE) introduced the following bill; which was referred to the

Committee on Education and the Workforce

OCTOBER 2, 2001

Additional sponsors: Mr. PASCRELL, Mr. GRAHAM, Mr. TANCREDO, Mr. ANDREWS, Mr. SMITH of Texas, Mr. UPTON, Mr. HINOJOSA, Mr. GOODE,

Mr. DEUTSCH, Mr. SCHROCK, Mr. SCHAFFER, Mrs. ROUKEMA, Mr.

HOEKSTRA, Mr. GREENWOOD, Mr. NORWOOD, Mr. KELLER, Mr. TERRY,

Mr. BACA, Mr. BURTON of Indiana, Mr. PAUL, Ms. HART, Mr. PLATTS,

Mr. PETRI, Mr. SHIMKUS, Mr. KILDEE, Mr. HORN, Mr. DEMINT, Mrs.

BIGGERT, Mr. OSBORNE, Mr. DOYLE, Mr. STRICKLAND, and Mr.

RAMSTAD

OCTOBER 2, 2001

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

A BILL

To amend the Higher Education Act of 1965 to expand
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the opportunities for higher education via telecommunications.

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 ‘‘ Internet Equity and

5 Education Act of 2001’’.

6 SEC. 2. EXCEPTION TO 50 PERCENT CORRESPONDENCE

7 COURSE LIMITATIONS.

8 (a) DEFINITION OF INSTITUTION OF HIGHER EDU9 CATION FOR TITLE IV PURPOSES.—Section 102(a) of the

10 Higher Education Act of 1965 (20 U.S.C. 1002(a)) is

11 amended by adding at the end the following new para12 graph:

13 ‘‘(7) EXCEPTION TO LIMITATION BASED ON

14 COURSE OF STUDY.—Courses offered via tele15 communications (as defined in section 484(l)(4))

16 shall not be considered to be correspondence courses

17 for purposes of paragraph (3)(A) for any institution

18 that—

19 ‘‘(A) is participating in either or both of

20 the loan programs under part B or D of title

21 IV on the date of enactment of the Internet Eq22 uity and Education Act of 2001; and

23 ‘‘(B) has a cohort default rate (as deter24 mined under section 435(m)) for each of the 3
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1 most recent fiscal years for which data are

2 available that is less than 10 percent.’’.

3 (b) DEFINITION OF ELIGIBLE STUDENT.—Section

4 484(l)(1) of the Higher Education Act of 1965 (20 U.S.C.

5 1091(l)(1)) is amended by adding at the end the following

6 new subparagraph:

7 ‘‘(C) EXCEPTION TO 50 PERCENT LIMITA8 TION.—Notwithstanding the 50 percent limita9 tion in subparagraph (A), a student enrolled in

10 a course of instruction described in such sub11 paragraph shall not be considered to be enrolled

12 in correspondence courses if the student is en13 rolled in an institution that—

14 ‘‘(i) is participating in either or both

15 of the loan programs under part B or D of

16 title IV on the date of enactment of the

17 Internet Equity and Education Act of

18 2001; and

19 ‘‘(ii) has a cohort default rate (as de20 termined under section 435(m)) for each of

21 the 3 most recent fiscal years for which

22 data are available that is less than 10 per23 cent.’’.
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1 SEC. 3. DEFINITION OF ACADEMIC YEAR.

2 Section 481(a)(2) of the Higher Education Act of

3 1965 (20 U.S.C. 1088(a)(2)) is amended by inserting

4 after the first sentence the following new sentence: ‘‘For

5 the purposes of any program under this title (whether a

6 standard or nonstandard term program), a week of in7 struction is defined as a week in which at least one day

8 of instruction, examination, or preparation for examina9 tion occurs.’’.

10 SEC. 4. INCENTIVE COMPENSATION.

11 (a) AMENDMENT.—Part G of title IV of the Higher

12 Education Act of 1965 is amended by inserting after sec13 tion 484B (20 U.S.C. 1091b) the following new section:

14 ‘‘SEC. 484C. INCENTIVE COMPENSATION PROHIBITED.

15 ‘‘No institution of higher education participating in

16 a program under this title shall make any payment of a

17 commission, bonus, or other incentive, non-salary pay18 ment, based directly on success in securing enrollments

19 or financial aid, to any person or entity directly engaged

20 in student recruiting or admission activities, or making de21 cisions regarding the award of student financial assist22 ance, except that this section shall not apply to the recruit23 ment of foreign students residing in foreign countries who

24 are not eligible to receive Federal student assistance.’’.

25 (b) CONFORMING AMENDMENT.—Paragraph (20) of

26 section 487(a) (20 U.S.C. 1094(a)(20)) is repealed.
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1 (c) TECHNICAL AMENDMENT.—Section 487(c)(1) of

2 the Higher Education Act of 1965 (20 U.S.C. 1094(c)(1))

3 is amended by striking ‘‘paragraph (2)(B)’’ each place it

4 appears in subparagraphs (F) and (H) and inserting

5 ‘‘paragraph (3)(B)’’.

6 SECTION 1. SHORT TITLE.

7 This Act may be cited as the ‘‘Internet Equity and

8 Education Act of 2001’’.

9 SEC. 2. EXCEPTION TO 50 PERCENT CORRESPONDENCE

10 COURSE LIMITATIONS.

11 (a) DEFINITION OF INSTITUTION OF HIGHER EDU12 CATION FOR TITLE IV PURPOSES.—Section 102(a) of the

13 Higher Education Act of 1965 (20 U.S.C. 1002(a)) is

14 amended by adding at the end the following new paragraph:

15 ‘‘(7) EXCEPTION TO LIMITATION BASED ON

16 COURSE OF STUDY.—Courses offered via telecommuni17 cations (as defined in section 484(l)(4)) shall not be

18 considered to be correspondence courses for purposes

19 of subparagraph (A) or (B) of paragraph (3) for any

20 institution that—

21 ‘‘(A) is participating in either or both of the

22 loan programs under part B or D of title IV on

23 the date of enactment of the Internet Equity and

24 Education Act of 2001;
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1 ‘‘(B) has a cohort default rate (as deter2 mined under section 435(m)) for each of the 3

3 most recent fiscal years for which data are avail4 able that is less than 10 percent; and

5 ‘‘(C)(i) has notified the Secretary, in a form

6 and manner prescribed by the Secretary (includ7 ing such information as the Secretary may re8 quire to meet the requirements of clause (ii)), of

9 the election by such institution to qualify as an

10 institution of higher education by means of the

11 provisions of this paragraph; and

12 ‘‘(ii) the Secretary has not, within 90 days

13 after such notice, and the receipt of any informa14 tion required under clause (i), notified the insti15 tution that the election by such institution would

16 pose a significant risk to Federal funds and the

17 integrity of programs under title IV.’’.

18 (b) DEFINITION OF ELIGIBLE STUDENT.—Section

19 484(l)(1) of the Higher Education Act of 1965 (20 U.S.C.

20 1091(l)(1)) is amended by adding at the end the following

21 new subparagraph:

22 ‘‘(C) EXCEPTION TO 50 PERCENT LIMITA23 TION.—Notwithstanding the 50 percent limita24 tion in subparagraph (A), a student enrolled in

25 a course of instruction described in such sub-
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1 paragraph shall not be considered to be enrolled

2 in correspondence courses if the student is en3 rolled in an institution that—

4 ‘‘(i) is participating in either or both

5 of the loan programs under part B or D of

6 title IV on the date of enactment of the

7 Internet Equity and Education Act of 2001;

8 ‘‘(ii) has a cohort default rate (as de9 termined under section 435(m)) for each of

10 the 3 most recent fiscal years for which data

11 are available that is less than 10 percent;

12 and

13 ‘‘(iii)(I) has notified the Secretary, in

14 form and manner prescribed by the Sec15 retary (including such information as the

16 Secretary may require to meet the require17 ments of subclause (II)), of the election by

18 such institution to qualify its students as el19 igible students by means of the provisions of

20 this subparagraph; and

21 ‘‘(II) the Secretary has not, within 90

22 days after such notice, and the receipt of

23 any information required under subclause

24 (I), notified the institution that the election

25 by such institution would pose a significant
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1 risk to Federal funds and the integrity of

2 programs under title IV.’’.

3 SEC. 3. DEFINITION OF ACADEMIC YEAR.

4 Section 481(a) of the Higher Education Act of 1965

5 (20 U.S.C. 1088(a)) is amended by adding at the end the

6 following new paragraph:

7 ‘‘(3) For the purposes of any eligible program, a week

8 of instruction is defined as a week in which at least one

9 day of regularly scheduled instruction or examinations oc10 curs, or at least one day of study for final examinations

11 occurs after the last scheduled day of classes. For an edu12 cational program using credit hours, but not using a semes13 ter, trimester, or quarter system, an institution of higher

14 education shall notify the Secretary, in the form and man15 ner prescribed by the Secretary, if the institution plans to

16 offer an eligible program of instruction of less than 12 hours

17 of regularly scheduled instruction, examinations, or prepa18 ration for examinations for a week of instructional time.’’.

19 SEC. 4. INCENTIVE COMPENSATION.

20 (a) AMENDMENT.—Part G of title IV of the Higher

21 Education Act of 1965 is amended by inserting after section

22 484B (20 U.S.C. 1091b) the following new section:

23 ‘‘SEC. 484C. INCENTIVE COMPENSATION PROHIBITED.

24 ‘‘(a) PROHIBITION.—No institution of higher edu25 cation participating in a program under this title shall
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1 make any payment of a commission, bonus, or other incen2 tive payment, based directly on success in securing enroll3 ments or financial aid, to any person or entity directly en4 gaged in student recruiting or admission activities, or mak5 ing decisions regarding the award of student financial as6 sistance, except that this section shall not apply to the re7 cruitment of foreign students residing in foreign countries

8 who are not eligible to receive Federal student assistance.

9 ‘‘(b) EXCEPTIONS.—Subsection (a) does not apply to

10 payment of a commission, bonus, or other incentive

11 payment—

12 ‘‘(1) pursuant to any contract with any third13 party service provider that has no control over eligi14 bility for admission or enrollment or the awarding of

15 financial aid at the institution of higher education,

16 provided that no employee of the third-party service

17 provider is paid a commission, bonus, or other incen18 tive payment based directly on success in securing en19 rollments or financial aid; or

20 ‘‘(2) to persons or entities for success in securing

21 agreements, contracts, or commitments from employ22 ers to provide financial support for enrollment by

23 their employees in an institution of higher education

24 or for activities that may lead to such agreements,

25 contracts, or commitments.
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1 ‘‘(c) EXCEPTION FOR FIXED COMPENSATION.—For

2 purposes of subsection (a), a person shall not be treated as

3 receiving incentive compensation when such person receives

4 a fixed compensation that is paid regularly for services and

5 that is adjusted no more frequently than every six months.’’.

6 (b) CONFORMING AMENDMENT.—Paragraph (20) of

7 section 487(a) of the Higher Education Act of 1965 (20

8 U.S.C. 1094(a)(20)) is repealed.

9 (c) TECHNICAL AMENDMENT.—Section 487(c)(1) of the

10 Higher Education Act of 1965 (20 U.S.C. 1094(c)(1)) is

11 amended by striking ‘‘paragraph (2)(B)’’ each place it ap12 pears in subparagraphs (F) and (H) and inserting ‘‘para13 graph (3)(B)’’.

14 SEC. 5. EVALUATION AND REPORT.

15 (a) INFORMATION FROM INSTITUTIONS.—

16 (1) INSTITUTIONS COVERED BY REQUIREMENT.—

17 The requirements of paragraph (2) apply to any in18 stitution of higher education that—

19 (A) has notified the Secretary of Education

20 of an election to qualify for the exception to limi21 tation based on course of study in section

22 102(a)(7) of the Higher Education Act of 1965

23 (20 U.S.C. 1002(a)(7)) or the exception to the 50

24 percent limitation in section 484(l)(1)(C) of such

25 Act (20 U.S.C. 1091(l)(1)(C));
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1 (B) has notified the Secretary under section

2 481(a)(3) of such Act (20 U.S.C. 1088(a)(3)); or

3 (C) contracts with outside parties for—

4 (i) the delivery of distance education

5 programs;

6 (ii) the delivery of programs offered in

7 nontraditional formats; or

8 (iii) the purpose of securing the enroll9 ment of students.

10 (2) REQUIREMENTS.—Any institution of higher

11 education to which this paragraph applies shall com12 ply, on a timely basis, with the Secretary of Edu13 cation’s reasonable requests for information on

14 changes in—

15 (A) the amount or method of instruction of16 fered;

17 (B) the types of programs or courses offered;

18 (C) enrollment by type of program or

19 course;

20 (D) the amount and types of grant, loan, or

21 work assistance provided under title IV of the

22 Higher Education Act of 1965 that is received by

23 students enrolled in programs conducted in non24 traditional formats; and
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1 (E) outcomes for students enrolled in such

2 courses or programs.

3 (b) REPORT BY SECRETARY REQUIRED.—The Sec4 retary of Education shall conduct by grant or contract a

5 study of, and by March 31, 2003, submit to the Congress,

6 a report on—

7 (1) the effect that the amendments made by this

8 Act have had on—

9 (A) the ability of institutions of higher edu10 cation to provide distance learning opportunities

11 to students; and

12 (B) program integrity;

13 (2) with respect to distance education or cor14 respondence education courses at institutions of high15 er education to which the information requirements of

16 subsection (a)(2) apply, changes from year-to-year

17 in—

18 (A) the amount or method of instruction of19 fered and the types of programs or courses of20 fered;

21 (B) the number and type of students en22 rolled in distance education or correspondence

23 education courses;
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1 (C) the amount of student aid provided to

2 such students, in total and as a percentage of the

3 institution’s revenue; and

4 (D) outcomes for students enrolled in dis5 tance education or correspondence education

6 courses, including graduation rates, job place7 ment rates, and loan delinquencies and defaults;

8 (3) any reported and verified claim of induce9 ment to participate in the student financial aid pro10 grams and any violation of the Higher Education Act

11 of 1965, including any actions taken by the Depart12 ment of Education against the violator; and

13 (4) any further improvements that should be

14 made to the provisions amended by this Act (and re15 lated provisions), in order to accommodate nontradi16 tional educational opportunities in the Federal stu17 dent assistance programs while ensuring the integrity

18 of those programs.

19 SEC. 6. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

20 Section 420J of the Higher Education Act of 1965 (20

21 U.S.C. 1070f–6) is amended by adding at the end the fol22 lowing new sentence: ‘‘If for any fiscal year funds are not

23 appropriated pursuant to this section, funds available

24 under part B of title VII, relating to the Fund for the Im25 provement of Postsecondary Education, may be made avail-
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1 able for continuation grants for any grant recipient under

2 this subpart.’’.

3 SEC. 7. IMPLEMENTATION.

4 (a) NO DELAY IN EFFECTIVE DATE.—Section 482(c)

5 of the Higher Education Act of 1965 (20 U.S.C. 1089(c))

6 shall not apply to the amendments made by this Act.

7 (b) IMPLEMENTING REGULATIONS.—Section 492 of the

8 Higher Education Act of 1965 (20 U.S.C. 1098a) shall not

9 apply to the amendments made by sections 2 and 3 of this

10 Act.

Union Calendar No. 137

107TH CONGRESS

1ST SESSION H. R. 1992

[Report No. 107–225]

A BILL

To amend the Higher Education Act of 1965 to expand the opportunities for higher education via

telecommunications.

OCTOBER 2, 2001

Reported with an amendment, committed to the Committee of the Whole House on the State of the Union,

and ordered to be printed