IIB

107TH CONGRESS

1ST SESSION H. R. 1992

IN THE SENATE OF THE UNITED STATES

OCTOBER 11, 2001

Received; read twice and referred to the Committee on Health, Education,

Labor, and Pensions

AN ACT

To amend the Higher Education Act of 1965 to expand

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,
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1 SECTION 1. SHORT TITLE.

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

3 Education Act of 2001’’.

4 SEC. 2. EXCEPTION TO 50 PERCENT CORRESPONDENCE

5 COURSE LIMITATIONS.

6 (a) DEFINITION OF INSTITUTION OF HIGHER EDU7 CATION FOR TITLE IV PURPOSES.—Section 102(a) of the

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

9 amended by adding at the end the following new para10 graph:

11 ‘‘(7) EXCEPTION TO LIMITATION BASED ON

12 COURSE OF STUDY.—Courses offered via tele13 communications (as defined in section 484(l)(4))

14 shall not be considered to be correspondence courses

15 for purposes of subparagraph (A) or (B) of para16 graph (3) for any institution that—

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

18 the loan programs under part B or D of title

19 IV on the date of enactment of the Internet Eq20 uity and Education Act of 2001;

21 ‘‘(B) has a cohort default rate (as deter22 mined under section 435(m)) for each of the 3

23 most recent fiscal years for which data are

24 available that is less than 10 percent; and

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

26 form and manner prescribed by the Secretary
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1 (including such information as the Secretary

2 may require to meet the requirements of clause

3 (ii)), of the election by such institution to qual4 ify as an institution of higher education by

5 means of the provisions of this paragraph; and

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

7 after such notice, and the receipt of any infor8 mation required under clause (i), notified the

9 institution that the election by such institution

10 would pose a significant risk to Federal funds

11 and the integrity of programs under title IV.’’.

12 (b) DEFINITION OF ELIGIBLE STUDENT.—Section

13 484(l)(1) of the Higher Education Act of 1965 (20 U.S.C.

14 1091(l)(1)) is amended by adding at the end the following

15 new subparagraph:

16 ‘‘(C) EXCEPTION TO 50 PERCENT LIMITA17 TION.—Notwithstanding the 50 percent limita18 tion in subparagraph (A), a student enrolled in

19 a course of instruction described in such sub20 paragraph shall not be considered to be enrolled

21 in correspondence courses if the student is en22 rolled in an institution that—

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

24 of the loan programs under part B or D of

25 title IV on the date of enactment of the
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1 Internet Equity and Education Act of

2 2001;

3 ‘‘(ii) has a cohort default rate (as de4 termined under section 435(m)) for each of

5 the 3 most recent fiscal years for which

6 data are available that is less than 10 per7 cent; and

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

9 form and manner prescribed by the Sec10 retary (including such information as the

11 Secretary may require to meet the require12 ments of subclause (II)), of the election by

13 such institution to qualify its students as

14 eligible students by means of the provisions

15 of this subparagraph; and

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

17 days after such notice, and the receipt of

18 any information required under subclause

19 (I), notified the institution that the elec20 tion by such institution would pose a sig21 nificant risk to Federal funds and the in22 tegrity of programs under title IV.’’.
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1 SEC. 3. DEFINITION OF ACADEMIC YEAR.

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

3 (20 U.S.C. 1088(a)) is amended by adding at the end the

4 following new paragraph:

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

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

7 day of regularly scheduled instruction or examinations oc8 curs, or at least one day of study for final examinations

9 occurs after the last scheduled day of classes. For an edu10 cational program using credit hours, but not using a se11 mester, trimester, or quarter system, an institution of

12 higher education shall notify the Secretary, in the form

13 and manner prescribed by the Secretary, if the institution

14 plans to offer an eligible program of instruction of less

15 than 12 hours of regularly scheduled instruction, examina16 tions, or preparation for examinations for a week of in17 structional time.’’.

18 SEC. 4. INCENTIVE COMPENSATION.

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

20 Education Act of 1965 is amended by inserting after sec21 tion 484B (20 U.S.C. 1091b) the following new section:

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

23 ‘‘(a) PROHIBITION.—No institution of higher edu24 cation participating in a program under this title shall

25 make any payment of a commission, bonus, or other incen26 tive payment, based directly on success in securing enroll-
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1 ments or financial aid, to any person or entity directly en2 gaged in student recruiting or admission activities, or

3 making decisions regarding the award of student financial

4 assistance, except that this section shall not apply to the

5 recruitment of foreign students residing in foreign coun6 tries who are not eligible to receive Federal student assist7 ance.

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

9 payment of a commission, bonus, or other incentive

10 payment—

11 ‘‘(1) pursuant to any contract with any third12 party service provider that has no control over eligi13 bility for admission or enrollment or the awarding of

14 financial aid at the institution of higher education,

15 provided that no employee of the third-party service

16 provider is paid a commission, bonus, or other incen17 tive payment based directly on success in securing

18 enrollments or financial aid; or

19 ‘‘(2) to persons or entities for success in secur20 ing agreements, contracts, or commitments from em21 ployers to provide financial support for enrollment

22 by their employees in an institution of higher edu23 cation or for activities that may lead to such agree24 ments, 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

3 as receiving incentive compensation when such person re4 ceives a fixed compensation that is paid regularly for serv5 ices and that is adjusted no more frequently than every

6 six months.’’.

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

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

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

10 (c) TECHNICAL AMENDMENT.—Section 487(c)(1) of

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

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

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

14 ‘‘paragraph (3)(B)’’.

15 SEC. 5. EVALUATION AND REPORT.

16 (a) INFORMATION FROM INSTITUTIONS.—

17 (1) INSTITUTIONS COVERED BY REQUIRE18 MENT.—The requirements of paragraph (2) apply to

19 any institution of higher education that—

20 (A) has notified the Secretary of Edu21 cation of an election to qualify for the exception

22 to limitation based on course of study in section

23 102(a)(7) of the Higher Education Act of 1965

24 (20 U.S.C. 1002(a)(7)) or the exception to the
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1 50 percent limitation in section 484(l)(1)(C) of

2 such Act (20 U.S.C. 1091(l)(1)(C));

3 (B) has notified the Secretary under sec4 tion 481(a)(3) of such Act (20 U.S.C.

5 1088(a)(3)); or

6 (C) contracts with outside parties for—

7 (i) the delivery of distance education

8 programs;

9 (ii) the delivery of programs offered in

10 nontraditional formats; or

11 (iii) the purpose of securing the en12 rollment of students.

13 (2) REQUIREMENTS.—Any institution of higher

14 education to which this paragraph applies shall com15 ply, on a timely basis, with the Secretary of Edu16 cation’s reasonable requests for information on

17 changes in—

18 (A) the amount or method of instruction

19 offered;

20 (B) the types of programs or courses of21 fered;

22 (C) enrollment by type of program or

23 course;

24 (D) the amount and types of grant, loan,

25 or work assistance provided under title IV of
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1 the Higher Education Act of 1965 that is re2 ceived by students enrolled in programs con3 ducted in nontraditional formats; and

4 (E) outcomes for students enrolled in such

5 courses or programs.

6 (b) REPORT BY SECRETARY REQUIRED.—The Sec7 retary of Education shall conduct by grant or contract a

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

9 a report on—

10 (1) the effect that the amendments made by

11 this Act have had on—

12 (A) the ability of institutions of higher

13 education to provide distance learning opportu14 nities to students; and

15 (B) program integrity;

16 (2) with respect to distance education or cor17 respondence education courses at institutions of

18 higher education to which the information require19 ments of subsection (a)(2) apply, changes from year20 to-year in—

21 (A) the amount or method of instruction

22 offered and the types of programs or courses of23 fered;
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1 (B) the number and type of students en2 rolled in distance education or correspondence

3 education courses;

4 (C) the amount of student aid provided to

5 such students, in total and as a percentage of

6 the institution’s revenue; and

7 (D) outcomes for students enrolled in dis8 tance education or correspondence education

9 courses, including graduation rates, job place10 ment rates, and loan delinquencies and defaults;

11 (3) any reported and verified claim of induce12 ment to participate in the student financial aid pro13 grams and any violation of the Higher Education

14 Act of 1965, including any actions taken by the De15 partment of Education against the violator; and

16 (4) any further improvements that should be

17 made to the provisions amended by this Act (and re18 lated provisions), in order to accommodate nontradi19 tional educational opportunities in the Federal stu20 dent assistance programs while ensuring the integ21 rity of those programs.

22 SEC. 6. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

23 Section 420J of the Higher Education Act of 1965

24 (20 U.S.C. 1070f–6) is amended by adding at the end the

25 following new sentence: ‘‘If for any fiscal year funds are
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1 not appropriated pursuant to this section, funds available

2 under part B of title VII, relating to the Fund for the

3 Improvement of Postsecondary Education, may be made

4 available for continuation grants for any grant recipient

5 under this subpart.’’.

6 SEC. 7. IMPLEMENTATION.

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

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

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

10 (b) IMPLEMENTING REGULATIONS.—Section 492 of

11 the Higher Education Act of 1965 (20 U.S.C. 1098a)

12 shall not apply to the amendments made by sections 2 and

13 3 of this Act.

Passed the House of Representatives October 10,

2001.

Attest: JEFF TRANDAHL,

Clerk.