II 

113TH CONGRESS 

1ST SESSION S. 406 

To amend the Higher Education Act of 1965 to provide for new program 

review requirements. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 28, 2013 

Mr. LAUTENBERG (for himself, Mr. HARKIN, Mr. ROCKEFELLER, and Mr. 

DURBIN) 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 new program review requirements. 

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 ‘‘Students First Act 

5 of 2013’’. 

6 SEC. 2. PROGRAM REVIEW AND DATA. 

7 (a) IN GENERAL.—Section 498A of the Higher Edu8 cation Act of 1965 (20 U.S.C. 1099c–1) is amended to 

9 read as follows: 


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1 ‘‘SEC. 498A. PROGRAM REVIEW AND DATA. 

2 ‘‘(a) DEFINITIONS.—In this section: 

3 ‘‘(1) DEFAULT MANIPULATION.— 

4 ‘‘(A) IN GENERAL.—The term ‘default ma5 nipulation’ means the knowing and willful en6 gagement in practices designed to evade sanc7 tions resulting from the application of a default 

8 rate determination to an institution, such as 

9 branching, consolidation of campuses or Office 

10 of Postsecondary Education Identification codes 

11 that designate campuses, change of ownership 

12 or control, serial forbearance, or any similar de13 vice or practice, as determined by the Secretary. 

14 ‘‘(B) EXCLUSION.—The term ‘default ma15 nipulation’ shall not include a practice carried 

16 out in accordance with a default management 

17 plan that has been approved by the Secretary. 

18 ‘‘(2) EXECUTIVE COMPENSATION.—The term 

19 ‘executive compensation’ means the wages, salary, 

20 fees, commissions, fringe benefits, deferred com21 pensation, retirement contributions, options, bo22 nuses, property, and any other form of remuneration 

23 that the Secretary determines is appropriate, given 

24 to employees who are among the 25 highest com25 pensated employees for the taxable year. 


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1 ‘‘(3) FEDERAL FUNDS.—The term ‘Federal 

2 funds’ means funds provided directly to an institu3 tion or to a student attending such institution under 

4 any of the following provisions of law: 

5 ‘‘(A) This title. 

6 ‘‘(B) Chapter 30, 31, 32, 33, 34, or 35 of 

7 title 38, United States Code. 

8 ‘‘(C) Chapter 101, 105, 106A, 1606, 1607, 

9 or 1608 of title 10, United States Code. 

10 ‘‘(D) Section 1784a, 2005, or 2007 of title 

11 10, United States Code. 

12 ‘‘(E) Title I of the Workforce Investment 

13 Act of 1998 (29 U.S.C. 2801 et seq.). 

14 ‘‘(F) The Adult Education and Family Lit15 eracy Act (20 U.S.C. 9201 et seq.). 

16 ‘‘(4) RECRUITING AND MARKETING ACTIVI17 TIES.— 

18 ‘‘(A) IN GENERAL.—The term ‘recruiting 

19 and marketing activities’ means— 

20 ‘‘(i) advertising and promotion activi21 ties, including naming rights, paid an22 nouncements in newspapers, magazines, or 

23 electronic media, on radio, television, or 

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1 plays or promotions at job fairs, military 

2 installations, or college recruiting events; 

3 ‘‘(ii) efforts to identify and attract 

4 prospective students, either directly or 

5 through a contractor or other third party, 

6 including contact concerning a prospective 

7 student’s potential enrollment or applica8 tion for a grant or loan or work assistance 

9 under this title, or participation in 

10 preadmission or advising activities, includ11 ing— 

12 ‘‘(I) paying employees responsible 

13 for overseeing enrollment and for con14 tacting potential students in person, 

15 by phone, by email, or by other inter16 net communications regarding enroll17 ment; and 

18 ‘‘(II) soliciting an individual to 

19 provide contact information to an in20 stitution of higher education, includ21 ing websites established for such pur22 pose and funds paid to third parties 

23 for such purpose; and 

24 ‘‘(iii) such other activities as the Sec25 retary may prescribe, including paying for 


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1 promotion or sponsorship of education or 

2 military-related associations. 

3 ‘‘(B) EXCEPTIONS.—Any activity that is 

4 required as a condition of receipt of funds by 

5 an institution under this title or is specifically 

6 authorized under this title, shall not be consid7 ered to be a recruiting or marketing activity 

8 under subparagraph (A). 

9 ‘‘(5) RELEVANT FEDERAL AGENCY.—The term 

10 ‘relevant Federal agency’ means— 

11 ‘‘(A) the Department of Education; 

12 ‘‘(B) the Department of Veterans Affairs; 

13 ‘‘(C) the Department of Defense; 

14 ‘‘(D) the Consumer Financial Protection 

15 Bureau; 

16 ‘‘(E) the Federal Trade Commission; or 

17 ‘‘(F) any other Federal agency that pro18 vides Federal student assistance or that the 

19 Secretary determines appropriate. 

20 ‘‘(6) RELEVANT STATE ENTITY OR AGENCY.— 

21 The term ‘relevant State entity or agency’ means— 

22 ‘‘(A) an appropriate State licensing or au23 thorizing agency; 

24 ‘‘(B) a State Attorney General; or 


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1 ‘‘(C) any other State entity or agency that 

2 the Secretary determines appropriate. 

3 ‘‘(7) SERIAL FORBEARANCE.—The term ‘serial 

4 forbearance’ means repeatedly attempting to move 

5 students’ loans into forbearance or default manage6 ment, especially when the forbearance and default 

7 management is not in the best, long term financial 

8 interests of the student. 

9 ‘‘(8) STUDENT DEFAULT RISK.—The term ‘stu10 dent default risk’ means a risk that is reflected as 

11 a percentage that is calculated by taking an institu12 tion’s 3-year cohort default rate, as defined in sec13 tion 435(m), for the most recent fiscal year avail14 able, and multiplying it by the percentage of stu15 dents enrolled at such institution receiving a Federal 

16 student loan authorized under this title during the 

17 previous academic year. 

18 ‘‘(b) PROGRAM REVIEWS FOR INSTITUTIONS PAR19 TICIPATING UNDER TITLE IV.— 

20 ‘‘(1) IN GENERAL.—The Secretary shall con21 duct program reviews, including on-site visits, of 

22 each institution of higher education participating in 

23 a program authorized under this title that poses a 

24 significant risk of failure to comply with this title, 

25 as described in paragraphs (2) and (3). 


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1 ‘‘(2) MANDATORY REVIEWS.— 

2 ‘‘(A) IN GENERAL.—The Secretary shall, 

3 on an annual basis, conduct program reviews of 

4 each institution of higher education partici5 pating in a program authorized under this title 

6 that meets 1 or more of the following criteria: 

7 ‘‘(i) As of the date of the determina8 tion— 

9 ‘‘(I) more than 15 percent of the 

10 students enrolled at the institution 

11 have received a Federal Direct Unsub12 sidized Stafford Loan during the pre13 vious year; and 

14 ‘‘(II) the institution has a cohort 

15 default rate, as defined in section 

16 435(m), that is more than twice the 

17 average cohort default rate of all in18 stitutions participating in programs 

19 authorized under this title. 

20 ‘‘(ii) As of the date of the determina21 tion— 

22 ‘‘(I) the institution has a cohort 

23 default rate, as defined in section 

24 435(m), that exceeds the national av25 erage; and 


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1 ‘‘(II) the institution has a cohort 

2 default rate, as so defined, in dollar 

3 volume that places the institution in 

4 the highest 1 percent of institutions 

5 participating in programs authorized 

6 under this title. 

7 ‘‘(iii) In the case of proprietary insti8 tutions of higher education, the institution 

9 received more than 85 percent of the insti10 tution’s revenues from Federal funds, as 

11 defined in subsection (a), during the 2 

12 most recent years for which data is avail13 able. 

14 ‘‘(iv) The institution is among the top 

15 1 percent of institutions participating in 

16 programs authorized under this title in 

17 terms of numbers or rates of complaints 

18 related to Federal student financial aid, 

19 educational practices and services, or re20 cruiting and marketing practices, as re21 ported in the system for collecting and 

22 tracking student complaints established 

23 under subsection (e)(4). 

24 ‘‘(v) As of the date of the determina25 tion, the institution is among the top 1 


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1 percent of institutions in terms of low 

2 graduation rates of all institutions partici3 pating in programs authorized under this 

4 title. 

5 ‘‘(vi) The institution spends more 

6 than 20 percent of the institution’s reve7 nues on recruiting and marketing activities 

8 and executive compensation. 

9 ‘‘(vii) The institution’s enrollment has 

10 increased by more than 50 percent in 2 

11 years or has more than doubled in 5 years. 

12 ‘‘(viii) The institution has engaged in 

13 default manipulation. 

14 ‘‘(ix) In the period immediately fol15 lowing the cohort default rate period, the 

16 institution’s loan defaults increase by 50 

17 percent or more. 

18 ‘‘(x) The institution is found to have 

19 deficiencies, or compliance problems, under 

20 this title, or is at significant risk of failing 

21 to comply with applicable Federal or State 

22 laws, by a relevant Federal agency or a rel23 evant State entity or agency, including the 

24 Comptroller General of the United States. 


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1 ‘‘(xi) The institution has been put on 

2 probation or show cause by its accrediting 

3 agency. 

4 ‘‘(xii) The institution or the institu5 tion’s executives have publically acknowl6 edged or disclosed that the institution is in 

7 violation or noncompliance with any provi8 sion of this title. 

9 ‘‘(B) PUBLICATION OF INSTITUTIONS RE10 VIEWED.—The Secretary shall— 

11 ‘‘(i) post, on a publically available 

12 website, the name of each institution of 

13 higher education that is reviewed under 

14 subparagraph (A); 

15 ‘‘(ii) indicate, on such website, with 

16 respect to each such institution, which of 

17 the mandatory review criteria, outlined in 

18 subparagraph (A), such institution met; 

19 and 

20 ‘‘(iii) indicate on the Department’s 

21 College Navigator website the name of 

22 each institution of higher education that is 

23 reviewed under subparagraph (A). 

24 ‘‘(C) INSTITUTIONAL DISCLOSURE OF RE25 VIEW.—Each institution of higher education 


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1 that is reviewed under subparagraph (A) 

2 shall— 

3 ‘‘(i) post on the home page of the in4 stitution’s website that the institution will 

5 be subject to a mandatory program review 

6 and why the institution is being reviewed 

7 and shall maintain such posting and expla8 nation for 1 year or until the Department 

9 has issued its final program review report 

10 under subsection (c)(5)(C), whichever oc11 curs sooner; 

12 ‘‘(ii) provide a clear, conspicuous dis13 closure of the information described in 

14 clause (i) to students who inquire about 

15 admission to the institution or submit an 

16 application for admission to the institution 

17 prior to the student signing an enrollment 

18 agreement with the institution, for 1 year 

19 or until the Department has issued its 

20 final program review report under sub21 section (c)(5)(C), whichever occurs sooner; 

22 and 

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1 dent before the student enrolls in the insti2 tution, for 1 year or until the Department 

3 has issued its final program review report 

4 under subsection (c)(5)(C), whichever oc5 curs sooner. 

6 ‘‘(3) RISK-BASED REVIEWS.— 

7 ‘‘(A) IN GENERAL.—The Secretary shall 

8 use a risk-based approach to select on an an9 nual basis not less than 2 percent of institu10 tions of higher education participating in a pro11 gram authorized under this title that are not 

12 reviewed under paragraph (2), for a program 

13 review. This approach shall prioritize program 

14 reviews of institutions that— 

15 ‘‘(i) have received large increases in 

16 funding under this title during the 5-year 

17 period preceding the date of the determina18 tion; 

19 ‘‘(ii) have a large proportion of overall 

20 revenue from Federal funds, as defined in 

21 subsection (a); 

22 ‘‘(iii) have a significant fluctuation in 

23 Federal Stafford Loan volume, Federal Di24 rect Stafford Loan volume, or Federal Pell 

25 Grant award volume, or any combination 


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1 thereof, in the year for which the deter2 mination is made, compared to the year 

3 prior to such year, that is not accounted 

4 for by the changes in the Federal Stafford 

5 Loan program, the Federal Direct Stafford 

6 Loan program, or the Federal Pell Grant 

7 program, or any combination thereof; 

8 ‘‘(iv) have experienced sharp increases 

9 in enrollment in absolute numbers or rate 

10 of growth; 

11 ‘‘(v) have high rates of defaults, rel12 ative to all other institutions of higher edu13 cation participating in a program author14 ized under this title, for loans issued under 

15 this title over the lifetime of the loans; 

16 ‘‘(vi) have high default rates, in dollar 

17 volume, or high cohort default rates for 

18 loans issued under this title; 

19 ‘‘(vii) have a student default risk that 

20 is more than 2 times the national average 

21 student default risk for all institutions par22 ticipating in a program under this title; 

23 ‘‘(viii) have a high proportion or high 

24 rate of complaints related to Federal stu25 dent financial aid, educational practices 


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1 and services, or recruiting and marketing 

2 practices, as reported in the system for col3 lecting and tracking student complaints es4 tablished under subsection (e)(4); 

5 ‘‘(ix) have extremely low graduation 

6 rates; 

7 ‘‘(x) are in poor financial health ac8 cording to financial responsibility stand9 ards described in section 498(c); 

10 ‘‘(xi) are spending more than 15 per11 cent of the institution’s revenues on re12 cruiting and marketing activities and exec13 utive compensation; 

14 ‘‘(xii) in the case of proprietary insti15 tutions of higher education, have large 

16 profit margins and profit growth; 

17 ‘‘(xiii) have been put on notice or 

18 warning by its accrediting agency; 

19 ‘‘(xiv) in the case of proprietary insti20 tutions of higher education, have experi21 enced a change in ownership of the institu22 tion, including a buyout; 

23 ‘‘(xv) in the case of proprietary insti24 tutions of higher education, have acquired 

25 a nonprofit institution of higher education 


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1 at any point during the 1-year period pre2 ceding the date of the determination; or 

3 ‘‘(xvi) were for-profit institutions of 

4 higher education and have become non5 profit institutions of higher education at 

6 any time during the 1-year period pre7 ceding the date of the determination. 

8 ‘‘(B) CHANGE IN OWNERSHIP.—In this 

9 paragraph, the term ‘change in ownership’ 

10 means 1 person or more than 1 person acting 

11 as a group, acquiring an ownership interest or 

12 a majority of the stock of the institution that, 

13 in the aggregate, constitutes more than 50 per14 cent of the total fair market value or total vot15 ing power, as applicable, of such institution. 

16 ‘‘(4) ADDITIONAL PROGRAM REVIEWS.—The 

17 Secretary may also conduct additional program re18 views of institutions of higher education partici19 pating in a program authorized under this title that 

20 are not determined to pose a significant risk of fail21 ure to comply with provisions of this title. 

22 ‘‘(5) PUBLIC DISCLOSURE OF VIOLATIONS.— 

23 The Secretary shall— 

24 ‘‘(A) post, on a publically available website, 

25 the name of each institution of higher education 


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1 that is found to have violated a provision of this 

2 title knowingly and willfully or with gross neg3 ligence; 

4 ‘‘(B) indicate on such website, with respect 

5 to each such institution, which of the provisions 

6 of this title the institution violated; and 

7 ‘‘(C) maintain such posting until the date 

8 the institution of higher education rectifies the 

9 violation or the date that is 1 year after the 

10 date the Secretary issues the final program re11 view report under subsection (c)(5)(C) with re12 spect to such institution, whichever date is 

13 later. 

14 ‘‘(6) INSTITUTIONAL DISCLOSURE OF VIOLA15 TIONS.—Each institution of higher education that is 

16 found to have violated a provision of this title know17 ingly and willfully or with gross negligence shall— 

18 ‘‘(A) not later than 15 days after the date 

19 of issuance of the final program review report 

20 containing the finding, post on the home page 

21 of the institution’s website that the institution 

22 has been found to have violated a provision of 

23 this title knowingly and willfully or with gross 

24 negligence, including the provision the institu25 tion was found to have violated; 


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1 ‘‘(B) maintain such posting until the date 

2 the institution rectifies the violation or the date 

3 that is 1 year after the date the Secretary 

4 issues the final program review report under 

5 subsection (c)(5)(C) with respect to such insti6 tution, whichever date is later; and 

7 ‘‘(C) include the information described in 

8 subparagraph (A) on materials of acceptance or 

9 admission submitted to each student before the 

10 student enrolls in the institution until the date 

11 the institution rectifies the violation or the date 

12 that is 1 year after the date the Secretary 

13 issues the final program review report under 

14 subsection (c)(5)(C) with respect to such insti15 tution, whichever date is later. 

16 ‘‘(c) CHARACTERISTICS OF PROGRAM REVIEWS.— 

17 ‘‘(1) NOTICE.—The Secretary may give not 

18 more than 72 hours notice to an institution of high19 er education that will undergo a program review 

20 pursuant to subsection (b) of such review. 

21 ‘‘(2) SHARING OF INFORMATION.—Without 

22 sharing personally identifiable information and in 

23 accordance with section 444 of the General Edu24 cation Provisions Act (20 U.S.C. 1232g, commonly 

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1 vacy Act of 1974’), the Secretary shall share all final 

2 program review results conducted under this section 

3 with relevant Federal agencies and relevant State 

4 entities or agencies, and appropriate accrediting 

5 agencies and associations, to enable such agencies, 

6 entities, and associations to determine the eligibility 

7 of institutions for funds or accreditation. 

8 ‘‘(3) COORDINATION OF REVIEWS.—To the ex9 tent practicable, the Secretary shall coordinate pro10 gram reviews conducted under this section with 

11 other reviews and audits conducted by the Depart12 ment, and with relevant Federal agencies and rel13 evant State entities or agencies. 

14 ‘‘(4) CONDUCT OF REVIEWS.—When conducting 

15 program reviews under this section, the Secretary 

16 shall assess the institution of higher education’s 

17 compliance with the provisions of this title. The pro18 gram reviews shall include, at a minimum, the fol19 lowing: 

20 ‘‘(A) With regard to the institutional infor21 mation, the Secretary shall assess financial ca22 pability, administrative capability, and program 

23 integrity, including whether the institution— 

24 ‘‘(i) knowingly and willfully misused 

25 Federal student aid from any source; 


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1 ‘‘(ii) violated section 487(a)(20); 

2 ‘‘(iii) engaged in substantial misrepre3 sentation of the nature of its educational 

4 program, its financial charges, or the em5 ployability of its graduates; or 

6 ‘‘(iv) violated the Department’s pro7 gram integrity regulations. 

8 ‘‘(B) With regard to student information, 

9 the Secretary shall examine— 

10 ‘‘(i) graduation rates compared with 

11 all other institutions participating in a pro12 gram authorized under this title; 

13 ‘‘(ii) student complaints, including 

14 interviews with current and former stu15 dents, faculty and staff, and accrediting 

16 agencies; and 

17 ‘‘(iii) information from the complaint 

18 data system established under subsection 

19 (e)(4). 

20 ‘‘(5) ADMINISTRATIVE PROCESS.— 

21 ‘‘(A) TRAINING.—The Secretary shall pro22 vide training to personnel of the Department 

23 designed to improve the quality of financial and 

24 compliance audits and program reviews con25 ducted under this section, including instruction 


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1 about appropriately and effectively conducting 

2 such audits and reviews for institutions of high3 er education from different sectors of higher 

4 education. In providing the training, the Sec5 retary shall not use funds appropriated to carry 

6 out this title. 

7 ‘‘(B) CARRYING OUT PROGRAM RE8 VIEWS.—In carrying out program reviews under 

9 this section, the Secretary shall— 

10 ‘‘(i) establish guidelines designed to 

11 ensure uniformity of practice in the con12 duct of such reviews; 

13 ‘‘(ii) make available to each institu14 tion of higher education participating in a 

15 program authorized under this title com16 plete copies of all review guidelines and 

17 procedures used in program reviews, except 

18 that internal training materials for Depart19 ment staff related to identifying instances 

20 of fraud, misrepresentation, or intentional 

21 noncompliance shall not be disclosed; 

22 ‘‘(iii) permit an institution of higher 

23 education to correct or cure an administra24 tive, accounting, or recordkeeping error 

25 within 90 days of the issuance of the final 


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1 program review report, if the error is not 

2 part of a pattern of error and there is no 

3 evidence of fraud or misconduct related to 

4 the error; 

5 ‘‘(iv) without sharing personally iden6 tifiable information and in accordance with 

7 section 444 of the General Education Pro8 visions Act (20 U.S.C. 1232g, commonly 

9 known as the ‘Family Educational Rights 

10 and Privacy Act of 1974’), inform the rel11 evant Federal agencies and relevant State 

12 entities or agencies, and accrediting agency 

13 or association, whenever the Secretary 

14 finds a violation of this title or sanctions 

15 an institution of higher education under 

16 this section, section 498, or section 432; 

17 and 

18 ‘‘(v) provide to an institution of high19 er education 90 calendar days to review 

20 and respond to any program review report 

21 and relevant materials related to the report 

22 before any final program review report is 

23 issued. 

24 ‘‘(C) FINAL PROGRAM REVIEW REPORT.— 


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1 ‘‘(i) IN GENERAL.—Not later than 

2 180 calendar days after issuing a program 

3 review report under this section, the Sec4 retary shall review and consider an institu5 tion of higher education’s response, and 

6 issue a final program review report or 

7 audit determination. The final report shall 

8 include— 

9 ‘‘(I) a written statement address10 ing the institution of higher edu11 cation’s response; 

12 ‘‘(II) a written statement of the 

13 basis for such report or determina14 tion; and 

15 ‘‘(III) a copy of the institution’s 

16 response. 

17 ‘‘(ii) CONFIDENTIALITY.—The Sec18 retary shall maintain and preserve at all 

19 times the confidentiality of any program 

20 review report until a final program review 

21 report is issued, other than to inform the 

22 relevant Federal agencies and relevant 

23 State entities or agencies, and accrediting 

24 agency or association, as required under 

25 this section. 


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1 ‘‘(iii) REPORTS DISCLOSED TO THE

2 INSTITUTION.—The Secretary shall 

3 promptly disclose each program review re4 port to the institution of higher education 

5 under review. 

6 ‘‘(iv) REMOVAL OF PERSONALLY

7 IDENTIFIABLE INFORMATION.—Any per8 sonally identifiable information from the 

9 education records of students shall be re10 moved from any program review report be11 fore the report is shared with any relevant 

12 Federal agency, State entity or agency, or 

13 accrediting agency or association. 

14 ‘‘(D) FOLLOW-UP REVIEWS AFTER VIOLA15 TIONS.—The Secretary shall conduct follow-up 

16 reviews of each institution of higher education 

17 that has been found in violation of a provision 

18 of this title not later than 1 year after the date 

19 of such finding. Such follow-up reviews may 

20 only assess whether the institution of higher 

21 education has corrected violations found in a 

22 previous program review. 

23 ‘‘(d) SANCTIONS.— 

24 ‘‘(1) IN GENERAL.—The Secretary shall imme25 diately sanction any institution of higher education 


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1 that, after the full program review process under 

2 this section, is found to have violated a provision of 

3 this title. 

4 ‘‘(2) AVAILABLE SANCTIONS.— 

5 ‘‘(A) CRITERIA.— 

6 ‘‘(i) IN GENERAL.—Not later than 

7 180 days after the date of enactment of 

8 the Students First Act of 2012, the Sec9 retary shall establish in regulations, with10 out regard to sections 482(c) and 492, sec11 tion 437 of the General Education Provi12 sions Act, and section 553 of title 5, 

13 United States Code, a comprehensive 

14 methodology and criteria for sanctions 

15 against institutions of higher education 

16 that, after the full program review process 

17 under this section, are found to have vio18 lated a provision of this title. 

19 ‘‘(ii) PARAMETERS OF SANCTIONS.— 

20 The sanctions described in clause (i) 

21 shall— 

22 ‘‘(I) be in addition to other sanc23 tions available to the Secretary under 

24 this Act; and 

25 ‘‘(II) take into account— 


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1 ‘‘(aa) the severity of the vio2 lation of this title; 

3 ‘‘(bb) whether the institution 

4 violated this title knowingly and 

5 willfully or with gross negligence; 

6 ‘‘(cc) whether the violation 

7 represents a persistent and docu8 mented pattern of violating this 

9 title; and 

10 ‘‘(dd) the extent of the harm 

11 or potential harm that such viola12 tions caused or had the potential 

13 to cause upon students and bor14 rowers. 

15 ‘‘(B) SANCTIONS FOR FAILURE TO COMPLY

16 WITH THE PROGRAM REVIEW PROCESS.—The 

17 Secretary may sanction an institution that fails 

18 to fully comply with the program review process 

19 described in this section, including the reporting 

20 requirements described in paragraphs (2)(C) 

21 and (6) of subsection (b). 

22 ‘‘(C) WAIVER.—The Secretary may waive 

23 sanctions described in subparagraph (A) with 

24 respect to an institution that has committed a 

25 minor violation of a provision of this title if— 


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1 ‘‘(i) the violation was not committed 

2 knowingly and willfully or with gross neg3 ligence; and 

4 ‘‘(ii) the violation has been rectified 

5 by such institution not later than 60 days 

6 after publication of the institution’s final 

7 program review report. 

8 ‘‘(3) REVOCATION OF TITLE IV ELIGIBILITY.— 

9 Notwithstanding section 487(d)(2), the Secretary 

10 shall revoke the eligibility to participate in student 

11 aid programs under this title of an institution of 

12 higher education that, after undergoing a program 

13 review, is determined to have— 

14 ‘‘(A) knowingly and willfully misused Fed15 eral student aid from any source; 

16 ‘‘(B) violated section 487(a)(20); 

17 ‘‘(C) engaged in substantial misrepresenta18 tion of the nature of its educational program, 

19 its financial charges, or the employability of its 

20 graduates; or 

21 ‘‘(D) violated the Department’s program 

22 integrity regulations. 

23 ‘‘(4) SANCTIONS FOR OFFICERS OF INSTITU24 TIONS.— 


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1 ‘‘(A) OFFICER.—In this paragraph, the 

2 term ‘officer of an institution of higher edu3 cation’ includes the President, Chief Executive 

4 Officer, and Chief Financial Officer of an insti5 tution of higher education. 

6 ‘‘(B) SANCTIONS.—The Secretary shall ex7 tend sanctions, including financial penalties, to 

8 an officer of an institution of higher education 

9 that participates in a program under this title 

10 that knowingly and willfully or with gross neg11 ligence, violates a provision of this title. Such 

12 sanctions shall include— 

13 ‘‘(i) prohibiting an officer of an insti14 tution of higher education that has know15 ingly and willfully or with gross negligence 

16 violated a provision of this title from being 

17 employed by such institution or another in18 stitution of higher education that partici19 pates in a program under this title for a 

20 period of 5 years from the date of the de21 termination of the violation; and 

22 ‘‘(ii) assessing a financial penalty 

23 against an officer of an institution of high24 er education that has knowingly and will25 fully or with gross negligence violated a 


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1 provision of this title that is equal to the 

2 officer’s annual compensation for the year 

3 for which the determination is made. 

4 ‘‘(5) FINANCIAL PENALTIES FOR INSTITU5 TIONS.— 

6 ‘‘(A) IN GENERAL.—With respect to each 

7 institution of higher education for which the 

8 Secretary has revoked eligibility to participate 

9 in student aid programs under this title or has 

10 determined to have violated this title knowingly 

11 and willfully or with gross negligence, the Sec12 retary shall assign penalties of not less than 20 

13 percent of the amount of funds received by the 

14 institution from Federal funds, as defined in 

15 subsection (a), for the last year for which data 

16 are available, which, notwithstanding any other 

17 provision of law, shall be retained by the Sec18 retary and placed in the Student Relief Fund 

19 established by the Secretary under subpara20 graph (C). 

21 ‘‘(B) PENALTIES FOR INSTITUTIONS THAT

22 DO NOT HAVE TITLE IV ELIGIBILITY RE23 VOKED.—Notwithstanding any other provision 

24 of law, with respect to each institution of higher 

25 education that has violated a provision of this 


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1 title and for which the Secretary has deter2 mined has harmed a student or the taxpayers 

3 but is not an institution described in subpara4 graph (A), the Secretary shall assign penalties 

5 of not more than $100,000, which shall be re6 tained by the Secretary and placed in the Stu7 dent Relief Fund established by the Secretary 

8 under subparagraph (C). 

9 ‘‘(C) STUDENT RELIEF FUND.— 

10 ‘‘(i) ESTABLISHMENT.—The Secretary 

11 shall establish a Student Relief Fund that 

12 shall be used, subject to the availability of 

13 funds, to provide financial relief, in a man14 ner determined by the Secretary and which 

15 may include relief such as tuition reim16 bursement or full or partial loan forgive17 ness, to any student enrolled in an institu18 tion of higher education that has failed to 

19 comply with the standards and agreements 

20 created for program participation eligibility 

21 under section 487 or has been sanctioned 

22 under this subsection. 

23 ‘‘(ii) AUTHORIZATION OF APPROPRIA24 TIONS.—In addition to funds derived from 

25 financial penalties assessed pursuant to 


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1 subparagraph (A), there are authorized to 

2 be appropriated such sums as may be nec3 essary to carry out this subparagraph. 

4 ‘‘(6) LIFTING OF SANCTIONS.—Notwithstanding 

5 any other provision of this title, an institution of 

6 higher education that has been sanctioned by the 

7 Secretary under this subsection or any other provi8 sion of this title may not have such sanctions lifted 

9 until the Secretary has conducted a subsequent fol10 low-up review and found the institution to be in 

11 compliance with this title. 

12 ‘‘(e) DATA COLLECTION AND COMPLAINT TRACK13 ING.— 

14 ‘‘(1) ESTABLISHMENT OF DATABASE.—The 

15 Secretary shall establish and operate a central data16 base of information on institutional accreditation, 

17 eligibility, and certification that includes all relevant 

18 information— 

19 ‘‘(A) available to the Department; 

20 ‘‘(B) made available to the Secretary by 

21 the heads of relevant Federal agencies; 

22 ‘‘(C) from accrediting agencies or associa23 tions; and 

24 ‘‘(D) available from a guaranty agency. 


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1 ‘‘(2) DEVELOPMENT OF PLAN.—In order to 

2 carry out the responsibilities described in paragraph 

3 (1), the Secretary shall develop a plan to carry out 

4 and collect all relevant information. 

5 ‘‘(3) INFORMATION AVAILABLE.—The Secretary 

6 shall make the information obtained pursuant to 

7 paragraph (1) readily available to the relevant Fed8 eral agencies and relevant State entities or agencies, 

9 all institutions of higher education, guaranty agen10 cies, States, and other organizations participating in 

11 the programs authorized under this title. 

12 ‘‘(4) COMPLAINT TRACKING.— 

13 ‘‘(A) ESTABLISHMENT OF COMPLAINT

14 TRACKING SYSTEM.—The Secretary shall estab15 lish a single, toll-free telephone number, a 

16 website, and a database, to facilitate the cen17 tralized collection of, monitoring of, and re18 sponse to student and staff complaints regard19 ing Federal student financial aid, educational 

20 practices and services, and recruiting and mar21 keting practices. 

22 ‘‘(B) ESTABLISHMENT OF COMPLAINT

23 TRACKING OFFICE.—The Secretary shall estab24 lish within the Department an office whose 

25 functions shall include establishing, adminVerDate Mar 15 2010 00:36 Mar 02, 2013 Jkt 029200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\S406.IS S406

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1 istering, and disseminating widely information 

2 about the complaint tracking system established 

3 under subparagraph (A). 

4 ‘‘(C) SHARING INFORMATION WITH FED5 ERAL AGENCIES.—The Secretary shall coordi6 nate with relevant Federal agencies to collect 

7 complaints from and route complaints to such 

8 agencies, as appropriate, with respect to edu9 cational products or services. 

10 ‘‘(D) PARTICIPATION OF INSTITUTIONS.— 

11 ‘‘(i) IN GENERAL.—The Secretary 

12 shall communicate with an institution of 

13 higher education about complaints received 

14 through the complaint tracking system 

15 with respect to such institution. 

16 ‘‘(ii) SUMMARY.—Without sharing any 

17 personally identifiable information and in 

18 accordance with section 444 of the General 

19 Education Provisions Act (20 U.S.C. 

20 1232g, commonly known as the ‘Family 

21 Educational Rights and Privacy Act of 

22 1974’), the Secretary shall provide a sum23 mary to an institution of higher education, 

24 at least once a year, of the numbers and 


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1 types of complaints that have been filed 

2 with respect to such institution. 

3 ‘‘(iii) SHARING INDIVIDUAL COM4 PLAINTS.—Notwithstanding any other pro5 vision of law, the Secretary may share a 

6 complaint and the information of the indi7 vidual submitting the complaint with the 

8 institution against which the complaint has 

9 been filed, if such individual who has filed 

10 the complaint affirms that the Secretary 

11 may share that individual’s personal infor12 mation and complaint with the institution. 

13 ‘‘(iv) RESPONSES FROM INSTITU14 TIONS.—The Secretary shall— 

15 ‘‘(I) provide an institution with 

16 90 days to respond to a complaint 

17 filed with respect to the institution 

18 with the complaint tracking system 

19 established under subparagraph (A); 

20 and 

21 ‘‘(II) consider such response and 

22 any resolution of the complaint when 

23 utilizing the information from the 

24 complaint during a program review. 


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1 ‘‘(5) DATA SHARING REQUIRED.—The Sec2 retary shall share consumer complaint information 

3 with, and collect such information from, relevant 

4 Federal agencies and relevant State entities or agen5 cies regarding educational products or services, in 

6 accordance with applicable data privacy laws and 

7 regulations, except that any personally identifiable 

8 information from the education records of students 

9 shall not be shared. 

10 ‘‘(6) TRANSPARENCY.—The Secretary shall 

11 publish on a publically accessible website information 

12 and analyses about complaint numbers, complaint 

13 types, and, where applicable, information about the 

14 resolution of complaints collected under this sub15 section.’’. 

16 (b) PROGRAM PARTICIPATION AGREEMENTS.—Sec17 tion 487(a) of the Higher Education Act of 1965 (20 

18 U.S.C. 1094(a)) is amended by adding at the end the fol19 lowing: 

20 ‘‘(30) The President, Chief Executive Officer, 

21 and Chief Financial Officer of the institution shall 

22 each— 

23 ‘‘(A) personally sign each program partici24 pation agreement for the institution; and 


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1 ‘‘(B) be liable for the institution’s compli2 ance with such agreement and with the provi3 sions of this title, as provided in section 

4 498A(d)(4).’’. 

Æ 


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