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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3380 Introduced in Senate (IS)]

<DOC>

114th CONGRESS
  2d Session
                                S. 3380

To amend the Higher Education Act of 1965 to provide for accreditation 
                    reform, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           September 22, 2016

  Ms. Warren (for herself, Mr. Durbin, and Mr. Schatz) 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, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Accreditation Reform and Enhanced 
Accountability Act of 2016''.

SEC. 2. PURPOSE.

    The purpose of this Act is to improve the effectiveness of 
recognized accreditation as an eligibility requirement for Federal 
education funding and to increase the accountability of institutions of 
higher education for student outcomes.

SEC. 3. RECOGNITION OF ACCREDITING AGENCY OR ASSOCIATION.

    Section 496 of the Higher Education Act of 1965 (20 U.S.C. 1099b) 
is amended--
            (1) in subsection (g)--
                    (A) in the subsection heading, by striking 
                ``Limitation on'';
                    (B) by striking ``Nothing in this section shall be 
                construed to permit the Secretary to establish any 
                criteria that specifies, defines, or prescribes the 
                standards that accrediting agencies or associations 
                shall use to assess any institution's success with 
                respect to student achievement.''; and
                    (C) by adding at the end the following: ``Nothing 
                in this section shall prohibit the Secretary from 
                establishing regulations regarding the criteria for 
                accrediting agencies or associations that are required 
                under this section, including criteria or standards 
                with respect to student achievement, or from 
                establishing differentiated recognition processes for 
                accrediting agencies or associations. Nothing in this 
                section shall be construed to permit the Secretary to 
                establish any regulation that limits the academic 
                freedom of an institution of higher education, such as 
                any criterion that specifies, defines, or prescribes 
                curriculum or instruction.''; and
            (2) in subsection (o), by striking ``Notwithstanding any 
        other provision of law, the Secretary shall not promulgate any 
        regulation with respect to the standards of an accreditation 
        agency or association described in subsection (a)(5).''.

SEC. 4. ACCREDITATION STANDARDS.

    Section 496(a) of the Higher Education Act of 1965 (20 U.S.C. 
1099b(a)) is amended--
            (1) in the matter preceding paragraph (1), by striking ``of 
        student achievement'' and inserting ``for the effectiveness of 
        accrediting agencies or associations'';
            (2) in paragraph (4)(A), by striking ``the stated objective 
        for which the courses or the programs are offered'' and 
        inserting ``the objectives for which courses or programs of 
        this type are offered''; and
            (3) in paragraph (5)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``assess the institution's'' and inserting 
                ``meet the criteria established by the Secretary with 
                respect to such standards and assess and make 
                accreditation determinations based on the 
                institution's'';
                    (B) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) outcomes and success with respect to student 
                achievement in relation to the institution's mission, 
                according to standards determined by the Secretary, and 
                data provided by the Secretary to accrediting agencies 
                or associations, including retention rate, graduation 
                and course completion rates, cohort default rate, 
                repayment rate, transfer rate, student earnings after 
                graduation, and job placement rates, professional and 
                vocational certification and licensing examination pass 
                rate, as applicable, and additional measures of student 
                achievement, as determined by the Secretary;'';
                    (C) by striking subparagraph (E) and inserting the 
                following:
                    ``(E) affordability, such as average net price and 
                changes in tuition and fees;'';
                    (D) in subparagraph (I)--
                            (i) by inserting ``and any actions taken 
                        against the institution by any State or the 
                        Federal Government, including ongoing 
                        investigations, lawsuits that have survived 
                        motions to dismiss, settlements, or any 
                        judgments against the institution in a State or 
                        Federal court'' after ``the agency or 
                        association''; and
                            (ii) by striking ``and'' after the 
                        semicolon;
                    (E) by striking subparagraph (J) and inserting the 
                following:
                    ``(J) record of compliance with its program 
                responsibilities under this title based on information 
                the Secretary may provide to the agency or association; 
                and''; and
                    (F) by inserting after subparagraph (J) the 
                following:
                    ``(K) enrollment levels of students receiving 
                Federal Pell Grants;''.

SEC. 5. MINIMUM BASELINE THRESHOLD.

    Section 496 of the Higher Education Act of 1965 (20 U.S.C. 1099b) 
is amended by adding at the end the following:
    ``(r) Minimum Baseline Threshold.--
            ``(1) In general.--In order to be recognized by the 
        Secretary as a reliable authority as to the quality of 
        education or training offered by an institution of higher 
        education seeking to participate in the programs authorized 
        under this title, an accrediting agency or association shall 
        require that each institution of higher education subject to 
        its jurisdiction meet or exceed the baseline thresholds 
        established by the Secretary pursuant to paragraph (3) for the 
        student achievement measures described in paragraph (2) not 
        less than 2 out of 3 consecutive years, in order to remain 
        accredited by the agency or association.
            ``(2) Student achievement measures.--The student 
        achievement measures required under this subsection shall be 
        each of the following:
                    ``(A) The graduation rate, as defined by the 
                Secretary through regulations, of the institution of 
                higher education, for the most recent year or years for 
                which data are available, for all students attending 
                the institution.
                    ``(B) The 3-year cohort default rate, calculated 
                for the most recent year for which data are available, 
                for all individuals who entered repayment on any 
                Federal Direct Loan received for attendance at the 
                institution during the applicable year (as determined 
                in accordance with section 435(m)).
                    ``(C) The 5-year cohort repayment rate, as defined 
                by the Secretary through regulations, calculated for 
                the most recent year for which data are available, for 
                all individuals who entered repayment on any Federal 
                Direct Loan received for attendance at the institution 
                during the applicable year.
                    ``(D) Any other measure, as determined by the 
                Secretary through regulation, in consultation with the 
                Commissioner of the National Center for Education 
                Statistics.
            ``(3) Baseline thresholds.--The Secretary shall, through 
        regulations, establish a baseline threshold for each of the 
        student achievement measures described in paragraph (2) in 
        relation to the institution's mission.
            ``(4) Student achievement data.--The Secretary shall 
        annually provide the necessary student achievement data to 
        accrediting agencies or associations to carry out this 
        subsection.
            ``(5) Rule of construction.--Nothing in this subsection 
        shall be construed as prohibiting an accrediting agency or 
        association from assessing institutions of higher education 
        using a holistic review of student achievement, which may 
        include measures and thresholds beyond what is required by this 
        subsection, or in subsection (a)(5)(A), for the purposes of 
        continuous institutional improvement.''.

SEC. 6. ACCREDITATION REVIEWS.

    Section 496 of the Higher Education Act of 1965 (20 U.S.C. 1099b), 
as amended by section 5, is further amended by adding at the end the 
following:
    ``(s) Accreditation Reviews.--
            ``(1) Standard reviews.--In order to be recognized by the 
        Secretary as a reliable authority as to the quality of 
        education or training offered by an institution of higher 
        education seeking to participate in the programs authorized 
        under this title, an accrediting agency or association shall--
                    ``(A) require that each institution of higher 
                education subject to its jurisdiction undergo a 
                standard accreditation review at regular intervals as 
                determined by the agency or association, and before the 
                agency or association first provides accreditation to 
                such institution; and
                    ``(B) conduct the standard accreditation review and 
                make accreditation determinations based on the 
                standards described in subsection (a)(5).
            ``(2) Enhanced accreditation reviews.--
                    ``(A) In general.--In order to be recognized by the 
                Secretary as a reliable authority as to the quality of 
                education or training offered by an institution of 
                higher education seeking to participate in the programs 
                authorized under this title, an accrediting agency or 
                association shall carry out an enhanced accreditation 
                review of an institution of higher education subject to 
                its jurisdiction--
                            ``(i) immediately after the agency or 
                        association learns--
                                    ``(I) that the institution is the 
                                subject of an investigation, 
                                settlement, or adverse judgment by a 
                                Federal authority (other than the 
                                Department) or a State for a violation 
                                relating to fraud or abuse, deceptive 
                                practices, or material harm to students 
                                enrolled, or previously enrolled, at 
                                the institution; or
                                    ``(II) of any other situation or 
                                factor required by the Secretary 
                                through regulations promulgated under 
                                this section that relate to the student 
                                achievement measures described in 
                                subsection (r);
                            ``(ii) if the agency or association has 
                        reason to believe that the institution is 
                        failing to meet its program responsibilities 
                        under this title or is engaged in fraud or 
                        abuse, deceptive practices, or material harm to 
                        students enrolled, or previously enrolled, at 
                        the institution; or
                            ``(iii) at any other time the agency or 
                        association determines necessary, as outlined 
                        in the agency or association's standards.
                    ``(B) Content of an enhanced accreditation 
                review.--For each enhanced accreditation review 
                required under subparagraph (A)--
                            ``(i) the accrediting agency or association 
                        may consider any of the factors that it 
                        considers during a standard accreditation 
                        review;
                            ``(ii) the accrediting agency or 
                        association shall--
                                    ``(I) investigate the issue that 
                                triggered the enhanced accreditation 
                                review; and
                                    ``(II) determine if the 
                                accreditation of the institution should 
                                be withdrawn or suspended, or if any 
                                other action should be taken; and
                            ``(iii) the institution shall be required 
                        to make additional disclosures, as determined 
                        by the Secretary through regulations 
                        promulgated under this section, to the students 
                        attending the institution and to the public.
                    ``(C) Review reporting requirements.--An 
                accrediting agency or association that conducts an 
                enhanced accreditation review under this paragraph 
                shall make available to the public on the agency or 
                association's website and submit to the Secretary, the 
                appropriate State licensing or authorizing agency, and 
                the appropriate State Attorney General--
                            ``(i) when the agency or association 
                        initiates the enhanced accreditation review and 
                        the reason for conducting the enhanced 
                        accreditation review;
                            ``(ii) at the conclusion of the enhanced 
                        accreditation review, the information obtained 
                        by the agency or association as part of the 
                        enhanced accreditation review, including the 
                        institution's performance on the student 
                        achievement measures, to the extent required by 
                        the Secretary through regulations promulgated 
                        under this section; and
                            ``(iii) at the conclusion of the enhanced 
                        accreditation review, the outcome of the 
                        enhanced accreditation review and an 
                        explanation of the reasons for any actions 
                        taken as a result of the enhanced accreditation 
                        review.''.

SEC. 7. ACCREDITATION AGENCY ACTION.

    Section 496 of the Higher Education Act of 1965 (20 U.S.C. 1099b), 
as amended by sections 5 and 6, is further amended by adding at the end 
the following:
    ``(t) Accreditation Agency Action.--
            ``(1) In general.--In order to be recognized by the 
        Secretary as a reliable authority as to the quality of 
        education or training offered by an institution of higher 
        education seeking to participate in the programs authorized 
        under this title, an accrediting agency or association shall 
        agree to take action, as described in paragraph (2), with 
        respect to an institution of higher education subject to its 
        jurisdiction if any of the following occur:
                    ``(A) Change in ownership of the institution.
                    ``(B) Rapid change in size of student population at 
                the institution, as defined by the Secretary in 
                regulations promulgated under this section.
                    ``(C) Any notification by the Secretary to the 
                agency or association of poor financial health, 
                including--
                            ``(i) a lowering in the credit rating 
                        provided to the institution by a credit rating 
                        agency (as defined in section 3(a) of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 
                        78c(a))); and
                            ``(ii) any other indicator of financial 
                        weakness as defined by the Secretary, which may 
                        include heightened cash monitoring or the 
                        requirement to post a letter of credit.
                    ``(D) Any substantive change to the institution's 
                programs or locations.
                    ``(E) Any other event determined appropriate by the 
                Secretary through regulations promulgated under this 
                section.
                    ``(F) Any other event determined by the accrediting 
                agency or association.
            ``(2) Actions.--The actions that may be taken by an 
        accrediting agency or association under this paragraph are the 
        following:
                    ``(A) An enhanced accreditation review.
                    ``(B) Formal accrediting action taken by the agency 
                or association, such as a compliance assessment or the 
                imposition of formal conditions on accreditation that 
                occurs separate from the standard accreditation 
                reviews.
                    ``(C) A formal request for additional information.
                    ``(D) A recommendation that the institution 
                carefully monitor and report to the accrediting agency 
                or association factors relating to the event described 
                in paragraph (1), or put into place appropriate 
                controls or improvement strategies relating to such 
                event.
                    ``(E) Other actions determined appropriate by the 
                accrediting agency or association.''.

SEC. 8. OPERATING PROCEDURES.

    (a) Notification.--Section 496(a)(7) of the Higher Education Act of 
1965 (20 U.S.C. 1099b(a)(7)) is amended--
            (1) by striking ``the Secretary and the appropriate State 
        licensing or authorizing agency within 30 days'' and inserting 
        ``the Secretary, the appropriate State licensing or authorizing 
        agency, and the appropriate State Attorney General, within 30 
        days''; and
            (2) by striking ``adverse'' and inserting ``negative''.
    (b) Availability to the Public.--Section 496(c) of the Higher 
Education Act of 1965 (20 U.S.C. 1099b(c)) is amended--
            (1) in paragraph (7)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``makes available to the public and the State 
                licensing or authorizing agency, and submits to the 
                Secretary, a summary of agency or association actions'' 
                and inserting ``makes available to the public on the 
                agency or association's website and submits to the 
                Secretary, the appropriate State licensing or 
                authorizing agency, and the appropriate State Attorney 
                General, and other relevant agencies, which may include 
                the Bureau of Consumer Financial Protection, the 
                Federal Trade Commission, the Department of Defense, 
                and the Department of Veterans Affairs, as appropriate, 
                a summary of and justification for the final decision 
                issued to the institution regarding each accreditation 
                action''; and
                    (B) in subparagraph (C), by striking ``adverse 
                action taken with respect to an institution or 
                placement on probation of an institution'' and 
                inserting ``negative action taken, including an order 
                to show cause, with respect to an institution, or 
                placement on probation of an institution'';
            (2) in paragraph (8), by striking ``and'' after the 
        semicolon; and
            (3) by adding at the end the following:
            ``(10) turns over to the Secretary all accreditation 
        documents of an institution that closes; and''.

SEC. 9. CONFLICT OF INTEREST.

    Section 496(a) of the Higher Education Act of 1965 (20 U.S.C. 
1099b(a)) is amended--
            (1) in paragraph (7), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (8), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(9) such agency or association prohibits an individual--
                    ``(A) from participating in any review or decision 
                making role in any part of the agency's or 
                association's accreditation process, including service 
                on the agency's or association's commission or 
                governing board and reviewing or deciding on 
                accreditation policies or the accreditation status of 
                institutions or programs, if the individual, or a 
                family member of the individual (as defined by the 
                Secretary)--
                            ``(i) is an administrative officer of an 
                        institution of higher education accredited by 
                        or seeking accreditation from such agency or 
                        association;
                            ``(ii) has a financial stake in any 
                        institution of higher education (other than as 
                        an employee), including as an investor, 
                        bondholder, creditor, vendor, or contractor;
                            ``(iii) has a fiduciary responsibility to 
                        an institution of higher education accredited 
                        by or seeking accreditation from such agency or 
                        association;
                            ``(iv) is a federally registered lobbyist; 
                        or
                            ``(v) is ineligible to participate under 
                        regulations prescribed by the Secretary based 
                        on affiliation with an institution that has a 
                        history of administrative or legal action 
                        brought on behalf of students or taxpayers, or 
                        that currently faces such action, or that 
                        closed without providing equitable treatment of 
                        students; and
                    ``(B) from participating in any review or decision 
                making role in any part of the agency's or 
                association's accreditation process with respect to a 
                particular institution or program, if the individual, 
                or a family member of the individual (as defined by the 
                Secretary), is an employee or was an employee in the 
                preceding 3 years of the institution or program.''.

SEC. 10. ACCREDITATION AGENCY ACCOUNTABILITY.

    (a) In General.--Section 496 of the Higher Education Act of 1965 
(20 U.S.C. 1099b) is amended--
            (1) in subsection (l)(1)--
                    (A) in subparagraph (A), by striking ``or'' after 
                the semicolon;
                    (B) in subparagraph (B)(ii), by striking the period 
                at the end and inserting ``; or''; and
                    (C) by adding at the end the following:
                    ``(C) impose a fine if the agency or association 
                failed to notify the Secretary when the agency or 
                association had reason to believe an institution of 
                higher education was failing to meet its program 
                responsibilities under this title or was engaged in 
                fraud or abuse, deceptive practices, or material harm 
                to students enrolled, or previously enrolled, at the 
                institution, or failed to take action under subsection 
                (t)(2) for such an institution.''; and
            (2) in subsection (n)--
                    (A) in paragraph (3)--
                            (i) in the first sentence, by inserting 
                        ``or any institution that the agency or 
                        association accredits'' before the period at 
                        the end;
                            (ii) by inserting after the first sentence 
                        the following: ``The Secretary shall conduct a 
                        performance-based review and make a holistic 
                        judgment regarding whether the accrediting 
                        agency or association is a reliable authority 
                        on the quality of postsecondary education, 
                        including the quality of the agency's or 
                        association's processes to accurately assess 
                        outcomes and success with respect to student 
                        achievement of the institutions the agency or 
                        association accredits to deliver a quality 
                        education consistent with the missions of the 
                        institutions, and the effectiveness, 
                        timeliness, and consistency of the accrediting 
                        agency or association in addressing the 
                        standards in subsection (a).''; and
                            (iii) by striking ``The Secretary shall 
                        not, under any circumstances, base decisions on 
                        the recognition or denial of recognition of 
                        accreditation agencies or associations on 
                        criteria other than those contained in this 
                        section.''; and
                    (B) by adding at the end the following:
            ``(5)(A) Not later than 30 days after a finding by a 
        Federal or State agency or court of law that an institution of 
        higher education has violated a Federal or State law related to 
        fraud or abuse, deceptive practices, materially harmed students 
        enrolled, or previously enrolled, at the institution of higher 
        education, breached its fiduciary duty to the Department under 
        this title, been the subject of a settlement or lawsuit that 
        has survived a motion to dismiss by a State or Federal entity 
        related to fraud or abuse or deceptive practices, or filed for 
        bankruptcy, the Secretary shall carry out the following:
                    ``(i) Initiate a review of the accrediting agency 
                or association that accredited the institution to 
                determine if the accrediting agency or association 
                failed to effectively apply the criteria in this 
                section, or is otherwise not in compliance with the 
                requirements of this section, and, if the accrediting 
                agency or association is not in compliance, shall 
                initiate action pursuant to subsection (l) to take any 
                or all of the following actions:
                            ``(I) Limit, suspend, or terminate 
                        recognition of the agency or association.
                            ``(II) Require the agency or association to 
                        take appropriate action.
                            ``(III) Impose a fine for noncompliance.
                    ``(ii) Make publicly available the initiation of 
                the review and outcome.
            ``(B) The Office of Inspector General of the Department 
        shall review, on an annual basis, the Secretary's actions under 
        this subsection, along with findings by the Secretary and 
        provide recommendations on appropriate fines or actions 
        (including withdrawing approval or recognition of the 
        accrediting agency or association) against an accrediting 
        agency or association sanctioned under this section to the 
        Secretary and appropriate Department staff.
            ``(C) The Office of Inspector General of the Department 
        shall provide a report that is made available to the public and 
        provide a copy to the National Advisory Committee on 
        Institutional Quality and Integrity, the Committee on Health, 
        Education, Labor, and Pensions of the Senate, and the Committee 
        on Education and the Workforce of the House of Representatives 
        on the review under subparagraph (B).
            ``(D) Any monetary penalty or payment assessed by an 
        accrediting agency or association on institutions of higher 
        education subject to the jurisdiction of the agency or 
        association as a result of a fine imposed under this paragraph 
        shall be assessed equally to each institution subject to the 
        jurisdiction of the agency or association.''.

SEC. 11. CREDIT TRANSFER AGREEMENT.

    Section 496(c) of the Higher Education Act of 1965 (20 U.S.C. 
1099b(c)), as amended by section 8(b), is further amended by adding at 
the end the following:
            ``(11)(A) not later than 4 years after the date of 
        enactment of the Accreditation Reform and Enhanced 
        Accountability Act of 2016, requires that each institution 
        subject to the jurisdiction of the agency or association have a 
        credit transfer agreement with all other institutions 
        accredited by the agency or association that provides for the 
        transfer of credit earned for all general education courses and 
        for courses required as part of substantially similar programs; 
        and
            ``(B) confirms, as a part of the accreditation or 
        reaccreditation review conducted by the agency or association, 
        that the institution has transfer of credit policies that--
                    ``(i) meet the requirements of subparagraph (A);
                    ``(ii) are publicly disclosed; and
                    ``(iii) include a statement of the criteria 
                established by the institution regarding the transfer 
                of credit earned at another institution of higher 
                education.''.

SEC. 12. ACCREDITATION DISCLOSURE.

    (a) Accreditation Disclosure System.--Part G of title IV of the 
Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is amended by 
adding at the end the following:

``SEC. 493E. ACCREDITATION DISCLOSURE SYSTEM.

    ``(a) In General.--Not later than 18 months after the date of 
enactment of the Accreditation Reform and Enhanced Accountability Act 
of 2016, the Secretary shall design and establish standards for 
standardized online accreditation disclosures by institutions of higher 
education that participate in any program under this title. The 
Secretary shall require each such institution of higher education to--
            ``(1) display, prominently on the institution's website, a 
        standard form of disclosure of the institution's accreditation 
        status, designed by the Secretary, including whether the status 
        is under appeal;
            ``(2) regularly update such display as its accreditation 
        status changes; and
            ``(3) include a link from such display, including on the 
        homepage of the institution's website, to any applicable 
        supporting public documentation relating to the institution's 
        accreditation status, including correspondence to and from the 
        accrediting agency or association.
    ``(b) Accreditation Terminology.--The Secretary shall work with 
accrediting agencies and associations to establish by regulation common 
definitions for the various accreditation statuses and actions taken by 
accrediting agencies and associations, for use by such agencies and 
associations in all public documents and reporting to the Secretary, 
State licensing or authorizing agency, and State Attorneys General.
    ``(c) Coordination.--In developing the system described in 
subsection (a), the Secretary shall consult with the Committee on 
Health, Education, Labor, and Pensions of the Senate and the Committee 
on Education and the Workforce of the House of Representatives, other 
Federal agencies, student and consumer advocacy groups, institutions of 
higher education, accrediting agencies and associations, and other 
entities determined appropriate by the Secretary.
    ``(d) Accreditation Status.--In this section, the term 
`accreditation status' means--
            ``(1) the issuance of any order to show cause;
            ``(2) the initiation of an enhanced accreditation review 
        under this Act and any action taken as a result of such review;
            ``(3) any action taken pursuant to section 496(t)(2);
            ``(4) any other action taken by an accrediting agency or 
        association, as described in subparagraph (A), (B), or (C) of 
        section 496(c)(8); and
            ``(5) any other factor determined appropriate by the 
        Secretary through regulation.
    ``(e) Transparency.--Not later than 1 year after the date of 
enactment of the Accreditation Reform and Enhanced Accountability Act 
of 2016, the Secretary shall collect from accrediting agencies and 
associations and publish on a federally maintained website all final 
documents produced in the agencies' and associations' reviews of 
institutions of higher education, including site-visit reports, 
decision letters, a list of members of the review committees, and all 
other final documents that the Secretary determines appropriate.''.
    (b) Program Participation Agreement.--Section 487(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1094(a)) is amended by adding at the 
end the following:
            ``(30) Not later than 3 years after the date of enactment 
        of the Accreditation Reform and Enhanced Accountability Act of 
        2016, the institution will use, prominently on the 
        institution's website, the standardized online accreditation 
        disclosure system established by the Secretary under section 
        493E to--
                    ``(A) disclose the accreditation status of the 
                institution; and
                    ``(B) update the disclosure within 48 hours of 
                receiving notification from an accrediting agency or 
                association of a change in accreditation status.''.

SEC. 13. DIFFERENTIATED ACCREDITATION STATUS.

    Section 496 of the Higher Education Act of 1965 (20 U.S.C. 1099b), 
as amended by sections 5, 6, and 7, is further amended by adding at the 
end the following:
    ``(u) Differentiated Accreditation Status.--
            ``(1) In general.--Solely for purposes of consumer 
        information, an accrediting agency or association may designate 
        an institution of higher education that the agency or 
        association accredits as `accredited with distinction' or 
        `accredited with risk' according to definitions developed by 
        the Secretary under paragraph (2).
            ``(2) Designation definitions.--The Secretary, through 
        regulation, shall develop definitions of `accredited with 
        distinction' and `accredited with risk' that an accrediting 
        agency or association shall use in making designations under 
        paragraph (1) based on student achievement standards developed 
        in accordance with subsection (a)(5)(A) in relation to the 
        institution of higher education's mission.''.

SEC. 14. TEACH-OUT PLANS.

    Section 496(c) of the Higher Education Act of 1965 (20 U.S.C. 
1099b(c)), as amended by sections 8 and 11, is further amended--
            (1) by striking paragraph (3) and inserting the following:
            ``(3)(A) requires an institution to submit for approval to 
        the accrediting agency or association a teach-out plan if--
                    ``(i) the accrediting agency or association acts to 
                withdraw, terminate, or suspend the accreditation of 
                the institution;
                    ``(ii) the accrediting agency or association 
                requires the institution to show cause for continued 
                accreditation; or
                    ``(iii) the institution notifies the accrediting 
                agency or association that the institution intends to 
                cease operations;
            ``(B) requires an institution to--
                    ``(i) submit for approval to the accrediting agency 
                or association a teach-out plan not later than 30 days 
                after the date--
                            ``(I) the Department notifies the 
                        accrediting agency or association of an action 
                        against the institution pursuant to section 
                        487(f);
                            ``(II) the accrediting agency or 
                        association places the institution on probation 
                        or show cause, or notifies the institution that 
                        the agency or association deems it a high-risk 
                        institution;
                            ``(III) the institution is required to post 
                        a Letter of Credit to the Department of 
                        Education;
                            ``(IV) the institution is placed on 
                        Heightened Cash Monitoring 2;
                            ``(V) the institution receives a failing 
                        Financial Responsibility Composite Score;
                            ``(VI) the institution is subject to an 
                        enhanced accreditation review under subsection 
                        (s)(2); or
                            ``(VII) the institution is at risk under 
                        regulations prescribed by the Secretary for 
                        this purpose; and
                    ``(ii) regularly update and maintain the teach-out 
                plan until such time as the Secretary determines; and
            ``(C) does not approve a teach-out plan that includes a 
        plan for the participation of any institution of higher 
        education that is the subject of an investigation, settlement, 
        or adverse judgment by a Federal authority (including the 
        Department) or a State for a violation relating to fraud or 
        abuse, deceptive practices, or material harm to students 
        enrolled, or previously enrolled, at the institution;'';
            (2) by redesignating paragraphs (4) through (11) as 
        paragraphs (5) through (12), respectively; and
            (3) by inserting after paragraph (3) the following:
            ``(4) with respect to private institutions, ensures that 
        sufficient funds have been, or will be, allocated to carry out 
        all teach-out plans and agreements required under paragraph 
        (3);''.

SEC. 15. JURISDICTION.

    Section 496 of the Higher Education Act of 1965 (20 U.S.C. 1099b), 
as amended by sections 5, 6, 7, and 13, is further amended by adding at 
the end the following:
    ``(v) Jurisdiction.--Notwithstanding any other provision of law, 
any civil action brought by any party regarding this section or 
implementing regulations, or an institution of higher education seeking 
accreditation from, or accredited by, an accrediting agency or 
association recognized by the Secretary for the purpose of this title 
and involving the denial, withdrawal, or termination of accreditation 
of the institution of higher education, shall be brought in the 
appropriate United States district court.''.

SEC. 16. CHANGE OF ACCREDITOR.

    Section 496(h) of the Higher Education Act of 1965 (20 U.S.C. 
1099b(h)) is amended to read as follows:
    ``(h) Change of Accrediting Agency or Association.--The Secretary 
shall not recognize the accreditation of any otherwise eligible 
institution of higher education that is in the process of changing its 
accrediting agency or association, including due to a change in 
ownership of the institution, unless--
            ``(1) the institution submits for approval to the Secretary 
        all materials relating to the prior accreditation, including 
        materials that the Secretary determines demonstrate reasonable 
        cause for changing the accrediting agency or association;
            ``(2) the institution received full reaccreditation from 
        the prior accrediting agency or association during the 24-month 
        period preceding the date of the recognition; and
            ``(3) the institution was reaccredited under its prior 
        accrediting agency or association's most recent accreditation 
        standards.''.

SEC. 17. SENSE OF CONGRESS.

    It is the sense of Congress that nothing in this Act or the 
amendments made by this Act limits the generally accepted principles of 
academic freedom of an institution of higher education or should be 
construed as providing authority to the Secretary of Education to limit 
that academic freedom.

SEC. 18. RULES OF CONSTRUCTION; STUDENT ACHIEVEMENT DATA.

    Section 496 of the Higher Education Act of 1965 (20 U.S.C. 1099b), 
as amended by sections 5, 6, 7, 13, and 15, is further amended by 
adding at the end the following:
    ``(w) Differentiated Accreditation Processes.--Nothing in this 
title shall be interpreted to prevent an accrediting agency or 
association from establishing differentiated accreditation processes 
for institutions based on risk.
    ``(x) Applicability.--The provisions of this section shall apply to 
both institutional and programmatic accreditation that is a condition 
for an institution to be an eligible institution for the purposes of 
any program authorized under this title.
    ``(y) Student Achievement Data.--
            ``(1) In general.--The Secretary shall provide the 
        necessary student achievement data to accrediting agencies or 
        associations needed to implement subsection (a)(5)(A).
            ``(2) Disaggregation.--To the extent practicable, the data 
        described in paragraph (1) shall be provided to accrediting 
        agencies or associations in a manner that can be disaggregated 
        by Pell Grant recipients.''.
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