For-Profit Fraud Act

To revise the 90–10 rule under the Higher Education Act of 1965, and for other purposes. 1. Short title This Act may be cited as the For-Profit Fraud Act 2. 85/15 Rule Section 487 of the Higher Education Act of 1965 ( 20 U.S.C. 1094 (1) in subsection (a)(24)— (A) by striking In the case (A) In the case ; (B) by striking not less than ten percent of such institution’s revenues from sources other than funds provided under this title not less than 15 percent of such institution’s revenues from sources other than Federal funds (C) by adding at the end the following: (B) Federal funds In this paragraph, the term Federal funds chapter 33 ; and (2) in subsection (d)— (A) in the heading, by amending the heading to read as follows: Implementation of revenue requirements for non-Federal education assistance funds (B) in paragraph (2)(A), by inserting at the end the following: The Secretary of Education shall notify the Secretary of Defense and the Secretary of Veterans Affairs when, by reason of failing to meet a requirement of subsection (a)(24), a proprietary institution of higher education becomes ineligible to participate in the programs authorized by this title, and when the institution regains such eligibility. 3. Ineligibility of certain proprietary institutions of higher education to participate in Department of Defense or Department Of Veterans Affairs programs of educational assistance (a) Department of Defense (1) In general Chapter 101 section 2008 2008a. Ineligibility of certain proprietary institutions of higher education to participate in Department of Defense programs of educational assistance Upon notice from the Secretary of Education under section 487(d)(2)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(d)(2)(A) 20 U.S.C. 1070 20 U.S.C. 1070 . (2) Clerical amendment The table of sections at the beginning of chapter 101 of such title is amended by inserting after the item relating to section 2008 the following new item: 2008a. Ineligibility of certain proprietary institutions of higher education to participate in Department of Defense programs of educational assistance. . (b) Department of Veterans Affairs (1) In general Subchapter II of chapter 36 section 3681 3681A. Ineligibility of certain proprietary institutions of higher education to participate in Department of Veterans Affairs programs of educational assistance (a) In general Upon notice from the Secretary of Education under section 487(d)(2)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(d)(2)(A) 20 U.S.C. 1070 20 U.S.C. 1070 . (2) Clerical amendment The table of sections at the beginning of chapter 36 of such title is amended by inserting after the item relating to section 3681 the following new item: 3681A. Ineligibility of certain proprietary institutions of higher education to participate in Department of Veterans Affairs programs of educational assistance. .

Summary: For-Profit Fraud Act This bill modifies requirements for a proprietary (i.e., for-profit) institution of higher education (IHE) to participate in federal student aid programs. Current law requires a proprietary IHE to derive at least 10% of its revenue from sources other than federal student aid. The bill requires a proprietary IHE to derive at least 15% of its revenue from sources other than federal funds (i.e., it replaces the so-called 90/10 rule with an 85/15 rule). The bill requires the Department of Education to notify the Department of Defense (DOD) and the Department of Veterans Affairs (VA) when a proprietary institution becomes ineligible to participate in federal student aid programs and when the institution regains such eligibility. Proprietary institutions that lose such eligibility are then ineligible to receive educational assistance from DOD or VA programs.