Pay for Student Success Act

To authorize pay-for-success projects designed to incentivize and reward successful efforts to increase postsecondary education retention and completion rates for low-income and first-generation students. 1. Short title This Act may be cited as the Pay for Student Success Act 2. Authorization of pay-for-success projects Part B of title VII of the Higher Education Act of 1965 ( 20 U.S.C. 1138 (1) by redesignating section 745 as section 746; and (2) by inserting after section 744 the following: 745. Pay-for-success projects (a) Definitions In this section: (1) Pay-for-success project The term pay-for-success project (A) the eligible entity pursues innovative strategies for improving outcomes and conducts a rigorous evaluation of the results to determine effectiveness; (B) the Secretary and the eligible entity agree to target outcomes; (C) the Federal Government imposes minimal administrative requirements on the eligible entity to allow for maximum flexibility to improve efficiency and effectiveness; and (D) the eligible entry may receive additional funding under this section if the eligible entity achieves successful outcomes as demonstrated through a rigorous independent evaluation approved by the Director of the Institute of Education Sciences. (2) Eligible entity The term eligible entity (A) an institution of higher education; (B) a nonprofit organization; (C) a consortium composed of an institution of higher education and a nonprofit organization; or (D) an entity described in subparagraph (A), (B), or (C) in partnership with— (i) a local educational agency; (ii) a business; (iii) a State educational agency; or (iv) a State department of higher education. (b) Pay-for-Success projects authorized From the amounts appropriated under section 746, the Secretary shall enter into contracts with eligible entities for pay-for-success projects that develop, implement, evaluate, and promote innovative strategies for increasing the postsecondary education retention and completion rates of— (1) students who receive Federal Pell Grants; and (2) first-generation postsecondary students. (c) Application (1) In general An eligible entity desiring a contract under this section shall submit to the Secretary an application at such time and in such form as the Secretary may require. (2) Contents The application described in paragraph (1) shall include— (A) a description of the eligible entity's strategy for improving the retention and completion rate, at one or more institutions of higher education, for students who receive Federal Pell Grants or first-generation postsecondary students; (B) an identification of the target population for the pay-for-success project and of the target outcomes to be achieved; (C) an identification of the independent entity that will carry out a robust, rigorous evaluation approved by the Director of the Institute of Education Sciences to determine the effectiveness of the pay-for-success project, and a description of the methodology that the entity will use for this evaluation, including the timeline for completion; and (D) the total cost of the pay-for-success project and an assurance that the eligible entity will meet the funding requirement described in subsection (d), and an identification of the sources of the funding. (d) Project funding (1) In general Each eligible entity receiving a contract under this section shall demonstrate that the eligible entity will provide for the project funds, in cash or through in-kind contributions, from non-Federal sources in an amount equal to 90 percent of the total cost of the pay-for-success project. (2) Federal support The Secretary shall provide a grant to each eligible entity receiving a contract under this section in an amount equal to 10 percent of the total cost of the pay-for-success project. (e) Pay-for-Success payments (1) Additional funds available If, upon completion of a pay-for-success project, the Secretary determines, based on the results of the evaluation described in subsection (c)(2)(C), that the pay-for-success project has demonstrated effectiveness in a cost-effective manner and has met the target outcomes described in subsection (c)(2)(B), the Secretary may use funds available under this part to provide additional funds to reimburse the eligible entity carrying out the pay-for-success project for not more than 75 percent of the total cost of the pay-for-success project identified in the application under subsection (c)(2)(D). (2) Considerations In making the determination under paragraph (1), the Secretary shall take into account the strength and ambition of the target outcomes described in subsection (c)(2)(B). (f) Dissemination of evidence-Based strategies The Director of the Institute of Education Sciences shall broadly disseminate— (1) the evaluations conducted under the contracts under subsection (b), including the data collected through the evaluations; (2) successful and evidence-based strategies of eligible entities carrying out pay-for-success projects; and (3) information, including project design and evaluation, from such eligible entities regarding practices that were found to be ineffective and, to the extent practicable, an explanation of why. .

Summary: Pay for Student Success Act This bill amends the Higher Education Act of 1965 to require the Department of Education (ED) to contract with eligible entities for pay-for-success projects that develop, implement, evaluate, and promote innovative strategies for increasing the postsecondary education retention and completion rates of students who receive Pell Grants and first-generation postsecondary students. Each entity that receives a contract must provide 90% of the project costs up front. ED may reimburse an entity for no more than 75% of the total project costs if ED determines, based on an independent evaluation, that the project is successful.