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SEC. 3. DEFINITION OF ACADEMIC YEAR.
Section 481(a) of the Higher Education Act of 1965
(20 U.S.C. 1088(a)) is amended by adding at the end the
following new paragraph:
‘‘(3) For the purposes of any eligible program, a week
of instruction is defined as a week in which at least one
day of regularly scheduled instruction or examinations oc-
curs, or at least one day of study for final examinations
occurs after the last scheduled day of classes. For an edu-
cational program using credit hours, but not using a se-
mester, trimester, or quarter system, an institution of
higher education shall notify the Secretary, in the form
and manner prescribed by the Secretary, if the institution
plans to offer an eligible program of instruction of less
than 12 hours of regularly scheduled instruction, examina-
tions, or preparation for examinations for a week of in-
structional time.’’.
SEC. 4. INCENTIVE COMPENSATION.
(a) AMENDMENT.—Part G of title IV of the Higher
Education Act of 1965 is amended by inserting after sec-
tion 484B (20 U.S.C. 1091b) the following new section:
‘‘SEC. 484C. INCENTIVE COMPENSATION PROHIBITED.
‘‘(a) PROHIBITION.—No institution of higher edu-
cation participating in a program under this title shall
make any payment of a commission, bonus, or other incen-
tive payment, based directly on success in securing enroll-
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ments or financial aid, to any person or entity directly en-
gaged in student recruiting or admission activities, or
making decisions regarding the award of student financial
assistance, except that this section shall not apply to the
recruitment of foreign students residing in foreign coun-
tries who are not eligible to receive Federal student assist-
ance.
‘‘(b) EXCEPTIONS.—Subsection (a) does not apply to
payment of a commission, bonus, or other incentive
payment—
‘‘(1) pursuant to any contract with any third-
party service provider that has no control over eligi-
bility for admission or enrollment or the awarding of
financial aid at the institution of higher education,
provided that no employee of the third-party service
provider is paid a commission, bonus, or other incen-
tive payment based directly on success in securing
enrollments or financial aid; or
‘‘(2) to persons or entities for success in secur-
ing agreements, contracts, or commitments from em-
ployers to provide financial support for enrollment
by their employees in an institution of higher edu-
cation or for activities that may lead to such agree-
ments, contracts, or commitments.
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‘‘(c) EXCEPTION FOR FIXED COMPENSATION.—For
purposes of subsection (a), a person shall not be treated
as receiving incentive compensation when such person re-
ceives a fixed compensation that is paid regularly for serv-
ices and that is adjusted no more frequently than every
six months.’’.
(b) CONFORMING AMENDMENT.—Paragraph (20) of
section 487(a) of the Higher Education Act of 1965 (20
U.S.C. 1094(a)(20)) is repealed.
(c) TECHNICAL AMENDMENT.—Section 487(c)(1) of
the Higher Education Act of 1965 (20 U.S.C. 1094(c)(1))
is amended by striking ‘‘paragraph (2)(B)’’ each place it
appears in subparagraphs (F) and (H) and inserting
‘‘paragraph (3)(B)’’.
SEC. 5. EVALUATION AND REPORT.
(a) INFORMATION FROM INSTITUTIONS.—
(1) INSTITUTIONS
COVERED
BY
REQUIRE-
MENT.—The requirements of paragraph (2) apply to
any institution of higher education that—
(A) has notified the Secretary of Edu-
cation of an election to qualify for the exception
to limitation based on course of study in section
102(a)(7) of the Higher Education Act of 1965
(20 U.S.C. 1002(a)(7)) or the exception to the
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50 percent limitation in section 484(l)(1)(C) of
such Act (20 U.S.C. 1091(l)(1)(C));
(B) has notified the Secretary under sec-
tion 481(a)(3) of such Act (20 U.S.C.
1088(a)(3)); or
(C) contracts with outside parties for—
(i) the delivery of distance education
programs;
(ii) the delivery of programs offered in
nontraditional formats; or
(iii) the purpose of securing the en-
rollment of students.
(2) REQUIREMENTS.—Any institution of higher
education to which this paragraph applies shall com-
ply, on a timely basis, with the Secretary of Edu-
cation’s reasonable requests for information on
changes in—
(A) the amount or method of instruction
offered;
(B) the types of programs or courses of-
fered;
(C) enrollment by type of program or
course;
(D) the amount and types of grant, loan,
or work assistance provided under title IV of
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the Higher Education Act of 1965 that is re-
ceived by students enrolled in programs con-
ducted in nontraditional formats; and
(E) outcomes for students enrolled in such
courses or programs.
(b) REPORT BY SECRETARY REQUIRED.—The Sec-
retary of Education shall conduct by grant or contract a
study of, and by March 31, 2003, submit to the Congress,
a report on—
(1) the effect that the amendments made by
this Act have had on—
(A) the ability of institutions of higher
education to provide distance learning opportu-
nities to students; and
(B) program integrity;
(2) with respect to distance education or cor-
respondence education courses at institutions of
higher education to which the information require-
ments of subsection (a)(2) apply, changes from year-
to-year in—
(A) the amount or method of instruction
offered and the types of programs or courses of-
fered;
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(B) the number and type of students en-
rolled in distance education or correspondence
education courses;
(C) the amount of student aid provided to
such students, in total and as a percentage of
the institution’s revenue; and
(D) outcomes for students enrolled in dis-
tance education or correspondence education
courses, including graduation rates, job place-
ment rates, and loan delinquencies and defaults;
(3) any reported and verified claim of induce-
ment to participate in the student financial aid pro-
grams and any violation of the Higher Education
Act of 1965, including any actions taken by the De-
partment of Education against the violator; and
(4) any further improvements that should be
made to the provisions amended by this Act (and re-
lated provisions), in order to accommodate nontradi-
tional educational opportunities in the Federal stu-
dent assistance programs while ensuring the integ-
rity of those programs.
SEC. 6. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.
Section 420J of the Higher Education Act of 1965
(20 U.S.C. 1070f–6) is amended by adding at the end the
following new sentence: ‘‘If for any fiscal year funds are