112 
(6)(A)(i) of subsection (d), based 
on a 10-year repayment period, 
when the borrower entered repay-
ment on such loans; or 
‘‘(BB) in the case of a Fed-
eral Direct Consolidation Loan, 
the total amount of principal and 
interest that the borrower would 
have repaid under the repayment 
schedule established for the loan 
under section 428C(c)(2) on the 
date on which such loan was 
made; plus 
‘‘(bb) an amount equal to 
the amount of any unpaid inter-
est that has accrued, but was not 
included in the calculation of the 
total amount of principal and in-
terest that would have been re-
paid under the standard repay-
ment plan or schedule described 
in item (aa)— 
‘‘(AA) 
during 
any 
deferment period described 
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in clause (i) or (ii) of sub-
section (f)(2)(A); or 
‘‘(BB) during any for-
bearance period while serv-
ing in a medical or dental 
internship or residency pro-
gram as described in section 
428(c)(3)(A)(i)(I); and 
‘‘(vi) a borrower who is repaying a 
loan pursuant to a repayment assistance 
plan under clause (i) may elect, at any 
time, to terminate repayment pursuant to 
such plan and repay such loan under the 
standard repayment plan under subsection 
(d)(6)(A)(i). 
‘‘(B) REPAYMENT
ASSISTANCE
FOR
DIS-
TRESSED BORROWERS.— 
‘‘(i) INTEREST
SUBSIDY.—For each 
month for which a borrower’s aggregate 
monthly payment under this paragraph is 
insufficient to pay the total amount of in-
terest that accrues on a loan for the 
month, the amount of interest accrued and 
not paid for the month shall be subtracted 
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from the total amount of interest due on 
such loan for the month. 
‘‘(ii) PRINCIPAL SUBSIDY.—For each 
month for which a borrower’s aggregate 
monthly payment under this paragraph re-
pays an amount due on an individual loan 
that is less than twice the total amount of 
interest that accrues on such loan for the 
month, the amount of the total principal 
due on such loan shall be reduced by an 
amount equal to half of the monthly pay-
ment under this paragraph on such loan 
for the month. 
‘‘(C) DEFINITIONS.—In this paragraph: 
‘‘(i) ADJUSTED GROSS INCOME.—The 
term ‘adjusted gross income’ has the 
meaning given the term in section 62 of 
the Internal Revenue Code of 1986. 
‘‘(ii) APPLICABLE
MONTHLY
PAY-
MENT.—The term ‘applicable monthly pay-
ment’ means, when used with respect to a 
borrower, the amount obtained by dividing 
by 12, 10 percent of the result obtained by 
calculating, on at least an annual basis, 
the amount by which— 
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‘‘(I) the adjusted gross income of 
the borrower or, if the borrower is 
married and files a Federal income 
tax return jointly with or separately 
from the borrower’s spouse, the ad-
justed gross income of the borrower 
and the borrower’s spouse; exceeds 
‘‘(II) 150 percent of the poverty 
line applicable to the borrower’s fam-
ily size as determined under section 
673(2) of the Community Services 
Block Grant Act (42 U.S.C. 9902(2)). 
‘‘(iii) 
EXCEPTED
CONSOLIDATION 
LOAN.—The term ‘excepted Consolidation 
Loan’ means a Federal Direct Consolida-
tion Loan, if the proceeds of such loan 
were used to the discharge the liability 
on— 
‘‘(I) an excepted PLUS loan; or 
‘‘(II) a Federal Direct Consolida-
tion loan, if the proceeds of such loan 
were used to discharge the liability on 
an excepted PLUS loan. 
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‘‘(iv) EXCEPTED
PLUS
LOAN.—The 
term ‘excepted PLUS Loan’ has the mean-
ing given the term in section 493C.’’. 
SEC. 223. LOAN REHABILITATION. 
Section 428F(a)(5) of the Higher Education Act of 
1965 (20 U.S.C. 1078–6(a)(5)) is amended by striking 
‘‘one time’’ and inserting ‘‘two times’’. 
SEC. 224. INTEREST CAPITALIZATION. 
(a) FEDERAL PLUS LOANS.—Section 428B(d)(2) of 
the Higher Education Act of 1965 (20 U.S.C. 1078– 
2(d)(2)) is amended to read as follows: 
‘‘(2) NO CAPITALIZATION OF INTEREST.—Inter-
est on loans made under this section for which pay-
ments of principal are deferred pursuant to para-
graph (1) shall be paid monthly or quarterly, if 
agreed upon by the borrower and the lender.’’. 
(b) FEDERAL
CONSOLIDATION
LOANS
DEFER-
RALS.—Section 428C(b)(4)(C)(ii)(III) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1078–3(b)(4)(C)(III)) is 
amended by striking ‘‘or capitalized,’’. 
(c) LOAN LIMITS
FOR UNSUBSIDIZED STAFFORD 
LOANS.—Section 428H(d)(5) of the Higher Education 
Act of 1965 (20 U.S.C. 1078–8(d)(5)) is amended by in-
serting ‘‘before the date of enactment of the College Cost 
Reduction Act’’ after ‘‘Interest capitalized’’. 
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(d) UNSUBSIDIZED STAFFORD LOANS FOR MIDDLE 
INCOME BORROWERS.—Section 428H(e)(2) of the Higher 
Education Act of 1965 (20 U.S.C. 1078–8(e)(2)) is 
amended— 
(1) in subparagraph (A), in the matter before 
clause (i), by striking ‘‘, if agreed upon by the bor-
rower and the lender’’ and all that follows through 
clause (ii)(IV) and inserting ‘‘be paid monthly or 
quarterly, if agreed upon by the borrower and the 
lender.’’; 
(2) by striking subparagraph (B); and 
(3) by redesignating subparagraph (C) as sub-
paragraph (B). 
(e) INCOME
CONTINGENT
REPAYMENT.—Section 
455(e)(5) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(e)(5)) is amended by striking the last sentence and 
inserting ‘‘No interest may be capitalized on such loan on 
or after the date of the enactment of the College Cost Re-
duction Act, and the Secretary shall promulgate regula-
tions with respect to the treatment of accrued interest that 
is not capitalized’’. 
(f) EFFECT OF DEFERMENT ON PRINCIPAL AND IN-
TEREST.—Section 455(f)(1)(B) of the Higher Education 
Act of 1965 (20 U.S.C. 1087e(f)(1)(B)) is amended by 
striking ‘‘capitalized or’’. 
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(g) INCOME-BASED REPAYMENT PROGRAM.—Section 
493C(b)(3)(B) of the Higher Education Act of 1965 (20 
U.S.C. 1098e(b)(3)(B)) is amended by inserting ‘‘shall ac-
crue but not’’ before ‘‘be capitalized’’. 
SEC. 225. ORIGINATION FEES. 
(a) REPEAL OF ORIGINATION FEES.—Subsection (c) 
of section 455 of the Higher Education Act of 1965 (20 
U.S.C. 1087e(c)) is repealed. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply with respect to loans made 
under part D of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1087a et seq.) for which the first dis-
bursement of principal is made, or, in the case of a Fed-
eral Direct Consolidation Loan, the application is received, 
on or after July 1, 2024. 
TITLE III—ACCOUNTABILITY 
AND STUDENT SUCCESS 
PART A—ACCOUNTABILITY 
Subpart 1—Department of Education 
SEC. 301. AGREEMENTS WITH INSTITUTIONS. 
Section 454 of the Higher Education Act of 1965 (20 
U.S.C. 1087d) is amended— 
(1) in subsection (a)— 
(A) in paragraph (5), by striking ‘‘and’’ 
after the semicolon; 
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(B) by redesignating paragraph (6) as 
paragraph (7); and 
(C) by inserting after paragraph (5) the 
following new paragraph: 
‘‘(6) remit annual risk-sharing payments to the 
Secretary in accordance with the requirements under 
subsection (d); and’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(d) RISK-SHARING REQUIREMENTS.— 
‘‘(1) ANNUAL
RISK-SHARING
PAYMENTS
RE-
QUIRED.—Beginning in award year 2024–2025, 
each institution of higher education participating in 
the direct student loan program under this part 
shall, for qualifying student loans, remit to the Sec-
retary, at such time as the Secretary may specify, an 
annual risk-sharing payment for each student cohort 
of the institution, based on the non-repayment bal-
ance of such cohort and calculated in accordance 
with paragraph (3). 
‘‘(2) STUDENT COHORTS.— 
‘‘(A) COHORTS ESTABLISHED.—For each 
institution of higher education, the Secretary 
shall establish student cohorts, beginning with 
award year 2023–2024, as follows: 
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‘‘(i) 
COMPLETING
STUDENT
CO-
HORT.—For each program of study at 
such institution, a student cohort com-
prised of all students who received Federal 
financial assistance under this title and 
who completed such program during such 
award year. 
‘‘(ii) 
UNDERGRADUATE
NON-COM-
PLETING STUDENT COHORT.—For such in-
stitution, a student cohort comprised of all 
students who received Federal financial as-
sistance under this title, who were enrolled 
in the institution during the previous 
award year in a program of study leading 
to an undergraduate credential, and who at 
the time the cohort is established— 
‘‘(I) have not completed such 
program of study; and 
‘‘(II) are not enrolled at the in-
stitution in any program of study 
leading to an undergraduate creden-
tial. 
‘‘(iii) GRADUATE
NON-COMPLETING 
STUDENT COHORT.—For each program of 
study leading to a graduate credential at 
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such institution, a student cohort com-
prised of all students who received Federal 
financial assistance under this title, who 
were enrolled in such program during the 
previous award year, and who at the time 
the cohort is established— 
‘‘(I) have not completed such 
program of study; and 
‘‘(II) are not enrolled in such 
program. 
‘‘(B) QUALIFYING
STUDENT
LOAN.—For 
the purposes of this subsection, the term ‘quali-
fying student loan’ means a Federal Direct 
loan, including a Federal Direct Consolidation 
loan, made under this part that— 
‘‘(i) was made to a student included 
in a student cohort of an institution; and 
‘‘(ii) except in the case of a loan de-
scribed in clause (i) or (ii) of subparagraph 
(C), is not included in any other student 
cohort of any institution of higher edu-
cation. 
‘‘(C) SPECIAL CIRCUMSTANCES.— 
‘‘(i) 
MULTIPLE
CREDENTIALS.—In 
the case of a student who completes two or 
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more programs of study during the same 
award year, each qualifying student loan of 
the student shall be included in the student 
cohort for each of such program of study 
for such award year. 
‘‘(ii) TREATMENT OF CERTAIN CON-
SOLIDATION
LOANS.—A Federal Direct 
Consolidation loan made under this title 
shall not be considered a qualifying stu-
dent loan for a student cohort for an 
award year if all of the loans included in 
such consolidation loan are attributable to 
another student cohort. 
‘‘(iii) CONSOLIDATION AFTER INCLU-
SION IN A STUDENT COHORT.—If a quali-
fying student loan is consolidated into a 
consolidation loan under this title after 
such qualifying student loan has been in-
cluded in a student cohort, the percentage 
of the consolidation loan that was attrib-
utable to such student cohort at the time 
of consolidation shall remain attributable 
to the student cohort for the life of the 
consolidation loan. 
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‘‘(3) CALCULATION
OF
RISK-SHARING
PAY-
MENTS.— 
‘‘(A) RISK-SHARING PAYMENT FORMULA.— 
For each student cohort of an institution of 
higher education established under this sub-
section, the annual risk-sharing payment for 
such cohort shall be equal to— 
‘‘(i) the risk-sharing percentage deter-
mined for the cohort in accordance with 
subparagraph (B); multiplied by 
‘‘(ii) the non-repayment balance for 
the cohort for the award year, determined 
in accordance with subparagraph (C). 
‘‘(B) RISK-SHARING
PERCENTAGE.—The 
risk-sharing percentage of a student cohort of 
an institution shall be determined by the Sec-
retary when the cohort is established, shall re-
main constant for the life of the student cohort, 
and shall be determined as follows: 
‘‘(i) 
COMPLETING
STUDENT
CO-
HORTS.—The risk-sharing percentage of a 
completing student cohort shall be equal to 
the percentage determined by— 
‘‘(I) subtracting from one the 
quotient of— 
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‘‘(aa) the median value- 
added earnings (as defined in 
section 103) of students who 
completed such program of study 
in the most recent award year for 
which data is available, as re-
ported on the College Scorecard 
at the time the cohort was estab-
lished; divided by 
‘‘(bb) the median total price 
charged to students included in 
such cohort; and 
‘‘(II) multiplying the difference 
determined under subclause (I) by 
100. 
‘‘(ii) SPECIAL
CIRCUMSTANCES
FOR 
COMPLETING STUDENT COHORTS.— 
‘‘(I) HIGH-RISK COHORTS.—Not-
withstanding clause (i), if the median 
value-added earnings of a completing 
student cohort under clause (i)(I)(aa) 
is negative, the risk-sharing percent-
age of the student cohort shall be 100 
percent. 
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‘‘(II) LOW-RISK COHORTS.—Not-
withstanding clause (i), if the median 
value-added earnings of a completing 
student cohort under clause (i)(I)(aa) 
exceeds the median total price of such 
cohort under clause (i)(I)(bb), the 
risk-sharing percentage of the student 
cohort shall be 0 percent. 
‘‘(iii) NON-COMPLETING STUDENT CO-
HORTS.—The risk-sharing percentage of a 
non-completing student cohort shall be de-
termined based on the most recent data 
available in the award year in which the 
cohort is established, and— 
‘‘(I) for an undergraduate non- 
completing student cohort, shall be 
equal to the percentage of under-
graduate students who received Fed-
eral financial assistance under this 
title at such institution who— 
‘‘(aa) did not complete an 
undergraduate program of study 
at the institution within 150 per-
cent of the program length of 
such program; or 
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‘‘(bb) only in the case of a 
two-year institution, did not, 
within 6 years after first enroll-
ing at the two-year institution, 
complete a program of study at a 
four-year institution for which a 
bachelor’s degree (or substan-
tially 
similar 
credential) 
is 
awarded; and 
‘‘(II) for a graduate non-com-
pleting student cohort, shall be equal 
to the percentage of students who re-
ceived Federal financial assistance 
under this title at the institution for 
the applicable graduate program of 
study and who did not complete such 
program of study within 150 percent 
of the program length. 
‘‘(C) NON-REPAYMENT LOAN BALANCE.— 
‘‘(i) IN
GENERAL.—For each award 
year, the Secretary shall determine the 
non-repayment loan balance for such 
award year for each student cohort of an 
institution of higher education by calcu-
lating the sum of— 
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‘‘(I) for loans in such cohort in 
repayment status that are being re-
paid under a standard 10-year repay-
ment plan under section 455(d)(1), 
the 
difference 
between 
the 
total 
amount of payments due from all bor-
rowers on such loans during such 
year, 
as 
required 
under 
section 
455(d)(1)(A), and the total amount of 
payments made by all such borrowers 
on such loans during such year; plus 
‘‘(II) for loans in such cohort in 
repayment status that are being re-
paid under the repayment assistance 
plan under section 455(e)(9)— 
‘‘(aa) the difference between 
the total amount of payments 
due from all borrowers on such 
loans during such year, as re-
quired under section 455(e)(9), 
and the total amount of pay-
ments made by all such bor-
rowers on such loans during such 
year; plus 
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‘‘(bb) the total amount of 
repayment assistance for such 
loans 
under 
such 
section 
455(e)(9) during such year, in-
cluding the unpaid principal re-
duced, and interest subtracted, 
by the Secretary. 
‘‘(ii) SPECIAL CIRCUMSTANCES.—For 
the purpose of calculating the non-repay-
ment loan balance of student cohorts under 
this paragraph, the Secretary shall— 
‘‘(I) for each qualifying student 
loan in a student cohort that is in-
cluded in another student cohort be-
cause the student who borrowed such 
loan completed two or more programs 
of study during the same award year, 
the total amount of repayment assist-
ance and amounts due but not paid 
for such qualifying student loan shall 
be divided equally among each of the 
student cohorts in which such loan is 
included; and 
‘‘(II) for each consolidation loan 
in a student cohort— 
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‘‘(aa) determine the percent-
age of the outstanding principal 
balance of the consolidation loan 
attributable to such student co-
hort— 
‘‘(AA) at the time of 
that loan was included in 
such cohort, in the case of a 
loan consolidated before in-
clusion in such cohort; or 
‘‘(BB) at the time of 
consolidation, in the case of 
a loan consolidated after in-
clusion in such cohort; and 
‘‘(bb) include in the calcula-
tions under clause (i) for such 
student cohort only the percent-
age of the total amount of repay-
ment assistance and amounts due 
but not paid for the consolidation 
loan for such year that is equal 
to the percentage of the consoli-
dation loan determined under 
item (aa). 
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‘‘(D) TOTAL
PRICE.—With respect to a 
student who received Federal financial assist-
ance under this title and who completes a pro-
gram of study, the term ‘total price’ means the 
total amount, before Federal financial assist-
ance under this title was applied, a student was 
required to pay to complete the program of 
study. A student’s total price shall be calculated 
by the Secretary as the difference between— 
‘‘(i) the total amount of tuition and 
fees (including the required costs described 
in section 484(b)(3)(A)(i)(I)) that were 
charged to such student before the applica-
tion of any Federal financial assistance 
provided under this title; minus 
‘‘(ii) the total amount of grants and 
scholarships 
described 
in 
section 
480(i)awarded to such student from non- 
Federal sources for such program of study. 
‘‘(4) NOTIFICATION AND REMITTANCE.—Begin-
ning with the first award year for which risk-sharing 
payments are required under this subsection, and for 
each succeeding award year, the Secretary shall— 
‘‘(A) notify each institution of higher edu-
cation of the amounts and due dates of each 
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annual risk-sharing payment calculated under 
paragraph (3) for each student cohort of the in-
stitution within 30 days of calculating such 
amounts; and 
‘‘(B) require the institution to remit such 
payments within 90 days of such notification. 
‘‘(5) PENALTY FOR LATE PAYMENTS.— 
‘‘(A) THREE-MONTH
DELINQUENCY.—If 
an institution fails to remit to the Secretary a 
risk-sharing payment for a student cohort as 
required under this subsection within 90 days 
of receiving notification from the Secretary in 
accordance with paragraph (4), the institution 
shall pay to the Secretary, in addition to such 
risk-sharing payment, interest on such pay-
ment, at a rate that is the average rate applica-
ble to the loans in such student cohort. 
‘‘(B) TWELVE-MONTH
DELINQUENCY.—If 
an institution fails to remit to the Secretary a 
risk-sharing payment for a student cohort as 
required under this subsection, plus interest 
owed in under subparagraph (A), within 12 
months of receiving notification from the Sec-
retary in accordance with paragraph (4), the in-
stitution shall be ineligible to make direct loans 
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to any student enrolled in the program of study 
for which the institution has failed to make the 
risk-sharing payments until such payment is 
made. 
‘‘(C) EIGHTEEN-MONTH DELINQUENCY.— 
If an institution fails to remit to the Secretary 
a risk-sharing payment for a student cohort as 
required under this subsection, plus interest 
owed under subparagraph (A), within 18 
months of receiving notification from the Sec-
retary in accordance with paragraph (4), the in-
stitution shall be ineligible to make direct loans 
or award Federal Pell grants under section 401 
to any student enrolled in the institution until 
such payment is made. 
‘‘(D) TWO-YEAR DELINQUENCY.—If an in-
stitution fails to remit to the Secretary a risk- 
sharing payment for a student cohort as re-
quired under this subsection, plus interest owed 
under subparagraph (A), within 2 years of re-
ceiving notification from the Secretary in ac-
cordance with paragraph (4), the institution 
shall be ineligible to participate in any program 
under this title for a period of not less than 10 
years. 
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‘‘(6) RELIEF FOR VOLUNTARY CESSATION OF 
FEDERAL
DIRECT
LOANS
FOR
A
PROGRAM
OF 
STUDY.—The Secretary shall, upon the request of an 
institution that voluntarily ceases to make Federal 
direct loans to students enrolled in a specific pro-
gram of study, reduce the amount of the annual 
risk-sharing payment owed by the institution for 
each student cohort associated with such program by 
50 percent if the institution assures the Secretary 
that the institution will not make Federal direct 
loans to any student enrolled in such program of 
study (or any substantially similar program of 
study) for a period of not less than 10 award years, 
beginning with the first award year that begins after 
the date on which the Secretary reduces such risk- 
sharing payment. 
‘‘(7) RESERVATION
OF
FUNDS
FOR
PROMISE 
GRANTS.—Notwithstanding any other provision of 
law, the Secretary shall reserve the funds remitted 
to the Secretary as risk-sharing payments in accord-
ance with this subsection, and such funds shall be 
made available to the Secretary only for the purpose 
of awarding PROMISE grants in accordance with 
subpart 4 of part A of this title.’’. 
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SEC. 302. REGULATORY RELIEF. 
(a) 90/10.— 
(1) REGULATION REPEALED.—Section 668.28 
of title 34, Code of Federal Regulations (relating to 
the 90/10 rule), as added or amended by the final 
regulations published by the Department of Edu-
cation in the Federal Register on October 28, 2022 
(87 Fed. Reg. 65426 et seq.), is repealed and will 
have no force or effect. 
(2) AMENDMENTS.—Section 487 of the Higher 
Education Act of 1965 (20 U.S.C. 1094) is amend-
ed— 
(A) in subsection (a), by striking para-
graph (24); 
(B) by striking subsection (d); and 
(C) 
by 
redesignating 
subsections 
(e) 
through (j) as subsections (d) through (i), re-
spectively. 
(b) FINANCIAL VALUE TRANSPARENCY AND GAIN-
FUL EMPLOYMENT.— 
(1) REGULATION REPEALED.—Sections 600.10, 
600.21, 668.2, 668.13, 668.43, 668.91, 668.402 
through 668.409 (excluding section 668.408), and 
668.601 through 668.606 of title 34, Code of Fed-
eral Regulations (relating to financial value trans-
parency and gainful employment), as added or 
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amended by the final regulations published by the 
Department of Education in the Federal Register on 
October 10, 2023 (88 FR 70004 et seq.), are re-
pealed and will have no force or effect. 
(2) PROHIBITION.—The Secretary of Education 
shall not, on or after the date of enactment of this 
Act, promulgate or enforce any regulation or rule 
with respect to the definition or application of the 
term ‘‘gainful employment’’ for any purpose under 
the Higher Education Act of 1965 (20 U.S.C. 1001 
et seq.). 
(c) CHANGES IN OWNERSHIP.— 
(1) REGULATION REPEALED.—Sections 600.2, 
600.4, 600.20, 600.21, and 600.31 of title 34, Code 
of Federal Regulations (relating to changes in own-
ership), as added or amended by the final regula-
tions published by the Department of Education in 
the Federal Register on October 28, 2022 (87 Fed. 
Reg. 65426 et seq.), are repealed and will have no 
force or effect. 
(2) AMENDMENTS.—Section 498(i) of the 
Higher Education Act of 1965 (20 U.S.C. 1099c(i)) 
is amended— 
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(A) in the subsection heading, by inserting 
‘‘AND PROPOSED CHANGES
OF OWNERSHIP’’ 
after ‘‘OWNERSHIP’’; 
(B) in paragraph (1)— 
(i) by striking ‘‘(1) An eligible institu-
tion’’, and inserting the following: ‘‘(1)(A) 
An eligible institution’’; 
(ii) by striking ‘‘the requirements of 
section 102 (other than the requirements 
in subsections (b)(5) and (c)(3))’’ and in-
serting ‘‘the applicable requirements of 
section 102 or 103(13)’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(B)(i) Prior to a change in ownership re-
sulting in a change of control, an institution 
may seek a pretransaction determination about 
whether the institution will meet the applicable 
requirements of section 102 or 103(13) and 
this section after such proposed change in own-
ership by submitting to the Secretary a materi-
ally complete pretransaction review application. 
‘‘(ii) In reviewing applications submitted 
under clause (i), the Secretary shall only pro-
vide a comprehensive review of each such appli-
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cation, and may not provide an abbreviated or 
partial review. 
‘‘(iii) If an institution submits a materially 
complete pretransaction review application at 
least 90 days prior to the transaction and the 
Secretary approves the application, the subse-
quent change in ownership application shall also 
be approved and the institution shall be cer-
tified as meeting the requirements for such 
transaction, provided that the institution— 
‘‘(I) complies with the applicable 
terms of this section; and 
‘‘(II) the transaction resulting in a 
change of control does not differ materially 
in its terms from the transaction proposed 
in the pretransaction review application.’’; 
(C) in paragraph (2)— 
(i) in subparagraph (E), by striking 
‘‘or’’ at the end; 
(ii) in subparagraph (F), by striking 
the period at the end and inserting ‘‘; or’’; 
and 
(iii) by adding the following at the 
end: 
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‘‘(G) in the case of a proprietary institution of 
higher education, a conversion to a public or other 
nonprofit institution of higher education.’’; 
(D) by adding at the end the following: 
‘‘(5)(A) Subject to subparagraph (B), when any insti-
tution submits an application for a change in ownership 
resulting in a change in control under this section or sub-
mits a pretransaction review application under paragraph 
(1)(B) (other than in the case of a conversion trans-
action), the institution shall be required to pay to the Sec-
retary an administrative fee that shall— 
‘‘(i) be in an amount equal to 0.15 percent of 
the total institutional revenue derived from this title 
by such institution for the most fiscal year for which 
data is available; and 
‘‘(ii) be used exclusively for expenses related to 
the processing of such application, and be available 
to the Secretary without further appropriation, ex-
clusively for expenses related to the processing of 
such approval or application. 
‘‘(B) In the case of a proprietary institution submit-
ting an application for conversion, or a pretransaction re-
view application for conversion, the institution shall be re-
quired to pay to the Secretary an administrative fee that 
shall— 
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‘‘(i) be in an amount equal to 0.30 percent of 
the total institutional revenue derived from this title 
by such institution for the most fiscal year for which 
data is available; and 
‘‘(ii) be used exclusively for expenses related to 
the processing of such application, and of which— 
‘‘(I) 50 percent shall be available to the 
Secretary without further appropriation, exclu-
sively for expenses related to the processing of 
such application; and 
‘‘(II) 50 percent shall be remitted by the 
Secretary to the Commissioner of the Internal 
Revenue, and shall be available, without further 
appropriation, to the Commissioner of Internal 
Revenue exclusively for purposes of determining 
whether the institution seeking such conversion 
or pretransaction review is an institution ex-
empt from tax and is otherwise in compliance 
with applicable requirements of the Internal 
Revenue Code of 1986. 
‘‘(C) An institution that pays a fee under subpara-
graph (A) or (B) for a pretransaction application with re-
spect to a proposed transaction shall not be required to 
pay another fee under such subparagraph for a change 
in ownership application with respect to such transaction. 
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‘‘(D) In no case may any fee remitted under subpara-
graph (A) or (B) exceed $120,000 for any transaction (or 
pretransaction) application, nor may the Secretary require 
an institution that has paid a fee under subparagraph (B) 
to pay an additional fee under subparagraph (A). 
‘‘(6)(A) The Secretary shall approve or deny a mate-
rially complete application (including pretransaction re-
views and conversion applications) submitted under this 
section as soon as practicable and not later than the 90- 
day period beginning on the date of receipt of such an 
application, except that in a case in which the Secretary 
determines, on a nondelegable basis, that good cause exists 
to not make the determination during such 90-day period, 
the Secretary shall notify the institution in writing detail-
ing the reasons for a good cause extension. 
‘‘(B) If the Secretary fails to approve or deny a mate-
rially complete application during the period described in 
subparagraph (A) and does not find good cause for exten-
sion, the materially complete application shall be deemed 
approved. 
‘‘(C) In no case may the Secretary grant a good cause 
extension under this section to an institution for more 
than one month at a time, or for a total of more than 
more than 12 months. 
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‘‘(D) To ensure timely submission of all relevant doc-
umentation, the Secretary may deny an application if an 
institution does not make a good faith effort to submit 
to the Secretary, in a timely manner— 
‘‘(i) all relevant documentation; or 
‘‘(ii) a materially complete application. 
‘‘(E)(i) Upon approving or denying an application 
under this paragraph, the Secretary shall publish in the 
Federal Register the reasoning for such approval or de-
nial, including— 
‘‘(I) a copy of the approval or denial letter sent 
to the institution; and 
‘‘(II) any analysis regarding how the Secretary 
determined under paragraph 7(A)(iii) that a director 
of the institution was an interested or disinterested 
party to the transaction. 
‘‘(ii) The Secretary shall not publish under clause (i) 
any information that is otherwise exempt from disclosure 
under section 552 of title 5, United States Code (relating 
to the Freedom of Information Act), including trade se-
crets and commercial or financial information that is privi-
leged or confidential. 
‘‘(7)(A) In the case of a proprietary institution that 
subsequent to the transaction would be owned and oper-
ated by an entity (in this paragraph referred to as the 
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‘buyer’) seeking to be recognized as a public or other non-
profit institution, the buyer shall meet the definition of 
a nonprofit institution under section 103(13) if— 
‘‘(i) the buyer pays no more than fair market 
value for any assets of the proprietary institution; 
‘‘(ii) the buyer pays no more than fair market 
value for any service or lease contracts, including 
such service and lease contracts provided by the en-
tity selling the proprietary institution; and 
‘‘(iii) to prevent self-dealing in the case where 
one or more individuals with a substantial ownership 
or controlling interests in the proprietary institution 
will also have substantial or controlling interests in 
the institution seeking to be recognized as a public 
or other nonprofit institution (meaning that one or 
more individuals are on both sides of the trans-
action), the change of control transaction, and any 
substantial asset acquisition, service, or lease agree-
ments with the proprietary institution shall be ap-
proved by a disinterested committee of directors of 
the entity that seeks to be recognized as a public or 
other nonprofit institution. 
‘‘(B) For the purposes of this paragraph, parties to 
the transaction are entitled to a rebuttable presumption 
that the assets, lease contracts, and service contracts that 
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are part of the transaction are purchased at fair market 
value if— 
‘‘(i) the acquiring entity pays no more than fair 
market value for such assets, lease contracts, or 
service contracts; and 
‘‘(ii) the value of the assets, lease contracts, or 
service contracts are evaluated by at least one inde-
pendent third-party entity hired by parties on both 
sides of the transaction. 
‘‘(8)(A) An institution that has been approved for 
conversion by the Secretary shall be subject to a moni-
toring period for a 5-year period beginning on the day 
after the date of such approval. In conducting the moni-
toring of the institution under this paragraph, the Sec-
retary— 
‘‘(i) shall only conduct monitoring to ensure 
that the institution is in compliance with the re-
quirements of section 103(13) and paragraph (7) of 
this subsection; and 
‘‘(ii) may require the institution to submit reg-
ular reports or conduct audits of such institution re-
lating to such compliance. 
‘‘(B) Each institution that is subject to the moni-
toring period under this paragraph shall remit an annual 
fee to the Secretary— 
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‘‘(i) in an amount equal to 0.15 percent of the 
total revenue derived from this title by such institu-
tion for the most recent fiscal year for which data 
is available; and 
‘‘(ii) that shall be exclusively for expenses re-
lated to monitoring of the institution for the period 
described in subparagraph (A)— 
‘‘(I) of which 50 percent shall be used by 
the Secretary, without further appropriation, 
exclusively for expenses related to monitoring of 
the institution during such period; and 
‘‘(II) of which 50 percent shall be remitted 
by the Secretary to the Commissioner of Inter-
nal Revenue, to be available to such Commis-
sioner, without further appropriation, exclu-
sively for monitoring compliance with the Inter-
nal Revenue Code of such institution during 
such period. 
‘‘(C) An institution may not be subject to an annual 
fee under subparagraph (B) for monitoring related to a 
conversion that exceeds $60,000. 
‘‘(D) If the Secretary determines that an institution 
should be subject to the monitoring under this paragraph 
beyond the 5-year period described in subparagraph (A), 
the Secretary shall provide the reasons justifying an exten-
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sion in writing to the institution (and in the Federal Reg-
ister) at least 30 days before the expiration of such period. 
‘‘(E) Any institution that is subject to monitoring 
under this paragraph may seek a waiver to be exempt from 
such monitoring (including the annual fee under subpara-
graph (B)) on an annual basis for any year during the 
monitoring period and the Secretary shall grant such waiv-
er if there is no ongoing contractual or financial relation-
ship between the institution and the former entity or indi-
viduals that previously owned the institution. The Sec-
retary may grant a waiver for more than 1 year in the 
case where the entity that formerly owned the proprietary 
institution has closed or no longer exists and the Secretary 
determines the institution is not at risk of violating the 
requirements of section 103(13) or paragraph (7) of this 
subsection. 
‘‘(9) Any institution that submits an application for 
conversion shall not promote or market itself, in any man-
ner, as a public or other nonprofit institution of higher 
education unless— 
‘‘(A) the Secretary has provided final approval 
of the conversion of the institution to a public or 
other nonprofit institution of higher education under 
this section; 
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‘‘(B) an accrediting agency or association recog-
nized by the Secretary pursuant to section 496 has 
approved such public or nonprofit status of the insti-
tution; 
‘‘(C) the State has given final approval to the 
institution as a public or nonprofit institution of 
higher education, as applicable; and 
‘‘(D) in the case of an institution seeking non-
profit status, the Commissioner of Internal Revenue 
has approved the institution as tax exempt pursuant 
to the Internal Revenue Code of 1986. 
‘‘(10) Not later than 270 days after the date of enact-
ment of the College Cost Reduction Act, and periodically 
thereafter, the Secretary shall publish (and update as nec-
essary) in the Federal Register— 
‘‘(A) descriptions of the documents and mate-
rials the Secretary expects or requires institutions of 
higher education to submit (including any standard-
ized forms) as part of any pretransaction application 
or change in ownership application under this sec-
tion, including a description of what the Secretary 
considers to be a materially complete application; 
and 
‘‘(B) after at least a 30-day notice and com-
ment period, responses to any public comments re-
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ceived with respect to such descriptions or updates 
to such descriptions. 
‘‘(11) In a case in which the Secretary requests a doc-
ument under this section as part of a pretransaction or 
change in ownership application that is not described in 
the Federal Register under paragraph (10), the Secretary 
shall— 
‘‘(A) substantiate, in writing to the institution, 
the reasons why the Secretary is requesting such 
documents; and 
‘‘(B) publish such reasons in the Federal Reg-
ister, including whether the Secretary may request 
other institutions that submit applications under this 
section to produce similar documentation. 
‘‘(12)(A) Not later than 18 months after the date of 
enactment of the College Cost Reduction Act, and annu-
ally thereafter, the Secretary shall submit a report to au-
thorizing committees, and post such report on a publicly 
available website regarding implementation of the amend-
ments made to this section by such Act, including the fol-
lowing information: 
‘‘(i) The mean and median length of time taken 
by the Secretary to review applications under this 
section during the preceding 12-month period. 
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‘‘(ii) The number of applications approved or 
denied during the preceding 12-month period. 
‘‘(iii) For any application not processed during 
the 90-day period beginning on the date of receipt 
of the application for which the Secretary found 
good cause under paragraph (6)(A) to extend the 
deadline in which the application shall be processed, 
a copy of the letter sent to the institution explaining 
why the Secretary believed good cause existed for 
such extension. 
‘‘(iv) For any application not processed during 
such 90-day period, which was deemed to be auto-
matically approved by the requirements of this sec-
tion under paragraph (6)(B), the name of each insti-
tution involved and an explanation for why the appli-
cation was not processed in a timely manner. 
‘‘(v) Any legislative suggestions the Secretary 
may have to improve the application or monitoring 
process under this section. 
‘‘(B) If the Secretary fails to submit a report under 
this paragraph by not later than 90 days after the dead-
line for such submission under subparagraph (A), the Sec-
retary may not, for the 12-month period following such 
failure, spend the fees remitted by institutions under this 
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section or remit such fees to the Commissioner unless 
Congress provides for such use by further appropriation. 
‘‘(13) For the purposes of this subsection, the term 
‘conversion’ means any transaction under which— 
‘‘(A) a proprietary institution is reorganized 
and seeks recognition as a public or other nonprofit 
institution; or 
‘‘(B) the control of a proprietary institution is 
transferred as a result of a sale, donation, or other 
method to an entity that seeks certification under 
this section as a public or other nonprofit institu-
tion.’’. 
(3) APPLICATION.—The amendments made by 
this section shall be apply with respect to applica-
tions submitted for change of control or conversion 
submitted on or after January 1, 2023. 
(4) REPORT.— Not later than 5 years after the 
date of enactment of this Act, the Comptroller Gen-
eral shall submit to the Committee on Education 
and the Workforce of the House of Representatives 
and the Committee on Health, Education, Labor, 
and Pensions of the Senate, a report on the imple-
mentation of the amendments made by this sub-
section, including recommendations to improve— 
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(A) the application process under section 
498(i) of the Higher Education Act of 1965 (20 
U.S.C. 1099c(i)), as amended by paragraph (2), 
for institutions of higher education seeking a 
change in ownership resulting in a change in 
control; or 
(B) the monitoring process under such sec-
tion for institutions of higher education that 
have recently converted from being recognized 
as a proprietary institution to a public or other 
nonprofit institution. 
(d) FINANCIAL RESPONSIBILITY.— 
(1) REGULATION REPEALED.—Sections 668.15, 
668.23, 668.171, and 668.174 through 668.177 of 
title 34, Code of Federal Regulations (relating to fi-
nancial responsibility), as added or amended by the 
final regulations published by the Department of 
Education in the Federal Register on October 31, 
2023 (87 Fed. Reg. 74568 et seq.), are repealed and 
will have no force or effect. 
(2) AMENDMENTS.—Section 498(c) of the 
Higher Education Act of 1965 (20 6 U.S.C. 
1099c(c)) is amended— 
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(A) by redesignating paragraphs (3), (4), 
(5), and (6) as paragraphs (4), (5), (6), and 
(7), respectively; 
(B) in paragraph (2)— 
(i) by striking ‘‘paragraph (1), if’’ and 
inserting ‘‘paragraph (1), the Secretary 
shall prescribe criteria regarding ratios 
that aid in the determination financial re-
sponsibility. Such ratios shall be first 
issued in draft form to the institution to 
allow for adequate review, consisting of an 
appeals process, by such institutions of 
higher education. If’’; and 
(ii) by striking ‘‘prescribed by the 
Secretary regarding ratios’’ and inserting 
‘‘prescribed by the Secretary regarding the 
final ratios’’; 
(C) by inserting after paragraph (2) the 
following: 
‘‘(3) Notwithstanding paragraph (2), the Secretary 
shall take into account an institution’s current total finan-
cial circumstances, including any subsequent change in the 
institution’s overall fiscal health based on the standards 
in paragraph (2), when making a determination of its abil-
ity to meet the standards herein required before any sub-
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152 
sequent action is taken under paragraph (4). If an institu-
tion meets the standards in paragraph (2), the institution 
shall be seen as financially responsible.’’; 
(D) in subparagraph (C) of paragraph (4), 
as so redesignated, by striking ‘‘establishes to 
the satisfaction of the Secretary, with’’ and in-
serting ‘‘establishes, with’’; 
(E) in paragraph (5), as so redesignated— 
(i) in subparagraph (A), by inserting 
‘‘and’’ after the semicolon at the end; 
(ii) in subparagraph (B), by striking 
‘‘; and’’ and inserting a period; and 
(iii) by striking subparagraph (C); 
(F) in paragraph (6), as so redesignated, 
by striking ‘‘(3)(C)’’ and inserting ‘‘(4)(C)’’; 
and 
(G) by adding at the end the following new 
paragraph: 
‘‘(8) Not later than 18 months after the date of en-
actment of the College Cost Reduction Act, the Secretary 
shall pursue a process to update the ratios regarding fi-
nancial responsibility as identified in paragraph (2). The 
Secretary shall report the revised ratios to— 
‘‘(A) the Committee on Education and the 
Workforce of the House of Representatives; and 
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‘‘(B) the Committee on Health, Education, 
Labor, and Pensions of the Senate.’’. 
(e) INCENTIVE
COMPENSATION; THIRD
PARTY 
SERVICER.— 
(1) AMENDMENTS.—Section 487(a)(20) (20 
U.S.C. 1094(a)(20)) is amended to read as follows: 
‘‘(20) The institution will not provide any com-
mission, bonus, or other incentive payment based di-
rectly or indirectly on success in securing enroll-
ments or financial aid to any persons or entities en-
gaged in any student recruiting or admission activi-
ties, or in making decisions regarding the award of 
student financial assistance, except that this para-
graph shall not apply— 
‘‘(A) to the recruitment of foreign students 
residing in foreign countries who are not eligi-
ble to receive Federal student assistance; or 
‘‘(B) to a third party where— 
‘‘(i) the third party is providing the 
institution recruiting or admissions activi-
ties as part of a larger bundle of services 
not covered by this paragraph and which 
may include marketing or advertising ac-
tivities that broadly disseminate or dis-
tribute widely available information; 
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‘‘(ii) the third party does not provide 
any commission, bonus, or other incentive- 
based payments to its employees or sub-
contractors who are providing services to 
the institution covered in this paragraph; 
and 
‘‘(iii) the third party is not awarding 
or 
disbursing 
Federal 
financial 
aid 
awards.’’. 
(2) DEFINITION.—Section 481(c) (20 U.S.C. 
1088(c)) is amended to read as follows: 
‘‘(c) THIRD PARTY SERVICER.— 
‘‘(1) For purposes of this title, the term ‘third 
party servicer’— 
‘‘(A) means any individual, any State, or 
any private, for-profit or nonprofit organization, 
which enters into a contract with— 
‘‘(i) any eligible institution of higher 
education to administer, through either 
manual or automated processing, any as-
pect of such institution’s student assist-
ance programs under this title; or 
‘‘(ii) any guaranty agency, or any eli-
gible lender, to administer, through either 
manual or automated processing, any as-
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pect of such guaranty agency’s or lender’s 
student loan programs under part B of 
this title, including originating, guaran-
teeing, monitoring, processing, servicing, or 
collecting loans; and 
‘‘(B) does not include any individual, any 
State, or any private, for-profit or nonprofit or-
ganization, which conducts activities or inter-
acts with prospective or enrolled students for 
the purposes of— 
‘‘(i) marketing or recruiting, such as 
soliciting potential enrollments through the 
dissemination of information and adver-
tising; 
‘‘(ii) assisting with the completion of 
applications for enrollment, such as screen-
ing pre-enrollment information and offer-
ing admission counseling; 
‘‘(iii) administering ability-to-benefit 
tests or establishing any aspect of an eligi-
ble career pathway program; 
‘‘(iv) conducting activities for the re-
tention of students, such as monitoring 
academic engagement and conducting out-
reach to student regarding attendance; and 
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‘‘(v) providing instructional content, 
such as evaluating course completion, de-
livering mandatory tutoring, assessing stu-
dent learning, including through electronic 
means, or developing curricula or course 
materials. 
‘‘(2) The Secretary shall not regulate on the 
definition of a ‘third party servicer’.’’. 
(f) OTHER REPEALS.—The following regulations (in-
cluding any supplement or revision to such regulations) 
are repealed and shall have no legal effect: 
(1) CLOSED
SCHOOL
DISCHARGES.—Sections 
674.33(g), 682.402(d), and 685.214 of title 34, 
Code of Federal Regulations (relating to closed 
school discharges), as added or amended by the final 
regulations published by the Department of Edu-
cation in the Federal Register on November 1, 2022 
(87 Fed. Reg. 65904 et seq.). 
(2) BORROWER
DEFENSE
TO
REPAYMENT.— 
Section 685.401 of title 34, Code of Federal Regula-
tions (relating to borrower defense to repayment), as 
added or amended by the final regulations published 
by the Department of Education in the Federal Reg-
ister on November 1, 2022 (87 Fed. Reg. 65904 et 
seq.). 
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(3) 
PRE-DISPUTE
ARBITRATION.—Sections 
668.41, 685.300, and 685.304 of title 34, Code of 
Federal Regulations (relating to pre-dispute arbitra-
tion), as added or amended by the final regulations 
published by the Department of Education in the 
Federal Register on November 1, 2022 (87 Fed. 
Reg. 65904 et seq.). 
(4) 
FALSE
CERTIFICATION.—Sections 
682.402(e), 685.215(c), and 685.215(d) of title 34, 
Code of Federal Regulations (relating to false cer-
tification), as added or amended by the final regula-
tions published by the Department of Education in 
the Federal Register on November 1, 2022 (87 Fed. 
Reg. 65904 et seq.). 
(5) 
ADMINISTRATIVE
CAPABILITY.—Sections 
668.16 of title 34, Code of Federal Regulations (re-
lating to administrative capability), as added or 
amended by the final regulations published by the 
Department of Education in the Federal Register on 
October 31, 2023 (87 Fed. Reg. 74568 et seq.). 
(6) 
CERTIFICATION
PROCEDURES.—Sections 
668.13, 668.14, and 668.43 of title 34, Code of Fed-
eral Regulations (relating to certification proce-
dures) as added or amended by the final regulations 
published by the Department of Education in the 
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Federal Register on October 31, 2023 (87 Fed. Reg. 
74568 et seq.). 
(7) ABILITY
TO
BENEFIT.—Sections 668.2, 
668.32, 668.156, and 668.157 of title 34, Code of 
Federal Regulations (relating to ability to benefit) as 
added or amended by the final regulations published 
by the Department of Education in the Federal Reg-
ister on October 31, 2023 (87 Fed. Reg. 74568 et 
seq.). 
(8) PERSONAL LIABILITY.—The electronic an-
nouncement titled ‘‘Establishing Personal Liability 
Requirements for Financial Losses Related to the 
Title IV Programs’’ (GENERAL–23–11, published 
on March 1, 2023). 
(g) EFFECT OF REPEAL.—Any regulations repealed 
by subsections (c) through (e) that were in effect on June 
30, 2023, are restored and revived as if the repeal of such 
regulations under such subsections had not taken effect. 
(h) PROHIBITION.—The Secretary of Education may 
not implement any rule, regulation, policy, or executive ac-
tion specified in this section (or a substantially similar 
rule, regulation, policy, or executive action) unless author-
ity for such implementation is explicitly provided in an Act 
of Congress. 
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(i) PROGRAM REVIEW AND DATA.—Section 498A (20 
U.S.C. 1099c–1) is amended by adding at the end the fol-
lowing: 
‘‘(f) TIME LIMIT
ON PROGRAM REVIEW ACTIVI-
TIES.—In conducting, responding to, and concluding pro-
gram review activities, the Secretary shall— 
‘‘(1) provide to the institution the initial report 
finding not later than 90 days after concluding an 
initial site visit; 
‘‘(2) upon each receipt of an institution’s re-
sponse during a program review inquiry, respond in 
a substantive manner within 90 days; 
‘‘(3) upon each receipt of an institution’s writ-
ten response to a draft final program review report, 
provide the final program review report and accom-
panying enforcement actions, if any, within 90 days; 
and 
‘‘(4) conclude the entire program review process 
not later than 2 years after the initiation of a pro-
gram review, unless the Secretary determines that 
such a review is sufficiently complex and cannot rea-
sonably be concluded before the expiration of such 2- 
year period, in which case the Secretary shall 
promptly notify the institution of the reasons for 
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such delay and provide an anticipated date for con-
clusion of the review.’’. 
SEC. 303. LIMITATION ON AUTHORITY OF SECRETARY TO 
PROPOSE OR ISSUE REGULATIONS AND EX-
ECUTIVE ACTIONS. 
Part G of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1088 et seq.) is amended by inserting 
after section 492 the following: 
‘‘SEC. 492A. LIMITATION ON AUTHORITY OF THE SEC-
RETARY TO PROPOSE OR ISSUE REGULA-
TIONS AND EXECUTIVE ACTIONS. 
‘‘(a) DRAFT REGULATIONS.—Beginning after the 
date of enactment of this section, a draft regulation imple-
menting this title (as described in section 492(b)(1)) that 
is determined by the Secretary to be economically signifi-
cant shall be subject to the following requirements (re-
gardless of whether negotiated rulemaking occurs): 
‘‘(1) The Secretary shall determine whether the 
draft regulation, if implemented, would result in an 
increase in a subsidy cost. 
‘‘(2) If the Secretary determines under para-
graph (1) that the draft regulation would result in 
an increase in a subsidy cost, then the Secretary 
may take no further action with respect to such reg-
ulation. 
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‘‘(b) PROPOSED OR FINAL REGULATIONS AND EXEC-
UTIVE ACTIONS.—Beginning after the date of enactment 
of this section, the Secretary may not issue a proposed 
rule, final regulation, or executive action implementing 
this title if the Secretary determines that the rule, regula-
tion, or executive action— 
‘‘(1) is economically significant; and 
‘‘(2) would result in an increase in a subsidy 
cost. 
‘‘(c) RELATIONSHIP TO OTHER REQUIREMENTS.— 
The analyses required under subsections (a) and (b) shall 
be in addition to any other cost analysis required under 
law for a regulation implementing this title, including any 
cost analysis that may be required pursuant to Executive 
Order 12866 (58 Fed. Reg. 51735; relating to regulatory 
planning and review), Executive Order 13563 (76 Fed. 
Reg. 3821; relating to improving regulation and regu-
latory review), or any related or successor orders. 
‘‘(d) DEFINITION.—In this section, the term ‘eco-
nomically significant’, when used with respect to a draft, 
proposed, or final regulation or executive action, means 
that the regulation or executive action is likely, as deter-
mined by the Secretary— 
‘‘(1) to have an annual effect on the economy 
of $100,000,000 or more; or 
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‘‘(2) adversely to affect in a material way the 
economy, a sector of the economy, productivity, com-
petition, jobs, the environment, public health or safe-
ty, or State, local, or tribal governments or commu-
nities.’’. 
SEC. 304. OFFICE OF FEDERAL STUDENT AID. 
(a) FEDERAL PREEMPTION.—Section 456 (20 U.S.C. 
1087f) is amended by adding at the end the following: 
‘‘(c) FEDERAL PREEMPTION.— 
‘‘(1) IN GENERAL.—Covered activities shall not 
be subject to any law or other requirement of any 
State or political subdivision of a State with respect 
to— 
‘‘(A) disclosure requirements; 
‘‘(B) requirements or restrictions on the 
content, time, quantity, or frequency of commu-
nications with borrowers, endorsers, or ref-
erences with respect to such loans; or 
‘‘(C) any other requirement relating to the 
servicing or collection of a loan made under this 
title. 
‘‘(2) COVERED ACTIVITIES DEFINED.—In this 
subsection, the term ‘covered activities’ means any 
of the following activities, as carried out by a quali-
fied entity: 
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‘‘(A) Origination of a loan made under this 
title. 
‘‘(B) Servicing of a loan made under this 
title. 
‘‘(C) Collection of a loan made under this 
title. 
‘‘(D) Any other activity related to the ac-
tivities described in subparagraphs (A) through 
(C).’’. 
(b) PROCUREMENT FLEXIBILITY.—Section 142 (20 
U.S.C. 1018a) is amended— 
(1) by redesignating subsection (l) as subsection 
(m); and 
(2) by inserting after subsection (k) the fol-
lowing: 
‘‘(l) GUIDANCE TO STUDENT LOAN SERVICERS.— 
‘‘(1) IN GENERAL.—In notifying a student loan 
servicer of a final contract modification (as such 
term is defined in section 2.101 of title 48, Code of 
Federal Regulations) that instructs such loan 
servicer to perform a function that is new or dif-
ferent from a function such servicer performs pursu-
ant to an existing contract, the PBO shall, not later 
than 30 days before such contract change takes ef-
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fect, provide such servicers with written guidance in 
the form of— 
‘‘(A) a change order (as such term is de-
fined in section 2.101 of title 48, Code of Fed-
eral Regulations); 
‘‘(B) a dear colleague letter; or 
‘‘(C) an electronic announcement. 
‘‘(2) NON-BINDING
DIRECTIVES.—A student 
loan servicer that is notified of a final contract 
modification described in paragraph (1) and receives 
guidance in a form other than a form described in 
paragraph (1) (including through emails or phone 
calls) shall not be subject to such contract modifica-
tion.’’. 
Subpart 2—Accreditors 
SEC. 311. ACCREDITING AGENCY RECOGNITION. 
(a) CRITERIA REQUIRED.—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), in 
the first sentence, by striking ‘‘or training’’ and in-
serting ‘‘skills development’’; 
(2) by amending paragraph (1) to read as fol-
lows: 
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‘‘(1) the accrediting agency or association 
(other than an accrediting agency or association de-
scribed in paragraph (2)(D)) shall be a State or na-
tional agency or association and shall demonstrate 
the ability to operate as an institutional or pro-
grammatic accrediting agency or association within 
the State or nationally, as appropriate;’’; 
(3) in paragraph (2)— 
(A) in subparagraph (A)— 
(i) in clause (i), by striking ‘‘prin-
cipal’’; and 
(ii) in clause (ii), by striking ‘‘its prin-
cipal’’ and inserting ‘‘a’’; and 
(B) in subparagraph (C), by inserting ‘‘or’’ 
at the end; and 
(C) by adding at the end the following: 
‘‘(D) is an entity (such as an industry-spe-
cific quality assurance entity) that has been— 
‘‘(i) determined by a State to be a re-
liable authority as to the quality of edu-
cation or skills development offered in such 
State for the purposes of this Act; and 
‘‘(ii) designated (in accordance with 
subsection (b)(1)) by such State as an ac-
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crediting agency or association with re-
spect to such State for such purposes;’’; 
(4) in paragraph (3)— 
(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) subparagraph (A), (C), or (D) of 
paragraph (2), then such agency or association 
is— 
‘‘(i) distinctly incorporated or orga-
nized; and 
‘‘(ii) both administratively and finan-
cially separate from, and independent of, 
any related, associated, or affiliated trade 
association or membership organization, by 
ensuring that— 
‘‘(I) the members of the board or 
governing body of the accrediting 
agency or association are not elected 
or selected by the board or chief exec-
utive officer (or the representative of 
such board or officer) of any related, 
associated, or affiliated trade associa-
tion or membership organization; 
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‘‘(II) among the membership of 
the board or governing body of the ac-
crediting agency or association— 
‘‘(aa) if such board or body 
is comprised of 5 or fewer mem-
bers, there is a minimum of one 
public member who represents 
business and who is not a mem-
ber of any related, associated, or 
affiliated trade association or 
membership organization; and 
‘‘(bb) if such board or body 
is comprised of 6 or more mem-
bers, there is a minimum of 1 
such public member for every 6 
members; 
‘‘(III) guidelines are established 
for such members to avoid conflicts of 
interest, including specific guidelines 
to ensure that no such member is an 
employee of any institution accredited 
by the agency or association or has a 
financial interest in any such institu-
tion; 
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‘‘(IV) dues to the accrediting 
agency or association are paid sepa-
rately from any dues paid to any re-
lated, associated, or affiliated trade 
association or membership organiza-
tion; and 
‘‘(V) the budget of the accred-
iting agency or association is devel-
oped, decided, and maintained by the 
accrediting agency or association with-
out any review by, consultation with, 
or approval by any related, associated, 
or affiliated trade association or mem-
bership organization;’’; 
(B) by striking ‘‘or’’ at the end of subpara-
graph (B); and 
(C) by striking subparagraph (C); 
(5) in paragraph (4)— 
(A) in subparagraph (A)— 
(i) by inserting ‘‘(in the manner de-
scribed in subparagraph (B))’’ after ‘‘reli-
gious missions’’; and 
(ii) by striking ‘‘and’’ at the end; and 
(B) by striking subparagraph (B) and in-
serting the following: 
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‘‘(B) such accrediting agency or associa-
tion consistently applies and enforces standards 
that respect the stated religious mission of an 
institution of higher education by— 
‘‘(i) basing decisions regarding accred-
itation and preaccreditation on the stand-
ards of accreditation of such agency or as-
sociation; and 
‘‘(ii) not using as a negative factor 
the institution’s religious mission based 
policies, decisions, and practices in the 
areas covered by subparagraphs (B), (C), 
(D), (E), and (F) of paragraph (5), except 
that the agency or association may require 
that the institution’s or a program of 
study’s curricula include all core compo-
nents required by the agency or association 
that are not inconsistent with the institu-
tion’s religious mission; and 
‘‘(C) such agency or association dem-
onstrates the ability to review, evaluate, and as-
sess the quality of any instruction delivery 
model or method such agency or association has 
or seeks to include within its scope of recogni-
tion, without giving preference to or differen-
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tially treating a particular instruction delivery 
model or method offered by an institution of 
higher education or program, except that— 
‘‘(i) in a case in which the instruction 
delivery model allows for the separation of 
the student from the instructor, the agency 
or association shall not be required to have 
separate standards, procedures, or policies 
for the evaluation of the quality of any in-
struction delivery model or method in order 
to meet the requirements of this subpara-
graph; and 
‘‘(ii) in the case in which the instruc-
tion delivery model allows for the separa-
tion of the student from the instructor— 
‘‘(I) the agency or association re-
quires the institution to have proc-
esses through which the institution es-
tablishes that the student who reg-
isters in a course or program is the 
same student who participates in the 
program (including, to the extent 
practicable, the testing or other as-
sessments required under the pro-
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gram), completes the program, and 
receives the academic credit; and 
‘‘(II) the agency or association 
requires that any process used by an 
institution to comply with the require-
ment under clause (I) does not in-
fringe upon student privacy and is im-
plemented in a manner that is mini-
mally burdensome to the student;’’; 
and 
(6) in paragraph (5)— 
(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) success with respect to student 
achievement outcomes in relation to the institu-
tion’s mission and to the programs the institu-
tion offers, or the mission of a specific degree, 
certificate, or credential program, which may 
include different standards for different institu-
tions or programs, and which shall include— 
‘‘(i) standards for consideration of the 
median total price charged to students for 
a program of study in relation to the me-
dian value-added earnings of students who 
completed such program; 
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‘‘(ii) standards for consideration of 
learning outcomes measures (such as com-
petency attainment and licensing examina-
tion passage rates); 
‘‘(iii) standards for consideration of 
labor market outcomes measures (such as 
employer 
satisfaction 
surveys, 
employ-
ability measures, earnings gains, employ-
ment rates, or other similar approaches); 
and 
‘‘(iv) standards for consideration of 
student success outcomes measures (such 
as completion rates, retention rates, and 
loan repayment rates);’’; 
(B) by amending subparagraph (I) to read 
as follows: 
‘‘(I) record of student complaints received 
by, or available to, the agency or association, 
and a process for resolving complaints received 
by the institution; and’’; and 
(C) in subparagraph (J), by inserting ‘‘and 
the median total price charged to students for 
a program of study in relation to the median 
value-added earnings of students who completed 
such program provided by the Secretary’’ after 
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‘‘student loan default rate data provided by the 
Secretary’’. 
(b) SECRETARIAL REQUIREMENTS
AND AUTHOR-
ITY.—Subsection (b) of section 496 of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1099b) is amended to read 
as follows: 
‘‘(b) SECRETARIAL REQUIREMENTS AND AUTHOR-
ITY.— 
‘‘(1) STATE DESIGNATED ACCREDITING AGEN-
CY.— 
‘‘(A) APPROVAL
OF
STATE
PLANS.—The 
Secretary shall— 
‘‘(i) approve a State’s designation of 
an entity as an accrediting agency or asso-
ciation for the purposes described in sub-
section (a)(2)(D) for a 5-year period, be-
ginning not later than 30 days after re-
ceipt of the plan from such State with re-
spect to such designation, if such plan in-
cludes each of the elements listed in sub-
paragraph (B); 
‘‘(ii) submit to the State and the au-
thorizing committees, and make publicly 
available the Secretary’s response to the 
State with respect to such plan, including 
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this section), that the State required the 
entity to comply with as a condition of re-
ceiving and maintaining such designation. 
‘‘(iv) A copy of the standards, policies, 
and procedures of the entity that the State 
considered in selecting the entity for such 
designation. 
‘‘(v) The State’s assessment of how 
the standards for accreditation of the enti-
ty will be effective in meeting the require-
ments of subsection (a)(5). 
‘‘(vi) Evidence that at least one other 
State has determined that such entity is a 
reliable authority as to the quality of edu-
cation offered for the purposes of this Act. 
‘‘(vii) An assurance that the State will 
comply with the monitoring requirements 
described in subparagraph (C). 
‘‘(C) STATE MONITORING.— 
‘‘(i) IN GENERAL.—A State that has 
designated an entity as an accrediting 
agency or association for the purposes de-
scribed in subsection (a)(2)(D) shall sub-
mit to the Secretary, and to the State au-
thorizing entity, as appropriate, a report at 
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the end of the 5-year period for which the 
entity has received such designation, which 
shall include, with respect to each postsec-
ondary education program or institution 
that has been accredited by such entity 
during such period, and disaggregated by 
type of credential, certification, or de-
gree— 
‘‘(I) the number and percentage 
of students who have successfully ob-
tained a postsecondary education cre-
dential, certification, or degree offered 
by such program or institution; and 
‘‘(II) the number and percentage 
of students who were enrolled and did 
not successfully obtain such a creden-
tial, certification, or degree within 150 
percent of the program length. 
‘‘(ii) 
COUNTING
TRANSFER
STU-
DENTS.—For purposes of clause (i)(I), a 
student shall be counted as obtaining a 
credential, certification, or degree offered 
by a program or institution that was ac-
credited by the entity during the period for 
which the report under this subparagraph 
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is being submitted, if the student obtains 
such credential, certification, or degree 
after transferring to another institution 
during such period. 
‘‘(2) AUTHORITY
TO
PROVIDE
AN
ACCELER-
ATED PATH TO RECOGNITION.—With respect to a 
prospective accrediting agency or association that 
submits to the Secretary an application for initial 
recognition under this Act, the Secretary may pro-
vide such recognition to such agency or association 
within 2 years after receipt of such application, if 
such application— 
‘‘(A) demonstrates that the agency or asso-
ciation— 
‘‘(i) has at least one year of experi-
ence 
in 
making 
accreditation 
or 
preaccreditation decisions; and 
‘‘(ii) has policies in place that meet all 
the criteria under subsection (a) for rec-
ognition covering the range of the specific 
degrees, certificates, institutions, or pro-
gram of study for which the agency or as-
sociation seeks such recognition; and 
‘‘(B) provides an assurance that if the 
agency or association receives such recognition, 
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the agency or association will submit to the 
Secretary monitoring reports regarding accredi-
tation or preaccreditation decisions, as appro-
priate. 
‘‘(3) 
DEVELOPMENT
OF
COMMON
TERMI-
NOLOGY.—Not later than 18 months after the date 
of enactment of the College Cost Reduction Act, the 
Secretary shall— 
‘‘(A) convene a panel of experts to develop 
common terminology for accrediting agencies or 
associations to use in making accrediting deci-
sions with respect to program of study or insti-
tutions, such as a common understanding of 
monitoring, warning, show cause, and other rel-
evant statuses, as appropriate; and 
‘‘(B) publish the recommendations for such 
common terminology in the Federal Register 
with a 60-day public comment period.’’. 
(c) OPERATING PROCEDURES REQUIRED.— 
(1) ON-SITE
INSPECTIONS
AND
REVIEWS.— 
Paragraph (1) of section 496(c) (20 U.S.C. 
1099b(c)) is amended— 
(A) by inserting ‘‘(which may vary based 
on institutional risk consistent with policies pro-
mulgated by the agency or association to deter-
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179 
mine such risk and interval frequency as au-
thorized under subsection (p))’’ after ‘‘inter-
vals’’; and 
(B) by striking ‘‘, including those regard-
ing distance education’’. 
(2) MECHANISM
TO
IDENTIFY
INSTITUTIONS 
AND
PROGRAMS
EXPERIENCING
DIFFICULTIES.— 
Section 496(c) (20 U.S.C. 1099b(c)) is further 
amended— 
(A) 
by 
redesignating 
paragraphs 
(2) 
through (9) as paragraphs (3) through (10), re-
spectively; and 
(B) by inserting after paragraph (1) the 
following: 
‘‘(2) develops a policy process to identify any 
institution or program of study accredited by the 
agency or association that is not meeting the stand-
ards for accreditation of the agency or association, 
with a focus on the standards assessing an institu-
tion’s or program of study’s student achievement 
outcomes described in subsection (a)(5)(A), and 
other indicators, which shall include— 
‘‘(A) not less than annually, evaluating the 
extent to which such an identified institution or 
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180 
program of study continues to be in compliance 
with such standards or other indicators; and 
‘‘(B) as appropriate, requiring the institu-
tion or program of study to submit a plan, on 
an annual basis, to the accrediting agency or 
association to— 
‘‘(i) address and remedy performance 
issues with respect to such compliance; and 
‘‘(ii) ensure that such plan is success-
fully implemented.’’. 
(3) PROCEDURES
WITH
RESPECT
TO
SUB-
STANTIVE
CHANGES.—Paragraph (5) of section 
496(c) (20 U.S.C. 1099b(c)) (as redesignated by 
paragraph (2)(A)) is amended to read as follows: 
‘‘(5) establishes and applies or maintains poli-
cies, which ensure that any substantive change to 
the educational mission, program of study, or pro-
gram of study of an institution after the agency or 
association has granted the institution accreditation 
or preaccreditation status does not adversely affect 
the capacity of the institution to continue to meet 
the agency’s or association’s standards for such ac-
creditation or preaccreditation status, which shall in-
clude policies that— 
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182 
struction of an educational program of the 
institution with such accreditation or 
preaccreditation status;’’. 
(4) PUBLIC AVAILABILITY.—Section 496(c) (20 
U.S.C. 1099b(c)) is further amended— 
(A) in paragraph (8) (as redesignated by 
paragraph (2)(A))— 
(i) in the matter preceding subpara-
graph (A), by inserting ‘‘, on the agency’s 
or association’s website,’’ after ‘‘public’’; 
and 
(ii) in subparagraph (C), by inserting 
before the semicolon at the end the fol-
lowing: ‘‘, and a summary of why such ac-
tion was taken or such placement was 
made’’; 
(B) in paragraph (9) (as so redesignated), 
by striking ‘‘and’’ at the end; 
(C) in paragraph (10)(B) (as so redesig-
nated), by inserting before the period at the end 
the following: ‘‘, including an assurance that 
the institution does not deny a transfer of cred-
it based solely on the accreditation of the insti-
tution at which the credit was earned’’; and 
(D) by adding at the end the following: 
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‘‘(11) such agency or association shall make 
publicly available, on the agency or association’s 
website, a list of the institutions of higher education 
or program of study accredited by such agency or 
association, which includes, with respect to each 
such institution or program of study— 
‘‘(A) the year accreditation was granted; 
‘‘(B) the most recent date of an award of 
accreditation or reaccreditation; and 
‘‘(C) the anticipated date of the institu-
tion’s next evaluation for reaccreditation.’’. 
(5) PROHIBITION ON LITMUS TESTS.—Section 
496(c) (20 U.S.C. 1099b(c)) is further amended by 
adding at the end the following: 
‘‘(12) confirms that the standards for accredita-
tion of the agency or association do not— 
‘‘(A) except as provided in subparagraph 
(B)— 
‘‘(i) require, encourage, or coerce any 
institution to— 
‘‘(I) support, oppose, or commit 
to supporting or opposing— 
‘‘(aa) a specific partisan, po-
litical, or ideological viewpoint or 
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184 
belief or set of such viewpoints or 
beliefs; or 
‘‘(bb) a specific viewpoint or 
belief or set of viewpoints or be-
liefs on social, cultural, or polit-
ical issues; or 
‘‘(II) support or commit to sup-
porting the disparate treatment of any 
individual or group of individuals on 
the basis of any protected class under 
Federal civil rights law, except as re-
quired by Federal law or a court 
order; or 
‘‘(ii) assess an institution’s or pro-
gram of study’s commitment to any ide-
ology, belief, or viewpoint; 
‘‘(B) prohibit an institution— 
‘‘(i) from having a religious mission or 
from requiring an applicant, student, em-
ployee, or independent contractor (such as 
an adjunct professor) of such an institu-
tion to— 
‘‘(I) provide or adhere to a state-
ment of faith; or 
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185 
‘‘(II) adhere to a code of conduct 
consistent with the stated religious 
mission of such institution or the reli-
gious tenets of such organization; or 
‘‘(ii) from requiring an applicant, stu-
dent, employee, or contractor to take an 
oath to uphold the Constitution of the 
United States; or 
‘‘(C) require, encourage, or coerce an insti-
tution of higher education to violate any right 
protected by the Constitution;’’. 
(6) PROHIBITION ON ASSESSMENT OF ELECTED 
OR
APPOINTED
OFFICIALS.—Section 496(c) (20 
U.S.C. 1099b(c)) is further amended by adding at 
the end the following: 
‘‘(13) confirms that the standards for accredita-
tion of the agency or association do not assess the 
roles (including actions or statements) of elected and 
appointed State and Federal officials and legislative 
bodies;’’. 
(7) PROHIBITION OF PRACTICES THAT DRIVE 
CREDENTIAL
INFLATION.—Section 
496(c) 
(20 
U.S.C. 1099b(c)) is further amended by adding at 
the end the following: 
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186 
‘‘(14) confirms that the standards for accredita-
tion of the agency or association do not require an 
institution to develop a program of study leading to 
a degree, certificate, or recognized postsecondary 
credential that is not in response to the needs of an 
industry or occupation.’’. 
(d) LENGTH OF RECOGNITION.—Subsection (d) of 
section 496 (20 U.S.C. 1099b) is amended— 
(1) by striking ‘‘No accrediting’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in paragraph (2), no accrediting’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(2) LONGER RECOGNITION AUTHORIZED FOR 
CERTAIN
AGENCIES
AND
ASSOCIATIONS.—Notwith-
standing paragraph (1), an accrediting agency or as-
sociation that has been recognized by the Secretary 
for the purpose of this Act for a period of 5 years, 
may be recognized for an additional period of up to 
3 years, if the Secretary determines, based on the 
performance of the accrediting agency or association 
during its recognition period under this Act, that the 
accrediting agency or association— 
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187 
‘‘(A) has the capability to evaluate the 
quality of institutions or program of study; and 
‘‘(B) has maintained compliance with the 
criteria for accrediting agencies or associations 
required by this section.’’. 
(e) LIMITATION ON SCOPE OF CRITERIA.—Section 
496 (20 U.S.C. 1099b) is further amended by amending 
subsection (g) to read as follows: 
‘‘(g) LIMITATION ON SCOPE OF CRITERIA.— 
‘‘(1) IN GENERAL.—The Secretary shall not es-
tablish criteria for accrediting agencies or associa-
tions that are not required by this section. 
‘‘(2) INSTITUTIONAL ELIGIBILITY.—An institu-
tion of higher education shall be eligible for partici-
pation in programs under this title if the institution 
is in compliance with the standards of its accrediting 
agency or association that assess the institution in 
accordance with subsection (a)(5), regardless of any 
additional standards adopted by the agency or asso-
ciation for purposes unrelated to participation in 
programs under this title.’’. 
(f) CHANGE OF ACCREDITING AGENCY.—Section 496 
(20 U.S.C. 1099b) is further amended by amending sub-
section (h) to read as follows: 
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188 
‘‘(h) CHANGE OF ACCREDITING AGENCY OR ASSOCIA-
TION.— 
‘‘(1) IN GENERAL.—The Secretary shall recog-
nize the accreditation of any otherwise eligible insti-
tution or program of study if the institution (or pro-
gram) is in the process of changing its accrediting 
agency or association, unless the institution (or pro-
gram) is subject to one or more covered actions. 
‘‘(2) COVERED
ACTION
DEFINED.—For pur-
poses of this subsection, the term ‘covered action’ 
means one or more of the following, when used with 
respect to an institution or program of study: 
‘‘(A) A pending or final action brought by 
a State agency to suspend, revoke, withdraw, or 
terminate the institution’s legal authority to 
provide postsecondary education in the State. 
‘‘(B) A decision by a recognized accred-
iting agency or association to deny accreditation 
or preaccreditation to the institution or pro-
gram of study. 
‘‘(C) A pending or final action brought by 
a recognized accrediting agency or association 
to suspend, revoke, withdraw, or terminate the 
institution’s or program of study’s accreditation 
or preaccreditation. 
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‘‘(D) Probation or an equivalent status im-
posed on the institution or program of study by 
a recognized accrediting agency or association. 
‘‘(3) INSTITUTIONS
OF
HIGHER
EDUCATION 
NOT SUBJECT TO COVERED ACTIONS.—An institu-
tion (or program of study) that is not subject to a 
covered action described in paragraph (1) and that 
desires to change its accrediting agency or associa-
tion for a reason not related to any such covered ac-
tion (such as compliance with State law) may make 
such a change without the approval of the Secretary, 
as long as the institution (or program) and the new 
accrediting agency or association of the institution 
(or program), not later than 30 days after the ac-
creditation decision by such agency or association, 
notify the Secretary, in writing, of the effective date 
of the institution’s (or program’s) accreditation by 
such agency or association.’’. 
(g) DUAL ACCREDITATION RULE.—Section 496 (20 
U.S.C. 1099b) is further amended by amending subsection 
(i) to read as follows: 
‘‘(i) DUAL ACCREDITATION RULE.— 
‘‘(1) RECOGNITION BY SECRETARY.—The Sec-
retary shall recognize the accreditation of any other-
wise eligible institution of higher education if the in-
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stitution of higher education is accredited, as an in-
stitution, by more than one accrediting agency or as-
sociation. 
‘‘(2) DESIGNATION BY INSTITUTION.—If the in-
stitution is accredited, as an institution, by more 
than one accrediting agency or association, the insti-
tution— 
‘‘(A) shall designate which agency’s or as-
sociation’s accreditation shall be utilized in de-
termining the institution’s eligibility for partici-
pation in programs under this Act; and 
‘‘(B) may change this designation at the 
end of the institution’s period of recognition.’’. 
(h) RELIGIOUS INSTITUTIONS RULE.—Section 496 
(20 U.S.C. 1099b) is further amended by amending sub-
section (k) to read as follows: 
‘‘(k) RELIGIOUS INSTITUTION RULE.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection 
(j), the Secretary shall allow an institution that has 
had its accreditation withdrawn, revoked, or other-
wise terminated, or has voluntarily withdrawn from 
an accreditation agency, to remain certified as an in-
stitution of higher education under section 102 and 
subpart 3 of this part for a period sufficient to allow 
such institution to obtain alternative accreditation, if 
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191 
the Secretary determines that the withdrawal, rev-
ocation, or termination— 
‘‘(A) is related to the religious mission or 
affiliation of the institution; and 
‘‘(B) is not related to the accreditation cri-
teria provided for in this section. 
‘‘(2) ADMINISTRATIVE
COMPLAINT
FOR
FAIL-
URE TO RESPECT RELIGIOUS MISSION.— 
‘‘(A) IN GENERAL.— 
‘‘(i) INSTITUTION.—If an institution 
of higher education believes that an ad-
verse action of an accrediting agency or as-
sociation fails to respect the institution’s 
religious mission in violation of subsection 
(a)(4)(B), the institution— 
‘‘(I) may file a complaint with 
the Secretary to review the adverse 
action of the agency or association; 
and 
‘‘(II) prior to filing such com-
plaint, shall notify the Secretary and 
the agency or association of an intent 
to file such complaint not later than 
30 days after— 
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‘‘(aa) receiving the adverse 
action from the agency or asso-
ciation; or 
‘‘(bb) determining that dis-
cussions with or the processes of 
the agency or association to rem-
edy the failure to respect the reli-
gious mission of the institution 
will fail to result in the with-
drawal of the adverse action by 
the agency or association. 
‘‘(ii) ACCREDITING AGENCY OR ASSO-
CIATION.—Upon notification of an intent 
to file a complaint and through the dura-
tion of the complaint process under this 
paragraph, the Secretary and the accred-
iting agency or association shall treat the 
accreditation status of the institution of 
higher education as if the adverse action 
for which the institution is filing the com-
plaint had not been taken. 
‘‘(B) COMPLAINT.—Not later than 45 days 
after providing notice of the intent to file a 
complaint, the institution shall file the com-
plaint with the Secretary (and provide a copy to 
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the accrediting agency or association), which 
shall include— 
‘‘(i) a description of the adverse ac-
tion; 
‘‘(ii) how the adverse action fails to 
respect the institution’s religious mission 
in violation of subsection (a)(4)(B); and 
‘‘(iii) any other information the insti-
tution determines relevant to the com-
plaint. 
‘‘(C) RESPONSE.— 
‘‘(i) IN
GENERAL.—The accrediting 
agency or association shall have 30 days 
from the date the complaint is filed with 
the Secretary to file with the Secretary 
(and provide a copy to the institution) a 
response to the complaint, which response 
shall include— 
‘‘(I) how the adverse action is 
based on a violation of the agency or 
association’s standards for accredita-
tion; and 
‘‘(II) how the adverse action does 
not fail to respect the religious mis-
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194 
sion of the institution and is in com-
pliance with subsection (a)(4)(B). 
‘‘(ii) BURDEN OF PROOF.— 
‘‘(I) IN GENERAL.—The accred-
iting agency or association shall bear 
the burden of proving that the agency 
or association has not taken the ad-
verse action as a result of the institu-
tion’s religious mission, and that the 
action does not fail to respect the in-
stitution’s religious mission in viola-
tion of subsection (a)(4)(B), by show-
ing that the adverse action does not 
impact the aspect of the religious mis-
sion claimed to be affected in the 
complaint. 
‘‘(II) INSUFFICIENT
PROOF.— 
Any evidence that the adverse action 
results from the application of a neu-
tral and generally applicable rule shall 
be insufficient to prove that the action 
does not fail to respect an institu-
tion’s religious mission. 
‘‘(D) 
ADDITIONAL
INSTITUTION
RE-
SPONSE.—The institution shall have 30 days 
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or association is not in compli-
ance with subsection (a)(4)(B), 
and that such agency or associa-
tion shall carry out the require-
ments of item (bb) to be in com-
pliance with subsection (a)(4)(B); 
and 
‘‘(bb) the agency or associa-
tion shall reverse the adverse ac-
tion immediately and take no fur-
ther action with respect to such 
adverse action. 
‘‘(iii) 
FINAL
DEPARTMENTAL
AC-
TION.—The 
Secretary’s 
determination 
under this subparagraph shall be the final 
action of the Department on the complaint. 
‘‘(F) RULE OF CONSTRUCTION.—Nothing 
in this paragraph shall prohibit— 
‘‘(i) an accrediting agency or associa-
tion from taking an adverse action against 
an institution of higher education for a 
failure to comply with the agency or asso-
ciation’s standards of accreditation as long 
as such standards are in compliance with 
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subsection (a)(4)(B) and any other appli-
cable requirements of this section; or 
‘‘(ii) an institution of higher education 
from exercising any other rights to address 
concerns with respect to an accrediting 
agency or association or the accreditation 
process of an accrediting agency or asso-
ciation. 
‘‘(G) GUIDANCE.— 
‘‘(i) IN
GENERAL.—The Secretary 
may only issue guidance under this para-
graph that explains or clarifies the process 
for providing notice of an intent to file a 
complaint or for filing a complaint under 
this paragraph. 
‘‘(ii) CLARIFICATION.—The Secretary 
may not issue guidance, or otherwise deter-
mine or suggest, when discussions to rem-
edy the failure by an accrediting agency or 
association to respect the religious mission 
of an institution of higher education re-
ferred to in subparagraph (A)(i)(II)(bb) 
have failed or will fail. 
‘‘(3) RELIGIOUS
MISSION
DEFINED.—In this 
Act, the term ‘religious mission’— 
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199 
‘‘(A) means a published institutional mis-
sion that is approved by the governing body of 
an institution of higher education and that in-
cludes, refers to, or is predicated upon religious 
tenets, beliefs, or teachings; and 
‘‘(B) may be reflected in any of the institu-
tion’s policies, decisions, or practices related to 
such tenets, beliefs, or teachings (including any 
policies or decisions concerning housing, em-
ployment, curriculum, self-governance, or stu-
dent admission, continuing enrollment, or grad-
uation).’’. 
(i) INDEPENDENT EVALUATION.—Section 496(n)(3) 
(20 U.S.C. 1099b(n)(3)) is amended by striking the last 
sentence. 
(j) REGULATIONS.—Section 496(o) (20 U.S.C. 
1099b(o)) is amended by inserting before the period at 
the end the following: ‘‘, or with respect to the policies 
and procedures of an accreditation agency or association 
described in paragraph (2) or (5) of subsection (c) or how 
the agency or association carries out such policies and pro-
cedures’’. 
(k) RISK-BASED REVIEW PROCESSES
OR PROCE-
DURES; WAIVER.—Section 496 (20 U.S.C. 1099b) is fur-
ther amended— 
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(1) by striking subsections (p) and (q); and 
(2) by adding at the end the following: 
‘‘(p) RISK-BASED
OR DIFFERENTIATED REVIEW 
PROCESSES OR PROCEDURES.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law (including subsection (a)(4)(A)), an 
accrediting agency or association shall establish risk- 
based processes or procedures for assessing compli-
ance with the accrediting agency or association’s 
standards (including policies related to substantive 
change and award of accreditation statuses) under 
which the agency or association— 
‘‘(A) creates a system for designating each 
institution of higher education and program of 
study that the agency or association evaluates, 
such as through using peer benchmarking to 
understand an institution’s or program of 
study’s performance in comparison with its 
peers (which may include past performance 
with respect to meeting the accrediting agency 
or association’s standards, including the stand-
ards relating to the student achievement out-
comes described in subclauses (I) through (IV) 
of subsection (a)(5)(A)); 
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‘‘(B) requires for each institution and pro-
gram of study designated as high-risk, in ac-
cordance with the accrediting agency or associa-
tion’s system in subparagraph (A), to submit 
the annual plans described in subsection 
(c)(2)(B) to the agency or association that ad-
dress the performance issues of such institution 
or program of study that resulted in such des-
ignation; 
‘‘(C) with respect to institutions or pro-
gram of study meeting or exceeding perform-
ance as described in subparagraph (A), reduces 
any compliance requirements with the stand-
ards of accreditation of the agency that are not 
assessing an institution or program of study 
under subsection (a)(5), such as on-site inspec-
tions; and 
‘‘(D) may require an institution or pro-
gram of study that has declining performance 
(such as an institution or program of study 
with a high-risk designation under subpara-
graph (B)), which has not improved as required 
by the annual plan submitted under subsection 
(c)(2)(B), to take actions to avoid or minimize 
the risks that may lead to revocation of accredi-
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tation (such as limiting certain program of 
study enrollment or recommending to the Sec-
retary to limit funds under this title for such an 
institution or program). 
‘‘(2) PROHIBITION.—Any risk-based review 
process or procedure established pursuant to this 
subsection shall not discriminate against, or other-
wise preclude, institutions of higher education based 
on institutional sector or category, including an in-
stitution of higher education’s tax status.’’. 
(l) TOTAL PRICE DEFINED.—Section 496 (20 U.S.C. 
1099b) is further amended by adding at the end the fol-
lowing: 
‘‘(q) TOTAL PRICE DEFINED.—For purposes of this 
section, the term ‘total price’ has the meaning given such 
term in section 454(d)(3).’’. 
SEC. 312. NATIONAL ADVISORY COMMITTEE ON INSTITU-
TIONAL QUALITY AND INTEGRITY (NACIQI). 
Section 114 (20 U.S.C. 1011c) is amended— 
(1) in subsection (b)— 
(A) in paragraph (2), by redesignating 
subparagraphs (A) through (C) as clauses (i) 
through (iii), respectively, and adjusting the 
margins accordingly; 
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(B) by striking ‘‘Individuals’’ and inserting 
the following: 
‘‘(A) IN GENERAL.—Individuals’’; 
(C) in clause (ii), as so redesignated, by 
striking ‘‘and training’’ and inserting ‘‘skills de-
velopment’’; 
(D) by adding at the end the following: 
‘‘(B) DISQUALIFICATION.—No individual 
may be appointed as a member of the Com-
mittee if such individual has a significant con-
flict of interest, such as being a current regu-
lator (such as a State authorizer) that would 
require the individual to frequently be recused 
from serving as a member of the Committee.’’; 
and 
(E) in paragraph (3), by striking ‘‘Except 
as provided in paragraph (5), the term’’ and in-
serting ‘‘The term’’; 
(2) in subsection (c)— 
(A) in paragraph (4), by adding ‘‘and’’ at 
the end; 
(B) in paragraph (5), by striking ‘‘; and’’ 
at the end and inserting a period; and 
(C) by striking paragraph (6); 
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(3) in subsection (d)(2), by inserting at the end 
the following: ‘‘The name of any member of the 
Committee who has been recused with respect to an 
agenda item of the meeting shall be included in such 
agenda.’’; 
(4) in subsection (e)(2)(D), by striking ‘‘, in-
cluding any additional functions established by the 
Secretary through regulation’’; and 
(5) in subsection (f), by striking ‘‘September 
30, 2021’’ and inserting ‘‘September 30, 2028’’. 
SEC. 313. ALTERNATIVE QUALITY ASSURANCE EXPERI-
MENTAL SITE INITIATIVE. 
Section 487A of the Higher Education Act of 1965 
(20 U.S.C. 1094a) is amended— 
(1) by redesignating subsection (c) as sub-
section (d); and 
(2) by inserting after subsection (b) the end the 
following: 
‘‘(c) ALTERNATIVE QUALITY ASSURANCE EXPERI-
MENTAL SITE INITIATIVE.— 
‘‘(1) EXPERIMENTAL SITE AUTHORIZED.—The 
Secretary shall select, in accordance with paragraph 
(4), eligible entities that voluntarily seek to partici-
pate in an Alternative Quality Assurance experi-
mental site initiative for a duration of 5 years and 
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receive the waivers or other flexibility described in 
paragraph (5) to evaluate whether the eligible enti-
ties, during such 5-year period, can maintain high 
student achievement outcomes while participating in 
programs under this title without being accredited 
by an accrediting agency or association recognized 
under section 496. 
‘‘(2) ELIGIBLE
ENTITY
DEFINED.—For pur-
poses of this subsection, an eligibility entity means— 
‘‘(A) an institution of higher education (as 
defined in section 102); or 
‘‘(B) an educational provider that— 
‘‘(i) is not an institution of higher 
education; 
‘‘(ii) does not receive funding under 
this Act; 
‘‘(iii) is not accredited by an accred-
iting agency or association for the pur-
poses of this title; and 
‘‘(iv) is authorized to operate in the 
State in which the provider is located. 
‘‘(3) APPLICATION.— 
‘‘(A) IN
GENERAL.—Each eligible entity 
desiring to participate in the experimental site 
initiative under this subsection shall submit an 
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application to the Secretary, at such time and 
in such manner as the Secretary may require, 
which shall contain the information described in 
subparagraph (B). The Secretary may not re-
quire any information in such an application 
that is not described in subparagraph (B). 
‘‘(B) CONTENTS.—Each application under 
paragraph (1) shall include— 
‘‘(i) a description of which program of 
study offered at the eligible entity will be 
included in the experimental site initiative, 
including— 
‘‘(I) in the case of an eligible en-
tity that is an institution of higher 
education, an attestation that such 
program meets the standards of ac-
creditation of the institution’s accred-
iting agency or association described 
in clauses (i) through (iv) of section 
496(a)(5)(A) (including the standard 
requiring that the median value-added 
earnings of students who complete the 
program are greater than the median 
total price charged to students for the 
program); and 
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‘‘(II) in the case of an eligible en-
tity defined in paragraph (2)(B), doc-
umentation and verified administra-
tive data that the program meets 
standards similar to the standards of 
accreditation referenced in subclause 
(I); 
‘‘(ii) a justification of the reason why 
the eligible entity seeks to receive the waiv-
er described in paragraph (5)(A), including 
estimates or documentation of the poten-
tial savings to the entity of receiving such 
waiver; and 
‘‘(iii) a description of how the eligible 
entity plans to share the financial risk with 
the Secretary of receiving the waivers de-
scribed in paragraph (5), such as by— 
‘‘(I) providing matching non-Fed-
eral funds to the Secretary to cover 
the cost of at least half of the ex-
pected disbursements under this title 
to the students that enroll in such 
program for the first year of the ex-
periment; 
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‘‘(II) providing a letter of credit 
to the Secretary to cover the cost de-
scribed in subclause (I); or 
‘‘(III) requesting to be placed on 
a reimbursement system of payment. 
‘‘(4) SELECTION.—No later than 6 months 
after the experimental site initiative is announced, 
the Secretary shall select eligible entities to partici-
pate in the initiative based on the applications sub-
mitted under paragraph (3). In making such selec-
tions, the Secretary— 
‘‘(A) shall consider— 
‘‘(i) the number and quality of appli-
cations; 
‘‘(ii) each applicant’s ability to effec-
tively share the financial risk as required 
under paragraph (3)(B)(iii); and 
‘‘(iii) in the case of an applicant that 
is an institution of higher education, the 
applicant’s history of compliance with the 
requirements of this Act; 
‘‘(B) shall ensure that the selected eligible 
entities represent a variety of eligible entities 
with respect to size, mission, and geographic 
distribution; 
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‘‘(C) shall ensure that the number of eligi-
ble entities selected that are institutions of 
higher education described in paragraph (2)(B) 
is equal to the number of eligible entities se-
lected that are educational providers described 
in paragraph (2)(B); and 
‘‘(D) may not select any eligible entity 
whose approval to operate in a State is at risk. 
‘‘(5) WAIVERS.—The Secretary is authorized to 
waive, for any eligible entity participating in the ex-
perimental site initiative under this subsection— 
‘‘(A) any requirements conditioning an eli-
gible entity’s eligibility to participate in pro-
grams under this title to being accredited by an 
accrediting agency or association recognized 
under section 496; and 
‘‘(B) any other requirements of this title 
determined necessary by the Secretary to carry 
out such initiative (including requirements re-
lated to the award process and disbursement of 
student financial aid, or other management pro-
cedures or processes), except that the Secretary 
shall not waive any provisions with respect to 
award rules (other than an award rule related 
to an experiment in modular or compressed 
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schedules), grant and loan maximum award 
amounts, and need analysis requirements, un-
less the waiver of such provisions is authorized 
by another provision under this title. 
‘‘(6) REVIEW AND EVALUATION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
review and evaluate the experimental site initia-
tive conducted under this subsection, including 
by evaluating, with respect to each participating 
program of each participating eligible entity, 
whether— 
‘‘(i) the median value-added earnings 
of students who complete the program of 
study are greater than the median total 
price charged to students for such pro-
gram; and 
‘‘(ii) the program of study is meeting 
other student achievement outcomes (such 
as outcomes based on standards of accredi-
tation described in section 496(a)(5)(A)), 
as appropriate for the program. 
‘‘(B) RECOMMENDATIONS.—If, based on 
such evaluation, the Secretary determines that 
participating eligible entities were able to meet 
the requirement of subparagraph (A)(i) and the 
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other student achievement outcomes evaluated 
by the Secretary under subparagraph (A)(ii), 
the Secretary shall submit to the authorizing 
committees recommendations regarding amend-
ments to this Act that will streamline and en-
hance the quality assurance process of institu-
tions of higher education, and educational pro-
viders described in paragraph (2)(B).’’. 
PART B—STUDENT SUCCESS 
SEC. 321. POSTSECONDARY STUDENT SUCCESS GRANTS. 
Part B of title VII of the Higher Education Act of 
1965 (20 U.S.C. 1138 et seq.) is amended— 
(1) in section 741— 
(A) by striking subsections (b), (c), (e), 
and (f); 
(B) by redesignating subsection (d) as sub-
section (c); and 
(C) by inserting after subsection (a) the 
following: 
‘‘(b) GRANTS.— 
‘‘(1) DEFINITIONS.—In this subsection: 
‘‘(A) COMPLETION RATE.—The term ‘com-
pletion rate’ means— 
‘‘(i) the percentage of students from 
an initial cohort enrolled at an institution 
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of higher education that is a 2-year institu-
tion who have graduated from the institu-
tion or transferred to a 4-year institution 
of higher education; or 
‘‘(ii) the percentage of students from 
an initial cohort enrolled at an institution 
of higher education in the State that is a 
4-year institution who have graduated 
from the institution. 
‘‘(B) ELIGIBLE ENTITY.—The term ‘eligi-
ble entity’ means— 
‘‘(i) an institution of higher education; 
‘‘(ii) a partnership between a non-
profit educational organization and an in-
stitution of higher education; and 
‘‘(iii) a consortium of institutions of 
higher education. 
‘‘(C) 
ELIGIBLE
INDIAN
ENTITY.—The 
term ‘eligible Indian entity’ means the entity re-
sponsible for the governance, operation, or con-
trol of a Tribal College or University. 
‘‘(D) EVIDENCE-BASED.—The term ‘evi-
dence-based’ has the meaning given the term in 
section 8101(21)(A) of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 
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7801(21)(A)), except that such term shall also 
apply to institutions of higher education. 
‘‘(E) EVIDENCE TIERS.— 
‘‘(i) EVIDENCE
TIER
REFORM
OR 
PRACTICE.—The term ‘evidence tier 1 re-
form or practice’ means a reform or prac-
tice that prior research suggests has prom-
ise for the purpose of successfully improv-
ing student achievement or attainment for 
high-need students. 
‘‘(ii) EVIDENCE TIER 2 REFORM OR 
PRACTICE.—The term ‘evidence tier 2 re-
form or practice’ means a reform or prac-
tice described in clause (i), or other prac-
tice meeting similar criteria, that measures 
impact and cost effectiveness of student 
success activities, and, through rigorous 
evaluation (including through the use of 
existing administrative data, as applicable), 
has been found to be successfully imple-
mented. 
‘‘(iii) EVIDENCE TIER 3 REFORM OR 
PRACTICE.—The term ‘evidence tier 3 re-
form or practice’ means a reform or prac-
tice described in clause (ii), or other prac-
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tice meeting similar criteria, that has been 
found to produce sizable, important im-
pacts on student success and— 
‘‘(I) determines whether such im-
pacts can be successfully reproduced 
and sustained over time; and 
‘‘(II) identifies the conditions in 
which such reform or practice is most 
effective. 
‘‘(F) FIRST
GENERATION
COLLEGE
STU-
DENT.—The term ‘first generation college stu-
dent’ has the meaning given the term in section 
402A(h) of the Higher Education Act of 1965 
(20 U.S.C. 1070a–11(h)). 
‘‘(G) HIGH-NEED
STUDENT.—The term 
‘high-need student’ means— 
‘‘(i) a student from low-income back-
ground; 
‘‘(ii) first generation college students; 
‘‘(iii) caregiver students; 
‘‘(iv) students with disabilities; 
‘‘(v) students who stopped out before 
completing; 
‘‘(vi) reentering justice-impacted stu-
dents; and 
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