‘‘(A) is a nonprofit, for-profit, or public in-
stitution that—
‘‘(i) provides an educational program 
for which the institution awards a bach-
elor’s degree; 
‘‘(ii) provides not less than a 2-year 
educational program which is acceptable 
for full credit towards such a degree; or 
‘‘(iii) provides not less than a 1-year 
program of training that prepares students 
for gainful employment in a recognized oc-
cupation; or 
‘‘(B) is a nonprofit, for-profit, or public in-
stitution that provides an eligible program (as 
defined in section 481)—
‘‘(i) for which the institution awards a 
certificate; and 
‘‘(ii) that prepares students for gain-
ful employment in a recognized occupation. 
‘‘(b) ADDITIONAL LIMITATIONS.—
‘‘(1) FOR-PROFIT
POSTSECONDARY
INSTITU-
TIONS.—
‘‘(A) DURATION
OF
ACCREDITATION.—A 
for-profit institution shall not be considered to 
be an institution of higher education unless
such institution is accredited by a nationally 
recognized accrediting agency or association 
and such institution has been in existence for at 
least 2 years. 
‘‘(B) INSTITUTIONAL
ELIGIBILITY
ONLY 
FOR COMPETITIVE GRANTS.—For the purposes 
of any program providing grants to institutions 
for use by the institution (and not for distribu-
tion among students), a for-profit institution 
shall not be considered to be an institution of 
higher education under this section if such 
grants are awarded on any basis other than 
competition on the merits of the grant proposal 
or application. 
‘‘(2) POSTSECONDARY
VOCATIONAL
INSTITU-
TIONS.—A nonprofit or public institution that meets 
the criteria of subsection (a)(4)(B) shall not be con-
sidered to be an institution of higher education un-
less such institution has been in existence for at 
least 2 years. 
‘‘(3) LIMITATIONS BASED ON MANAGEMENT.—
An institution shall not be considered to meet the 
definition of an institution of higher education in 
this section if—
‘‘(A) the institution, or an affiliate of the 
institution that has the power, by contract or 
ownership interest, to direct or cause the direc-
tion of the management or policies of the insti-
tution, has filed for bankruptcy, except that 
this paragraph shall not apply to a nonprofit in-
stitution, the primary function of which is to 
provide health care educational services (or an 
affiliate of such an institution that has the 
power, by contract or ownership interest, to di-
rect or cause the direction of the institution’s 
management or policies) that filed for bank-
ruptcy under chapter 11 of title 11, United 
States Code, between July 1, 1998, and Decem-
ber 1, 1998; or 
‘‘(B) the institution, the institution’s 
owner, or the institution’s chief executive officer 
has been convicted of, or has pled nolo 
contendere or guilty to, a crime involving the 
acquisition, use, or expenditure of Federal 
funds, or has been judicially determined to have 
committed a crime involving the acquisition, 
use, or expenditure involving Federal funds. 
‘‘(4) LIMITATION ON COURSE OF STUDY OR EN-
ROLLMENT.—An institution shall not be considered
to meet the definition of an institution of higher 
education in subsection (a) if such institution—
‘‘(A) offers more than 50 percent of such 
institution’s courses by correspondence (exclud-
ing courses offered by telecommunications as 
defined in 484(l)(4)), unless the institution is 
an institution that meets the definition in sec-
tion 3(3)(C) of the Carl D. Perkins Vocational 
and Technical Education Act of 1998; 
‘‘(B) enrolls 50 percent or more of the in-
stitution’s students in correspondence courses 
(excluding courses offered by telecommuni-
cations as defined in 484(l)(4)), unless the in-
stitution is an institution that meets the defini-
tion in section 3(3)(C) of the Carl D. Perkins 
Vocational and Technical Education Act of 
1998, except that the Secretary, at the request 
of the institution, may waive the applicability of 
this subparagraph to the institution for good 
cause, as determined by the Secretary in the 
case of an institution of higher education that 
provides a 2- or 4-year program of instruction 
(or both) for which the institution awards an 
associate or baccalaureate degree, respectively;
‘‘(C) has a student enrollment in which 
more than 25 percent of the students are incar-
cerated, except that the Secretary may waive 
the limitation contained in this subparagraph 
for an institution that provides a 2- or 4-year 
program of instruction (or both) for which the 
institution awards a bachelor’s degree, or an as-
sociate’s degree or a postsecondary certificate, 
respectively; or 
‘‘(D) has a student enrollment in which 
more than 50 percent of the students either do 
not meet the requirements of section 484(d)(3) 
or do not have a secondary school diploma or 
its recognized equivalent, and does not provide 
a 2- or 4-year program of instruction (or both) 
for which the institution awards an associate’s 
degree or a bachelor’s degree, respectively, ex-
cept that the Secretary may waive the limita-
tion contained in this subparagraph if an insti-
tution demonstrates to the satisfaction of the 
Secretary that the institution exceeds such limi-
tation because the institution serves, through 
contracts with Federal, State, or local govern-
ment agencies, significant numbers of students 
who do not meet the requirements of section
484(d)(3) or do not have a secondary school di-
ploma or its recognized equivalent. 
‘‘(c) LIST OF ACCREDITING AGENCIES.—For pur-
poses of this section, the Secretary shall publish a list of 
nationally recognized accrediting agencies or associations 
that the Secretary determines, pursuant to subpart 2 of 
part H of title IV, to be reliable authority as to the quality 
of the education or training offered. 
‘‘(d) CERTIFICATION.—The Secretary shall certify, 
for the purposes of participation in title IV, an institu-
tion’s qualification as an institution of higher education 
in accordance with the requirements of subpart 3 of part 
H of title IV. 
‘‘(e) LOSS OF ELIGIBILITY.—An institution of higher 
education shall not be considered to meet the definition 
of an institution of higher education in this section for 
the purposes of participation in title IV if such institution 
is removed from eligibility for funds under title IV as a 
result of an action pursuant to part H of title IV. 
‘‘SEC. 102. INSTITUTIONS OUTSIDE THE UNITED STATES. 
‘‘(a) 
INSTITUTIONS
OUTSIDE
THE
UNITED 
STATES.—
‘‘(1) IN GENERAL.—An institution outside the 
United States shall be considered to be an institu-
tion of higher education only for purposes of part B
of title IV if the institution is comparable to an in-
stitution of higher education, as defined in section 
101, is legally authorized by the education ministry 
(or comparable agency) of the country in which the 
school is located, and has been approved by the Sec-
retary for purposes of that part. The Secretary shall 
establish criteria by regulation for that approval and 
that determination of comparability. An institution 
may not be so approved or determined to be com-
parable unless such institution is a public or non-
profit institution, except that, subject to paragraph 
(2)(B), a graduate medical school or veterinary 
school located outside the United States may be a 
for-profit institution. 
‘‘(2) MEDICAL AND VETERINARY SCHOOL CRI-
TERIA.—In the case of a graduate medical or veteri-
nary school outside the United States, such criteria 
shall include a requirement that a student attending 
such school outside the United States is ineligible 
for loans made, insured, or guaranteed under part B 
of title IV unless—
‘‘(A) in the case of a graduate medical 
school located outside the United States—
‘‘(i)(I) at least 60 percent of those en-
rolled in, and at least 60 percent of the
graduates of, the graduate medical school 
outside the United States were not persons 
described in section 484(a)(5) in the year 
preceding the year for which a student is 
seeking a loan under part B of title IV; 
and 
‘‘(II) at least 60 percent of the indi-
viduals who were students or graduates of 
the graduate medical school outside the 
United States or Canada (both nationals of 
the United States and others) taking the 
examinations administered by the Edu-
cational Commission for Foreign Medical 
Graduates received a passing score in the 
year preceding the year for which a stu-
dent is seeking a loan under part B of title 
IV; or 
‘‘(ii) the institution has a clinical 
training program that was approved by a 
State as of January 1, 1992; or 
‘‘(B) in the case of a veterinary school lo-
cated outside the United States that is not a 
public or nonprofit institution, the institution’s 
students complete their clinical training at an
approved veterinary school located in the 
United States. 
‘‘(b) ADVISORY PANEL.—
‘‘(1) IN GENERAL.—For the purpose of quali-
fying a foreign medical school as an institution of 
higher education only for purposes of part B of title 
IV, the Secretary shall publish qualifying criteria by 
regulation and establish an advisory panel of medical 
experts that shall—
‘‘(A) evaluate the standards of accredita-
tion applied to applicant foreign medical 
schools; and 
‘‘(B) determine the comparability of those 
standards to standards for accreditation applied 
to United States medical schools. 
‘‘(2) FAILURE
TO
RELEASE
INFORMATION.—
The failure of an institution outside the United 
States to provide, release, or authorize release to the 
Secretary of such information as may be required by 
subsection (a)(2) shall render such institution ineli-
gible for the purpose of part B of title IV. 
‘‘(c) SPECIAL RULE.—If, pursuant to this section, an 
institution located outside the United States loses eligi-
bility to participate in the programs under part B of title 
IV, then a student enrolled at such institution may, not-
withstanding such loss of eligibility, continue to be eligible 
to receive a loan under part B of title IV while attending 
such institution for the academic year succeeding the aca-
demic year in which such loss of eligibility occurred.’’. 
(b) RESTRICTIONS
ON FUNDS
FOR FOR-PROFIT 
SCHOOLS.—Part B of title I is amended by inserting after 
section 122 (20 U.S.C. 1011k) the following new section: 
‘‘SEC. 123. RESTRICTIONS ON FUNDS FOR FOR-PROFIT 
SCHOOLS. 
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of this Act authorizing the use of funds by an insti-
tution of higher education that receives funds under this 
Act, none of the funds made available under this Act to 
a for-profit institution of higher education may be used 
for—
‘‘(1) construction, maintenance, renovation, re-
pair, or improvement of classrooms, libraries, labora-
tories, or other facilities; 
‘‘(2) establishing, improving, or increasing an 
endowment fund; or 
‘‘(3) establishing or improving an institutional 
development office to strengthen or improve con-
tributions from alumni and the private sector. 
‘‘(b) EXCEPTION.—Subsection (a) shall not apply to 
funds received by the institution from the grant, loan, or