I 
116TH CONGRESS 
1ST SESSION H. R. 4724 
To amend the Higher Education Act of 1965 to make for-profit institutions 
ineligible for Federal student aid and to protect the integrity of nonprofit 
institutions of higher education. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 17, 2019 
Ms. JAYAPAL (for herself, Ms. BARRAGA´N, Mr. BLUMENAUER, Mr. GARCI´A of 
Illinois, Ms. GARCIA of Texas, Ms. OMAR, Ms. PRESSLEY, and Ms. 
TLAIB) introduced the following bill; which was referred to the Committee 
on Education and Labor 
A BILL 
To amend the Higher Education Act of 1965 to make for- 
profit institutions ineligible for Federal student aid and 
to protect the integrity of nonprofit institutions of higher 
education. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Students Not Profits 
Act of 2019’’. 
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SEC. 2. DEFINITION OF INSTITUTION OF HIGHER EDU-
CATION. 
The Higher Education Act of 1965 (20 U.S.C. 1001 
et seq.) is amended— 
(1) in section 101— 
(A) in subsection (a), in the matter pre-
ceding paragraph (1), by striking ‘‘other than 
title IV,’’; 
(B) in subsection (b)— 
(i) in the matter preceding paragraph 
(1), by striking ‘‘other than title IV,’’; 
(ii) in paragraph (1), by striking 
‘‘and’’ after the semicolon; 
(iii) in paragraph (2)(B), by striking 
the period at the end and inserting a semi-
colon; and 
(iv) by adding at the end the fol-
lowing: 
‘‘(3) a public, nonprofit postsecondary voca-
tional institution; and 
‘‘(4) only for the purposes of part D of title IV, 
an institution outside the United States that is com-
parable to an institution of higher education, as de-
fined in subsection (a), and that has been approved 
by the Secretary for the purpose of part D of title 
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IV, consistent with the requirements of section 
452(d).’’; 
(C) in subsection (c), by striking ‘‘and sec-
tion 102’’; and 
(D) by adding at the end the following: 
‘‘(d) REQUIREMENTS OF COURSES OF STUDY AND 
ENROLLMENT.—An institution shall be considered to meet 
the definition of an institution of higher education in sub-
section (a) or (b) only if such institution— 
‘‘(1) limits enrollment of students in distance 
education courses offered by the institution to not 
more than 50 percent of all students enrolled in the 
institution, unless the institution is a public or non-
profit technical institution or career and technical 
education school, as described in section 3(3)(C) of 
the Carl D. Perkins Career and Technical Education 
Act of 2006; 
‘‘(2) limits enrollment of students who are in-
carcerated to not more than 25 percent of all stu-
dents enrolled in the institution; 
‘‘(3) limits enrollment of students who do not 
have a secondary school diploma or its recognized 
equivalent to not more than 50 percent of all stu-
dents enrolled in the institution; and 
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‘‘(4) if the institution offers an education or 
training program that leads to a certificate, or other 
nondegree recognized credential and funds available 
under title IV for students are used for enrollment 
in such education or program, ensures that such 
education or program prepares students for gainful 
employment in a recognized occupation. 
‘‘(e) LIMITATIONS BASED ON MANAGEMENT.—An in-
stitution shall not be considered to meet the definition of 
an institution of higher education in subsection (a) or (b) 
if such institution— 
‘‘(1) the institution, or an affiliate of the insti-
tution that has the power, by contract or ownership 
interest, to direct or cause the direction of the man-
agement or policies of the institution, has filed for 
bankruptcy; or 
‘‘(2) the institution, the institution’s owner, the 
institution’s chief executive officer, or any other ex-
ecutive officer of the institution— 
‘‘(A) has been convicted of, or has pled 
nolo contendere or guilty to, a crime involving 
the acquisition, use, or expenditure of funds 
under title IV; 
‘‘(B) has been determined to have com-
mitted fraud, substantial misrepresentation, or 
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false certification involving funds under title IV; 
or 
‘‘(C) has been previously employed at an 
institution receiving funds under title IV that 
closed. 
‘‘(f) CERTIFICATION.—The Secretary shall certify an 
institution’s qualification as an institution of higher edu-
cation in accordance with the requirements of subpart 3 
of part H of title IV. 
‘‘(g) LOSS OF ELIGIBILITY.—An institution of higher 
education shall not be considered to meet the definition 
of an institution of higher education in subsection (a) or 
(b) 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. 
‘‘(h) POSTSECONDARY VOCATIONAL INSTITUTION.— 
‘‘(1) PRINCIPAL CRITERIA.—For the purpose of 
this section, the term ‘postsecondary vocational insti-
tution’ means a school that— 
‘‘(A) provides an eligible program of train-
ing to prepare students for gainful employment 
in a recognized occupation; 
‘‘(B) meets the requirements of paragraphs 
(1), (2), (4), and (5) of subsection (a); and 
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‘‘(C) has been in existence for at least 2 
years. 
‘‘(2) ADDITIONAL
INSTITUTIONS.—The term 
‘postsecondary vocational institution’ also includes 
an educational institution in any State that, in lieu 
of the requirement in subsection (a)(1), admits as 
regular students individuals— 
‘‘(A) who are beyond the age of compul-
sory school attendance in the State in which the 
institution is located; or 
‘‘(B) who will be dually or concurrently en-
rolled in the institution and a secondary school. 
‘‘(i) INSTITUTION OUTSIDE THE UNITED STATES.— 
‘‘(1) IN GENERAL.—For the purpose of quali-
fying as an institution under subsection (b)(4), the 
Secretary shall establish criteria by regulation for 
the approval of institutions outside the United 
States and for the determination that such institu-
tions are comparable to an institution of higher edu-
cation, as defined in subsection 101(a) (except that 
a graduate medical school, nursing school, or a vet-
erinary school, located outside the United States 
shall not be required to meet the requirements of 
subsection (a)(4)). Such criteria shall include a re-
quirement that a student attending such school out-
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‘‘(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 
paragraph (1) shall render such institution ineligible 
for the purpose of part D of title IV. 
‘‘(3) SPECIAL RULE.—If, pursuant to this sub-
section, an institution loses eligibility to participate 
in the programs under title IV, then a student en-
rolled in such institution may, notwithstanding such 
loss of eligibility, continue to be eligible to receive a 
loan under part D of title IV while attending such 
institution for the academic year succeeding the aca-
demic year in which such loss of eligibility oc-
curred.’’; 
(2) by striking section 102; and 
(3) by redesignating section 103 as section 102. 
SEC. 3. REPEAL OF EXISTING REFERENCES TO PROPRI-
ETARY INSTITUTIONS. 
Section 487 of the Higher Education Act of 1965 (20 
U.S.C. 1094) is amended— 
(1) in subsection (a)— 
(A) by striking paragraph (24); 
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(B) by redesignating paragraphs (25) 
through (29) as paragraphs (24) through (28), 
respectively; 
(C) in paragraph (24)(A)(ii) (as redesig-
nated by subparagraph (B)), by striking ‘‘sub-
section (e)’’ and inserting ‘‘subsection (d)’’; and 
(D) in paragraph (26) (as redesignated by 
subparagraph (B)), by striking ‘‘subsection (h)’’ 
and inserting ‘‘subsection (g)’’; 
(2) by striking subsection (d); 
(3) by redesignating subsections (e) through (j) 
as subsections (d) through (i), respectively; 
(4) in subsection (f)(1) (as redesignated by 
paragraph (3)), by striking ‘‘subsection (e)(2)’’ and 
inserting ‘‘subsection (d)(2)’’; and 
(5) in subsection (g)(1) (as redesignated by 
paragraph (3)), by striking ‘‘subsection (a)(27)’’ in 
the matter preceding subparagraph (A) and insert-
ing ‘‘subsection (a)(26)’’. 
SEC. 4. CONFORMING AMENDMENTS. 
The Higher Education Act of 1965 (20 U.S.C. 1001 
et seq.) is amended— 
(1) in section 102, as redesignated by sub-
section (a)(3), in paragraph (5)(B), by striking ‘‘(as 
such term is defined in section 102)’’; 
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(2) in section 114— 
(A) in subsection (a), by striking ‘‘(as de-
fined in section 102)’’; and 
(B) in subsection (b)(2)(B), by striking 
‘‘(as defined in section 102)’’; 
(3) in section 133(b)— 
(A) by striking paragraph (5); and 
(B) 
by 
redesignating 
paragraphs 
(6) 
through (9) as paragraphs (5) through (8), re-
spectively; 
(4) in section 151(2), by striking ‘‘, as such 
term in defined in section 102,’’; 
(5) in section 152— 
(A) in subsection (a)(1)(A), by striking 
‘‘subsections (a)(27) and (h) of section 487’’ 
and inserting ‘‘subsections (a)(26) and (g) of 
section 487’’; and 
(B) in subsection (b)(1)(B)(i)(I), by strik-
ing ‘‘section 487(e)’’ and inserting ‘‘section 
487(d)’’; 
(6) in section 153(c)(3), by striking ‘‘section 
487(a)(25)’’ each place the term appears and insert-
ing ‘‘section 487(a)(24)’’; 
(7) in section 420L(1), by striking ‘‘, as defined 
in section 102,’’; 
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(8) in section 435(a)(1), by striking ‘‘, as de-
fined in section 102,’’; 
(9) section 486(b)— 
(A) in paragraph (2), by striking ‘‘sections 
102(a)(3)(A), 102(a)(3)(B)’’; 
(B) in paragraph (3)(B), by striking ‘‘sec-
tion 102(a)(1)(C)’’ and inserting ‘‘section 
101(b)(4)’’; and 
(C) in paragraph (3)(C), by striking ‘‘an 
institution of higher education that meets the 
requirements of subsection (a) of section 102, 
other than the requirement of paragraph (3)(A) 
or (3)(B) of such subsection,’’ and inserting 
‘‘an institution of higher education that meets 
the requirements of section 101, other than the 
requirement of section 101(e)(1)(A),’’; 
(10) in section 487— 
(A) in subsection (c)(1)(A)(iii), by striking 
‘‘section 102(a)(1)(C)’’ and inserting ‘‘section 
101(b)(4)’’; and 
(B) in subsection (i)— 
(i) by striking paragraph (4); and 
(ii) by redesignating paragraphs (5) 
and (6) as paragraphs (4) and (5), respec-
tively; 
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(11) in section 491(l)(2)(A), by striking ‘‘sec-
tion 
102(a)(1)(C)’’ 
and 
inserting 
‘‘section 
101(b)(4)’’; 
(12) in section 496— 
(A) in subsection (c)(3)(A), by striking 
‘‘section 
487(f)’’ 
and 
inserting 
‘‘section 
487(e)’’; 
(B) in subsection (j), by striking ‘‘section 
102’’ and inserting ‘‘section 101’’; and 
(C) in subsection (k), by striking ‘‘section 
102’’ and inserting ‘‘section 101’’; 
(13) in section 498— 
(A) in subsection (g)(3), by striking ‘‘sec-
tion 102(a)(1)(C)’’ and inserting ‘‘section 
101(b)(4)’’; 
(B) in subsection (i), by striking ‘‘section 
102’’ and inserting ‘‘section 101’’; 
(C) in subsection (j), by striking ‘‘sections 
102(b)(1)(E) and 102(c)(1)(C)’’ and inserting 
‘‘section 101(i)(1)(C)’’; and 
(D) in subsection (k)— 
(i) in paragraph (1), by striking ‘‘sec-
tion 
487(f)’’ 
and 
inserting 
‘‘section 
487(e)’’; and 
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the Internal Revenue Code of 1986 and is exempt 
from taxation under section 501(a) of such Code. 
‘‘(5) Subject to subsection (c), that none of the 
core functions of the institution of higher education 
are under the control of, or subject to significant di-
rection from, an entity that is not a public institu-
tion of higher education or other nonprofit entity. 
‘‘(c) PRESUMPTION OF SIGNIFICANT DIRECTION.— 
For purposes of subsection (b)(5), in the case of an insti-
tution, there shall be a conclusive presumption that an en-
tity (other than such institution) exercises significant di-
rection over such institution if one or more of the employ-
ees or owners of the entity serves as an officer, member 
of the board, or person holding similar authority for such 
institution. 
‘‘(d) TRANSITION PERIOD.—In the case of an institu-
tion of higher education approved for conversion under 
subsection (a), such institution shall be subject to any 
rules and regulations that apply to proprietary institutions 
of higher education, as defined in section 102(b), for a 
minimum of 5 years. 
‘‘(e) VALUE.—The term ‘value’, with respect to an 
acquisition under subsection (b)(2)— 
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‘‘(1) includes the value of any ongoing relation-
ship (including any contract, agreement, lease or 
other arrangement); 
‘‘(2) subject to paragraph (3), may be dem-
onstrated through— 
‘‘(A) a third-party appraisal based on com-
parable assets acquired by, or goods or services 
procured by, nonprofit corporations in similar 
market conditions; 
‘‘(B) an independent financing of the ac-
quisition based upon the assets acquired; or 
‘‘(C) a full and open competition in the ac-
quisition of services or assets, as such term is 
defined in section 2.101(b) of title 48, Code of 
Federal Regulations, as in effect on the date of 
the enactment of this section; and 
‘‘(3) shall be subject to such other demonstra-
tion process determined appropriate by the Secretary 
in a case in which the Secretary does not accept a 
demonstration process described in paragraph (2). 
‘‘(f) PUBLICATION.— 
‘‘(1) APPLICATION.—Before the Secretary may 
approve the conversion of an institution of higher 
education under subsection (a), the application of 
such institution submitted to the Secretary under 
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subsection (b) shall be published in the Federal Reg-
ister with an appropriate notice and comment pe-
riod. 
‘‘(2) DETERMINATION.—The Secretary shall 
publish each determination under this section, and 
the reasons for such determination, under the Fed-
eral Register. 
‘‘(g) PUBLIC REPRESENTATION AND MARKETING OF 
NONPROFIT STATUS.—An institution of higher education 
shall not promote or market itself, in any manner, as a 
nonprofit institution of higher education unless— 
‘‘(1) in the case of an institution of higher edu-
cation that seeks to convert to a nonprofit institu-
tion of higher education under this section— 
‘‘(A) the Secretary has given final approval 
of the conversion of the institution to a non-
profit institution of higher education under this 
section; 
‘‘(B) an accrediting agency or association 
recognized by the Secretary pursuant to section 
496 has approved the nonprofit status of the 
institution; and 
‘‘(C) the State has given final approval to 
the institution as a nonprofit institution of 
higher education, as applicable; and 
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‘‘(2) the Commissioner of Internal Revenue has 
approved the institution as tax exempt for purposes 
of the Internal Revenue Code of 1986. 
‘‘(h) OFFICE
TO
MONITOR
NONPROFIT
INTEG-
RITY.—Not later than 1 year after the date of enactment 
of the Students Not Profits Act of 2019, the Secretary 
shall establish an office within the Department with the 
expertise necessary to carry out this section. 
‘‘SEC. 125. REVIEW OF GOVERNANCE. 
‘‘The Secretary shall review the governance of an in-
stitution of higher education when such institution has en-
gaged in transactions or arrangements determined by the 
Secretary as potential indicators of private inurement, in 
order to promote the highest standards of nonprofit integ-
rity.’’. 
Æ 
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