I 
115TH CONGRESS 
1ST SESSION H. R. 2300 
To amend the Higher Education Act of 1965 to improve the determination 
of cohort default rates and provide for enhanced civil penalties, to ensure 
personal liability of owners, officers, and executives of institutions of 
higher education, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 2, 2017 
Ms. MAXINE WATERS of California (for herself, Mr. AL GREEN of Texas, Mr. 
BLUMENAUER, Ms. LEE, Mr. ELLISON, Ms. VELA´ZQUEZ, and Ms. 
SPEIER) introduced the following bill; which was referred to the Com-
mittee on Education and the Workforce 
A BILL 
To amend the Higher Education Act of 1965 to improve 
the determination of cohort default rates and provide 
for enhanced civil penalties, to ensure personal liability 
of owners, officers, and executives of institutions of high-
er education, and for other purposes. 
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 Before Prof-
its Act of 2017’’. 
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SEC. 2. IMPROVED DETERMINATION OF COHORT DEFAULT 
RATES. 
Section 435 of the Higher Education Act of 1965 (20 
U.S.C. 1085) is amended— 
(1) in subsection (a)(2), by adding at the end 
the following: 
‘‘(E)(i) In any case where the Secretary has de-
termined that the institution has engaged in default 
manipulation, the Secretary— 
‘‘(I) shall recalculate the cohort default 
rate for the institution under this section using 
corrected data and information, for all fiscal 
years for which the default manipulation has 
occurred; and 
‘‘(II) using the recalculated cohort default 
rate, shall redetermine whether the institution 
is ineligible to participate in a program under 
this title. 
‘‘(ii) In this section, the term ‘default manipu-
lation’ means engaging in a device or practice, such 
as branching, consolidation of campuses, consolida-
tion or manipulation of the identification codes used 
by the Office of Postsecondary Education to des-
ignate campuses and institutions, change of owner-
ship or control, serial forbearance, or any similar de-
vice or practice (as determined by the Secretary) 
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when, but for the device or practice, one or more 
campuses of an institution of higher education would 
be at risk of cohort default rate sanctions under this 
section or student default risk sanctions under sec-
tion 489A.’’; and 
(2) in subsection (m)(3), by striking ‘‘through 
the use of’’ and all that follows through the period 
at the end and inserting ‘‘through default manipula-
tion.’’. 
SEC. 3. CIVIL PENALTIES. 
(a) IN GENERAL.—Part G of title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1088 et seq.) is amend-
ed by inserting after section 489 the following: 
‘‘SEC. 489A. CIVIL PENALTIES AND OTHER REMEDIES. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) OFFICER OF AN INSTITUTION OF HIGHER 
EDUCATION.—The term ‘officer of an institution of 
higher education’ includes the president, chief execu-
tive officer, and chief financial officer of an institu-
tion of higher education or their equivalents. 
‘‘(2) STUDENT DEFAULT RISK.—The term ‘stu-
dent default risk’ means a risk that is reflected as 
a percentage that is calculated by taking an institu-
tion’s 3-year cohort default rate, as defined in sec-
tion 435(m), for the most recent fiscal year avail-
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able, and multiplying it by the percentage of stu-
dents enrolled at such institution receiving a Federal 
student loan authorized under this title during the 
previous academic year. 
‘‘(3) SUBSTANTIAL
MISREPRESENTATION
OR 
OTHER SERIOUS VIOLATION.—The term ‘substantial 
misrepresentation or other serious violation’ means 
either of the following: 
‘‘(A) A substantial misrepresentation re-
garding— 
‘‘(i) the nature of the educational pro-
gram of an institution of higher education; 
‘‘(ii) the financial charges of the insti-
tution; 
‘‘(iii) the space availability in a pro-
gram of the institution for which a student 
is considering enrollment; 
‘‘(iv) the admission requirements of 
the institution; 
‘‘(v) the transferability of credits from 
the institution; 
‘‘(vi) whether a program of the insti-
tution meets the necessary standards to 
qualify students to sit for licensing exami-
nations, or obtain certification required as 
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a precondition for employment, in the 
State in which the students reside; 
‘‘(vii) the passage rates of students at 
the institution in obtaining certification re-
quirements; 
‘‘(viii) the passage rates of students 
who sit for licensing examinations; or 
‘‘(ix) the employability of the grad-
uates of the institution. 
‘‘(B) A violation as follows that is deter-
mined to constitute an unfair, deceptive, or 
abusive act or practice: 
‘‘(i) A violation of section 487(a)(20). 
‘‘(ii) A violation of the default manip-
ulation regulations promulgated by the 
Secretary under section 435(m)(3). 
‘‘(iii) Failure to comply with the pro-
gram review process described in section 
498A. 
‘‘(iv) A violation of the program integ-
rity regulations promulgated by the Sec-
retary under this Act. 
‘‘(v) A violation of this Act that the 
Secretary has determined, by regulation, to 
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be a serious violation for purposes of this 
section. 
‘‘(b) SANCTIONS FOR SUBSTANTIAL MISREPRESEN-
TATIONS OR SERIOUS VIOLATIONS.— 
‘‘(1) CIVIL PENALTIES.— 
‘‘(A) IN
GENERAL.—The Secretary may 
impose a civil penalty upon an eligible institu-
tion upon making a determination, after reason-
able notice and opportunity for a hearing, that 
an eligible institution has engaged in a substan-
tial misrepresentation or other serious violation. 
‘‘(B) AMOUNT
OF
CIVIL
PENALTIES.—A 
civil penalty imposed for a violation under sub-
paragraph (A) shall be not less than $100,000 
or— 
‘‘(i) in the case of a first violation, an 
amount equal to the product of $1,000,000 
multiplied by the institution’s student de-
fault risk, whichever is larger; 
‘‘(ii) in the case of a second violation, 
an amount equal to the product of 
$2,000,000 multiplied by the institution’s 
student default risk, whichever is larger; 
and 
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‘‘(iii) in the case of a third or subse-
quent violation, an amount equal to the 
product of $3,000,000 multiplied by the in-
stitution’s student default risk, whichever 
is larger. 
‘‘(C) TREATMENT OF MULTIPLE INSTITU-
TIONS.—For the purpose of determining the 
number of violations under subparagraph (B), 
any violation by a particular institution will ac-
crue against all identification codes used by the 
Office of Postsecondary Education to designate 
campuses and institutions affiliated with the in-
stitution, and within the period of participation 
for the institution, as defined in section 
668.13(b) of title 34, Code of Federal Regula-
tions, or any successor regulation. 
‘‘(c) SANCTIONS FOR OTHER VIOLATIONS OF THIS 
TITLE.—Upon determination, after reasonable notice and 
opportunity for a hearing, that an eligible institution has 
engaged in a violation of any other provision of this title, 
including the failure to carry out any provision of this 
title, that is not a significant misrepresentation or other 
serious violation, the Secretary may impose a civil penalty 
upon such institution of not more than $100,000 (subject 
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to such adjustments for inflation as may be prescribed in 
regulation) for each such violation. 
‘‘(d) CIVIL PENALTIES AND SANCTIONS FOR OFFI-
CERS OF INSTITUTIONS.—Upon determination, after rea-
sonable notice and an opportunity for a hearing, that an 
officer of an institution of higher education that partici-
pates in a program under this title has knowingly and will-
fully, or with gross negligence, violated a provision of this 
title, the Secretary may sanction the officer. Such sanc-
tions may include the following: 
‘‘(1) Prohibiting the institution of higher edu-
cation that has employed the officer of an institution 
of higher education and that participates in a pro-
gram under this title, or any other institution of 
higher education that participates in a program 
under this title, from employing the officer, except 
that any such prohibition under this subsection shall 
not be for a period of more than 5 years from the 
date of the determination of the violation. 
‘‘(2) Assessing a civil penalty against an officer 
of an institution of higher education who has know-
ingly and willfully, or with gross negligence, violated 
a provision of this title, except that any such civil 
penalty under this subsection shall not be greater 
than the amount of the officer’s compensation for 
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each year for which the violations are determined to 
have occurred. For purposes of this paragraph, an 
officer’s compensation shall include proceeds of any 
sales of stock and any incentive-based compensation 
(including stock options awarded as compensation) 
based on information required to be reported to the 
Secretary or any other Federal agency during the 
period in which the violations are determined to have 
occurred. 
‘‘(e) LIMITATION, SUSPENSION, OR TERMINATION OF 
ELIGIBILITY STATUS.— 
‘‘(1) IN GENERAL.—Upon determination, after 
reasonable notice and opportunity for a hearing, that 
an eligible institution has engaged in a violation of 
any provision of this title (including the failure to 
carry out any provision of this title or any regulation 
prescribed under such provision) or a violation of 
any applicable special arrangement, agreement, or 
limitation, the Secretary may limit, suspend, or ter-
minate the participation in any program under this 
title of an eligible institution, subject to the require-
ments of paragraph (2). 
‘‘(2) SUSPENSION PROCEDURES.—No period of 
suspension under this section shall exceed 60 days 
unless the institution and the Secretary agree to an 
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extension or unless limitation or termination pro-
ceedings are initiated by the Secretary within that 
period of time. 
‘‘(f) EMERGENCY ACTION.— 
‘‘(1) IN GENERAL.—The Secretary may take an 
emergency action against an institution, under which 
the Secretary shall, effective on the date on which a 
notice and statement of the basis of the action is 
mailed to the institution (by registered mail, return 
receipt requested), withhold funds from the institu-
tion or its students and withdraw the institution’s 
authority to obligate funds under any program 
under this title, if the Secretary— 
‘‘(A) receives information, determined by 
the Secretary to be reliable, that the institution 
is violating any provision of this title, any regu-
lation prescribed under this title, or any appli-
cable special arrangement, agreement, or limita-
tion; 
‘‘(B) determines that immediate action is 
necessary to prevent misuse of Federal funds; 
and 
‘‘(C) determines that the likelihood of loss 
outweighs the importance of the procedures pre-
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scribed in subsection (e) for limitation, suspen-
sion, or termination. 
‘‘(2) TIME LIMITATION.—An emergency action 
described in paragraph (1) shall not exceed 30 days 
unless limitation, suspension, or termination pro-
ceedings are initiated by the Secretary against the 
institution within that period of time. 
‘‘(3) OPPORTUNITY TO SHOW CAUSE.—The Sec-
retary shall provide an institution that is the subject 
of an emergency action under this subsection an op-
portunity to show cause, if the institution so re-
quests, that the emergency action is unwarranted 
and should be lifted. 
‘‘(g) LIFTING OF SANCTIONS.—Notwithstanding any 
other provision of this title, an institution of higher edu-
cation that has been sanctioned by the Secretary under 
this section or any other provision of this title may not 
have such sanctions lifted until the Secretary has con-
ducted a subsequent program review under section 498A 
and has found the institution to be in compliance with this 
title. 
‘‘(h) SINGLE COURSE OF CONDUCT; COMPROMISE 
AUTHORITY.— 
‘‘(1) SAME
COURSE
OF
CONDUCT.—For pur-
poses of this section, acts and omissions relating to 
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a single course of conduct shall be treated as a sin-
gle violation. 
‘‘(2) COMPROMISE AUTHORITY.—Any civil pen-
alty under this section may be compromised by the 
Secretary. In determining the amount of such pen-
alty, or the amount agreed upon in compromise, the 
Secretary shall consider— 
‘‘(A) the appropriateness of the penalty to 
the size of the institution of higher education 
subject to the determination; and 
‘‘(B) the gravity of the violation, failure, or 
misrepresentation. 
‘‘(i) COLLECTION OF PENALTY.—The amount of any 
penalty under this section may be deducted from any sums 
owing by the United States to the institution charged. 
‘‘(j) DISPOSITION OF AMOUNTS RECOVERED.— 
‘‘(1) USE FOR STUDENT RELIEF FUND.—For 
each fiscal year, an amount equal to 100 percent of 
the amounts recovered or collected under this section 
shall be deposited into the Student Relief Fund es-
tablished under subsection (k). 
‘‘(2) REPORT.—The Secretary shall regularly 
publish, on the Web site of the Department, a de-
tailed description that includes the amount of funds 
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that were used for the Student Relief Fund under 
paragraph (1). 
‘‘(k) STUDENT RELIEF FUND.— 
‘‘(1) ESTABLISHMENT.—The Secretary shall es-
tablish a Student Relief Fund (referred to in this 
subsection as the ‘Fund’) that shall be used, subject 
to the availability of funds, to provide financial relief 
to any student enrolled in an institution of higher 
education that— 
‘‘(A) has failed to comply with an eligi-
bility requirement under section 101 or 102 or 
an obligation incurred under the terms of the 
program participation agreement under section 
487; or 
‘‘(B) has been sanctioned under subsection 
(b) or (c). 
‘‘(2) 
TREATMENT
AND
AVAILABILITY
OF 
FUNDS.— 
‘‘(A) FUNDS THAT ARE NOT GOVERNMENT 
FUNDS.—Funds obtained by or transferred to 
the Fund shall not be construed to be Govern-
ment funds or appropriated monies. 
‘‘(B) AMOUNTS NOT SUBJECT TO APPOR-
TIONMENT.—Notwithstanding any other provi-
sion of law, amounts in the Fund shall not be 
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subject to apportionment for purposes of chap-
ter 15 of title 31, United States Code, or under 
any other authority. 
‘‘(C) NO FISCAL YEAR LIMITATION.—Sums 
deposited in the Fund shall remain in the Fund 
and be available for expenditure under this sub-
section without fiscal year limitation. 
‘‘(3) INVESTMENTS.— 
‘‘(A) AMOUNTS
IN
FUND
MAY
BE
IN-
VESTED.—The Secretary of Education may re-
quest the Secretary of the Treasury to invest 
the portion of the Fund that is not, in the dis-
cretion of the Secretary of Education, required 
to meet the current needs of the Fund. 
‘‘(B) 
ELIGIBLE
INVESTMENTS.—Invest-
ments shall be made by the Secretary of the 
Treasury in obligations of the United States or 
obligations that are guaranteed as to principal 
and interest by the United States, with matu-
rities suitable to the needs of the Fund as de-
termined by the Secretary on the record. 
‘‘(C) INTEREST
AND
PROCEEDS
CRED-
ITED.—The interest on, and the proceeds from 
the sale or redemption of, any obligations held 
in the Fund shall be credited to the Fund. 
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‘‘(4) REGULATIONS.—The Secretary shall pre-
scribe regulations to implement the requirements of 
this section within 1 year after the date of enact-
ment of the Students Before Profits Act of 2017. 
‘‘(5) AUTHORIZATION OF APPROPRIATIONS.—In 
addition to funds derived from financial penalties as-
sessed pursuant to subsection (j), there are author-
ized to be appropriated such sums as may be nec-
essary to carry out this subsection for fiscal year 
2017 and each of the 5 succeeding fiscal years. 
‘‘(l) STATE ENFORCEMENT.— 
‘‘(1) IN GENERAL.—Any violation of subsection 
(b), including the regulations promulgated under 
such subsection, shall be a cause of action enforce-
able by the State, through the attorney general (or 
the equivalent thereof) of the State, in any district 
court of the United States in that State or in a 
State court that is located in that State and that 
has jurisdiction over the defendant. The State may 
seek any relief provided under paragraph (4)(B) for 
such violation, or any remedies otherwise provided 
under law. 
‘‘(2) NOTICE REQUIRED.— 
‘‘(A) IN GENERAL.—Before initiating any 
action in a court or other administrative or reg-
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ulatory proceeding against any institution of 
higher education as authorized by paragraph 
(1) to enforce any provision of this subsection, 
including any regulation promulgated by the 
Secretary under this subsection, a State attor-
ney general shall timely provide a copy of the 
complete complaint to be filed and written no-
tice describing such action or proceeding to the 
Secretary, except as provided in subparagraph 
(B). 
‘‘(B) EMERGENCY ACTION.—If prior notice 
is not practicable, the State attorney general 
shall provide a copy of the complete complaint 
and the notice to the Secretary immediately 
upon instituting the action or proceeding. 
‘‘(C) CONTENTS OF NOTICE.—The notifi-
cation required under this paragraph shall, at a 
minimum, describe— 
‘‘(i) the identity of the parties; 
‘‘(ii) the alleged facts underlying the 
proceeding; and 
‘‘(iii) whether there may be a need to 
coordinate the prosecution of the pro-
ceeding so as not to interfere with any ac-
tion, including any rulemaking, undertaken 
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