SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Advancing Com-
petency-Based Education Demonstration Project Act of 
2014’’. 
SEC. 2. COMPETENCY-BASED EDUCATION DEMONSTRATION 
PROJECTS. 
(a) PROJECTS.—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 486A the following: 
‘‘SEC. 486B. COMPETENCY-BASED EDUCATION DEMONSTRA-
TION PROJECTS. 
‘‘(a) DEMONSTRATION PROJECTS AUTHORIZED.— 
The Secretary shall select, in accordance with subsection 
(c), eligible entities to voluntarily carry out competency- 
based education demonstration projects and receive waiv-
ers described in subsection (d) to carry out such projects. 
‘‘(b) APPLICATION.— 
‘‘(1) IN GENERAL.—Each eligible entity desir-
ing to carry out a demonstration project under this 
section shall submit an application to the Secretary, 
at such time and in such manner as the Secretary 
may require. 
‘‘(2) OUTREACH.—The Secretary shall, prior to 
any deadline to submit applications under paragraph 
(1), conduct outreach to historically Black colleges 
and universities, Hispanic-serving institutions, Na-
tive American-serving, nontribal institutions, institu-
tions serving students with special needs, and insti-
tutions located in rural areas to provide those insti-
tutions with information on the opportunity to apply 
to carry out a demonstration project under this sec-
tion. 
‘‘(3) AMENDMENTS.— 
‘‘(A) IN GENERAL.—An eligible entity that 
has been selected to carry out a demonstration 
project under this section may submit to the 
Secretary amendments to the eligible entity’s 
approved application under paragraph (1), at 
such time and in such manner as the Secretary 
may require, which the Secretary shall approve 
or deny within 15 days of receipt. 
‘‘(B) 
EXPANDING
ENROLLMENT.—Not-
withstanding the assurance required with re-
spect to maximum enrollment under paragraph 
(3)(H)— 
‘‘(i) an eligible entity whose dem-
onstration project has been evaluated 
under subsection (f)(2) not less than twice 
may submit to the Secretary an amend-
ment to the eligible entity’s application 
under paragraph (1) to increase enrollment
in the project to more than 3,000 students, 
but not more than 5,000 students, and 
which shall specify— 
‘‘(I) the proposed maximum en-
rollment or annual enrollment growth 
for the project; 
‘‘(II) how the eligible entity will 
successfully carry out the project with 
such maximum enrollment or enroll-
ment growth; and 
‘‘(III) any other amendments to 
the eligible entity’s application under 
paragraph (1) that are related to such 
maximum enrollment or enrollment 
growth; and 
‘‘(ii) the Secretary shall determine 
whether to approve or deny an amendment 
submitted under clause (i) for a dem-
onstration project based on the project’s 
evaluations under subsection (f)(2). 
‘‘(4) CONTENTS.—Each application shall in-
clude— 
‘‘(A) a description of the competency-based 
education to be offered by the eligible entity 
under the demonstration project;
‘‘(B) a description of the proposed aca-
demic delivery, business, and financial models 
for the demonstration project, including expla-
nations of how competency-based education of-
fered under the demonstration project would— 
‘‘(i) result in the achievement of com-
petencies; 
‘‘(ii) differ from standard credit hour 
approaches, in whole or in part; and 
‘‘(iii) result in lower costs or short-
ened time to degree, certificate, or creden-
tial completion; 
‘‘(C) a description of how the competency- 
based education offered under the demonstra-
tion project will progress a student toward com-
pletion of a degree, certificate, or credential; 
‘‘(D) a description of how the eligible enti-
ty will articulate the transcript from the com-
petency-based education demonstration project 
to another program within an institution of 
higher education that is part of the eligible enti-
ty or to another institution of higher education; 
‘‘(E) a description of the statutory and 
regulatory requirements described in subsection 
(d) for which the eligible entity is seeking a
waiver, and why such waiver is necessary to 
carry out the demonstration project; 
‘‘(F) a description of how the eligible enti-
ty will develop and evaluate the competencies 
and assessments of student knowledge (which 
may include prior-learning assessments) admin-
istered as part of the demonstration project, in-
cluding how such competencies and assessments 
are aligned with workforce needs; 
‘‘(G) a description of the proposal for de-
termining a student’s Federal student aid eligi-
bility under this title for participating in the 
demonstration project, the award and distribu-
tion of such aid, and safeguards to ensure that 
students are making satisfactory progress that 
warrants disbursement of such aid; 
‘‘(H) a description of the students to 
whom competency-based education will be of-
fered, including an assurance that the dem-
onstration project will enroll a minimum of 50 
and a maximum of 3,000 students; 
‘‘(I) an assurance that students partici-
pating in the demonstration project will not be 
eligible for more Federal assistance under this
title than such students would have been eligi-
ble for under a traditional program; 
‘‘(J) an assurance the eligible entity will 
identify and disseminate best practices with re-
spect to the demonstration project to other eli-
gible entities carrying out a demonstration 
project under this section; and 
‘‘(K) A description of the population of 
students served by the eligible entity that are 
veterans or members of the Armed Forces and 
how such eligible entity will, when appropriate, 
incorporate the specific needs of such popu-
lation when carrying out the demonstration 
project. 
‘‘(c) SELECTION.— 
‘‘(1) IN GENERAL.—Not later than 6 months 
after the date of enactment of this section, the Sec-
retary shall select not more than 30 eligible entities 
to carry out a competency-based education dem-
onstration project under this section. 
‘‘(2) CONSIDERATIONS.—In selecting eligible 
entities under paragraph (1), the Secretary shall— 
‘‘(A) prioritize projects which show prom-
ise in reducing the time or cost required to 
complete a degree, certificate, or credential;
‘‘(B) consider the number and quality of 
applications received; 
‘‘(C) consider an eligible entity’s— 
‘‘(i) ability to successfully execute the 
demonstration project as described in the 
eligible entity’s application under sub-
section (b); 
‘‘(ii) commitment and ability to effec-
tively finance the demonstration project; 
‘‘(iii) ability to provide administrative 
capability and the expertise to evaluate 
student progress based on measures other 
than credit hours or clock hours; and 
‘‘(iv) commitment to work with the 
Secretary to evaluate the demonstration 
project and the impact of the demonstra-
tion project; 
‘‘(D) ensure the selection of a diverse 
group of eligible entities with respect to size, 
mission, and geographic distribution of the eli-
gible entities; 
‘‘(E) not limit the types of programs of 
study or courses of study approved for partici-
pation in a demonstration project; and
‘‘(F) not select an eligible entity that has 
had, for 1 of the preceding 2 fiscal years— 
‘‘(i) a cohort default rate (defined in 
section 435(m)) that is 30 percent or 
greater; and 
‘‘(ii) a borrowing rate of loans under 
this title of more than 50 percent of the 
students enrolled at institutions of higher 
education of the eligible entity. 
‘‘(d) WAIVERS.—The Secretary may waive for any el-
igible entity selected to carry out a demonstration project 
under this section any requirements of the following provi-
sions of law (including any regulations promulgated under 
such provisions) or regulations and for which the eligible 
entity has provided a reason for waiving under subsection 
(b)(3)(E): 
‘‘(1) Subparagraphs (A) and (B) of section 
102(a)(3). 
‘‘(2) Subsections (a) and (b) of section 481, as 
such subsections relate to requirements for a min-
imum number of weeks of instruction. 
‘‘(3) Section 484(l)(1). 
‘‘(4) Section 668.32(a)(1)(iii) of title 34, Code 
of Federal Regulations.
‘‘(5) Any of the requirements under provisions 
in title I, part F of this title, or this part, that in-
hibit the operation of competency-based education, 
including requirements with respect to— 
‘‘(A) documenting attendance; 
‘‘(B) weekly academic activity; 
‘‘(C) minimum weeks of instructional time; 
‘‘(D) requirements for credit hour or clock 
hour equivalencies; 
‘‘(E) requirements for substantive inter-
action with faculty; and 
‘‘(F) definitions of the terms ‘academic 
year’, ‘full-time student’, ‘term’ (including 
‘standard term’, ‘non-term’, and ‘non-standard 
term’), ‘satisfactory academic progress’, ‘edu-
cational activity’, ‘project of study’, and ‘pay-
ment period’. 
‘‘(e) NOTIFICATION.—Not later than 6 months after 
the date of enactment of this section, the Secretary shall 
make available to the authorizing committees and the pub-
lic a list of eligible entities selected to carry out a dem-
onstration project under this section, which shall include 
for each such eligible entity— 
‘‘(1) the specific statutory and regulatory re-
quirements being waived under subsection (d); and
‘‘(2) a description of the competency-based edu-
cation programs of study or courses of study to be 
offered under the project. 
‘‘(f) INFORMATION AND EVALUATION.— 
‘‘(1) INFORMATION.— 
‘‘(A) IN
GENERAL.—Each eligible entity 
that carries out a demonstration project under 
this section shall provide to the Director of the 
Institute of Education Sciences with respect to 
the students participating in the competency- 
based education project carried out by the eligi-
ble entity the following information: 
‘‘(i) The average number of credit 
hours the students earned prior to enroll-
ment in the demonstration project, if appli-
cable. 
‘‘(ii) The number and percentage of 
students participating in the demonstration 
project that are also enrolled in programs 
of study or courses of study offered in 
credit hours or clock hours, disaggregated 
by student status as a first-year, second- 
year, third-year, fourth-year, or other stu-
dent.
‘‘(iii) The average period of time be-
tween the enrollment of a student in the 
demonstration project and the first assess-
ment of student knowledge of such stu-
dent. 
‘‘(iv) The average time to 25 percent, 
50 percent, 75 percent, and 100 percent of 
the completion of a degree, certificate, or 
credential by a student who participated in 
the demonstration project. 
‘‘(v) The percentage of assessments of 
student knowledge that students passed on 
the first attempt, during the period of the 
participation in the demonstration project 
by the students. 
‘‘(vi) The percentage of assessments 
of student knowledge that students passed 
on the second attempt and the average pe-
riod of time between the first and second 
attempts by students, during the period of 
the participation in the demonstration 
project by the students. 
‘‘(vii) The average number of com-
petencies a student acquired while partici-
pating in the demonstration project and
the period of time during which the stu-
dent acquired such competencies. 
‘‘(viii) Such other information as the 
Director may reasonably require. 
‘‘(B) EMPLOYMENT DATA.— 
‘‘(i) IN GENERAL.—Each eligible enti-
ty that carries out a demonstration project 
under this section may provide to the Di-
rector of the Institute of Education 
Sciences with respect to the students par-
ticipating in the competency-based edu-
cation project carried out by the eligible 
entity the number and percentage of stu-
dents completing a competency-based edu-
cation program or course of study offered 
by such eligible entity who find employ-
ment in a field related to the program or 
course of study of such students. 
‘‘(ii) TECHNICAL
ASSISTANCE.—The 
Director of the Institute of Education 
Sciences shall, at the request of an eligible 
entity, provide technical assistance to such 
eligible entity to assist such eligible entity 
in collecting and reporting accurate infor-
mation relating to the employment of stu-
dents participating in a competency-based 
education project carried out by such eligi-
ble entity. 
‘‘(C) DISAGGREGATION.—Each eligible en-
tity shall provide the information required 
under subparagraph (A) disaggregated by age, 
race, gender, disability status, and status as a 
recipient of a Federal Pell Grant, provided that 
the disaggregation of the information does not 
identify any individual student participating in 
the demonstration project. 
‘‘(2) EVALUATION.—The Director of the Insti-
tute of Education Sciences, in consultation with the 
Secretary, shall annually evaluate each demonstra-
tion project under this section. Each evaluation shall 
include— 
‘‘(A) the extent to which the eligible entity 
has met the goals set forth in its application to 
the Secretary; 
‘‘(B) the number and types of students 
participating in the competency-based education 
offered 
under 
the 
project, 
including 
the 
progress of participating students toward com-
pletion of a degree, certificate, or credential,
and the extent to which participation and reten-
tion in such project increased; 
‘‘(C) whether the project led to reduced 
cost or time to completion of a degree, certifi-
cate, or credential, and the amount of cost or 
time reduced for such completion; 
‘‘(D) obstacles related to student financial 
assistance for competency-based education; 
‘‘(E) the extent to which statutory or regu-
latory requirements not waived under sub-
section (d) present difficulties for students or 
institutions of higher education; 
‘‘(F) degree, certificate, or credential com-
pletion rates; 
‘‘(G) retention rates; 
‘‘(H) total cost and net cost to the student 
of the competency-based education offered 
under the project; 
‘‘(I) a description of the assessments of 
student knowledge and the corresponding com-
petencies; and 
‘‘(J) outcomes of the assessments of stu-
dent knowledge.
‘‘(3) ANNUAL
REPORT.—The Director of the 
Institute of Education Sciences shall annually pro-
vide to the authorizing committees a report on— 
‘‘(A) the evaluations of the demonstration 
projects required under paragraph (2); 
‘‘(B) the number and types of students re-
ceiving assistance under this title for com-
petency-based education under such projects; 
‘‘(C) the retention and completion rates of 
students participating in such projects; 
‘‘(D) any proposed statutory or regulatory 
changes designed to support and enhance the 
expansion of competency-based education, which 
may be independent of or combined with tradi-
tional credit hour or clock hour projects; 
‘‘(E) the most effective means of delivering 
competency-based 
education 
through 
dem-
onstration projects; and 
‘‘(F) the appropriate level and distribution 
methodology of Federal assistance under this 
title for students enrolled in competency-based 
education. 
‘‘(g) OVERSIGHT.—In carrying out this section, the 
Secretary shall, on a continuing basis—
‘‘(1) assure compliance of eligible entities with 
the requirements of this title (other than the provi-
sions of law and regulations that are waived under 
subsection (d)); 
‘‘(2) provide technical assistance; 
‘‘(3) monitor fluctuations in the student popu-
lation enrolled in the eligible entities carrying out 
the demonstration projects under this section; 
‘‘(4) consult with appropriate accrediting agen-
cies or associations and appropriate State regulatory 
authorities for additional ways of improving the de-
livery of competency-based education; and 
‘‘(5) collect and disseminate to eligible entities 
carrying out a demonstration project under this sec-
tion, best practices with respect to demonstration 
projects under this section. 
‘‘(h) DISCLOSURE OF AUTHORIZATION TO SELL STU-
DENT DATA.—An eligible entity carrying out a demonstra-
tion project under this section shall ensure that each insti-
tution of higher education of the eligible entity provides 
to each student, or the parents of each minor student, en-
rolled in the institution of higher education— 
‘‘(1) a disclosure letter, which describes the per-
sonally identifiable information of the student that 
may be sold by a person with whom the institution
of higher education has an agreement to provide 
software applications for students; and 
‘‘(2) an option to opt-out of such personally 
identifiable information from being sold. 
‘‘(i) DEFINITIONS.—For the purpose of this section: 
‘‘(1) COMPETENCY-BASED
EDUCATION.—The 
term ‘competency-based education’ means an edu-
cational process or program that measures knowl-
edge, skills, and experience through assessments of 
such knowledge, skills, or experience in place of or 
in addition to the use of credit hours or clock hours. 
‘‘(2) ELIGIBLE ENTITY.—The term ‘eligible en-
tity’ means— 
‘‘(A) an institution of higher education in-
cluding an institution of higher education that 
offers a dual-enrollment program under which a 
secondary school student is able simultaneously 
to earn credit toward a secondary school di-
ploma and a postsecondary degree, certificate, 
or credential; 
‘‘(B) a system of institutions of higher 
education; or 
‘‘(C) a consortium of institutions of higher 
education.
‘‘(3) INSTITUTION OF HIGHER EDUCATION.— 
The term ‘institution of higher education’ has the 
meaning given the term in section 102, except that 
such term does not include institutions described in 
section 102(a)(1)(C).’’. 
(b) RULE OF CONSTRUCTION.—Nothing in this Act 
or the amendments made by this Act shall be construed 
to alter the authority of the Secretary of Education to es-
tablish experimental sites under any other provision of 
law. 
(c) REPORT.—The Secretary of Education shall re-
port to Congress, every 10 years, on the needs of limited 
English proficient students using the Free Application for 
Federal Student Aid. 
(d) FUNDING.— 
(1) USE OF EXISTING FUNDS.—Of the amount 
authorized to be appropriated for salaries and ex-
penses of the Department of Education, $1,000,000 
shall be available to carry out this Act and the 
amendments made by this Act. 
(2) NO ADDITIONAL FUNDS AUTHORIZED.—No 
funds are authorized to be appropriated by this Act 
to carry out this Act or the amendments made by 
this Act.
(1) REPORT
REQUIRED.—Not later than 6 
months after the date of enactment of this Act, the 
Secretary of Education shall submit to Congress and 
make available on a publicly available website a re-
port (in this section referred to as the ‘‘Higher Edu-
cation Regulatory Reform Report’’) prepared by the 
Higher Education Regulatory Reform Task Force on 
Department of Education regulatory requirements 
for institutions of higher education described in 
paragraph (2). 
(2) CONTENTS OF REPORT.—The Higher Edu-
cation Regulatory Reform Report shall contain the 
following with respect to Department of Education 
regulatory requirements for institutions of higher 
education: 
(A) A list of rules that are determined to 
be outmoded, duplicative, ineffective, or exces-
sively burdensome. 
(B) For each rule listed in accordance with 
subparagraph (A) and that is in effect at the 
time of the review under subparagraph (A), an 
analysis of whether the costs outweigh the bene-
fits for such rule.
(C) Recommendations to consolidate, mod-
ify, simplify, or repeal such rules to make such 
rules more effective or less burdensome. 
(D) A description of the justification for 
and impact of the recommendations described 
in subparagraph (C), as appropriate and avail-
able, including supporting data for such jus-
tifications and the financial impact of such rec-
ommendations on institutions of higher edu-
cation of varying sizes and types. 
(E) Recommendations on the establish-
ment of a permanent entity to review new De-
partment of Education regulatory requirements 
affecting institutions of higher education. 
(3) NOTICE AND COMMENT.—At least 30 days 
before submission of the Higher Education Regu-
latory Reform Report required under paragraph (1), 
the Secretary of Education shall publish the report 
in the Federal Register for public notice and com-
ment. The Higher Education Regulatory Reform 
Task Force may modify the report in response to 
any comments received before submission of the re-
port to Congress. 
(d) DEFINITION OF INSTITUTION OF HIGHER EDU-
CATION.—For the purposes of this section, the term ‘‘in-
stitution of higher education’’ has the meaning given such 
term in section 102 of the Higher Education Act of 1965 
(20 U.S.C. 1002), except that such term does not include 
institutions described in subsection (a)(1)(C) of such sec-
tion 102. 
SEC. 4. STUDY ON USE OF INDIVIDUAL INCOME TAX RE-
TURNS AS PRIMARY APPLICATION FOR FED-
ERAL STUDENT AID. 
Section 483 of the Higher Education Act of 1965 (20 
U.S.C. 1090) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(i) STUDY ON USE OF INDIVIDUAL INCOME TAX 
RETURNS AS PRIMARY APPLICATION FOR FEDERAL STU-
DENT AID.— 
‘‘(4) STUDY.—The Secretary of Education, in 
consultation with the Commissioner of Internal Rev-
enue, shall conduct a study on the feasibility and ad-
vantages and disadvantages of using individual in-
come tax returns as the primary form of application 
for student aid under the Higher Education Act of 
1965 (20 U.S.C. 1001 et seq.). 
‘‘(5) REPORT.—Not later than one year after 
the date of the enactment of this subsection, the 
Secretary, in consultation with the Commissioner,
shall submit to Congress a report containing the re-
sults of the study conducted under subsection (a).’’. 
Passed the House of Representatives July 23, 2014. 
Attest: 
Clerk.
113TH CONGRESS 
2D SESSION 
H. R. 3136 
AN ACT 
To establish a demonstration program for 
competency-based education.