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104TH CONGRESS
1ST SESSION
H. R. 2834
To amend the Higher Education Act of 1965 to improve accountability
and reform certain programs.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 22, 1995
Mr. KLINK introduced the following bill; which was referred to the Committee
on Economic and Educational Opportunities
A BILL
To amend the Higher Education Act of 1965 to improve
accountability and reform certain programs.
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 ‘‘Federal Accountability
and Institutional Reform in Education Act of 1995’’.
SEC. 2. FINDINGS.
The Congress finds that—
(1) the Federal Government is reducing spend-
ing in all areas, including postsecondary education;
(2) reductions in postsecondary education
spending fall on students, schools, State loan guar-
anty agencies and lenders;
(3) the administration of postsecondary edu-
cation is the responsibility of the Department of
Education; and
(4) reforms should be made to postsecondary
education programs to provide greater accountability
from the Department, educational institutions, lend-
ers, and guarantee agencies and to enhance institu-
tional compliance with Department policies.
SEC. 3. STUDENT LOAN COHORT DEFAULT MANAGEMENT
REFORMS.
(a) ADMINISTRATIVE AND FISCAL PROCEDURES.—
Section 428(c)(2)(A) of the Higher Education Act of 1965
is amended by striking ‘‘proof that reasonable attempts
were made’’ and inserting ‘‘proof that the institution was
contacted and other reasonable attempts were made’’
(b) REIMBURSEMENT.—Section 428(c)(2)(G) of the
Higher Education Act of 1965 is amended by striking
‘‘certifies to the Secretary that diligent attempts have been
made’’ and inserting ‘‘demonstrates to the Secretary that
diligent attempts, including direct contact with the institu-
tion have been made.’’.
(c) LIMITATION.—Section 428 of the Higher Edu-
cation Act of 1965 is amended by adding at the end the
following:
‘‘(o) LIMITATION.—Notwithstanding any other provi-
sion of this section, the Secretary shall not reimburse or
permit any eligible lender, servicer, or guaranty agency (or
its affiliates) who previously filed a claim for reimburse-
ment on a loan to retain any proceeds from rehabilitation
of a defaulted loan to the extent that such funds, when
added to the amount of prior reimbursement under this
section, exceed 100 percent of the original principal of the
loan.’’.
(d) NOTICE
TO SECRETARY
AND PAYMENT
OF
LOSS.—Section 430(a) of the Higher Education Act of
1965 is amended—
(1) by inserting ‘‘all’’ after ‘‘required to meet’’;
and
(2) by inserting ‘‘the institution was contacted
and other’’ after ‘‘submit proof that’’.
(e) ANNUAL REPORT.—Section 430 of the Higher
Education Act of 1965 is amended by adding at the end
the following:
‘‘(f) ANNUAL REPORT.—The Secretary shall report
annually to Congress that lenders, servicers and guaranty
agencies have attested to their compliance with servicing
amended by striking ‘‘paid claims’’ and inserting ‘‘prop-
erly paid claims as required in section 430 of this Act’’.
SEC. 4. ELIGIBLE INSTITUTION REFORM.
Section 481 (b) of the Higher Education Act of 1965
is amended—
(1) by inserting before the period at the end of
the first sentence the following: ‘‘on the basis of a
review by the institution’s independent auditor using
generally accepted accounting principles’’; and
(2) by inserting before the second sentence the
following:
‘‘For the purposes of paragraph (6), revenues from
sources that are not derived from funds under this title
include revenues from programs of education or training
that do not meet the definition of an eligible program in
subsection (e), but are provided on a contractual basis
under Federal, State or local training programs, to busi-
ness and industry, or to other eligible applicants. For the
purposes of determining whether an institution meets the
requirements of paragraph (6), the Secretary shall not
consider the financial information of any institution for
a fiscal year that began on or before April 30, 1994.’’.
SEC. 5. ACCOUNTING PROCEDURES FOR INSTITUTIONAL
PROGRAM PARTICIPATION.
Section 498(c) of the Higher Education Act of 1965
is amended by inserting ‘‘, based on an audited financial
statement using any generally accepted accounting prin-
ciples’’ after ‘‘is able’’.
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