H. R. 6—174
SEC. 490B. ADMINISTRATIVE SUBPOENA AUTHORITY.
Part G of title IV is further amended by inserting immediately
after section 490 (20 U.S.C. 1097) the following:
‘‘SEC. 490A. ADMINISTRATIVE SUBPOENAS.
‘‘(a) AUTHORITY.—To assist the Secretary in the conduct of
investigations of possible violations of the provisions of this title,
the Secretary is authorized to require by subpoena the production
of information, documents, reports, answers, records, accounts,
papers, and other documentary evidence pertaining to participation
in any program under this title. The production of any such records
may be required from any place in a State.
‘‘(b) ENFORCEMENT.—In case of contumacy by, or refusal to
obey a subpoena issued to, any person, the Secretary may request
the Attorney General to invoke the aid of any court of the United
States where such person resides or transacts business for a court
order for the enforcement of this section.’’.
SEC. 490C. ADVISORY COMMITTEE ON STUDENT FINANCIAL ASSIST-
ANCE.
Section 491 (20 U.S.C. 1098) is amended—
(1) in subsection (b)—
(A) in the second sentence, by striking ‘‘and expendi-
tures’’ and inserting ‘‘, expenditures and staffing levels’’;
and
(B) by inserting after the third sentence the following:
‘‘Reports, publications, and other documents of the Advisory
Committee, including such reports, publications, and docu-
ments in electronic form, shall not be subject to review
by the Secretary.’’;
(2) in subsection (e)—
(A) by redesignating paragraphs (3), (4), and (5), as
paragraphs (4), (5), and (6), respectively; and
(B) by inserting after paragraph (2) the following:
‘‘(3) No officers or full-time employees of the Federal Govern-
ment shall serve as members of the Advisory Committee.’’;
(3) in subsection (g), by striking ‘‘(1) Members’’ and all
that follows through ‘‘of the United States may each’’ and
inserting ‘‘Members of the Advisory Committee may each’’;
(4) in subsection (h)(1)—
(A) by inserting ‘‘determined’’ after ‘‘as may be’’; and
(B) by adding at the end the following: ‘‘The Advisory
Committee may appoint not more than 1 full-time equiva-
lent, nonpermanent, consultant without regard to the provi-
sions of title 5, United States Code. The Advisory Commit-
tee shall not be required by the Secretary to reduce person-
nel to meet agency personnel reduction goals.’’;
(5) in subsection (i), by striking ‘‘$750,000’’ and inserting
‘‘$800,000’’;
(6) by amending subsection ( j) to read as follows:
‘‘( j) 
SPECIAL
ANALYSES
AND
ACTIVITIES.—The 
Advisory
Committee shall—
‘‘(1) monitor and evaluate the modernization of student
financial aid systems and delivery processes, including the
implementation of a performance-based organization within the
H. R. 6—175
Department, and report to Congress regarding such moderniza-
tion on not less than an annual basis, including recommenda-
tions for improvement;
‘‘(2) assess the adequacy of current methods for disseminat-
ing information about programs under this title and recommend
improvements, as appropriate, regarding early needs assess-
ment and information for first-year secondary school students;
‘‘(3) assess and make recommendations concerning the fea-
sibility and degree of use of appropriate technology in the
application for, and delivery and management of, financial
assistance under this title, as well as policies that promote
use of such technology to reduce cost and enhance service
and program integrity, including electronic application and re-
application, just-in-time delivery of funds, reporting of disburse-
ments and reconciliation;
‘‘(4) assess the implications of distance education on student
eligibility and other requirements for financial assistance under
this title, and make recommendations that will enhance access
to postsecondary education through distance education while
maintaining access, through on-campus instruction at eligible
institutions, and program integrity; and
‘‘(5) make recommendations to the Secretary regarding
redundant or outdated provisions of and regulations under
this Act, consistent with the Secretary’s requirements under
section 498B.’’;
(7) in subsection (k), by striking ‘‘1998’’ and inserting
‘‘2004’’; and
(8) by repealing subsection (l).
SEC. 490D. MEETINGS AND NEGOTIATED RULEMAKING.
(a) MEETINGS.—Section 492(a) (20 U.S.C. 1098a) is amended—
(1) in paragraph (1)—
(A) by striking ‘‘convene regional meetings to’’;
(B) by striking ‘‘parts B, G, and H of this title,’’ and
inserting ‘‘this title;’’; and
(C) by striking ‘‘Such meetings shall include’’ and
inserting ‘‘The Secretary shall obtain the advice of and
recommendations from’’; and
(2) in paragraph (2)—
(A) by striking ‘‘During such meetings the’’ and insert-
ing ‘‘The’’;
(B) by striking ‘‘parts B, G, and H’’ and inserting
‘‘this title’’;
(C) by striking ‘‘1992’’ and inserting ‘‘1998 through
such mechanisms as regional meetings and electronic
exchanges of information’’; and
(D) by striking ‘‘at such meetings’’ and inserting
‘‘through such mechanisms’’.
(b) DRAFT REGULATIONS.—Section 492(b) is amended—
(1) by striking ‘‘After’’ and inserting the following:
‘‘(1) IN GENERAL.—After’’;
(2) in paragraph (1) (as redesignated by paragraph (1))—
(A) by striking ‘‘holding regional meetings’’ and insert-
ing ‘‘obtaining the advice and recommendations described
in subsection (a)(1)’’;
(B) by striking ‘‘parts B, G, and H of this title’’ and
inserting ‘‘this title’’;
H. R. 6—176
(C) by striking ‘‘1992’’ and inserting ‘‘1998’’;
(D) by striking ‘‘The Secretary shall follow the guidance
provided in sections 305.82–4 and 305.85–5 of chapter 1,
Code of Federal Regulations, and any successor rec-
ommendation, regulation, or law.’’;
(E) by striking ‘‘participating in the regional meetings’’;
(F) by striking ‘‘240-day’’ and inserting ‘‘360-day’’; and
(G) by striking ‘‘section 431(g)’’ and inserting ‘‘section
437(e)’’; and
(3) by adding at the end the following:
‘‘(2) EXPANSION OF NEGOTIATED RULEMAKING.—All regula-
tions pertaining to this title that are promulgated after the
date of enactment of this paragraph shall be subject to a
negotiated rulemaking (including the selection of the issues
to be negotiated), unless the Secretary determines that applying
such a requirement with respect to given regulations is imprac-
ticable, unnecessary, or contrary to the public interest (within
the meaning of section 553(b)(3)(B) of title 5, United States
Code), and publishes the basis for such determination in the
Federal Register at the same time as the proposed regulations
in question are first published. All published proposed regula-
tions shall conform to agreements resulting from such nego-
tiated rulemaking unless the Secretary reopens the negotiated
rulemaking process or provides a written explanation to the
participants in that process why the Secretary has decided
to depart from such agreements. Such negotiated rulemaking
shall be conducted in accordance with the provisions of para-
graph (1), and the Secretary shall ensure that a clear and
reliable record of agreements reached during the negotiations
process is maintained.’’.
SEC. 490E. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT OF
EDUCATION.
Part G of title IV (20 U.S.C. 1088 et seq.) is amended by
adding at the end the following:
‘‘SEC. 493A. YEAR 2000 REQUIREMENTS AT THE DEPARTMENT.
‘‘(a) PREPARATIONS FOR YEAR 2000.—In order to ensure that
the processing, delivery, and administration of grant, loan, and
work assistance provided under this title is not interrupted due
to operational problems related to the inability of computer systems
to indicate accurately dates after December 31, 1999, the Secretary
of Education shall—
‘‘(1) take such actions as are necessary to ensure that
all internal and external systems, hardware, and data exchange
infrastructure administered by the Department that are nec-
essary for the processing, delivery, and administration of the
grant, loan, and work assistance are Year 2000 compliant by
March 31, 1999, such that there will be no business interruption
after December 31, 1999;
‘‘(2) ensure that the Robert T. Stafford Federal Student
Loan Program and the William D. Ford Federal Direct Loan
Program are equal in level of priority with respect to address-
ing, and that resources are managed to equally provide for
successful resolution of, the Year 2000 computer problem in
both programs by December 31, 1999;
‘‘(3) work with the Department’s various data exchange
partners under this title to fully test all data exchange routes
H. R. 6—177
for Year 2000 compliance via end-to-end testing, and submit
a report describing the parameters and results of such tests
to the Comptroller General not later than March 31, 1999;
‘‘(4) ensure that the Inspector General of the Department
(or an external, independent entity selected by the Inspector
General) performs and publishes a risk assessment of the sys-
tems and hardware under the Department’s management, that
has been reviewed by an independent entity, and make such
assessment publicly available not later than 60 days after the
date of enactment of the Higher Education Amendments of
1998;
‘‘(5) not later than June 30, 1999, ensure that the Inspector
General (or an external, independent entity selected by the
Inspector General) conducts a review of the Department’s Year
2000 compliance for the processing, delivery, and administra-
tion of grant, loan, and work assistance, and submits a report
reflecting the results of that review to the Chairperson of
the Committee on Labor and Human Resources of the Senate
and the Chairperson of the Committee on Education and the
Workforce of the House of Representatives;
‘‘(6) develop a contingency plan to ensure the programs
under this title will continue to run uninterrupted in the event
of widespread disruptions in the flow of accurate computerized
data, which contingency plan shall include a prioritization of
mission critical systems and strategies to allow data partners
to transfer data through alternate means; and
‘‘(7) alert Congress at the earliest possible time if mission
critical deadlines will not be met.
‘‘(b) POSTPONEMENT AUTHORITY FOR THE YEAR 2000.—
‘‘(1) PURPOSE.—It is the purpose of this subsection to
provide the Secretary with the flexibility necessary to—
‘‘(A) ensure that the resources and capabilities of
institutions, lenders, and guaranty agencies are not over-
burdened by the combination of student aid processing
and delivery requirements added or modified by the amend-
ments made by the Higher Education Amendments of 1998
and by the changes required to ensure that the systems
of the institutions, lenders and guaranty agencies are Year
2000 compliant; and
‘‘(B) avoid the disruption of grant, loan, or work assist-
ance funds awarded to students because of Year 2000
compliance problems at a substantial number of institu-
tions, lenders, and guaranty agencies.
‘‘(2) AUTHORITY TO POSTPONE.—The Secretary may post-
pone, for a period of time described in paragraph (3), the
implementation of any requirements under part B, D, E, or
G that are added or modified by the amendments made by
the Higher Education Amendments of 1998 related to the
processing or delivery of grant, loan, and work assistance (which
shall not include the determination of need for such assistance)
provided under this title, if the Secretary—
‘‘(A) determines that—
‘‘(i) implementation of such requirements would
require extensive changes to the existing systems of
institutions, lenders, or guaranty agencies; and
‘‘(ii) postponement is necessary to avoid jeopardiz-
ing the ability of a substantial number of institutions,
H. R. 6—178
lenders, or guaranty agencies to ensure that all of
the systems of the institutions, lenders, or guaranty
agencies related to the processing or delivery of such
assistance function successfully after December 31,
1999; and
‘‘(B) promptly publishes in the Federal Register a list
of, 
and 
notifies 
Congress 
of, 
any 
provisions, 
the
implementation of which the Secretary intends to postpone,
with the reasons for such postponement.
‘‘(3) EXCEPTIONS TO AUTHORITY.—The Secretary may not
postpone the implementation of one or more provisions
described in this subsection longer than the earlier of—
‘‘(A) the period of time that the Secretary determines
necessary to ensure that the processing and delivery sys-
tems of the institutions, lenders, and guaranty agencies
referred to in paragraph (1)(A)(ii) are capable of functioning
successfully after December 31, 1999; or
‘‘(B) one award year after the effective date applicable
to such provision under the Higher Education Amendments
of 1998.’’.
SEC. 490F. PROCEDURES FOR CANCELLATIONS AND DEFERMENTS FOR
ELIGIBLE DISABLED VETERANS.
Part G of title IV (20 U.S.C. 1088 et seq.) is amended by
adding after section 493A (as added by section 490E) the following:
‘‘SEC. 493B. PROCEDURES FOR CANCELLATIONS AND DEFERMENTS
FOR ELIGIBLE DISABLED VETERANS.
‘‘The Secretary, in consultation with the Secretary of Veterans
Affairs, shall develop and implement a procedure to permit Depart-
ment of Veterans Affairs physicians to provide the certifications
and affidavits needed to enable disabled veterans enrolled in the
Department of Veterans Affairs health care system to document
such veterans’ eligibility for deferments or cancellations of student
loans made, insured, or guaranteed under this title. Not later
than 6 months after the date of enactment of the Higher Education
Amendments of 1998, the Secretary and the Secretary of Veterans
Affairs jointly shall report to Congress on the progress made in
developing and implementing the procedure.’’.
PART H—PROGRAM INTEGRITY
SEC. 491. STATE ROLE AND RESPONSIBILITIES.
Part H of title IV (20 U.S.C. 1099a et seq.) is amended by—
(1) striking the heading of such part and inserting the
following:
‘‘PART H—PROGRAM INTEGRITY’’;
and
(2) by amending subpart 1 (20 U.S.C. 1099a et seq.) to
read as follows:
H. R. 6—181
such requirements within a timeframe specified by the Sec-
retary, except that—
‘‘(i) such timeframe shall not exceed 12 months unless
the Secretary extends such period for good cause; and
‘‘(ii) if the agency or association fails to bring the
agency or association into compliance within such time-
frame, the Secretary shall, after notice and opportunity
for a hearing, limit, suspend, or terminate the recognition
of the agency or association.’’; and
(6) in subsection (n)—
(A) by striking ‘‘standards’’ each place the term appears
and inserting ‘‘criteria’’;
(B) in paragraph (3)—
(i) by striking ‘‘approval process’’ and inserting
‘‘recognition process’’;
(ii) by striking ‘‘approval or disapproval’’ and
inserting ‘‘recognition or denial of recognition’’; and
(iii) by adding at the end the following: ‘‘When
the Secretary decides to recognize an accrediting
agency or association, the Secretary shall determine
the agency or association’s scope of recognition. If the
agency or association reviews institutions offering dis-
tance education courses or programs and the Secretary
determines that the agency or association meets the
requirements of this section, then the agency shall
be recognized and the scope of recognition shall include
accreditation of institutions offering distance education
courses or programs.’’; and
(C) by striking paragraph (4) and inserting the
following:
‘‘(4) The Secretary shall maintain sufficient documentation to
support the conclusions reached in the recognition process, and,
if the Secretary does not recognize any accreditation agency or
association, shall make publicly available the reason for denying
recognition, including reference to the specific criteria under this
section which have not been fulfilled.’’.
SEC. 493. ELIGIBILITY AND CERTIFICATION PROCEDURES.
(a) SINGLE APPLICATION FORM.—Section 498(b) (20 U.S.C.
1099c(b)) is amended—
(1) in paragraph (1), by striking ‘‘and capability’’ and insert-
ing ‘‘financial responsibility, and administrative capability’’;
(2) by amending paragraph (3) to read as follows:
‘‘(3) requires—
‘‘(A) a description of the third party servicers of an
institution of higher education; and
‘‘(B) the institution to maintain a copy of any contract
with a financial aid service provider or loan servicer, and
provide a copy of any such contract to the Secretary upon
request;’’;
(3) in paragraph (4), by striking the period and inserting
‘‘; and’’; and
(4) by adding at the end the following:
‘‘(5) provides, at the option of the institution, for participa-
tion in one or more of the programs under part B or D.’’.
(b) FINANCIAL RESPONSIBILITY STANDARDS.—Section 498(c) is
amended—
H. R. 6—182
(1) in paragraph (2)—
(A) in the first sentence, by striking ‘‘with respect
to operating losses, net worth, asset to liabilities ratios,
or operating fund deficits’’ and inserting ‘‘regarding ratios
that demonstrate financial responsibility,’’; and
(B) in the second sentence, by inserting ‘‘, public,’’
after ‘‘for profit’’;
(2) in paragraph (3)(A), by inserting ‘‘that the Secretary
determines are reasonable’’ after ‘‘guarantees’’; and
(3) in paragraph (4)—
(A) in the matter preceding subparagraph (A), by
striking ‘‘ratio of current assets to current liabilities’’ and
inserting ‘‘criteria’’; and
(B) in subparagraph (C), by striking ‘‘current operating
ratio requirement’’ and inserting ‘‘criteria’’.
(c) FINANCIAL GUARANTEES FROM OWNERS.—
(1) AMENDMENT.—Section 498(e) is amended by adding at
the end the following:
‘‘(6) Notwithstanding any other provision of law, any individual
who—
‘‘(A) the Secretary determines, in accordance with para-
graph (2), exercises substantial control over an institution
participating in, or seeking to participate in, a program under
this title;
‘‘(B) is required to pay, on behalf of a student or borrower,
a refund of unearned institutional charges to a lender, or to
the Secretary; and
‘‘(C) willfully fails to pay such refund or willfully attempts
in any manner to evade payment of such refund,
shall, in addition to other penalties provided by law, be liable
to the Secretary for the amount of the refund not paid, to the
same extent with respect to such refund that such an individual
would be liable as a responsible person for a penalty under section
6672(a) of Internal Revenue Code of 1986 with respect to the
nonpayment of taxes.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall be effective with respect to any unpaid refunds that
were first required to be paid to a lender or to the Secretary
on or after 90 days after the date of enactment of this Act.
(d) 
APPLICATIONS
AND
SITE
VISITS.—Section 
498(f ) 
is
amended—
(1) in the subsection heading, by striking ‘‘; SITE VISITS
AND FEES’’ and inserting ‘‘AND SITE VISITS’’;
(2) in the second sentence, by striking ‘‘shall’’ and inserting
‘‘may’’;
(3) in the third sentence—
(A) by striking ‘‘may establish’’ and insert ‘‘shall
establish’’; and
(B) by striking ‘‘may coordinate’’ and inserting ‘‘shall,
to the extent practicable, coordinate’’; and
(4) by striking the fourth sentence.
(e) TIME LIMITATIONS
ON, AND RENEWAL
OF, ELIGIBILITY.—
Subsection (g) of section 498 is amended to read as follows:
‘‘(g) TIME LIMITATIONS ON, AND RENEWAL OF, ELIGIBILITY.—
‘‘(1) GENERAL RULE.—After the expiration of the certifi-
cation of any institution under the schedule prescribed under
this section (as this section was in effect prior to the enactment
H. R. 6—183
of the Higher Education Act Amendments of 1998), or upon
request for initial certification from an institution not pre-
viously certified, the Secretary may certify the eligibility for
the purposes of any program authorized under this title of
each such institution for a period not to exceed 6 years.
‘‘(2) NOTIFICATION.—The Secretary shall notify each institu-
tion of higher education not later than 6 months prior to
the date of the expiration of the institution’s certification.
‘‘(3) INSTITUTIONS
OUTSIDE
THE
UNITED
STATES.—The
Secretary shall promulgate regulations regarding the recertifi-
cation requirements applicable to an institution of higher edu-
cation outside of the United States that meets the requirements
of section 102(a)(1)(C) and received less than $500,000 in funds
under part B for the most recent year for which data are
available.’’.
(f ) 
PROVISIONAL
CERTIFICATION.—Section 
498(h)(2) 
is
amended—
(1) by striking ‘‘the approval’’ and inserting ‘‘the recogni-
tion’’; and
(2) by striking ‘‘of approval’’ and inserting ‘‘of recognition’’.
(g) CHANGE
IN OWNERSHIP.—Section 498(i) is amended by
adding at the end the following:
‘‘(4)(A) The Secretary may provisionally certify an institution
seeking approval of a change in ownership based on the preliminary
review by the Secretary of a materially complete application that
is received by the Secretary within 10 business days of the trans-
action for which the approval is sought.
‘‘(B) A provisional certification under this paragraph shall
expire not later than the end of the month following the month
in which the transaction occurred, except that if the Secretary
has not issued a decision on the application for the change of
ownership within that period, the Secretary may continue such
provisional certification on a month-to-month basis until such deci-
sion has been issued.’’.
(h) TREATMENT OF BRANCHES.—The second sentence of section
498( j)(1) is amended by inserting ‘‘after the branch is certified
by the Secretary as a branch campus participating in a program
under this title,’’ after ‘‘2 years’’.
SEC. 494. PROGRAM REVIEW AND DATA.
Section 498A (20 U.S.C. 1099c–1) is amended—
(1) in subsection (a)—
(A) in paragraph (2)—
(i) in the matter preceding subparagraph (A), by
striking ‘‘may’’ and inserting ‘‘shall’’;
(ii) by amending subparagraph (C) to read as fol-
lows:
‘‘(C) institutions with a significant fluctuation in Fed-
eral Stafford Loan volume, Federal Direct Stafford/Ford
Loan volume, or Federal Pell Grant award volume, or
any combination thereof, in the year for which the deter-
mination is made, compared to the year prior to such
year, that are not accounted for by changes in the Federal
Stafford Loan program, the Federal Direct Stafford/Ford
Loan program, or the Pell Grant program, or any combina-
tion thereof;’’;
H. R. 6—184
(iii) by amending subparagraph (D) to read as
follows:
‘‘(D) institutions reported to have deficiencies or finan-
cial aid problems by the State licensing or authorizing
agency, or by the appropriate accrediting agency or associa-
tion;’’;
(iv) in subparagraph (E), by inserting ‘‘and’’ after
the semicolon; and
(v) by striking subparagraphs (F) and (G) and
inserting the following:
‘‘(F) such other institutions that the Secretary deter-
mines may pose a significant risk of failure to comply
with the administrative capability or financial responsibil-
ity provisions of this title; and’’; and
(B) in paragraph (3)(A), by inserting ‘‘relevant’’ after
‘‘all’’; and
(2) by amending subsection (b) to read as follows:
‘‘(b) SPECIAL ADMINISTRATIVE RULES.—In carrying out para-
graphs (1) and (2) of subsection (a) and any other relevant provisions
of this title, the Secretary shall—
‘‘(1) establish guidelines designed to ensure uniformity of
practice in the conduct of program reviews of institutions of
higher education;
‘‘(2) make available to each institution participating in
programs authorized under this title complete copies of all
review guidelines and procedures used in program reviews;
‘‘(3) permit the institution to correct or cure an administra-
tive, accounting, or recordkeeping error if the error is not
part of a pattern of error and there is no evidence of fraud
or misconduct related to the error;
‘‘(4) base any civil penalty assessed against an institution
of higher education resulting from a program review or audit
on the gravity of the violation, failure, or misrepresentation;
and
‘‘(5) inform the appropriate State and accrediting agency
or association whenever the Secretary takes action against
an institution of higher education under this section, section
498, or section 432.’’.
SEC. 495. REVIEW OF REGULATIONS.
Part H of title IV is further amended by adding at the end
the following:
‘‘SEC. 498B. REVIEW OF REGULATIONS.
‘‘(a) REVIEW REQUIRED.—The Secretary shall review each regu-
lation issued under this title that is in effect at the time of the
review and applies to the operations or activities of any participant
in the programs assisted under this title. The review shall include
a determination of whether the regulation is duplicative, or is
no longer necessary. The review may involve one or more of the
following:
‘‘(1) An assurance of the uniformity of interpretation and
application of such regulations.
‘‘(2) The establishment of a process for ensuring that eligi-
bility and compliance issues, such as institutional audit, pro-
gram review, and recertification, are considered simultaneously.
‘‘(3) A determination of the extent to which unnecessary
costs are imposed on institutions of higher education as a