Title: For-Profit Fraud Act
Policy area: Education

Summary:
For-Profit Fraud Act
This bill modifies requirements for a proprietary (i.e., for-profit) institution of higher education (IHE) to participate in federal student aid programs.
Current law requires a proprietary IHE to derive at least 10% of its revenue from sources other than federal student aid. The bill requires a proprietary IHE to derive at least 15% of its revenue from sources other than federal funds (i.e., it replaces the so-called 90/10 rule with an 85/15 rule).
The bill requires the Department of Education to notify the Department of Defense (DOD) and the Department of Veterans Affairs (VA) when a proprietary institution becomes ineligible to participate in federal student aid programs and when the institution regains such eligibility. Proprietary institutions that lose such eligibility are then ineligible to receive educational assistance from DOD or VA programs.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3112 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 3112

 To revise the 90-10 rule under the Higher Education Act of 1965, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 5, 2019

  Ms. Waters introduced the following bill; which was referred to the 
Committee on Education and Labor, and in addition to the Committees on 
Armed Services, and Veterans' Affairs, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To revise the 90-10 rule under the Higher Education Act of 1965, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``For-Profit Fraud Act''.

SEC. 2. 85/15 RULE.

    Section 487 of the Higher Education Act of 1965 (20 U.S.C. 1094) is 
amended--
            (1) in subsection (a)(24)--
                    (A) by striking ``In the case'' and inserting:
                    ``(A) In the case'';
                    (B) by striking ``not less than ten percent of such 
                institution's revenues from sources other than funds 
                provided under this title'' and inserting ``not less 
                than 15 percent of such institution's revenues from 
                sources other than Federal funds''; and
                    (C) by adding at the end the following:
            ``(B) Federal funds.--In this paragraph, the term `Federal 
        funds' means any Federal funds provided, under this Act or any 
        other Federal law, through a grant, contract, subsidy, loan, 
        guarantee, insurance, or other means to a proprietary 
        institution, including Federal funds disbursed or delivered to 
        an institution or on behalf of a student or to a student to be 
        used to attend the institution, except that such term shall not 
        include any monthly housing stipend provided under the Post-9/
        11 Educational Assistance Program under chapter 33 of title 38, 
        United States Code.''; and
            (2) in subsection (d)--
                    (A) in the heading, by amending the heading to read 
                as follows: ``Implementation of Revenue Requirements 
                for Non-Federal Education Assistance Funds''; and
                    (B) in paragraph (2)(A), by inserting at the end 
                the following: ``The Secretary of Education shall 
                notify the Secretary of Defense and the Secretary of 
                Veterans Affairs when, by reason of failing to meet a 
                requirement of subsection (a)(24), a proprietary 
                institution of higher education becomes ineligible to 
                participate in the programs authorized by this title, 
                and when the institution regains such eligibility.'';

SEC. 3. INELIGIBILITY OF CERTAIN PROPRIETARY INSTITUTIONS OF HIGHER 
              EDUCATION TO PARTICIPATE IN DEPARTMENT OF DEFENSE OR 
              DEPARTMENT OF VETERANS AFFAIRS PROGRAMS OF EDUCATIONAL 
              ASSISTANCE.

    (a) Department of Defense.--
            (1) In general.--Chapter 101 of title 10, United States 
        Code, is amended by inserting after section 2008 the following 
        new section:
``Sec. 2008a. Ineligibility of certain proprietary institutions of 
              higher education to participate in Department of Defense 
              programs of educational assistance
    ``Upon notice from the Secretary of Education under section 
487(d)(2)(A) of the Higher Education Act of 1965 (20 U.S.C. 
1094(d)(2)(A)) that a proprietary institution of higher education is 
ineligible to participate in the programs authorized by title IV of 
such Act (20 U.S.C. 1070 et seq.), the Secretary of Defense shall 
ensure that no educational assistance provided by the Secretary under 
this title or any other provision of law is available or used for 
education at the institution for the period of institutional fiscal 
years during which the institution remains ineligible to participate in 
the programs authorized by title IV of the Higher Education Act of 1965 
(20 U.S.C. 1070 et seq.).''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 101 of such title is amended by inserting 
        after the item relating to section 2008 the following new item:

``2008a. Ineligibility of certain proprietary institutions of higher 
                            education to participate in Department of 
                            Defense programs of educational 
                            assistance.''.
    (b) Department of Veterans Affairs.--
            (1) In general.--Subchapter II of chapter 36 of title 38, 
        United States Code, is amended by inserting after section 3681 
        the following new section:
``Sec. 3681A. Ineligibility of certain proprietary institutions of 
              higher education to participate in Department of Veterans 
              Affairs programs of educational assistance
    ``(a) In General.--Upon notice from the Secretary of Education 
under section 487(d)(2)(A) of the Higher Education Act of 1965 (20 
U.S.C. 1094(d)(2)(A)) that a proprietary institution of higher 
education is ineligible to participate in the programs authorized by 
title IV of such Act (20 U.S.C. 1070 et seq.), the Secretary of 
Veterans Affairs shall ensure that no educational assistance provided 
by the Secretary under this title or any other provision of law is 
available or used for education at the institution for the period of 
institutional fiscal years during which the institution remains 
ineligible to participate in the programs authorized by title IV of the 
Higher Education Act of 1965 (20 U.S.C. 1070 et seq.).''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 36 of such title is amended by inserting 
        after the item relating to section 3681 the following new item:

``3681A. Ineligibility of certain proprietary institutions of higher 
                            education to participate in Department of 
                            Veterans Affairs programs of educational 
                            assistance.''.
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