Title: PROTECT Students Act of 2019
Policy area: Education

Summary:
Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2019 or the PROTECT Students Act of 2019
This bill provides additional oversight of postsecondary education programs, including for-profit institutions of higher education (IHEs), and addresses protections for students and student loan borrowers from fraudulent or predatory practices.
The bill sets forth a variety of provisions concerning oversight of for-profit IHEs. Specifically, the bill decreases the cap on the amount of revenue for-profit IHEs may receive from federal sources, including funds from the Department of Veterans Affairs and the Department of Defense. In addition, it establishes (1) a process for reviewing for-profit IHEs that convert to nonprofit or public status, and (2) a For-Profit Education Oversight Coordination Committee.
The bill also sets forth provisions to address predatory practices in higher education. For instance, the bill requires career education programs to prepare students for gainful employment. In addition, it requires the Office of Federal Student Aid to have a unit that enforces compliance with laws governing student financial assistance programs. The office must also maintain a system that tracks reports of suspicious activity of IHEs or student loan servicers, including anonymous complaints. Lastly, the bill allows borrowers of student loans to seek loan forgiveness if IHEs mislead the students or engage in other misconduct.
Finally, the bill prohibits IHEs that receive federal funding from limiting students' legal actions, providing incentive compensation, and using educational assistance funds for recruiting and marketing activities.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 867 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  1st Session
                                 S. 867

    To protect students of institutions of higher education and the 
 taxpayer investment in institutions of higher education by improving 
   oversight and accountability of institutions of higher education, 
 particularly for-profit colleges, improving protections for students 
 and borrowers, and ensuring the integrity of postsecondary education 
                   programs, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 26, 2019

  Ms. Hassan (for herself, Mr. Durbin, and Mr. Brown) introduced the 
 following bill; which was read twice and referred to the Committee on 
                 Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
    To protect students of institutions of higher education and the 
 taxpayer investment in institutions of higher education by improving 
   oversight and accountability of institutions of higher education, 
 particularly for-profit colleges, improving protections for students 
 and borrowers, and ensuring the integrity of postsecondary education 
                   programs, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Preventing Risky 
Operations from Threatening the Education and Career Trajectories of 
Students Act of 2019'' or the ``PROTECT Students Act of 2019''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. References.
Sec. 3. Effective date.
Sec. 4. Definitions.
                    TITLE I--FOR-PROFIT INSTITUTIONS

Sec. 101. Closing the GI Bill loophole and restoring the 85/15 rule for 
                            for-profit institutions.
Sec. 102. Process for for-profit institutions to convert to nonprofit 
                            or public status.
Sec. 103. For-Profit Education Oversight Coordination Committee.
               TITLE II--STUDENT AND BORROWER PROTECTIONS

Sec. 201. Gainful employment programs.
Sec. 202. Prohibition on institutions limiting student legal action.
Sec. 203. Enforcement unit established in the Office of Federal Student 
                            Aid.
Sec. 204. Establishment and maintenance of complaint resolution and 
                            tracking system.
Sec. 205. Borrower defense to repayment.
   TITLE III--ENSURING INTEGRITY AT INSTITUTIONS OF HIGHER EDUCATION

Sec. 301. Restrictions on sources of funds for recruiting and marketing 
                            activities.
Sec. 302. Strengthening the incentive compensation ban.
Sec. 303. Definition of nonprofit institution of higher education.
Sec. 304. Definition of public institution of higher education.
Sec. 305. Enhanced civil penalties, State enforcement, and private 
                            right of action.
Sec. 306. Substantial misrepresentation prohibited.

SEC. 2. REFERENCES.

    Except as otherwise expressly provided, whenever in this Act an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Higher Education Act of 
1965 (20 U.S.C. 1001 et seq.).

SEC. 3. EFFECTIVE DATE.

    Except as otherwise specified, this Act, and the amendments made by 
this Act, shall take effect beginning on July 1, 2020.

SEC. 4. DEFINITIONS.

    (a) In General.--Section 103 (20 U.S.C. 1003) is amended--
            (1) by redesignating paragraphs (15) through (22), (23), 
        and (24) as paragraphs (17) through (24), (26), and (27);
            (2) by inserting after paragraph (14) the following:
            ``(16) Revenue sharing arrangements.--The term `revenue 
        sharing arrangement' means an arrangement between an 
        institution of higher education and a third party contractor 
        under which--
                    ``(A) the third party contractor provides, 
                exclusively or nonexclusively, educational products or 
                services to prospective students or students attending 
                the institution of higher education; and
                    ``(B) the third party contractor or institution of 
                higher education pays a fee or provides other material 
                benefits, including revenue- or profit-sharing, to the 
                institution of higher education or third party 
                contractor in connection with the educational products 
                or services provided to prospective students or 
                students attending the institution of higher 
                education.''; and
            (3) by inserting after paragraph (24), as redesignated by 
        paragraph (1), the following:
            ``(25) Third party contractor.--The term `third party 
        contractor' means any State, person, or entity that enters into 
        a contract or agreement, including a revenue sharing 
        arrangement, with an eligible institution of higher education 
        to act on the institution's behalf, including any entity that--
                    ``(A) sells the names of prospective students (also 
                known as a `lead generator'); or
                    ``(B) offers services including recruiting, 
                financial aid packaging, curriculum development, 
                facilities management, hiring and oversight of faculty, 
                and the provision of student services representatives, 
                job placement counselors, or other employees (also 
                known as an `online program manager').''.
    (b) Renaming Proprietary Institutions For-Profit Institutions.--
            (1) In general.--Section 102 (20 U.S.C. 1002) is amended--
                    (A) in subsection (a)(1)(A), by striking 
                ``proprietary institution'' and inserting ``for-profit 
                institution''; and
                    (B) in subsection (b)--
                            (i) in the subsection heading, by striking 
                        ``Proprietary'' and inserting ``For-profit'';
                            (ii) in the matter preceding subparagraph 
                        (A) of paragraph (1), by striking 
                        ``proprietary'' and inserting ``for-profit''; 
                        and
                            (iii) in paragraph (2), by striking 
                        ``proprietary'' each place the term appears and 
                        inserting ``for-profit''.
            (2) Conforming amendments.--
                    (A) Department of education organization act.--The 
                Department of Education Organization Act (20 U.S.C. 
                3401 et seq.) is amended--
                            (i) in section 219 (20 U.S.C. 3426)--
                                    (I) in the section heading, by 
                                striking ``proprietary'' and inserting 
                                ``for-profit'';
                                    (II) by striking ``Proprietary'' 
                                each place the term appears and 
                                inserting ``For-Profit''; and
                                    (III) by striking ``proprietary'' 
                                each place the term appears and 
                                inserting ``for-profit''; and
                            (ii) in section 1, by striking the item 
                        relating to section 219 in the table of 
                        contents and inserting the following:

``219. Liaison for For-Profit Institutions of Higher Education.''.
                    (B) Higher education act of 1965.--The Act (20 
                U.S.C. 1001 et seq.) is amended--
                            (i) in each of sections 435 and 443(b)(8), 
                        by striking ``proprietary'' each place the term 
                        appears and inserting ``for-profit''; and
                            (ii) in section 807(d)(1)(A)(iii), by 
                        striking ``proprietary'' and inserting ``for-
                        profit''.
                    (C) Scientific and advanced-technology act of 
                1992.--Section 3(j)(2)(B) of the Scientific and 
                Advanced-Technology Act of 1992 (20 U.S.C. 
                1862i(j)(2)(B)) is amended by striking ``proprietary 
                institution'' and inserting ``for-profit institution''.
            (3) References.--
                    (A) Proprietary institution.--Any reference to a 
                proprietary institution, as defined in section 102(b) 
                of the Higher Education Act of 1965 (20 U.S.C. 1002) on 
                the day before the date of enactment of this Act, in 
                any law, rule, regulation, certificate, directive, 
                instruction, or other official paper in force on the 
                date of enactment of this Act shall be considered to 
                refer and apply to a for-profit institution, as defined 
                in section 102(b) of the Higher Education Act of 1965 
                (20 U.S.C. 1002(b)), as amended by this Act.
                    (B) Liaison.--Any reference to the Liaison for 
                Proprietary Institutions of Higher Education in any 
                law, rule, regulation, certificate, directive, 
                instruction, or other official paper in force on the 
                date of enactment of this Act shall be considered to 
                refer and apply to the Liaison for For-Profit 
                Institutions of Higher Education established under 
                section 219 of the Department of Education Organization 
                Act (20 U.S.C. 3401), as amended by this Act.

                    TITLE I--FOR-PROFIT INSTITUTIONS

SEC. 101. CLOSING THE GI BILL LOOPHOLE AND RESTORING THE 85/15 RULE FOR 
              FOR-PROFIT INSTITUTIONS.

    (a) In General.--Section 102(b) (20 U.S.C. 1002), as amended by 
section 4(b), is further amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (D), by striking ``and'' after 
                the semicolon; and
                    (B) in subparagraph (E), by striking the period at 
                the end and inserting ``; and''; and
                    (C) by adding at the end the following:
                    ``(F) meets the requirements of paragraph (2).'';
            (2) by redesignating paragraph (2) as paragraph (3); and
            (3) by inserting after paragraph (1) the following:
            ``(2) Revenue sources.--
                    ``(A) In general.--In order to qualify as a for-
                profit institution of higher education under this 
                subsection, an institution shall derive not less than 
                15 percent of the institution's revenues from sources 
                other than Federal education assistance funds, as 
                calculated in accordance with subparagraphs (B) and 
                (C).
                    ``(B) Federal education assistance funds.--In this 
                paragraph, the term `Federal education assistance 
                funds' means any Federal financial assistance provided, 
                under this Act or any other Federal law, through a 
                grant, contract, subsidy, loan, guarantee, insurance, 
                or other means to an institution of higher education, 
                including Federal financial assistance that is 
                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 Veterans Educational Assistance Program under 
                chapter 33 of title 38, United States Code.
                    ``(C) Implementation of non-federal revenue 
                requirement.--In making calculations under subparagraph 
                (A), an institution of higher education shall--
                            ``(i) use the cash basis of accounting;
                            ``(ii) consider as revenue only those funds 
                        generated by the institution from--
                                    ``(I) tuition, fees, and other 
                                institutional charges for students 
                                enrolled in programs eligible for 
                                assistance under title IV;
                                    ``(II) activities conducted by the 
                                institution that are necessary for the 
                                education and training of the 
                                institution's students, if such 
                                activities are--
                                            ``(aa) conducted on campus 
                                        or at a facility under the 
                                        control of the institution;
                                            ``(bb) performed under the 
                                        supervision of a member of the 
                                        institution's faculty; and
                                            ``(cc) required to be 
                                        performed by all students in a 
                                        specific educational program at 
                                        the institution; and
                                    ``(III) a contractual arrangement 
                                with a Federal agency for the purpose 
                                of providing job training to low-income 
                                individuals who are in need of such 
                                training;
                            ``(iii) presume that any Federal education 
                        assistance funds that are disbursed or 
                        delivered to an institution on behalf of a 
                        student or directly to a student will be used 
                        to pay the student's tuition, fees, or other 
                        institutional charges, regardless of whether 
                        the institution credits such funds to the 
                        student's account or pays such funds directly 
                        to the student, except to the extent that the 
                        student's tuition, fees, or other institutional 
                        charges are satisfied by--
                                    ``(I) grant funds provided by an 
                                outside source that--
                                            ``(aa) has no affiliation 
                                        with the institution; and
                                            ``(bb) shares no employees, 
                                        executives, or board members 
                                        with the institution;
                                    ``(II) funds provided under a 
                                contractual arrangement with a Federal, 
                                State, or local government agency for 
                                the purpose of providing job training 
                                to low-income individuals who are in 
                                need of that training; or
                                    ``(III) institutional scholarships 
                                described in clause (v);
                            ``(iv) include no loans made by an 
                        institution of higher education as revenue to 
                        the school, except for payments made by 
                        students on such loans;
                            ``(v) include a scholarship provided by the 
                        institution--
                                    ``(I) only if the scholarship is in 
                                the form of monetary aid based upon the 
                                academic achievements or financial need 
                                of students, disbursed to qualified 
                                student recipients during each fiscal 
                                year from an established restricted 
                                account; and
                                    ``(II) only to the extent that 
                                funds in that account represent 
                                designated funds, or income earned on 
                                such funds, from an outside source 
                                that--
                                            ``(aa) has no affiliation 
                                        with the institution; and
                                            ``(bb) shares no employees, 
                                        executives, or board members 
                                        with the institution; and
                            ``(vi) exclude from revenues--
                                    ``(I) the amount of funds the 
                                institution received under part C of 
                                title IV, unless the institution used 
                                those funds to pay a student's 
                                institutional charges;
                                    ``(II) the amount of funds the 
                                institution received under subpart 4 of 
                                part A of title IV;
                                    ``(III) the amount of funds 
                                provided by the institution as matching 
                                funds for any Federal program;
                                    ``(IV) the amount of Federal 
                                education assistance funds provided to 
                                the institution to pay institutional 
                                charges for a student that were 
                                refunded or returned; and
                                    ``(V) the amount charged for books, 
                                supplies, and equipment, unless the 
                                institution includes that amount as 
                                tuition, fees, or other institutional 
                                charges.
                    ``(D) Report to congress.--Not later than July 1, 
                2020, and by July 1 of each succeeding year, the 
                Secretary shall submit to the authorizing committees a 
                report that contains, for each for-profit institution 
                of higher education that receives assistance under 
                title IV and as provided in the audited financial 
                statements submitted to the Secretary by each 
                institution pursuant to the requirements of section 
                487(c)--
                            ``(i) the amount and percentage of such 
                        institution's revenues received from Federal 
                        education assistance funds; and
                            ``(ii) the amount and percentage of such 
                        institution's revenues received from other 
                        sources.''.
    (b) Repeal of Existing Requirements.--Section 487 (20 U.S.C. 1094) 
is amended--
            (1) in subsection (a)--
                    (A) by striking paragraph (24);
                    (B) by redesignating paragraphs (25) through (29) 
                as paragraphs (24) through (28), respectively;
                    (C) in paragraph (24)(A)(ii) (as redesignated by 
                subparagraph (B)), by striking ``subsection (e)'' and 
                inserting ``subsection (d)''; and
                    (D) in paragraph (26) (as redesignated by 
                subparagraph (B)), by striking ``subsection (h)'' and 
                inserting ``subsection (g)'';
            (2) by striking subsection (d);
            (3) by redesignating subsections (e) through (j) as 
        subsections (d) through (i), respectively;
            (4) in subsection (d) (as redesignated by paragraph (3)), 
        by striking ``(a)(25)'' and inserting ``(a)(24)'';
            (5) in subsection (f)(1) (as redesignated by paragraph 
        (3)), by striking ``subsection (e)(2)'' and inserting 
        ``subsection (d)(2)''; and
            (6) in subsection (g)(1) (as redesignated by paragraph 
        (3)), by striking ``subsection (a)(27)'' in the matter 
        preceding subparagraph (A) and inserting ``subsection 
        (a)(26)''.
    (c) Conforming Amendments.--The Act (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in section 152 (20 U.S.C. 1019a)--
                    (A) in subsection (a)(1)(A), by striking 
                ``subsections (a)(27) and (h) of section 487'' and 
                inserting ``subsections (a)(26) and (g) of section 
                487''; and
                    (B) in subsection (b)(1)(B)(i)(I), by striking 
                ``section 487(e)'' and inserting ``section 487(d)'';
            (2) in section 153(c)(3) (20 U.S.C. 1019b(c)(3)), by 
        striking ``section 487(a)(25)'' each place the term appears and 
        inserting ``section 487(a)(24)'';
            (3) in section 496(c)(3)(A) (20 U.S.C. 1099b(c)(3)(A)), by 
        striking ``section 487(f)'' and inserting ``section 487(e)''; 
        and
            (4) in section 498(k)(1) (20 U.S.C. 1099c(k)(1)), by 
        striking ``section 487(f)'' and inserting ``section 487(e)''.

SEC. 102. PROCESS FOR FOR-PROFIT INSTITUTIONS TO CONVERT TO NONPROFIT 
              OR PUBLIC STATUS.

    (a) Conversion Process.--Part B of title I (20 U.S.C. 1011 et seq.) 
is further amended by adding at the end the following:

``SEC. 124. PROCESS FOR FOR-PROFIT INSTITUTIONS TO CONVERT TO NONPROFIT 
              OR PUBLIC STATUS.

    ``(a) Determination.--
            ``(1) In general.--In any case where the Secretary 
        determines that a for-profit institution of higher education, 
        as defined in section 102(b), meets the applicable requirements 
        of subsection (b), the Secretary shall approve the conversion 
        of the institution of higher education to a nonprofit or public 
        institution of higher education for not more than a 5-year 
        period.
            ``(2) Periodic review.--For each for-profit institution 
        that is converted under this section to a nonprofit or public 
        institution of higher education, the Secretary shall--
                    ``(A) review the determination not less than once 
                every 5 years; and
                    ``(B) at the conclusion of a review described in 
                subparagraph (A)--
                            ``(i) in a case where the Secretary 
                        determines the institution continues to meet 
                        the requirements of this section, approve the 
                        institution's status as a nonprofit institution 
                        of higher education or public institution of 
                        higher education for an additional period not 
                        to exceed 5 years; and
                            ``(ii) in a case where the Secretary 
                        determines the institution no longer meets the 
                        requirements, classify the institution as a 
                        for-profit institution.
    ``(b) Requirements.--To be eligible to convert to a nonprofit or 
public institution of higher education, a for-profit institution of 
higher education shall submit an application to the Secretary that 
demonstrates that--
            ``(1) the institution, as of the date of the application, 
        meets the definition of a nonprofit or public institution of 
        higher education;
            ``(2) the institution has not acquired any other 
        institution of higher education (as defined in section 102), or 
        a significant portion of the assets of such other institution, 
        for more than the value of such other institution or such 
        assets, respectively, as determined in accordance with 
        subsection (d); and
            ``(3) in the case of an institution that has been acquired 
        by another party, such institution is not controlled by such 
        party.
    ``(c) Transition Period.--A for-profit institution of higher 
education approved for conversion under subsection (a) shall be subject 
to any rules and regulations that apply to for-profit institutions of 
higher education, as defined in section 102(b), for a minimum 5-year 
period after conversion, which may be extended by the Secretary if the 
Secretary identifies a reason for concern relating to the institution's 
converted status.
    ``(d) Value.--The term `value', with respect to an acquisition 
under subsection (b)(2)--
            ``(1) includes the value of any ongoing relationship 
        (including any contract, agreement, lease, or other arrangement 
        between the acquiring institution and the acquired institution) 
        between affiliates, as defined in section 180.905 of title 2, 
        Code of Federal Regulations, as in effect on the date of 
        enactment of the PROTECT Students Act of 2019; and
            ``(2) may be demonstrated through--
                    ``(A) third-party valuation;
                    ``(B) independent financing of the acquisition 
                based upon the assets acquired; or
                    ``(C) full and open competition in the acquisition, 
                as such term is defined in section 2.101(b) of title 
                48, Code of Federal Regulations, as in effect on the 
                date of the enactment of the PROTECT Students Act of 
                2019, of services or assets.
    ``(e) Publication.--
            ``(1) Application.--Before the Secretary may approve the 
        conversion of an institution of higher education under 
        subsection (a), the Secretary shall publish the application of 
        the institution in the Federal Register with a notice and 
        comment period of not less than 60 days.
            ``(2) Determination.--The Secretary shall publish each 
        determination on an application for conversion under this 
        section, and the reasons for such determination, in the Federal 
        Register.
    ``(f) Tax Exempt Status.--In carrying out this section, the 
Secretary may consider the nonprofit corporation status under State law 
or the tax exempt status of an institution of higher education under 
section 501(c)(3) of the Internal Revenue Code of 1986, but shall not 
use such statuses as the sole determining factor for approval under 
subsection (a).
    ``(g) Public Representation and Marketing of Nonprofit Status.--A 
for-profit institution of higher education that receives assistance 
under title IV that is seeking to convert under this section shall not 
promote or market itself, in any manner, as a nonprofit institution of 
higher education until--
            ``(1) the Secretary has approved the conversion of the 
        institution to a nonprofit institution under this section;
            ``(2) the Commissioner of Internal Revenue has approved the 
        institution as tax exempt for purposes of the Internal Revenue 
        Code of 1986 and the institution is an organization described 
        in clause (ii) or (vi) of section 170(b)(1)(A) of such Code; 
        and
            ``(3) a nationally recognized accrediting agency or 
        association recognized by the Secretary pursuant to section 496 
        has approved the nonprofit status of the institution.''.
    (b) Review and Enforcement Process.--
            (1) In general.--Section 487(c)(1) of the Act (20 U.S.C. 
        1094(c)(1)) is amended--
                    (A) by redesignating subparagraphs (B) through (I) 
                as subparagraphs (C) through (J), respectively; and
                    (B) by inserting after subparagraph (A) the 
                following:
                    ``(B)(i) a requirement that an institution of 
                higher education shall use the same qualified, 
                independent organization or person, in accordance with 
                standards established by the Comptroller General for 
                the audit of governmental organizations, programs, and 
                functions, and as prescribed in regulations of the 
                Secretary, for both the financial and compliance audits 
                required for a given year under subparagraph (A);
                    ``(ii) a requirement that the qualified, 
                independent organization or person chosen to conduct 
                the annual financial and compliance audits under 
                subparagraph (A) shall document, in the audit, any 
                transactions or relationships that may conflict with an 
                institution's status as a nonprofit institution of 
                higher education or public institution of higher 
                education; and
                    ``(iii) in accordance with section 489A, in any 
                case where the Secretary determines, after providing an 
                institution with reasonable notice and an opportunity 
                for a hearing, that the institution is classified as a 
                public institution of higher education or a nonprofit 
                institution for purposes of this Act but is in 
                violation of, or has failed to carry out, any 
                requirements relating to such nonprofit or public 
                status in accordance with paragraphs (13) and (15) of 
                section 103 or section 124, a process through which the 
                Secretary may--
                            ``(I) limit, suspend, or terminate the 
                        institution's participation in any program 
                        under this title under section 489A(b)(1);
                            ``(II) impose a civil penalty under section 
                        489A(c); or
                            ``(III) take an emergency action under 
                        section 498A(d) against an institution.'';
            (2) Conforming amendments.--Section 487(i) (20 U.S.C. 
        1094(i)), as redesignated by section 101(b)(3), is further 
        amended--
                    (A) by striking ``subsection (c)(1)(D),''; and
                    (B) by inserting ``or subsection (b)(1) or (c) of 
                section 489A'' after ``of this section''.

SEC. 103. FOR-PROFIT EDUCATION OVERSIGHT COORDINATION COMMITTEE.

    Part B of title I (20 U.S.C. 1011 et seq.), as amended by section 
102, is further amended by adding at the end the following:

``SEC. 125. FOR-PROFIT EDUCATION OVERSIGHT COORDINATION COMMITTEE.

    ``(a) Definitions.--In this section:
            ``(1) Executive officer.--The term `executive officer', 
        with respect to a for-profit institution that is a publicly 
        traded corporation, means--
                    ``(A) the president of such corporation;
                    ``(B) a vice president of such corporation who is 
                in charge of a principal business unit, division, or 
                function of such corporation, such as sales, 
                administration, or finance; or
                    ``(C) any other officer or person who performs a 
                policy-making function for such corporation.
            ``(2) Federal education assistance funds.--The term 
        `Federal education assistance funds' has the meaning given the 
        term in section 102(b)(2)(B).
            ``(3) For-profit institution.--The term `for-profit 
        institution'--
                    ``(A) means a for-profit institution of higher 
                education as defined in section 102(b)(2); and
                    ``(B) includes a former for-profit institution of 
                higher education that has been approved for conversion 
                under section 124 but is still in the transition period 
                required under section 124(c).
            ``(4) Private education loan.--The term `private education 
        loan'--
                    ``(A) means a loan provided by a private 
                educational lender (as defined in section 140(a) of the 
                Truth in Lending Act (15 U.S.C. 1650(a))) that--
                            ``(i) is not made, insured, or guaranteed 
                        under title IV;
                            ``(ii) is issued expressly for 
                        postsecondary educational expenses to a 
                        borrower, regardless of whether the loan is 
                        provided through the educational institution 
                        that the subject student attends or directly to 
                        the borrower from the private educational 
                        lender; and
                            ``(iii) is not made, insured, or guaranteed 
                        under title VII or title VIII of the Public 
                        Health Service Act (42 U.S.C. 292 et seq. and 
                        296 et seq.); and
                    ``(B) does not include an extension of credit under 
                an open end consumer credit plan, a reverse mortgage 
                transaction, a residential mortgage transaction, or any 
                other loan that is secured by real property or a 
                dwelling.
            ``(5) Recruiting and marketing activities.--The term 
        `recruiting and marketing activities' means the recruiting and 
        marketing activities described in section 126(d)(2).
            ``(6) State approval agency.--The term `State approval 
        agency' means any State agency that determines whether an 
        institution of higher education is legally authorized within 
        such State to provide a program of education beyond secondary 
        education.
            ``(7) Veterans service organization.--The term `veterans 
        service organization' means an organization recognized by the 
        Secretary of Veterans Affairs for the representation of 
        veterans under section 5902 of title 38, United States Code.
    ``(b) Establishment of Committee.--
            ``(1) Establishment.--There is established in the executive 
        branch a committee to be known as the `For-Profit Education 
        Oversight Coordination Committee' (referred to in this section 
        as the `Committee') and to be composed of the head (or the 
        designee of such head) of each of the following Federal 
        entities:
                    ``(A) The Department of Education.
                    ``(B) The Bureau of Consumer Financial Protection.
                    ``(C) The Department of Justice.
                    ``(D) The Securities and Exchange Commission.
                    ``(E) The Department of Defense.
                    ``(F) The Department of Veterans Affairs.
                    ``(G) The Federal Trade Commission.
                    ``(H) The Department of Labor.
                    ``(I) The Internal Revenue Service.
                    ``(J) The enforcement unit of the Performance-Based 
                Organization established under section 141(g).
                    ``(K) At the discretion of the Chairperson of the 
                Committee, any other relevant Federal agency or 
                department.
            ``(2) Purposes.--The Committee shall have the following 
        purposes:
                    ``(A) Coordinate Federal oversight of for-profit 
                institutions to--
                            ``(i) improve enforcement of applicable 
                        Federal laws and regulations;
                            ``(ii) increase accountability of for-
                        profit institutions to students and taxpayers; 
                        and
                            ``(iii) ensure the promotion of quality 
                        education programs.
                    ``(B) Coordinate Federal activities to protect 
                students from unfair, deceptive, abusive, unethical, 
                fraudulent, or predatory practices, policies, or 
                procedures of for-profit institutions.
                    ``(C) Encourage information sharing among agencies 
                related to Federal investigations, audits, program 
                reviews, inquiries, complaints, financial statements, 
                and other information relevant to the oversight of for-
                profit institutions.
                    ``(D) Develop binding memoranda of understanding 
                that the Federal entities represented on the committee 
                will use regarding the sharing of information to 
                exercise the oversight described in this section.
                    ``(E) Increase coordination and cooperation between 
                Federal and State agencies, including State Attorneys 
                General and State approval agencies, with respect to 
                improving oversight and accountability of for-profit 
                institutions.
                    ``(F) Develop best practices and consistency among 
                Federal and State agencies in the dissemination of 
                consumer information regarding for-profit institutions 
                to ensure that students, parents, and other 
                stakeholders have easy access to such information.
            ``(3) Membership.--
                    ``(A) Designees.--For any designee described in 
                paragraph (1), the head of the member entity shall 
                appoint a high-level official who exercises significant 
                decision-making authority for the oversight or 
                investigatory activities and responsibilities related 
                to for-profit institutions of the respective member 
                entity.
                    ``(B) Chairperson.--The Secretary of Education or 
                the designee of such Secretary shall serve as the 
                Chairperson of the Committee.
                    ``(C) Committee support.--The head of each entity 
                described in paragraph (1) shall ensure appropriate 
                staff and officials of such entity are available to 
                support the Committee-related work of such entity.
    ``(c) Meetings.--
            ``(1) Committee meetings.--The members of the Committee 
        shall meet regularly, but not less than once during each 
        quarter of each fiscal year, to carry out the purposes 
        described in subsection (b)(2).
            ``(2) Meetings with state agencies and stakeholders.--The 
        Committee shall meet not less than once each fiscal year, and 
        shall otherwise interact regularly, with State Attorneys 
        General, State approval agencies, veterans service 
        organizations, and consumer advocates to carry out the purposes 
        described in subsection (b)(2).
    ``(d) Director.--The Chairperson shall appoint a full-time 
executive director to support the Committee and may appoint and fix the 
pay of additional staff as the Chairperson considers appropriate.
    ``(e) Report.--
            ``(1) In general.--The Committee shall submit a report each 
        year to the authorizing committees and any other committee of 
        Congress that the Committee determines appropriate.
            ``(2) Public access.--The report described in paragraph (1) 
        shall be made available to the public in a manner that is 
        easily accessible to parents, students, and other stakeholders, 
        in accordance with the best practices developed under 
        subsection (b)(2)(F).
            ``(3) Contents.--
                    ``(A) In general.--The report shall include--
                            ``(i) an accounting of any action (as 
                        defined in subparagraph (C)) taken by the 
                        Federal Government, any member entity of the 
                        Committee, or a State--
                                    ``(I) to enforce Federal or State 
                                laws and regulations applicable to for-
                                profit institutions;
                                    ``(II) to hold for-profit 
                                institutions accountable to students 
                                and taxpayers; and
                                    ``(III) to promote quality 
                                education programs;
                            ``(ii) a summary of complaints against each 
                        for-profit institution received by any member 
                        entity of the Committee;
                            ``(iii) the data described in subparagraph 
                        (B) and any other data relevant to for-profit 
                        institutions that the Committee determines 
                        appropriate; and
                            ``(iv) recommendations of the Committee for 
                        such legislative and administrative actions as 
                        the Committee determines are necessary to--
                                    ``(I) improve enforcement of 
                                applicable Federal laws;
                                    ``(II) increase accountability of 
                                for-profit institutions to students and 
                                taxpayers; and
                                    ``(III) ensure the promotion of 
                                quality education programs.
                    ``(B) Data.--
                            ``(i) Industry-wide and institution-level 
                        data.--The report shall include data on all 
                        for-profit institutions, including the 
                        following:
                                    ``(I) The following data, in the 
                                aggregate for all for-profit 
                                institutions and disaggregated for each 
                                individual for-profit institution:
                                            ``(aa) The total amount of 
                                        Federal education assistance 
                                        funds that for-profit 
                                        institutions received for the 
                                        previous academic year, and the 
                                        percentage of the total amount 
                                        of Federal education assistance 
                                        funds provided to institutions 
                                        of higher education (as defined 
                                        in section 102) for such 
                                        previous academic year that 
                                        reflects such total amount of 
                                        Federal education assistance 
                                        funds provided to for-profit 
                                        institutions for such previous 
                                        academic year.
                                            ``(bb) The total amount of 
                                        Federal education assistance 
                                        funds that for-profit 
                                        institutions received for the 
                                        previous academic year, 
                                        disaggregated by whether the 
                                        funds were provided--

                                                    ``(AA) in the form 
                                                of a loan under title 
                                                IV;

                                                    ``(BB) in the form 
                                                of a grant under such 
                                                title;

                                                    ``(CC) under 
                                                chapter 33 of title 38, 
                                                United States Code;

                                                    ``(DD) for tuition 
                                                and expenses under 
                                                section 2007 of title 
                                                10, United States Code;

                                                    ``(EE) under 
                                                section 1784a of title 
                                                10, United States Code; 
                                                and

                                                    ``(FF) in a manner 
                                                not described in 
                                                subitems (AA) through 
                                                (EE).

                                            ``(cc) The percentage of 
                                        the total amount of Federal 
                                        education assistance funds 
                                        provided to institutions of 
                                        higher education (as defined in 
                                        section 102) for such previous 
                                        academic year for each of the 
                                        programs described in subitems 
                                        (AA) through (EE) of item (bb) 
                                        that reflects such total amount 
                                        of Federal education assistance 
                                        funds provided to for-profit 
                                        institutions for such previous 
                                        academic year for each of such 
                                        programs.
                                            ``(dd) Expenses by 
                                        classification, including 
                                        separate classifications for--

                                                    ``(AA) pre-
                                                enrollment recruiting 
                                                and marketing 
                                                activities;

                                                    ``(BB) student 
                                                instruction; and

                                                    ``(CC) student 
                                                support services.

                                            ``(ee) Net income and other 
                                        changes in equity.
                                            ``(ff) Executive 
                                        compensation for the 10 
                                        highest-paid for-profit 
                                        institution executives.
                                            ``(gg) The average 
                                        retention and graduation rates 
                                        for students pursuing a 
                                        certificate or a degree at for-
                                        profit institutions.
                                            ``(hh) The average cohort 
                                        default rate (as defined in 
                                        section 435(m)).
                                            ``(ii) With respect to all 
                                        careers requiring the passage 
                                        of a licensing examination, and 
                                        disaggregated by each such 
                                        career--

                                                    ``(AA) the average 
                                                passage rate of 
                                                individuals who 
                                                attended a for-profit 
                                                institution taking such 
                                                examination to pursue 
                                                such a career;

                                                    ``(BB) the average 
                                                passage rate of all 
                                                individuals taking such 
                                                exam to pursue such a 
                                                career; and

                                                    ``(CC) the 
                                                percentage of all 
                                                individuals taking such 
                                                exam who attended a 
                                                for-profit institution.

                                            ``(jj) Information 
                                        regarding the use of private 
                                        education loans at for-profit 
                                        institutions that includes--

                                                    ``(AA) an estimate 
                                                of the total number of 
                                                such loans; and

                                                    ``(BB) information 
                                                on the average debt, 
                                                default rate, and 
                                                interest rate of such 
                                                loans.

                                    ``(II) The financial composite 
                                scores, in accordance with section 498, 
                                for each for-profit institution, the 
                                name and dollar amount of any letters 
                                of credit required under subpart L of 
                                part 668 of title 34, Code of Federal 
                                Regulations (or any successor 
                                regulation), and the name of each 
                                institution placed under the heightened 
                                cash monitoring payment method, as 
                                established under section 668.162(d) of 
                                title 34, Code of Federal Regulations 
                                (or any successor regulation).
                            ``(ii) Data on corporations.--
                                    ``(I) In general.--The report shall 
                                include data on for-profit institutions 
                                that are publicly traded corporations, 
                                consisting of information on--
                                            ``(aa) any pre-tax profit 
                                        of such for-profit 
                                        institutions--

                                                    ``(AA) reported as 
                                                a total amount and as 
                                                the average percentage 
                                                of revenue for all such 
                                                for-profit 
                                                institutions; and

                                                    ``(BB) reported as 
                                                a total amount and as 
                                                the average percentage 
                                                of revenue for each 
                                                such for-profit 
                                                institution;

                                            ``(bb) spending on pre-
                                        enrollment recruiting and 
                                        marketing activities, student 
                                        instruction, and student 
                                        support services, and for each 
                                        of the 3 categories separately 
                                        reported--

                                                    ``(AA) as a total 
                                                amount and the average 
                                                percentage of revenue 
                                                for all such for-profit 
                                                institutions; and

                                                    ``(BB) for each 
                                                such for-profit 
                                                institution;

                                            ``(cc) total compensation 
                                        packages of the executive 
                                        officers of each such for-
                                        profit institution;
                                            ``(dd) a list of 
                                        institutional loan programs 
                                        offered by each such for-profit 
                                        institution that includes 
                                        information on the default and 
                                        interest rates of such 
                                        programs; and
                                            ``(ee) the data described 
                                        in subclauses (II) and (III).
                                    ``(II) Disaggregated by 
                                ownership.--The report shall include 
                                data on for-profit institutions that 
                                are corporations, disaggregated by 
                                corporate or parent entity, brand name, 
                                and campus, consisting of--
                                            ``(aa) the total cost of 
                                        attendance for each program at 
                                        each such for-profit 
                                        institution;
                                            ``(bb) total enrollment, 
                                        disaggregated by--

                                                    ``(AA) individuals 
                                                enrolled in programs 
                                                taken exclusively 
                                                online;

                                                    ``(BB) individuals 
                                                enrolled in programs 
                                                that are exclusively in 
                                                person; and

                                                    ``(CC) individuals 
                                                enrolled in programs 
                                                that are a mix of 
                                                online and in person;

                                            ``(cc) the retention and 
                                        graduation rates for students 
                                        pursuing a degree at such for-
                                        profit institutions, including 
                                        the number of students who 
                                        enroll each year and withdraw 
                                        in less than one year;
                                            ``(dd) the percentage of 
                                        students enrolled in such for-
                                        profit institutions who 
                                        complete a program of such an 
                                        institution within--

                                                    ``(AA) the standard 
                                                period of completion 
                                                for such program; and

                                                    ``(BB) a period 
                                                that is 150 percent of 
                                                such standard period of 
                                                completion;

                                            ``(ee) the average cohort 
                                        default rate, as defined in 
                                        section 435(m), for such for-
                                        profit institutions, and an 
                                        annual list of cohort default 
                                        rates (as so defined) for all 
                                        for-profit institutions;
                                            ``(ff) the median 
                                        educational debt incurred by 
                                        students who complete a program 
                                        at such a for-profit 
                                        institution of higher 
                                        education;
                                            ``(gg) the median 
                                        educational debt incurred by 
                                        students who start but do not 
                                        complete a program at such a 
                                        for-profit institution of 
                                        higher education;
                                            ``(hh) the job placement 
                                        rate for students who complete 
                                        a program at such a for-profit 
                                        institution of higher education 
                                        and the type of employment 
                                        obtained by such students;
                                            ``(ii) for careers 
                                        requiring the passage of a 
                                        licensing examination, the rate 
                                        of individuals who attended 
                                        such a for-profit institution 
                                        and passed such an examination; 
                                        and
                                            ``(jj) the number of 
                                        complaints from students 
                                        enrolled in such for-profit 
                                        institutions that have been 
                                        submitted to any member entity 
                                        of the Committee.
                                    ``(III) Department of defense and 
                                veterans affairs assistance.--
                                            ``(aa) In general.--To the 
                                        extent practicable, the report 
                                        shall provide information on 
                                        the data described in subclause 
                                        (II) for individuals who pay 
                                        for the costs of attending a 
                                        for-profit institution of 
                                        higher education that is a 
                                        corporation by using Federal 
                                        education assistance provided 
                                        under--

                                                    ``(AA) chapter 33 
                                                of title 38, United 
                                                States Code;

                                                    ``(BB) section 2007 
                                                of title 10, United 
                                                States Code; and

                                                    ``(CC) section 
                                                1784a of title 10, 
                                                United States Code.

                                            ``(bb) Revenue.--The report 
                                        shall provide information on 
                                        the revenue of such for-profit 
                                        institutions that is derived 
                                        from the Federal education 
                                        assistance described in item 
                                        (aa).
                            ``(iii) Comparison data.--The report shall 
                        provide information comparing, in the aggregate 
                        and disaggregated by State, each of the data 
                        elements described in clause (ii) for for-
                        profit institutions that are publicly traded 
                        corporations, for-profit institutions that are 
                        not owned or operated by a publicly traded 
                        company, nonprofit institutions, and public 
                        institutions.
                            ``(iv) Information regarding ownership 
                        interests.--The report shall, for each for-
                        profit institution of higher education that is 
                        not a publicly traded corporation, report the 
                        name of any individual, partnership, or 
                        corporation that holds an ownership interest of 
                        5 percent or greater of the for-profit 
                        institution of higher education.
                    ``(C) Accounting of any action.--For the purposes 
                of subparagraph (A)(i), the term `any action' shall 
                include--
                            ``(i) a complaint filed by a Federal or 
                        State agency in a local, State, Federal, or 
                        Tribal court;
                            ``(ii) an administrative proceeding by a 
                        Federal or State agency involving noncompliance 
                        of any applicable law or regulation;
                            ``(iii) any other review, audit, or 
                        administrative process by any Federal or State 
                        agency that results in a penalty, suspension, 
                        or termination from any Federal or State 
                        program; or
                            ``(iv) a negative or adverse action taken 
                        by an accrediting agency or association 
                        recognized by the Secretary pursuant to section 
                        496 with respect to an approved institution or 
                        program.
    ``(f) For-Profit College Warning List for Parents and Students.--
            ``(1) In general.--Each academic year, the Committee shall 
        publish a list to be known as the `For-Profit College Warning 
        List for Parents and Students' to be comprised of for-profit 
        institutions--
                    ``(A) that have engaged in illegal activity during 
                the previous academic year as determined by a Federal 
                or State court;
                    ``(B) that have entered into a settlement with a 
                Federal or State entity resulting in a monetary 
                payment;
                    ``(C) that have had any higher education program 
                limited, withdrawn, or suspended by an external entity 
                (such as a Federal or State entity or an accrediting 
                agency or association recognized by the Secretary 
                pursuant to section 496); and
                    ``(D) for which the Committee has sufficient 
                evidence of widespread or systemic unfair, deceptive, 
                abusive, unethical, fraudulent, or predatory practices, 
                policies, or procedures that pose a threat to the 
                academic success, financial security, or general best 
                interest of students.
            ``(2) Determinations.--In making a determination pursuant 
        to paragraph (1)(D), the Committee may consider evidence that 
        includes the following:
                    ``(A) Any consumer complaint collected by any 
                member entity of the Committee.
                    ``(B) Any complaint filed by a Federal or State 
                entity in a Federal, State, local, or Tribal court.
                    ``(C) Any administrative proceeding by a Federal or 
                State entity involving noncompliance of any applicable 
                law or regulation.
                    ``(D) Any other review, audit, or administrative 
                process by any Federal or State entity that results in 
                a penalty, suspension, or termination from any Federal 
                or State program.
                    ``(E) Data or information submitted by a for-profit 
                institution to any accrediting agency or association 
                recognized by the Secretary pursuant to section 496 or 
                the findings or adverse actions of any such accrediting 
                agency or association.
                    ``(F) Information submitted by a for-profit 
                institution to any member entity of the Committee.
                    ``(G) Any other evidence that the Committee 
                determines relevant in making such determination.
            ``(3) Publication.--Not later than July 1 of each fiscal 
        year, the Committee shall publish the list under paragraph (1) 
        prominently and in a manner that is easily accessible to 
        parents, students, and other stakeholders, in accordance with 
        any best practices developed under subsection (b)(2)(F).''.

               TITLE II--STUDENT AND BORROWER PROTECTIONS

SEC. 201. GAINFUL EMPLOYMENT PROGRAMS.

    (a) In General.--Section 102 (20 U.S.C. 1002), as amended by 
sections 4(b) and 101, is further amended--
            (1) in subsection (b)(1)(A)--
                    (A) by striking clause (ii);
                    (B) by striking ``(i) provides'' and inserting 
                ``provides''; and
                    (C) by striking ``recognized occupation; or'' and 
                inserting ``recognized occupation, as described in 
                subsection (e);'';
            (2) in subsection (c)(1)(A), by inserting ``, as described 
        in subsection (e)'' after ``recognized occupation''; and
            (3) by adding at the end the following:
    ``(e) Gainful Employment in a Recognized Occupation.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Debt-to-earnings rates.--The term `debt-to-
                earnings rates' means the discretionary income rate and 
                the annual earnings rate, as determined under the 
                gainful employment rules.
                    ``(B) Eligible training program.--The term 
                `eligible training program' means a program of training 
                that--
                            ``(i) in order to qualify for assistance 
                        under title IV, is required under subsection 
                        (b)(1)(A)(i) or (c)(1)(A), or section 
                        101(b)(1), to satisfy the gainful employment 
                        requirements of this subsection; and
                            ``(ii) is offered by an institution 
                        eligible to receive assistance under such 
                        title.
                    ``(C) Gainful employment rules.--The term `gainful 
                employment rules' means the rules issued under subpart 
                Q of title 34, Code of Federal Regulations, as 
                published on October 31, 2014, relating to gainful 
                employment in a recognized occupation.
            ``(2) In general.--An eligible training program prepares 
        students for gainful employment in a recognized occupation if 
        the eligible training program complies with all requirements of 
        the gainful employment rules (including any modifications made 
        by this subsection), including--
                    ``(A) the provisions relating to the calculation of 
                debt-to-earnings rates for the eligible training 
                program, using actual annual earnings data of students 
                who completed the eligible training program;
                    ``(B) the provisions relating to the determination 
                of outcomes for an eligible training program based on 
                the debt-to-earnings rates, including whether an 
                eligible training program is a `passing', `failing', or 
                `zone' program;
                    ``(C) the provisions relating to the associated 
                consequences for an eligible training program that is 
                not passing the debt-to-earnings rates, including a 
                student warning and ultimate loss of eligibility for 
                assistance under title IV;
                    ``(D) the requirements relating to disclosure, 
                reporting, and certification; and
                    ``(E) the calculation of completion rates, 
                withdrawal rates, repayment rates, program cohort 
                default rates, and median loan debt for the eligible 
                training program.
            ``(3) Annual calculations and verifications.--The Secretary 
        shall carry out all of the following:
                    ``(A) On an annual calendar year basis 
                (notwithstanding section 668.403(c)(5) of the gainful 
                employment rules) and for each eligible training 
                program, calculate for each award year both of the 
                debt-to-earnings rates for the eligible training 
                program, issue a notice of determination, and enforce 
                restrictions based on those determinations. In order to 
                carry out the preceding sentence, the Secretary shall--
                            ``(i) create a list of students who 
                        completed the eligible training program during 
                        the cohort period identified by the Secretary;
                            ``(ii) provide the list to the institution 
                        offering the eligible training program and 
                        allow the institution a 45-day period beginning 
                        the day after the date that the Secretary 
                        provides the list to the institution, to submit 
                        any corrections to the list;
                            ``(iii) after resolving any corrections, 
                        provide the institution with the final list and 
                        submit the final list of students who completed 
                        the eligible training program to the Social 
                        Security Administration, the Internal Revenue 
                        Service, or any other Federal agency that 
                        administers a database that contains earnings 
                        information that can be matched to the 
                        individuals named in the final list, and 
                        retrieve the mean and median annual earnings of 
                        students on the lists, in aggregate and not in 
                        individual form, within 10 business days after 
                        submission;
                            ``(iv) calculate and send the debt-to-
                        earnings rates to the institution offering the 
                        eligible training program and allow the 
                        institution a 45-day period, beginning after 
                        the date the Secretary notifies an institution 
                        of the debt-to-earnings rates, to challenge the 
                        accuracy of information used to calculate the 
                        eligible training program's median loan debt;
                            ``(v) subject to the resolution of any 
                        challenge, issue a notice of determination 
                        informing the institution--
                                    ``(I) of the final debt-to-earnings 
                                rates of each eligible training program 
                                to the institution offering the 
                                program;
                                    ``(II) of the final determination 
                                regarding whether the program is a 
                                passing, failing, or zone program, or 
                                is ineligible, and the consequences of 
                                that determination;
                                    ``(III) whether the program could 
                                become ineligible based on its final 
                                debt-to-earnings rates for the next 
                                award year;
                                    ``(IV) whether the institution is 
                                required to provide warnings to 
                                enrolled students and prospective 
                                students; and
                                    ``(V) if the program is determined 
                                to be a failing or zone program due to 
                                the final debt-to-earnings rates, how 
                                the program may make an alternate 
                                earnings appeal, in accordance with 
                                paragraph (4);
                            ``(vi) with respect to an institution that 
                        receives a notification from the Secretary 
                        under clause (v)(III) and that does not submit 
                        an intent to appeal in accordance with 
                        paragraph (4) or for which the appeal is 
                        denied, require the institution, not later than 
                        30 days after receiving the notification of the 
                        determination or denial, to--
                                    ``(I) issue warnings to enrolled 
                                students and prospective students; and
                                    ``(II) update the disclosure 
                                template, as required by the gainful 
                                employment rules, as modified by 
                                paragraph (5); and
                            ``(vii) enforce restrictions whereby--
                                    ``(I) an institution may not 
                                disburse program funds under title IV 
                                to students enrolled in an ineligible 
                                program; and
                                    ``(II) an institution may not seek 
                                to reestablish the eligibility of a 
                                failing or zone program that it 
                                discontinued voluntarily, reestablish 
                                the eligibility of a program that is 
                                ineligible under the debt-to-earnings 
                                rates, or establish the eligibility of 
                                a program that is substantially similar 
                                to the discontinued or ineligible 
                                program, until 3 years following the 
                                date specified in the notice of 
                                determination informing the institution 
                                of the program's ineligibility or the 
                                date the institution discontinued the 
                                failing or zone program; and
                    ``(B) develop processes to verify, on an annual 
                calendar year basis, that--
                            ``(i) required warnings under the gainful 
                        employment rules are delivered to enrolled 
                        students and prospective students and are 
                        published on the eligible training program's 
                        disclosure template, in accordance with 
                        subparagraph (A)(vii); and
                            ``(ii) each eligible training program is 
                        publishing the disclosure template on the 
                        website of the eligible training program, as 
                        required by the gainful employment rules, as 
                        modified by paragraph (5).
            ``(4) Alternate earnings appeals process.--The Secretary 
        shall establish and enforce an appeals process for any 
        institution of higher education that wish to file an alternate 
        earnings appeal for an eligible training program that is a 
        failing or zone program under the debt-to-earnings rates. The 
        appeals process shall be carried out in accordance with the 
        gainful employment rules, except that the appeals process shall 
        also--
                    ``(A) allow an institution to file an alternate 
                earnings appeal, in accordance with the gainful 
                employment rules, to request the recalculation of a 
                gainful employment program's most recent final debt-to-
                earnings rates issued by the Secretary, except that--
                            ``(i) any institution that elects to submit 
                        alternate earnings from an institutional survey 
                        shall, in addition to the other requirements in 
                        the gainful employment rules--
                                    ``(I) include a test for non-
                                response bias;
                                    ``(II) allow for an exception to 
                                issues of bias due to sample sizes 
                                below 10; and
                                    ``(III) subject the institutional 
                                survey instrument and survey responses 
                                to an audit by the Inspector General of 
                                the Department; and
                            ``(ii) the Inspector General of the 
                        Department shall--
                                    ``(I) audit the institutional 
                                survey instrument, and the survey 
                                responses, submitted by an institution 
                                under clause (i); and
                                    ``(II) furnish data showing the 
                                Inspector General verified the accuracy 
                                of student survey responses; and
                    ``(B) require the Secretary to accept the alternate 
                earnings estimate from an institutional survey if the 
                test for non-response bias includes a response rate 
                that guarantees that the lower bound of the 95 percent 
                confidence interval of the alternate earnings estimate 
                is at or above the earnings level retrieved from the 
                Social Security Administration, the Internal Revenue 
                Service, or any other Federal agency with a database 
                containing individual-level earnings data.
            ``(5) Gainful employment disclosure requirements.--
        Notwithstanding section 668.412(a) of the gainful employment 
        rules, the Secretary shall include in the disclosure template 
        all the information listed in paragraphs (1) through (16) of 
        section 668.412(a) of the gainful employment rules, unless the 
        Secretary--
                    ``(A) determines that consumer testing supports the 
                noninclusion of the information listed in any such 
                paragraph; and
                    ``(B) publishes the Secretary's determination, and 
                the consumer testing supporting the determination, on 
                the public website of the Department.
            ``(6) Role of social security administration, the internal 
        revenue service, and other federal agencies.--The Commissioner 
        of Social Security, the Commissioner of Internal Revenue, and 
        the head of any other Federal agency that administers the 
        database of individual-level earnings data shall, in 
        coordination with the Secretary, timely provide the Secretary 
        with the earnings information as required in accordance with 
        paragraph (3)(A)(iii) and the gainful employment rules.''.
    (b) Conforming Amendment.--Section 101(b)(1) (20 U.S.C. 1001(b)(1)) 
is amended by inserting ``, as described in section 102(e),'' after 
``recognized occupation''.
    (c) Effective Date.--Notwithstanding section 3, this section shall 
take effect on the date of enactment of this Act.

SEC. 202. PROHIBITION ON INSTITUTIONS LIMITING STUDENT LEGAL ACTION.

    (a) Enforcement of Arbitration Agreements.--
            (1) In general.--Chapter 1 of title 9, United States Code, 
        (relating to the enforcement of arbitration agreements) shall 
        not apply to an enrollment agreement made between a student and 
        an institution of higher education.
            (2) Definition.--In this section, the term ``institution of 
        higher education'' has the meaning given such term in section 
        102 of the Higher Education Act of 1965 (20 U.S.C. 1002), as 
        amended by section 101 of this Act.
    (b) Prohibition on Limitations on Ability of Students To Pursue 
Claims Against Certain Institutions of Higher Education.--Section 
487(a) (20 U.S.C. 1094(a)), as amended by section 101, is further 
amended by adding at the end the following:
            ``(29) The institution will not require any student to 
        agree to, and will not enforce, any limitation or restriction 
        (including a limitation or restriction on any available choice 
        of applicable law, a jury trial, or venue) on the ability of a 
        student to pursue a claim, individually or with others, against 
        an institution in court.''.
    (c) Effective Date.--Notwithstanding section 3, this section shall 
take effect on the date of enactment of this Act.

SEC. 203. ENFORCEMENT UNIT ESTABLISHED IN THE OFFICE OF FEDERAL STUDENT 
              AID.

    Section 141 (20 U.S.C. 1018) is amended--
            (1) by redesignating subsections (g) through (i) as 
        subsections (h) through (j), respectively; and
            (2) by inserting after subsection (f) the following:
    ``(g) Enforcement Unit.--
            ``(1) In general.--The Chief Operating Officer, in 
        consultation with the Secretary, shall establish an enforcement 
        unit within the PBO (referred to in this section as the 
        `enforcement unit').
            ``(2) Appointment.--
                    ``(A) Chief enforcement officer.--The Chief 
                Operating Officer, in consultation with the Secretary, 
                shall appoint a Chief Enforcement Officer as a senior 
                manager, in accordance with subsection (e), to perform 
                the functions described in this subsection. The Chief 
                Enforcement Officer shall report solely and directly to 
                the Chief Operating Officer.
                    ``(B) Bonus.--Notwithstanding subsection (e), the 
                Chief Enforcement Officer may receive a bonus, 
                separately determined from the methodology which 
                applies to the calculation of bonuses for other senior 
                managers, based upon the Chief Operating Officer's 
                evaluation of the Chief Enforcement Officer's 
                performance in relation to the goals set forth in a 
                performance agreement related to the specific duties of 
                the enforcement unit.
            ``(3) Duties.--The enforcement unit shall--
                    ``(A) receive, process, and analyze allegations and 
                complaints regarding the potential violation of Federal 
                or State law (including civil and criminal law) or 
                other unfair, deceptive, or abusive acts or practices, 
                by institutions of higher education, third party 
                servicers that contract with such institutions, and 
                third party contractors;
                    ``(B) investigate and coordinate investigations of 
                potential or actual misconduct of institutions of 
                higher education, third party servicers that contract 
                with such institutions, and third party contractors; 
                and
                    ``(C) enforce compliance with laws governing 
                Federal student financial assistance programs under 
                title IV, including through the use of an emergency 
                action in accordance to section 489A, the limitation, 
                suspension, or termination of the participation of an 
                eligible institution in a program under title IV, or 
                the imposition of a civil penalty in accordance with 
                section 489A.
            ``(4) Coordination and staffing.--The enforcement unit 
        shall--
                    ``(A) coordinate with relevant Federal and State 
                agencies and oversight bodies, including the For-Profit 
                Education Oversight Coordination Committee established 
                under section 125; and
                    ``(B) hire staff, (including by appointing not more 
                than 10 individuals in positions of excepted service, 
                as described in subsection (h)(3)) with such expertise 
                as is necessary to conduct investigations, respond to 
                allegations and complaints, and enforce compliance with 
                laws governing Federal student financial assistance 
                programs under title IV.
            ``(5) Divisions.--
                    ``(A) In general.--The enforcement unit shall have 
                separate divisions with the following focus areas:
                            ``(i) An investigations division to 
                        investigate potential or actual misconduct at 
                        institutions of higher education, third party 
                        servicers that contract with such institutions, 
                        and third party contractors.
                            ``(ii) A division focused on evaluating the 
                        claims of borrowers who assert a defense to 
                        repayment of Federal student loans, or groups 
                        of borrowers who qualify to assert such a 
                        defense to repayment, under section 455(h).
                            ``(iii) A division focused on oversight of 
                        the Jeanne Clery Disclosure of Campus Security 
                        Policy and Campus Crime Statistics Act, the 
                        reporting of crime and fire statistics by 
                        institutions of higher education, and the 
                        oversight and enforcement of section 120 
                        (relating to drug and alcohol abuse 
                        prevention).
                            ``(iv) A division to administer the 
                        Secretary's authority to fine, limit, suspend, 
                        terminate, or take action against institutions 
                        of higher education, third party servicers that 
                        contract with such institutions, and third 
                        party contractors, participating in the Federal 
                        student financial assistance programs under 
                        title IV.
                            ``(v) A division that administers a program 
                        of compliance monitoring and oversight of 
                        institutions of higher education, third party 
                        servicers that contract with such institutions, 
                        and third party contractors, including systems 
                        and procedures to support the eligibility, 
                        certification, and oversight of program 
                        participants, for all institutions of higher 
                        education participating in the Federal student 
                        financial assistance programs under title IV.
                            ``(vi) Any other division that the Chief 
                        Enforcement Officer, in coordination with the 
                        Chief Operating Officer and the Secretary, 
                        determines is necessary.
                    ``(B) Reporting.--The staff of each division 
                described in subparagraph (A) shall report to the Chief 
                Enforcement Officer.
            ``(6) Actions recommended.--The Chief Enforcement Officer 
        may recommend, as appropriate to the particular circumstance, 
        that the Chief Operating Officer--
                    ``(A) terminate, suspend, or limit an institution 
                of higher education, a third party servicer that 
                contracts with such institution, or a third party 
                contractor, from participation in one or more programs 
                under title IV (in accordance with section 489A), or 
                provisionally certify such participation (in accordance 
                to section 498(h));
                    ``(B) impose a civil penalty in accordance with 
                section 489A;
                    ``(C) make a recommendation to the Secretary about 
                whether to approve or deny the claims of borrowers, 
                including groups of borrowers, who assert a defense to 
                repayment in accordance with section 455(h); or
                    ``(D) carry out any other enforcement activity 
                applicable to the Department under section 489A.
            ``(7) Definitions.--In this subsection--
                    ``(A) the term `institution of higher education' 
                has the meaning given that term in section 102; and
                    ``(B) the term `third party servicer' has the 
                meaning given that term in section 481(c).''.

SEC. 204. ESTABLISHMENT AND MAINTENANCE OF COMPLAINT RESOLUTION AND 
              TRACKING SYSTEM.

    Title I (20 U.S.C. 1001 et seq.) is amended by adding at the end 
the following new part:

                  ``PART F--COMPLAINT TRACKING SYSTEM

``SEC. 161. COMPLAINT TRACKING SYSTEM.

    ``(a) In General.--
            ``(1) In general.--The Secretary shall maintain a complaint 
        tracking system that includes a single, toll-free telephone 
        number and a website to facilitate the centralized collection 
        of, monitoring of, and response to complaints and reports 
        (including evidence, as available) of suspicious activity (such 
        as unfair, deceptive, or abusive acts or practices) regarding--
                    ``(A) Federal student financial aid and the 
                servicing of postsecondary education loans by loan 
                servicers;
                    ``(B) educational practices and services of 
                institutions of higher education; and
                    ``(C) the recruiting and marketing practices of 
                institutions of higher education.
            ``(2) Definitions.--In this section--
                    ``(A) the term `institution of higher education' 
                has the meaning given that term in section 102; and
                    ``(B) the term `recruiting and marketing 
                activities' means activities described in section 
                126(d)(2) (as added by section 301 of the Preventing 
                Risky Operations from Threatening the Education and 
                Career Trajectories of Students Act of 2019).
    ``(b) Complaints.--Complaints and reports of suspicious activity 
submitted to the tracking system by students, borrowers of student 
loans, staff, or the general public--
            ``(1) may remain anonymous, if the complainant so chooses; 
        and
            ``(2) may describe problems that are systematic in nature 
        and not associated with a particular student.
    ``(c) Establishment of Complaint Tracking Office.--The Secretary 
shall establish within the Department an office whose functions shall 
include establishing and administering the complaint tracking system, 
and widely disseminating information about the complaint tracking 
system, established under this subsection. The Secretary shall--
            ``(1) to the extent necessary, combine and consolidate the 
        other offices and functions of the Department to ensure that 
        the office established under this subsection is the single 
        point of contact for students and borrowers with complaints or 
        reports of suspicious activity regarding Federal student 
        financial aid, student loan servicers, educational practices 
        and services of institutions of higher education, and 
        recruiting and marketing activities of institutions of higher 
        education; and
            ``(2) to the extent practicable, ensure that the office 
        established under this subsection will work with the Student 
        Loan Ombudsman appointed in accordance with section 141(f) and 
        the Student Loan Ombudsman of the Bureau of Consumer Financial 
        Protection to assist borrowers of Federal student loans that 
        submit complaints or reports of suspicious activity to the 
        complaint tracking system.
    ``(d) Handling of Complaints.--
            ``(1) Timely response to complaints.--The Secretary shall 
        establish, in consultation with the heads of appropriate 
        agencies (including the Director of the Bureau of Consumer 
        Financial Protection), reasonable procedures to provide a 
        response to complainants not more than 90 days after receiving 
        a complaint in the complaint tracking system, in writing where 
        appropriate. Each response shall include a description of--
                    ``(A) the steps that have been taken by the 
                Secretary in response to the complaint or report of 
                suspicious activity;
                    ``(B) any responses received by the Secretary from 
                the institution of higher education or from a servicer; 
                and
                    ``(C) any additional actions that the Secretary has 
                taken, or plans to take, in response to the complaint 
                or report of suspicious activity.
            ``(2) Timely response to secretary by institution of higher 
        education or loan servicer.--If the Secretary determines that 
        it is necessary, the Secretary shall notify an institution of 
        higher education or loan servicer that is the subject of a 
        complaint or report of suspicious activity through the 
        complaint tracking system under this subsection regarding the 
        complaint or report and directly address and resolve the 
        complaint or report in the system. Not later than 60 days after 
        receiving such notice, such institution or loan servicer shall 
        provide a response to the Secretary concerning the complaint or 
        report, including--
                    ``(A) the steps that have been taken by the 
                institution or loan servicer to respond to the 
                complaint or report;
                    ``(B) all responses received by the institution or 
                loan servicer from the complainant; and
                    ``(C) any additional actions that the institution 
                or loan servicer has taken, or plans to take, in 
                response to the complaint or report.
            ``(3) Further investigation.--The Secretary may, in the 
        event that the complaint is not adequately resolved or 
        addressed by the responses of the institution of higher 
        education or loan servicer under paragraph (2), ask additional 
        questions of such institution or loan servicer or seek 
        additional information from or action by the institution or 
        loan servicer.
            ``(4) Provision of information.--
                    ``(A) In general.--An institution of higher 
                education or loan servicer shall, in a timely manner, 
                comply with a request by the Secretary for information 
                in the control or possession of such institution or 
                loan servicer concerning a complaint or report of 
                suspicious activity received by the Secretary under 
                this subsection, including supporting written 
                documentation, subject to subparagraph (B).
                    ``(B) Exceptions.--An institution of higher 
                education or loan servicer shall not be required to 
                make available under this subsection--
                            ``(i) any nonpublic or confidential 
                        information, including any confidential 
                        commercial information;
                            ``(ii) any information collected by the 
                        institution for the purpose of preventing fraud 
                        or detecting or making any report regarding 
                        other unlawful or potentially unlawful conduct; 
                        or
                            ``(iii) any information required to be kept 
                        confidential by any other provision of law.
            ``(5) Compliance.--An institution of higher education or 
        loan servicer shall comply with the requirements to provide 
        responses and information, in accordance with this subsection, 
        as a condition of receiving funds under title IV or as a 
        condition of the contract with the Department, as applicable.
    ``(e) Transparency.--
            ``(1) Collecting and sharing information with federal, 
        state, and nationally recognized accrediting agencies.--In 
        accordance with section 444 of the General Education Provisions 
        Act (20 U.S.C. 1232g) (commonly referred to as the `Family 
        Educational Rights and Privacy Act of 1974') and other laws, 
        the Secretary shall coordinate with the heads of relevant 
        Federal or State agencies or entities, and nationally 
        recognized accrediting agencies or associations recognized by 
        the Secretary pursuant to section 496 to--
                    ``(A) collect any complaints and reports of 
                suspicious activity described in subsection (a)(1) from 
                such agencies, entities, or associations; and
                    ``(B) route complaints and reports received by the 
                complaint tracking system under this section and 
                complaints and reports collected in accordance with 
                subparagraph (A) to the Department, the Department of 
                Justice, the Department of Defense, the Department of 
                Veterans Affairs, the Federal Trade Commission Consumer 
                Sentinel Network, the Bureau of Consumer Financial 
                Protection, any equivalent State agency, or the 
                relevant nationally recognized accrediting agency or 
                association.
            ``(2) Interaction with existing complaint systems.--To the 
        extent practicable, all procedures established under this 
        section, and all coordination carried out under paragraph (1), 
        shall be established and carried out in accordance with the 
        complaint tracking systems established under Executive Order 
        13607 (77 Fed. Reg. 25861; relating to establishing principles 
        of excellence for educational institutions serving 
        servicemembers, veterans, spouses, and other family members).
            ``(3) Public information.--
                    ``(A) In general.--The Secretary shall, on an 
                annual basis, publish on the website of the Department 
                information on the complaints and reports of suspicious 
                activity received for each institution of higher 
                education or loan servicer under this subsection, 
                including--
                            ``(i) the number of complaints and reports 
                        received;
                            ``(ii) the types of complaints and reports 
                        received; and
                            ``(iii) where applicable, information about 
                        the resolution of the complaints and reports.
                    ``(B) Data privacy.--In carrying out subparagraph 
                (A), the Secretary shall--
                            ``(i) comply with applicable data privacy 
                        laws and regulations; and
                            ``(ii) ensure that personally identifiable 
                        information is not shared.
            ``(4) Reports.--Each year, the Secretary shall prepare and 
        submit to Congress a report describing--
                    ``(A) the types and nature of complaints or reports 
                the Secretary has received under this section;
                    ``(B) the extent to which complainants are 
                receiving adequate resolution pursuant to this section;
                    ``(C) whether particular types of complaints or 
                reports are more common in a given sector of 
                institutions of higher education or with particular 
                loan servicers;
                    ``(D) any legislative recommendations that the 
                Secretary determines are necessary to better assist 
                students and families regarding the activities 
                described in subsection (a)(1); and
                    ``(E) the institutions of higher education and loan 
                servicers with the highest volume of complaints and 
                reports, as determined by the Secretary.''.

SEC. 205. BORROWER DEFENSE TO REPAYMENT.

    Section 455(h) (20 U.S.C. 1087e) is amended to read as follows:
    ``(h) Borrower Defenses.--
            ``(1) Application.--
                    ``(A) In general.--A borrower of a loan under this 
                part or part B may submit an application to the 
                Secretary claiming a defense to repayment of the loan 
                (as described in paragraph (7)) (referred to in this 
                subsection as a `borrower defense'), at any time and 
                regardless of the current payment status of the loan. 
                The application shall--
                            ``(i) certify that the borrower received 
                        the proceeds of a loan or loans issued under 
                        this part or part B to attend an eligible 
                        institution of higher education;
                            ``(ii) provide evidence that supports the 
                        borrower defense;
                            ``(iii) indicate whether the borrower has 
                        made a claim with respect to the information 
                        underlying the borrower defense with any third 
                        party, such as the holder of a performance bond 
                        or a tuition recovery program, and, if so, the 
                        amount of any payment received by the borrower 
                        or credited to the borrower's loan obligation; 
                        and
                            ``(iv) provide any other information or 
                        supporting documentation reasonably requested 
                        by the Secretary.
                    ``(B) Borrower defense for a group.--
                            ``(i) In general.--
                                    ``(I) Group defense.--The Secretary 
                                may initiate and carry out a process to 
                                determine whether a group of borrowers, 
                                identified by the Secretary, has a 
                                borrower defense.
                                    ``(II) Identification of group.--
                                The Secretary may--
                                            ``(aa) identify members of 
                                        such a group from individually 
                                        filed applications submitted 
                                        under subparagraph (A); or
                                            ``(bb) if the Secretary 
                                        determines that there are 
                                        common facts and claims that 
                                        apply to borrowers who have not 
                                        filed an application under 
                                        subparagraph (A), identify such 
                                        members based on information in 
                                        the possession of the 
                                        Secretary.
                                    ``(III) Representative.--In the 
                                case of a group identified by the 
                                Secretary under this clause, the 
                                Secretary shall designate a Department 
                                official to present the group's claim 
                                in the process described under 
                                paragraph (2).
                            ``(ii) Application for a group.--A State 
                        attorney general or nonprofit legal assistance 
                        organization that represents borrowers may 
                        submit an application described in subparagraph 
                        (A) on behalf of a group of borrowers whose 
                        claims are similar or identical, without 
                        requiring an application from each individual 
                        borrower in that group or class.
                            ``(iii) Notification.--
                                    ``(I) Upon initiation of the 
                                process under clause (i) or receipt of 
                                an application under clause (ii), the 
                                Secretary shall provide the borrowers 
                                who may be members of a group borrower 
                                defense claim with a written notice of 
                                such initiation or receipt, as the case 
                                may be, and an option to opt out of the 
                                proceeding under this subsection for 
                                that group.
                                    ``(II) Upon receipt of an 
                                application on behalf of a group of 
                                borrowers under clause (ii), the 
                                Secretary shall provide the entity 
                                submitting that application with a 
                                written determination, not later than 
                                120 days after receipt of the 
                                application, stating--
                                            ``(aa) whether the 
                                        Secretary will forgo the review 
                                        of claims for individual 
                                        borrowers and instead will 
                                        review the claims for the group 
                                        described in that application 
                                        (or for a subset of borrowers 
                                        in that group, if applicable);
                                            ``(bb) if the Secretary 
                                        determines not to evaluate the 
                                        application for that group (or 
                                        not to evaluate the application 
                                        for all the requested members 
                                        of that group), the reasons for 
                                        the determination; and
                                            ``(cc) that the Secretary 
                                        may reconsider the 
                                        determination in item (bb) if 
                                        presented with new evidence 
                                        that would allow for the 
                                        consideration of claims for the 
                                        group described in the 
                                        application.
                            ``(iv) Relief.--If the Secretary approves a 
                        group application for relief under this 
                        subsection, all borrowers in the group who have 
                        not affirmatively opted out are entitled to 
                        relief, regardless of whether an individual 
                        borrower filed an application.
            ``(2) Process.--
                    ``(A) In general.--Upon receipt of an application 
                from an individual borrower or upon receipt of an 
                application from a group of borrowers or initiation of 
                a claim on behalf of a group of borrowers, as described 
                in paragraph (1)(B), the Secretary shall carry out the 
                following activities:
                            ``(i) With regard to the borrower's payment 
                        status (including each borrower in such group 
                        who does not opt out under paragraph 
                        (1)(B)(iii)(I)), the Secretary shall--
                                    ``(I) grant an administrative 
                                forbearance without requiring 
                                documentation from the borrower, 
                                including a forbearance for any period 
                                necessary for the Secretary to 
                                determine the borrower's eligibility 
                                for discharge;
                                    ``(II) notify the borrower of the 
                                option to decline that forbearance and 
                                continue making payments on the loan;
                                    ``(III) provide the borrower with 
                                information about the availability of 
                                an income-based repayment plan; and
                                    ``(IV) if the borrower's loan is in 
                                default--
                                            ``(aa) suspend collection 
                                        activity on the loan, including 
                                        any garnishments or offsets, 
                                        until a decision on the 
                                        borrower's claim is issued;
                                            ``(bb) notify the borrower 
                                        of the suspension of collection 
                                        activity;
                                            ``(cc) notify the borrower 
                                        that if the Secretary 
                                        determines the borrower does 
                                        not qualify for a discharge of 
                                        the loan, collection activity 
                                        will resume unless the borrower 
                                        chooses to make payments under 
                                        any repayment plan, including 
                                        income-based repayment 
                                        described under section 493C; 
                                        and
                                            ``(dd) notify the borrower 
                                        that if the Secretary 
                                        determines the borrower does 
                                        not qualify for a discharge of 
                                        the loan, and if the borrower 
                                        makes payments under any 
                                        repayment plan, including an 
                                        income-based repayment, as 
                                        described in item (cc), the 
                                        Secretary shall submit a report 
                                        to the consumer reporting 
                                        agencies to which the Secretary 
                                        previously made adverse credit 
                                        reports with regard to the 
                                        borrower's loan under this part 
                                        or part B to remove the 
                                        borrower's record of default 
                                        and the Secretary shall refund 
                                        any collection costs paid by 
                                        the borrower subsequent to the 
                                        borrower submitting an 
                                        application under paragraph 
                                        (1), but prior to the 
                                        suspension of the collection 
                                        activity, as described in item 
                                        (aa).
                            ``(ii) With regard to the fact-finding 
                        process, the Secretary shall designate a 
                        Department official (which shall not be an 
                        official designated under paragraph 
                        (1)(B)(i)(III) and shall be a staff member in 
                        the enforcement unit, in accordance with 
                        section 141(g)) to--
                                    ``(I) notify the institution of 
                                higher education of the borrower 
                                defense application or the initiation 
                                of the borrower defense claim;
                                    ``(II) determine whether the 
                                borrower has established a borrower 
                                defense, which shall include--
                                            ``(aa) consideration of 
                                        evidence or argument presented 
                                        by the borrower; and
                                            ``(bb) consideration of 
                                        additional information, 
                                        including--

                                                    ``(AA) Department 
                                                records;

                                                    ``(BB) any response 
                                                or submission from the 
                                                institution; and

                                                    ``(CC) any 
                                                additional information; 
                                                and

                                    ``(III) upon the borrower's 
                                reasonable request, identify and 
                                provide to the borrower any records the 
                                Secretary is considering as part of the 
                                borrower's claim.
                            ``(iii) Not later than 18 months after the 
                        date of receipt of an application under 
                        paragraph (1)(A) or (1)(B)(ii), or the 
                        initiation of a claim under paragraph 
                        (1)(B)(i), as the case may be, the Secretary 
                        shall determine if a borrower or group of 
                        borrowers has a successful borrower defense 
                        claim. If the Secretary fails to issue a 
                        determination by the date that is 18 months 
                        after the date of receipt of such application 
                        or initiation, the loan underlying the borrower 
                        defense claim shall be automatically 
                        discharged.
                    ``(B) Institution's response.--An institution shall 
                provide information to the Secretary, not later than 30 
                days after the date of a request by the Secretary, and 
                as directed by the Secretary, regarding any response or 
                submission that is requested from the Secretary 
                relating to a borrower defense claim.
            ``(3) Standard of evidence.--A borrower defense claim shall 
        be approved under this subsection, if the Secretary finds that 
        a preponderance of the evidence shows that the borrower has 
        established a borrower defense that meets the requirements of 
        this subsection.
            ``(4) Successful borrower defense claim.--
                    ``(A) Borrower relief.--If a borrower is determined 
                to have a borrower defense in accordance with this 
                subsection, the Secretary shall--
                            ``(i) discharge the borrower of the 
                        borrower's obligation to repay the loan 
                        (including associated interest, costs, and fees 
                        that the borrower would otherwise be obligated 
                        to pay) in regards to which there is a borrower 
                        defense;
                            ``(ii) notify the borrower of the discharge 
                        described in clause (i) and the other 
                        information described in subparagraph (C);
                            ``(iii) retroactively waive any interest 
                        that accrued after the borrower submitted an 
                        application under this subsection;
                            ``(iv) provide the borrower such further 
                        relief as the Secretary determines is 
                        appropriate under the circumstances, which 
                        shall include--
                                    ``(I) reimbursing the borrower for 
                                amounts paid toward the loan 
                                voluntarily or through enforced 
                                collection; and
                                    ``(II) determining that the 
                                borrower is not in default on the loan 
                                and is eligible to receive assistance 
                                under title IV; and
                            ``(v) not later than 30 days after the date 
                        of such determination, submit new reports to 
                        consumer reporting agencies to which the 
                        Secretary previously made adverse credit 
                        reports with regard to the borrower's loan 
                        under this part or part B.
                    ``(B) Amount of loan discharge.--
                            ``(i) In general.--There shall be a 
                        presumption that on the finding of a successful 
                        borrower defense claim, the full amount of the 
                        borrower's loan shall be discharged as 
                        described in subparagraph (A). If the Secretary 
                        determines that discharge of the full amount of 
                        the loan is not appropriate in a particular 
                        case, the Secretary shall provide the borrower 
                        with--
                                    ``(I) a written explanation as to 
                                why partial relief is appropriate; and
                                    ``(II) if the borrower defense is a 
                                defense based on State law and 
                                described in paragraph (7)(B)(i) or is 
                                a defense described in paragraph 
                                (7)(B)(ii) or (7)(B)(iii), include an 
                                assurance that the amount of relief is 
                                not less than the amount of relief that 
                                would be afforded under State law.
                            ``(ii) Substantial misrepresentation.--
                        Notwithstanding clause (i), in the case of a 
                        determination that a borrower defense based on 
                        paragraph (7)(B)(iv) has been established, the 
                        full amount of the borrower's loan shall be 
                        discharged.
                            ``(iii) Limitation.--The total amount of 
                        relief granted with respect to a borrower 
                        defense regarding a loan under this part or 
                        part B shall not exceed the amount of the loan 
                        under this part or part B, as the case may be, 
                        and any associated interest, costs, and fees. 
                        Such amount will be reduced by the amount of 
                        any refund, reimbursement, indemnification, 
                        restitution, compensatory damages, settlement, 
                        debt forgiveness, discharge, cancellation, 
                        compromise, or any other financial benefit 
                        received by, or on behalf of, the borrower that 
                        was related to the borrower defense and that 
                        reduced the borrower's debt for the loan under 
                        this part or part B.
                            ``(iv) Relief for a non-federal loan or 
                        out-of-pocket expenses.--Any relief provided to 
                        a borrower, such as relief for an education 
                        loan that is not a Federal loan or refunds from 
                        a State tuition recovery fund for out-of-pocket 
                        expenses, shall not decrease the amount of 
                        relief that the borrower shall be entitled to 
                        for a loan under this part or part B based on a 
                        borrower defense.
                            ``(v) Minimum amount of relief.--A borrower 
                        that has a borrower defense based on State law 
                        and described in paragraph (7)(B)(i) or a 
                        defense described in paragraph (7)(B)(ii) or 
                        (7)(B)(iii) shall not receive an amount of 
                        relief that is less than the relief the 
                        borrower would receive under the applicable 
                        State law.
                    ``(C) Notification.--If a borrower defense is 
                successful the Secretary shall notify the borrower (or 
                the entity that submitted the application, in the case 
                of an application described in paragraph (1)(B)(ii)) in 
                writing--
                            ``(i) of the reasons for the approval and 
                        the evidence that was relied upon;
                            ``(ii) that the borrower is relieved of the 
                        obligation to repay the loan (or a portion of 
                        the loan, as described in subparagraph (B)) and 
                        associated costs and fees that the borrower 
                        would otherwise be obligated to pay;
                            ``(iii) in the event the Secretary does not 
                        grant a discharge of the full amount of the 
                        loan, an explanation of the reason why partial 
                        relief is granted, and (if applicable) an 
                        assurance described in subparagraph (B)(i)(II);
                            ``(iv) that the borrower will be reimbursed 
                        for some or all of the amounts paid toward the 
                        loan voluntarily or through enforced 
                        collection, if applicable;
                            ``(v) of the amount of any portion of the 
                        loan that is due and payable to the Secretary;
                            ``(vi) that if any balance remains on the 
                        loan, the loan will return to the status prior 
                        to the borrower's submission of the 
                        application, except that in the case of a loan 
                        that was in default prior to such application, 
                        the borrower shall first be removed from 
                        default status and given the opportunity to 
                        enter repayment, including income-based 
                        repayment described under section 493C, before 
                        the loan will be sent to collections;
                            ``(vii) that if the borrower chooses to 
                        make payments, including payments under income-
                        based repayment as described in clause (vi), 
                        the Secretary shall--
                                    ``(I) submit a report to the 
                                consumer reporting agencies to which 
                                the Secretary previously made adverse 
                                credit reports with regard to the 
                                borrower's loan under this part or part 
                                B to remove the record of default; and
                                    ``(II) refund any collection costs 
                                paid with regard to that loan by the 
                                borrower subsequent to the borrower 
                                submitting an application under 
                                paragraph (1);
                            ``(viii) that if only some of the loan will 
                        be discharged, the borrower will have the 
                        opportunity for reconsideration of the 
                        borrower's claim as described in paragraph (6);
                            ``(ix) that the borrower is eligible to 
                        receive assistance under title IV, if 
                        applicable; and
                            ``(x) that reports to consumer reporting 
                        agencies to which the Secretary previously made 
                        adverse credit reports with regard to the 
                        borrower's loan shall be updated not later than 
                        30 days from the date the determination under 
                        this paragraph was made.
            ``(5) Denial of borrower defense claim.--If the Secretary 
        denies a borrower defense, the Secretary shall retroactively 
        waive a portion of interest that accrued during the forbearance 
        period (as described in subparagraph (B)) and notify the 
        borrower--
                    ``(A) of the reasons for the denial and the 
                evidence that was relied upon;
                    ``(B) that the interest accruing on the relevant 
                loan after the first 12-month period of forbearance 
                that occurred from the time the borrower's application 
                was submitted under this subsection will be 
                retroactively waived;
                    ``(C) of the amount of any portion of the loan that 
                is due and payable to the Secretary;
                    ``(D) whether the Secretary will reimburse any 
                amounts previously collected prior to the suspension of 
                the collection activity, as described in paragraph 
                (2)(A)(i)(IV)(aa);
                    ``(E) that if any balance remains on the loan, the 
                loan will return to the status prior to the borrower's 
                submission of the application, except that in the case 
                of a loan that was in default prior to such 
                application, the borrower shall first be removed from 
                default status and given the opportunity to enter 
                repayment, including income-based repayment described 
                under section 493C, before the loan will be sent to 
                collections; and
                    ``(F) that the borrower shall have the opportunity 
                for reconsideration of the borrower's claim as 
                described in paragraph (6).
            ``(6) Reconsideration.--
                    ``(A) In general.--The decision of the Secretary 
                and any relief that may be granted on the claim shall 
                be considered the final agency action that shall be 
                subject to appeal in district court, except that--
                            ``(i) if the borrower defense is denied in 
                        full or in part, the borrower may request that 
                        the Secretary reconsider the borrower defense 
                        upon the identification of new evidence in 
                        support of the borrower's claim; and
                            ``(ii) the Secretary may reopen a borrower 
                        defense application at any time to consider 
                        evidence that was not considered in making the 
                        previous decision on that application.
                    ``(B) Prohibition on rescinding relief.--The 
                Secretary shall not reduce the amount of any relief 
                that was previously granted to a borrower under this 
                section, or reinstate any amounts owed on a previously 
                discharged loan.
            ``(7) Borrower defense claims and establishing a borrower 
        defense.--
                    ``(A) Claims.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of State or Federal law, a 
                        borrower may claim as a defense to repayment of 
                        a loan made under this part or part B any 
                        borrower defense established under subparagraph 
                        (B). Such a borrower defense claim may 
                        include--
                                    ``(I) a defense to repayment of 
                                amounts owed to the Secretary on a loan 
                                under this part or part B, in whole or 
                                in part; and
                                    ``(II) a right to recover amounts 
                                previously collected by the Secretary 
                                on such loan, in whole or in part.
                            ``(ii) Consolidation loan.--In the case of 
                        a Direct Consolidation Loan--
                                    ``(I) the Secretary shall consider 
                                a borrower defense claim to such loan 
                                by determining whether a borrower 
                                defense described in subparagraph (B) 
                                has been established with regard to a 
                                loan made under this part or part B 
                                that was paid off by the Direct 
                                Consolidation Loan;
                                    ``(II) the Secretary shall 
                                discharge the appropriate portion of 
                                the Direct Consolidation Loan if the 
                                borrower is determined to have a 
                                borrower defense with respect to a loan 
                                made under this part or part B that was 
                                paid off by the Direct Consolidation 
                                Loan; and
                                    ``(III) the Secretary shall return 
                                to the borrower any payments made by 
                                the borrower or otherwise recovered on 
                                the Direct Consolidation Loan or the 
                                loans that were paid off by the Direct 
                                Consolidation Loan that exceed the 
                                amount owed on that portion of the 
                                Direct Consolidation Loan that was not 
                                discharged, if--
                                            ``(aa) the borrower is 
                                        determined to have a borrower 
                                        defense with respect to a loan 
                                        made under this part or part B 
                                        that was paid off by the Direct 
                                        Consolidation Loan; and
                                            ``(bb) the payment was made 
                                        directly to the Secretary on 
                                        the loan.
                            ``(iii) PLUS loan.--In the case of a Direct 
                        PLUS Loan made on behalf of a student, the 
                        Secretary shall consider a borrower defense 
                        claim related to the student on whose behalf 
                        the Direct PLUS Loan was borrowed. Any amounts 
                        discharged will be applied to the parent or 
                        borrower of the Direct PLUS Loan.
                    ``(B) Establishing a borrower defense.--A borrower 
                has established a borrower defense if--
                            ``(i) the borrower (whether as an 
                        individual or as a member of a group or class) 
                        or a government agency, has obtained against 
                        the institution of higher education a judgment 
                        relating to the borrower's claim based on State 
                        or Federal law in a court or administrative 
                        tribunal of competent jurisdiction;
                            ``(ii) the institution of higher education 
                        that the borrower attended using a loan under 
                        this part failed to perform the institution's 
                        obligations under the terms of a contract with 
                        the borrower;
                            ``(iii) the borrower was subject to any act 
                        or omission of the institution related to the 
                        making of the loan for enrollment at the 
                        institution or the provision of educational 
                        services for which the loan was provided that 
                        would give rise to a cause of action against 
                        the institution under applicable State law;
                            ``(iv) the institution of higher education, 
                        a third servicer that contracts with such 
                        institution, or third party contractor made a 
                        substantial misrepresentation; or
                            ``(v) the institution has made any other 
                        act or omission that the Secretary, through 
                        regulations, or any Federal law, has 
                        established is an act or omission that 
                        constitutes a borrower defense under this 
                        subsection.
                    ``(C) Limitation.--A violation by an institution of 
                a requirement in this Act (including implementing 
                regulations) is not a basis for a borrower defense 
                under this subsection unless the violation would 
                otherwise constitute a basis for a borrower defense, as 
                described in this paragraph.
            ``(8) Finding of substantial misrepresentation.--An 
        eligible institution is deemed to have engaged in a substantial 
        misrepresentation for purposes of this subsection when an 
        eligible institution, third party servicer that contracts with 
        such institution, or third party contractor, commits a 
        substantial misrepresentation, as defined in section 489A. A 
        sworn statement or attestation from the borrower shall be 
        considered as evidence, and, in the Secretary's discretion, may 
        be sufficient evidence for the Secretary to find that a 
        substantial misrepresentation was made to a borrower. If the 
        Secretary determines that an eligible institution, third party 
        servicer that contracts with such institution, or third party 
        contractor, has engaged in a substantial misrepresentation, the 
        Secretary shall, in addition to finding a borrower defense 
        under this section, take enforcement action against the 
        institution, third party servicer that contracts with such 
        institution, or third party contractor, in accordance with 
        section 489A.
            ``(9) Action against the institution.--If a borrower is 
        determined to have established a borrower defense in accordance 
        with this subsection, the Secretary shall initiate an 
        appropriate proceeding to require the institution whose act or 
        omission resulted in the borrower defense to repay to the 
        Secretary the amount discharged under paragraph (7)(A) whether 
        by offset, claim on a letter of credit, or other protection 
        provided by the institution.
            ``(10) Reporting.--Not less than once every 3 months, the 
        Secretary shall publish on a website, and report to Congress, 
        data--
                    ``(A) for each institution, on--
                            ``(i) the number of claims considered under 
                        this subsection;
                            ``(ii) the number of those claims pending 
                        and the date of receipt of the application, or 
                        the date of the initiation of the claim by the 
                        Secretary, of those claims; and
                            ``(iii) the number of claims under this 
                        subsection for which a determination has been 
                        made and the results of each such 
                        determination; and
                    ``(B) in the aggregate, and disaggregated by State, 
                on--
                            ``(i) the total number of claims pending 
                        under this subsection;
                            ``(ii) the number of those claims that are 
                        approved borrower defense claims and total 
                        dollar amount of relief;
                            ``(iii) the percentage of those total 
                        approved claims receiving partial relief and 
                        the median student loan debt remaining for 
                        borrowers receiving partial relief; and
                            ``(iv) the number of those claims that are 
                        denied borrower defense claims.''.

   TITLE III--ENSURING INTEGRITY AT INSTITUTIONS OF HIGHER EDUCATION

SEC. 301. RESTRICTIONS ON SOURCES OF FUNDS FOR RECRUITING AND MARKETING 
              ACTIVITIES.

    (a) Repeal.--Section 119 of the Higher Education Opportunity Act 
(20 U.S.C. 1011m) is repealed.
    (b) Amendment to the Higher Education Act of 1965.--Part B of title 
I of the Act (20 U.S.C. 1011 et seq.), as amended by title I, is 
further amended by adding at the end the following:

``SEC. 126. USE OF FEDERAL FUNDS; RESTRICTIONS ON SOURCES OF FUNDS FOR 
              RECRUITING AND MARKETING ACTIVITIES.

    ``(a) Prohibition.--
            ``(1) In general.--No Federal student aid funding under 
        this Act received by an institution of higher education may be 
        used to pay any person for influencing or attempting to 
        influence an officer or employee of any agency, a Member of 
        Congress, an officer or employee of Congress, or an employee of 
        a Member of Congress in connection with any Federal action 
        described in paragraph (2).
            ``(2) Applicability.--The prohibition in paragraph (1) 
        applies with respect to the following Federal actions:
                    ``(A) The awarding of any Federal contract.
                    ``(B) The making of any Federal grant.
                    ``(C) The making of any Federal loan.
                    ``(D) The entering into of any Federal cooperative 
                agreement.
                    ``(E) The extension, continuation, renewal, 
                amendment, or modification of any Federal contract, 
                grant, loan, or cooperative agreement.
    ``(b) Lobbying and Earmarks.--No Federal student aid funding under 
this Act may be used to hire a registered lobbyist or pay any person or 
entity for securing an earmark.
    ``(c) Restrictions on Sources of Funds for Recruiting and Marketing 
Activities.--
            ``(1) In general.--An institution of higher education may 
        not use revenues derived from Federal education assistance 
        funds for recruiting or marketing activities described in 
        paragraph (2).
            ``(2) Covered activities.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the recruiting and marketing 
                activities subject to paragraph (1) shall include the 
                following:
                            ``(i) Advertising and promotion activities, 
                        including paid announcements in newspapers, 
                        magazines, radio, television, billboards, 
                        electronic media, naming rights, or any other 
                        public medium of communication, including 
                        paying for displays or promotions at job fairs, 
                        military installations, or college recruiting 
                        events.
                            ``(ii) Efforts to identify and attract 
                        prospective students, either directly or 
                        through a third party contractor, including 
                        contact concerning a prospective student's 
                        potential enrollment or application for grant, 
                        loan, or work assistance under title IV or 
                        participation in preadmission or advising 
                        activities, including--
                                    ``(I) paying employees responsible 
                                for overseeing enrollment and for 
                                contacting potential students in-
                                person, by phone, by email, or by other 
                                Internet communications regarding 
                                enrollment; and
                                    ``(II) soliciting an individual to 
                                provide contact information to an 
                                institution of higher education, 
                                including websites established for such 
                                purpose and funds paid to third parties 
                                for such purpose.
                            ``(iii) Such other activities as the 
                        Secretary may prescribe, including paying for 
                        promotion or sponsorship of education or 
                        military-related associations.
                    ``(B) Exceptions.--Any activity that is required as 
                a condition of receipt of funds by an institution under 
                title IV, is specifically authorized under such title, 
                or is otherwise specified by the Secretary, shall not 
                be considered to be a covered activity under this 
                paragraph.
            ``(3) Rule of construction.--Nothing in this subsection 
        shall be construed as a limitation on the use by an institution 
        of revenues derived from sources other than Federal education 
        assistance funds.
            ``(4) Reports.--Each institution of higher education, that 
        derives 65 percent or more of revenues from Federal education 
        assistance funds shall report annually to the Secretary and to 
        Congress and shall include in such report--
                    ``(A) the institution's expenditures on 
                advertising, marketing, and recruiting;
                    ``(B) a verification from an independent auditor 
                that the institution is in compliance with the 
                requirements of this subsection; and
                    ``(C) a certification from the institution that the 
                institution is in compliance with the requirements of 
                this subsection.
            ``(5) Federal education assistance funds.--In this 
        subsection, the term `Federal education assistance funds' has 
        the meaning given that term in section 102(b)(2)(B) (as added 
        by section 101 of the Preventing Risky Operations from 
        Threatening the Education and Career Trajectories of Students 
        Act of 2019).
    ``(d) Certification.--Each institution of higher education 
receiving Federal funding under this Act, as a condition for receiving 
such funding, shall annually certify to the Secretary that the 
requirements of this section have been met.
    ``(e) Actions To Implement and Enforce.--The Secretary shall take 
such actions as are necessary to ensure that the provisions of this 
section are implemented and enforced.''.

SEC. 302. STRENGTHENING THE INCENTIVE COMPENSATION BAN.

    (a) Sense of Congress Regarding Incentive Compensation.--It is the 
sense of Congress that--
            (1) the use of commission-paid sales practices, also known 
        as incentive compensation, leads to overly aggressive, 
        manipulative, and often misleading tactics in advertising, 
        recruiting, and counseling students;
            (2) such practices are inappropriate at any institution 
        benefitting from Federal funding and an implied Federal 
        endorsement through participation in programs under title IV of 
        the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.);
            (3) previous investigations by the Federal Trade 
        Commission, as well as by Congress, including the Permanent 
        Subcommittee on Investigations of the Senate (referred to as 
        the ``Nunn Commission'') in 1991 and the Committee on Health, 
        Education, Labor, and Pensions of the Senate in 2012, found 
        that incentive compensation schemes frequently contribute to 
        high-pressure sales and other predatory abuses at federally 
        supported schools;
            (4) the ban on incentive compensation under section 
        487(a)(20) of the Higher Education Act of 1965 (20 U.S.C. 
        1094(a)(20)), as amended by subsection (b), is intended to 
        preclude the use of such abusive practices at any point in the 
        process of recruiting or enrolling students, or assisting 
        students in securing employment; and
            (5) an institution that receives assistance under title IV 
        of such Act remains responsible for the actions of any entity 
        that performs functions and tasks on the institution's behalf, 
        and these responsibilities include ensuring that employees, 
        third party servicers that contract with such institutions, and 
        third party contractors are not paid for services that would 
        convert these payments into prohibited incentive compensation 
        because of the activities in which the employees, third party 
        servicers that contract with such institutions, or third party 
        contractors engage.
    (b) Amendments.--Section 487 (20 U.S.C. 1094) is amended--
            (1) in subsection (a), by striking paragraph (20) and 
        inserting the following:
            ``(20) The institution, any third party servicer that 
        contracts with such institution, and any third party contractor 
        will comply with the ban on prohibited incentive compensation 
        ban under subsection (j).''; and
            (2) by adding at the end the following:
    ``(j) Incentive Compensation Ban.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Covered activity.--
                            ``(i) In general.--The term `covered 
                        activity' means any of the following 
                        activities:
                                    ``(I) Securing enrollment of 
                                students into the institution of higher 
                                education, which includes--
                                            ``(aa) activities that an 
                                        individual or entity engages in 
                                        at any point in time during an 
                                        educational program for the 
                                        purpose of the admission or 
                                        matriculation of students for 
                                        any period of time, including 
                                        contact in any form with a 
                                        prospective student, such as 
                                        contact through preadmission or 
                                        advising activities, scheduling 
                                        an appointment to visit the 
                                        enrollment office or any other 
                                        office of the institution, 
                                        attendance at such an 
                                        appointment, or involvement in 
                                        a prospective student's signing 
                                        of an enrollment agreement or 
                                        financial aid application; and
                                            ``(bb) other recruitment 
                                        and marketing activities.
                                    ``(II) Securing or awarding 
                                financial aid to students for 
                                attendance at the institution, 
                                including--
                                            ``(aa) any involvement in a 
                                        prospective student's signing 
                                        of a financial aid application; 
                                        and
                                            ``(bb) completing financial 
                                        aid applications on behalf of a 
                                        prospective applicant 
                                        (including activities 
                                        authorized by the Department, 
                                        such as the FAA Access tool, 
                                        which can be used to enter, 
                                        correct, verify, or analyze 
                                        financial aid application 
                                        data).
                                    ``(III) Improving job placement 
                                activities for students attending, or 
                                who have attended, the institution.
                                    ``(IV) Reducing the number of 
                                students who default on their student 
                                loans.
                            ``(ii) Exclusion.--The term `covered 
                        activity' does not include--
                                    ``(I) the provision of student 
                                contact information for prospective 
                                students, if any payment for such 
                                service is not based on--
                                            ``(aa) any additional 
                                        conduct or action by the third 
                                        party servicer that contracts 
                                        with such institutions or third 
                                        party contractor or the 
                                        prospective student, such as 
                                        participation in preadmission 
                                        or advising activities, 
                                        scheduling an appointment to 
                                        visit the enrollment office or 
                                        any other office of the 
                                        institution or attendance at 
                                        such an appointment, or the 
                                        signing, or being involved in 
                                        the signing, of a prospective 
                                        student's enrollment agreement 
                                        or financial aid application; 
                                        or
                                            ``(bb) the number of 
                                        students (calculated at any 
                                        point in time of an educational 
                                        program) who apply for 
                                        enrollment, are awarded 
                                        financial aid, or are enrolled 
                                        for any period of time, 
                                        including through completion of 
                                        an educational program; or
                                    ``(II) student support services not 
                                included in the covered activities 
                                under clause (i).
                    ``(B) Prohibited incentive compensation.--
                            ``(i) In general.--The term `prohibited 
                        incentive compensation' includes--
                                    ``(I) any commission, bonus, or 
                                other incentive payment, of a sum of 
                                money or other item of value, paid to 
                                or given to a person or an entity that 
                                is not a fixed salary or wages and that 
                                is paid or given for meeting a certain 
                                quota or numerical target, or avoiding 
                                penalties for a benchmark set in 
                                Federal law, relating to covered 
                                activities;
                                    ``(II) other direct or indirect 
                                forms of payment for meeting a certain 
                                quota or numerical target, or avoiding 
                                penalties for a benchmark set in 
                                Federal law, relating to covered 
                                activities, including--
                                            ``(aa) tuition sharing as a 
                                        measure of compensation when 
                                        based on a formula that relates 
                                        the amount payable to the 
                                        entity to meeting a certain 
                                        quota or numerical target, or 
                                        avoiding penalties for a 
                                        benchmark set in Federal law, 
                                        as a result of the covered 
                                        activity of the entity;
                                            ``(bb) profit-sharing plans 
                                        from which distributions are 
                                        made to individuals based on 
                                        meeting a certain quota or 
                                        numerical target, or avoiding 
                                        penalties for a benchmark set 
                                        in Federal law, as a result of 
                                        covered activities by the 
                                        recipient;
                                            ``(cc) salary adjustments 
                                        that take the form of incentive 
                                        payments based directly or 
                                        indirectly on meeting a quota 
                                        or numerical target. or 
                                        avoiding penalties for a 
                                        benchmark set in Federal law, 
                                        with respect to a covered 
                                        activity;
                                            ``(dd) payments based on 
                                        meeting a certain quota or 
                                        numerical target, or avoiding 
                                        penalties for a benchmark set 
                                        in Federal law, relating to 
                                        covered activities; and
                                            ``(ee) bonuses or other 
                                        payments based on meeting a 
                                        certain quota or numerical 
                                        target, or avoiding penalties 
                                        for a benchmark set in Federal 
                                        law, relating to covered 
                                        activities;
                                    ``(III) a decrease or removal of a 
                                payment or benefit described in 
                                subclause (I) or (II) (and not excluded 
                                under clause (ii)), if that decrease or 
                                removal is based directly or indirectly 
                                on meeting a certain quota or numerical 
                                target, or avoiding penalties for a 
                                benchmark set in Federal law, relating 
                                to covered activities; and
                                    ``(IV) a change in employment 
                                status, such as a promotion, demotion, 
                                or termination if based on meeting a 
                                certain quota or numerical target, or 
                                avoiding penalties for a benchmark set 
                                in Federal law, relating to covered 
                                activities.
                            ``(ii) Exclusions.--The following payments 
                        or benefits shall not be considered prohibited 
                        incentive compensation, if the payment or 
                        benefit is determined in a way that is not 
                        related to the role the recipient plays in any 
                        covered activity:
                                    ``(I) A profit sharing plan, 
                                including a qualified cash or deferred 
                                arrangement (as defined in section 
                                401(k)(2) of the Internal Revenue Code 
                                of 1986) offered to all employees on a 
                                basis that is neutral with respect to 
                                the role the recipient plays in any 
                                covered activity.
                                    ``(II) An employee benefits plan 
                                offered to all employees on a basis 
                                that is neutral with respect to the 
                                role the recipient plays in any covered 
                                activity.
                                    ``(III) A cost of living 
                                adjustment.
                                    ``(IV) A payment to a senior 
                                executive with responsibility for the 
                                development of policies that affect 
                                marketing and recruitment, enrollment, 
                                financial aid, or student support 
                                services, including job placement 
                                services.
                    ``(C) Recruitment and marketing activity.--The term 
                `recruitment and marketing activity' means--
                            ``(i) broad information dissemination and 
                        disseminating targeted information to 
                        individuals;
                            ``(ii) soliciting individuals regarding an 
                        institution;
                            ``(iii) advertising a program that 
                        disseminates information to potential students;
                            ``(iv) collecting contact information;
                            ``(v) contacting potential applicants for 
                        the admission or matriculation of a student 
                        into an institution;
                            ``(vi) screening pre-enrollment information 
                        to determine whether a prospective student 
                        meets the requirements that an institution has 
                        established for enrollment in an academic 
                        program;
                            ``(vii) aiding individuals in filling out 
                        any information relating to an application for 
                        admission or matriculation into an institution;
                            ``(viii) determining whether an enrollment 
                        application is materially complete, as long as 
                        the enrollment decision remains with the 
                        institution; or
                            ``(ix) any other activity described in 
                        section 126(d)(2).
                    ``(D) Student support services.--The term `student 
                support services' means any of the following services:
                            ``(i) Counseling or other nonacademic 
                        support activities provided to students that is 
                        not a covered activity.
                            ``(ii) Institutional services provided to 
                        students, such as information technology 
                        assistance, food service, or housing, that is 
                        not a covered activity.
                            ``(iii) Other services involved in the 
                        administration of support for students that is 
                        not a covered activity.
            ``(2) Incentive compensation ban.--
                    ``(A) In general.--The institution, any third party 
                servicer that contracts with such institution, and any 
                third party contractor shall not provide any prohibited 
                incentive compensation to any person or entity.
                    ``(B) Applicability.--The ban on prohibited 
                incentive compensation under this subsection applies to 
                any entity or individual engaged in any covered 
                activity, including--
                            ``(i) with respect to an entity engaged in 
                        any student recruitment or admission activity 
                        or in making decisions about the award of 
                        financial aid, any institution or entity that 
                        undertakes the recruiting or the admitting of 
                        students or that makes decisions about and 
                        awards program funds under this title; and
                            ``(ii) with respect to an individual 
                        engaged in any student recruitment or admission 
                        activity or in making decisions about the award 
                        of financial aid--
                                    ``(I) any employee who undertakes 
                                recruiting or admitting of students or 
                                who makes decisions about and awards 
                                program funds under this title; and
                                    ``(II) any higher-level employee 
                                with responsibility for recruitment or 
                                admission of students, or making 
                                decisions about awarding program funds 
                                under this title.
                    ``(C) Exclusion of certain employees.--The ban on 
                prohibited incentive compensation under this subsection 
                shall not apply to any senior manager or executive 
                level employee who--
                            ``(i) is involved only in the development 
                        of policy related to the manner in which 
                        marketing and recruitment, enrollment, 
                        financial aid, or student support services will 
                        be pursued or provided; and
                            ``(ii) does not engage in individual 
                        student contact or other covered activities.
                    ``(D) Individual with multiple adjustments to 
                compensation.--An employee of an institution, a third 
                party servicer that contracts with such institution, or 
                a third party contractor, who receives multiple 
                adjustments to compensation in a calendar year and is 
                engaged in a covered activity shall be considered to be 
                engaged in prohibited incentive compensation if the 
                adjustments create compensation that is based in any 
                part, directly or indirectly, upon meeting certain 
                quotas or numerical targets, or avoiding penalties for 
                a benchmark set in Federal law, regarding those covered 
                activities.
            ``(3) Notice of incentive compensation ban.--
                    ``(A) Notice to servicer and contractor.--The 
                institution shall provide notice of the ban on 
                prohibited incentive compensation under this subsection 
                at least once a year to each third party servicer and 
                third party contractor that contracts with the 
                institution.
                    ``(B) Notice to employees.--The institution, and 
                any third party contractor or third party servicer that 
                contracts with such institution, shall--
                            ``(i) provide notice of the ban on 
                        prohibited incentive compensation under this 
                        subsection at least once a year to employees; 
                        and
                            ``(ii) publish a clear statement in all 
                        internal recruitment materials, including 
                        guides or manuals, acknowledging the ban on 
                        prohibited incentive compensation under this 
                        subsection.
            ``(4) Consequences for incentive compensation violation.--
                    ``(A) In general.--The Secretary, in coordination 
                with the Office of the Inspector General of the 
                Department of Education, shall develop a written policy 
                for the enforcement of the ban on prohibited incentive 
                compensation under this subsection, and shall update 
                that policy as needed.
                    ``(B) Contents of policy.--The policy developed 
                under subparagraph (A)--
                            ``(i) shall require that compliance review 
                        occur on an annual basis;
                            ``(ii) may include automatic triggers for 
                        inquiries by the Department or regular `secret 
                        shopper' or audit-based investigations to 
                        ensure that institutions of higher education 
                        remain in compliance with the ban; and
                            ``(iii) shall explain the range of 
                        sanctions, as described in section 489A, that 
                        the Secretary may carry out to enforce this 
                        subsection.
                    ``(C) Report.--The Department shall publish an 
                annual report, and shall submit that report to the 
                authorizing committees and the For-Profit Education 
                Oversight Coordination Committee established under 
                section 125, which shall include--
                            ``(i) a description of the status of any 
                        investigations conducted under this subsection;
                            ``(ii) the names of institutions found to 
                        be not in compliance with this subsection;
                            ``(iii) the sanctions the non-compliant 
                        institution of higher education faced; and
                            ``(iv) in the case of an institution 
                        subject to liability for funds under this title 
                        pursuant to subparagraph (B)(iii), the amount 
                        of such liability.''.

SEC. 303. DEFINITION OF NONPROFIT INSTITUTION OF HIGHER EDUCATION.

    Section 103 (20 U.S.C. 1003) is amended by striking paragraph (13) 
and inserting the following:
            ``(13) Nonprofit.--
                    ``(A) In general.--The term `nonprofit'--
                            ``(i) as applied to a school, agency, 
                        organization, or institution, means a school, 
                        agency, organization, or institution 
                        controlled, owned, and operated by one or more 
                        nonprofit corporations or associations, no part 
                        of the net earnings of which inures, or may 
                        lawfully inure, to the benefit of any private 
                        shareholder or individual; and
                            ``(ii) as applied to an institution of 
                        higher education, means an institution--
                                    ``(I) that meets the requirements 
                                of subparagraph (A);
                                    ``(II) that is an organization 
                                described in section 170(b)(1)(A)(ii) 
                                or (vi) of the Internal Revenue Code of 
                                1986; and
                                    ``(III) with respect to which--
                                            ``(aa) no member of the 
                                        governing board of the 
                                        institution (other than any ex 
                                        officio member serving at the 
                                        pleasure of the remainder of 
                                        the governing board and 
                                        receiving a fixed salary) 
                                        receives any substantial direct 
                                        or indirect economic benefit 
                                        (including a lease, promissory 
                                        note, or other contract) from 
                                        the institution; and
                                            ``(bb) no person with the 
                                        power to appoint or remove 
                                        members of the governing board 
                                        receives any such substantial 
                                        direct or indirect economic 
                                        benefit (including a lease, 
                                        promissory note, or other 
                                        contract) from the institution.
                    ``(B) Exclusions.--
                            ``(i) In general.--An institution of higher 
                        education shall not be considered a nonprofit 
                        institution of higher education, as defined in 
                        this paragraph, if--
                                    ``(I) one or more core functions 
                                are under the control of, or subject to 
                                significant direction from an entity 
                                that is not a public institution of 
                                higher education or is not formed as a 
                                nonprofit corporation; or
                                    ``(II) a substantial share of the 
                                assets of the institution are committed 
                                to a joint venture with a person or 
                                entity that is not a public institution 
                                of higher education and is not a 
                                nonprofit corporation, and the core 
                                functions of the venture are conducted 
                                by, under the control of, or subject to 
                                significant direction from that person 
                                or entity.
                            ``(ii) Presumption of significant 
                        direction.--There shall be a conclusive 
                        presumption that an entity exercises 
                        significant direction if one or more of the 
                        entity's employees or owners serves as an 
                        officer, member of the board, or person holding 
                        similar authority for the institution of higher 
                        education.''.

SEC. 304. DEFINITION OF PUBLIC INSTITUTION OF HIGHER EDUCATION.

    Section 103 (20 U.S.C. 1003), as amended by section 4, is further 
amended--
            (1) by inserting after paragraph (14) the following:
            ``(15) Public institution of higher education.--
                    ``(A) In general.--The term `public', when used 
                with respect to an institution of higher education, 
                means an institution of higher education--
                            ``(i)(I) operated by--
                                    ``(aa) the Federal Government;
                                    ``(bb) a State, as defined in 
                                section 3306(j)(1) of the Internal 
                                Revenue Code of 1986;
                                    ``(cc) a local government, as 
                                defined in section 1393(a)(5) of such 
                                Code; or
                                    ``(dd) an Indian tribal government, 
                                as defined in section 7701(a)(40) of 
                                such Code;
                            ``(II) for which all obligations of the 
                        institution are valid and binding obligations 
                        of the State, local government, or Indian 
                        tribal government; and
                            ``(III) for which the full faith and credit 
                        of such State, local government, or Indian 
                        tribal government is pledged for the timely 
                        payment of such obligations; or
                            ``(ii) that is an instrumentality of a 
                        State or local government (as such terms are 
                        defined in subparagraph (A)).
                    ``(B) Instrumentality of a state or local 
                government.--An institution shall be considered an 
                instrumentality of a State or local government for 
                purposes of this paragraph if the institution meets all 
                of the following requirements:
                            ``(i) The employees of the institution are 
                        employees of the State or local government.
                            ``(ii) Any liability of the institution is 
                        payable to the same degree as if the liability 
                        was a liability of the State or local 
                        government, in the State or local government 
                        jurisdiction where the institution is formed.
                            ``(iii) The institution is subject to the 
                        same financial oversight and open public 
                        records laws as the State or local government, 
                        in the State or local government jurisdiction 
                        where the institution is formed.''.

SEC. 305. ENHANCED CIVIL PENALTIES, STATE ENFORCEMENT, AND PRIVATE 
              RIGHT OF ACTION.

    (a) In General.--Part G of title IV (20 U.S.C. 1088 et seq.) is 
amended by inserting after section 489 the following:

``SEC. 489A. ENHANCED CIVIL PENALTIES, STATE ENFORCEMENT, AND PRIVATE 
              RIGHT OF ACTION.

    ``(a) Definitions.--In this section:
            ``(1) Misrepresentation.--The term `misrepresentation' 
        means any false, erroneous, or misleading statement an eligible 
        institution of higher education, a third party servicer that 
        contracts with such institution, or a third party contractor 
        makes directly or indirectly to a student, prospective student, 
        or any member of the public, or to an accrediting agency or 
        association, State approval agency, or the Secretary. A 
        misrepresentation includes--
                    ``(A) the making of a statement that has the 
                likelihood or tendency to deceive; or
                    ``(B) the omission of any material facts necessary 
                in order to make any statements made, in light of the 
                circumstances under which they were made, not false, 
                deceptive, unfair, erroneous, or misleading.
            ``(2) Officer of an institution of higher education.--The 
        term `officer of an institution of higher education' including 
        at any nonprofit, for-profit, or public institution of higher 
        education, includes the president, chief executive officer, and 
        chief financial officer of an institution of higher education 
        as well as all officers charged with overseeing a principal 
        business unit, division, or function, such as sales, 
        administration, or finance.
            ``(3) Prospective student.--The term `prospective student' 
        means any individual who has contacted an institution of higher 
        education for the purpose of requesting information about 
        enrolling at the institution of higher education or who has 
        been contacted directly or indirectly by the institution of 
        higher education or a third party contractor through 
        advertising about enrolling at the institution.
            ``(4) State approval agency.--The term `State approval 
        agency' means any State agency that determines whether an 
        institution of higher education is legally authorized within 
        such State to provide a program of education beyond secondary 
        education.
            ``(5) Substantial misrepresentation.--The term `substantial 
        misrepresentation' means any misrepresentation on which the 
        person to whom it was made could reasonably be expected to 
        rely, or has reasonably relied, to that person's detriment.
    ``(b) Limitation, Suspension, or Termination of Eligibility 
Status.--
            ``(1) In general.--Upon determination, after reasonable 
        notice and opportunity for a hearing, that an eligible 
        institution, a third party servicer that contracts with such 
        institution, or a third party contractor has violated or failed 
        to carry out any provision of this title, any regulation 
        prescribed under this title, or any applicable special 
        arrangement, agreement, or limitation, the Secretary may limit, 
        suspend, or terminate the participation of that institution in 
        any program under this title, or the eligibility of that third 
        party contractor or third party servicer to contract with any 
        institution, subject to the requirements 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 extension or unless limitation or 
        termination proceedings are initiated by the Secretary within 
        that period of time.
            ``(3) Substantial misrepresentation.--Upon determination, 
        after reasonable notice and opportunity for a hearing, that an 
        eligible institution, a third party servicer that contracts 
        with such institution, or a third party contractor has engaged 
        in substantial misrepresentation, including a misrepresentation 
        relating to the nature of an educational program, financial 
        charges, the space availability in a program of the institution 
        for which a student is considering enrollment, admission 
        requirements, the transferability of credits, whether one of 
        that institution's programs meets necessary State standards to 
        obtain certification or sit for licensing examinations, the 
        passage rates of students in obtaining certifications or 
        sitting for licensing examinations, or the employability or 
        earnings of graduates, the Secretary may suspend, limit, or 
        terminate the eligibility status for any or all programs under 
        this title of any otherwise eligible institution, or of any 
        third party contractor or third party servicer to contract with 
        any institution, in accordance with procedures specified in 
        paragraph (1), until the Secretary finds that such practices 
        have been corrected.
    ``(c) Civil Penalties.--
            ``(1) In general.--The Secretary shall impose a civil 
        penalty upon an eligible institution, a third party servicer 
        that contracts with such institution, or a third party 
        contractor, upon making a determination, after reasonable 
        notice and opportunity for a hearing, that an eligible 
        institution, a third party servicer that contracts with such 
        institution, or a third party contractor has--
                    ``(A) violated or failed to carry out any provision 
                of this title or any regulation prescribed under this 
                title; or
                    ``(B) engaged in a substantial misrepresentation, 
                including a substantial misrepresentation described in 
                subsection (b)(3).
            ``(2) Amount of civil penalties.--
                    ``(A) A civil penalty imposed for a violation or 
                failure described under paragraph (1)(A) shall not 
                exceed $100,000 (subject to such adjustments for 
                inflation as may be prescribed in regulation) for each 
                such violation.
                    ``(B) A civil penalty imposed for a violation 
                described under paragraph (1)(B) shall be in an amount 
                not to exceed the greater of--
                            ``(i) $100,000 (subject to such adjustments 
                        for inflation as may be prescribed in 
                        regulation) for each such violation; or
                            ``(ii)(I) in the case of an institution, 
                        1.0 percent of the amount of funds the 
                        institution received through this title in the 
                        most recent award year prior to the 
                        determination for each such violation; and
                            ``(II) in the case of a third party 
                        servicer that contracts with such institution 
                        or a third party contractor, the amount of the 
                        contract with the institution.
            ``(3) Treatment of multiple institutions.--For the purpose 
        of determining the amount of civil penalties under this 
        subsection, any violation by a particular institution will 
        accrue against all identification codes used by the Office of 
        Postsecondary Education to designate campuses and institutions 
        affiliated with the institution, and within the period of 
        participation for the institution as defined in section 
        668.13(b) of title 34, Code of Federal Regulations, or any 
        successor regulation.
    ``(d) Emergency Action.--The Secretary may take an emergency action 
against an institution, a third party servicer that contracts with such 
institution, or a third party contractor, 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, third party servicer 
that contracts with such institution, or third party contractor (by 
registered mail, return receipt requested), withhold funds from the 
institution or its students, or from the third party servicer that 
contracts with such institution or third party contractor, and withdraw 
the institution's authority to obligate funds under this title, or the 
authority of the third party servicer that contracts with such 
institution or third party contractor to act on behalf of an 
institution under any program under this title, if the Secretary--
            ``(1) receives information, determined by the Secretary to 
        be reliable, that the institution, or third party servicer that 
        contracts with such institution, or third party contractor is 
        violating any provision of this title, any regulation 
        prescribed under this title, or any applicable special 
        arrangement, agreement, or limitation;
            ``(2) determines that immediate action is necessary to 
        prevent misuse of Federal funds; and
            ``(3) determines that the likelihood of loss outweighs the 
        importance of the procedures prescribed in subsection (b) for 
        limitation, suspension, or termination,
except that an emergency action shall not exceed 30 days unless the 
limitation, suspension, or termination proceedings are initiated by the 
Secretary against the individual or organization within that period of 
time, and except that the Secretary shall provide the individual or 
organization an opportunity to show cause, if it so requests, that the 
emergency action is unwarranted.
    ``(e) Individual or Organization With Substantial Control.--If an 
individual who, or entity that, exercises substantial control, as 
determined by the Secretary in accordance with the definition of 
substantial control in subpart 3 of part H, over one or more 
institutions participating in any program under this title, or, for 
purposes of this section over one or more organizations that contract 
with an institution to administer any aspect of the institution's 
student assistance program under this title, is determined to have 
committed one or more violations of the requirements of any program 
under this title, or has been suspended or debarred in accordance with 
the regulations of the Secretary, the Secretary may use such 
determination, suspension, or debarment as the basis for imposing an 
emergency action on, or limiting, suspending, or terminating, in a 
single proceeding, the participation of any or all institutions under 
the substantial control of that individual or entity.
    ``(f) 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 established under subsection (g).
            ``(2) Report.--The Secretary shall regularly publish, on 
        the website of the Department, a detailed accounting of the 
        funds in the Student Relief Fund, including the amount of funds 
        that were collected and deposited into the Student Relief Fund 
        under paragraph (1), and how those funds were used, pursuant to 
        subsection (g)(1).
    ``(g) Student Relief Fund.--
            ``(1) Establishment.--The Secretary shall establish 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 that is 
        enrolled in an institution of higher education that--
                    ``(A) has failed to comply with an eligibility 
                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 Government funds, appropriated monies, 
                or Federal education assistance funds, as defined in 
                section 102(b)(2)(B) (as added by section 101 of the 
                Preventing Risky Operations from Threatening the 
                Education and Career Trajectories of Students Act of 
                2019).
                    ``(B) Amounts not subject to apportionment.--
                Notwithstanding any other provision of law, amounts in 
                the Fund shall not be subject to apportionment for 
                purposes of chapter 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 subsection without fiscal year 
                limitation.
    ``(h) State Enforcement.--
            ``(1) In general.--
                    ``(A) State cause of action.--A violation described 
                in subparagraph (B) shall be a cause of action 
                enforceable by a State, through the attorney general 
                (or the equivalent thereof) of such 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 (3) for such 
                violation, including a civil penalty under subsection 
                (c), or any remedies otherwise available under law.
                    ``(B) Violations.--A violation described in this 
                subparagraph is:
                            ``(i) A substantial misrepresentation.
                            ``(ii) A violation of section 487(a)(20).
                            ``(iii) A violation of the default 
                        manipulation regulations promulgated by the 
                        Secretary under section 435(m)(3).
                            ``(iv) A violation of the program integrity 
                        regulations promulgated by the Secretary under 
                        this Act, including regulations promulgated in 
                        section 102, section 455, and part H.
                            ``(v) In accordance with section 455(h), 
                        any act or omission of the institution, third 
                        party servicer that contracts with such 
                        institution, or third party contractor, related 
                        to the making of the loan for enrollment at the 
                        institution or the provision of educational 
                        services for which the loan was provided that 
                        would give rise to a cause of action against 
                        the institution under applicable State law.
            ``(2) Notice required.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), before initiating any action in a 
                court or other administrative or regulatory proceeding 
                against any institution of higher education, third 
                party servicer that contracts with such institution, or 
                third party contractor, as authorized by paragraph (1), 
                a State attorney general or the equivalent thereof 
                shall timely provide to the Secretary a copy of the 
                complete complaint to be filed and written notice 
                describing such action or proceeding.
                    ``(B) Waiver of prior notice.--If prior notice is 
                not practicable under subparagraph (A), the State 
                attorney general or equivalent thereof shall provide to 
                the Secretary a copy of the complete complaint and the 
                notice described in subparagraph (A) immediately upon 
                instituting the action or proceeding.
                    ``(C) Contents of notice.--The notification 
                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 proceeding so 
                        as not to interfere with any action, including 
                        any rulemaking, undertaken by the Secretary or 
                        another Federal agency.
            ``(3) Preservation of state authority.--
                    ``(A) State claims.--Nothing in this subsection 
                shall be construed as altering, limiting, or affecting 
                the authority of a State attorney general or any other 
                regulatory or enforcement agency or authority to bring 
                an action or other regulatory proceeding arising solely 
                under the law in effect in that State.
                    ``(B) Relief.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), relief under this subsection may 
                        include, without limitation--
                                    ``(I) rescission or reformation of 
                                contracts;
                                    ``(II) refund of moneys or return 
                                of real property;
                                    ``(III) restitution;
                                    ``(IV) disgorgement or compensation 
                                for unjust enrichment;
                                    ``(V) payment of damages or other 
                                monetary relief;
                                    ``(VI) public notification 
                                regarding the violation, including the 
                                costs of notification; or
                                    ``(VII) limits on the activities or 
                                functions of involved persons, 
                                institutions, third party servicers 
                                that contract with institutions, or 
                                third party contractors.
                            ``(ii) Exclusion.--Relief under this 
                        subsection shall not include the ability to 
                        suspend or terminate the eligibility status of 
                        an institution of higher education for programs 
                        under this title or withdrawal of the authority 
                        of the third party servicer or third party 
                        contractor to act on behalf of an institution 
                        or contract with an institution.
    ``(i) Private Right of Action.--
            ``(1) In general.--
                    ``(A) Private right of action.--A violation 
                described in subparagraph (B) shall be subject to a 
                private right of action enforceable by a student or 
                former student of an institution of higher education, 
                on behalf of such individual or such individual and a 
                class, in an appropriate district court of the United 
                States or any other court of competent jurisdiction 
                that also has jurisdiction over the defendant. The 
                student or former student may seek any relief provided 
                under subsection (h)(3)(B) for such violation, or any 
                remedies otherwise available to the individual under 
                law and equity.
                    ``(B) Violations.--A violation described in this 
                subparagraph is:
                            ``(i) A substantial misrepresentation.
                            ``(ii) A violation of section 487(a)(20).
                            ``(iii) A violation of the default 
                        manipulation regulations promulgated by the 
                        Secretary under section 435(m)(3).
                            ``(iv) A violation of the program integrity 
                        regulations promulgated by the Secretary under 
                        this Act, including regulations promulgated in 
                        section 102, section 455, and part H.
            ``(2) Amount of damages.--
                    ``(A) In general.--Any institution of higher 
                education, third party servicer that contracts with 
                such institution, or third party contractor, that 
                commits a substantial misrepresentation may be held 
                liable to a student or former student of that 
                institution in an amount equal to the sum of--
                            ``(i) any actual damage sustained by such 
                        individual as a result of each substantial 
                        misrepresentation;
                            ``(ii) any additional damages as the court 
                        may allow; and
                            ``(iii) in the case of any successful 
                        action to enforce the foregoing liability, the 
                        costs of the action, together with a reasonable 
                        attorney's fee as determined by the court.
                    ``(B) Ability to assess punitive damages.--
                            ``(i) In general.--On a finding by the 
                        court that the institution of higher education, 
                        third party servicer that contracts with such 
                        institution, or third party contractor, has 
                        committed a violation described in paragraph 
                        (1)(B) with actual or constructive knowledge or 
                        reckless disregard for such violation, the 
                        court may assess punitive damages not to exceed 
                        threefold the sum of actual damages sustained 
                        by the plaintiff or class, including court 
                        costs and a reasonable attorney's fee.
                            ``(ii) Factors considered by court.--In 
                        determining the amount of liability in any 
                        action under clause (i), the court shall 
                        consider, among other relevant factors--
                                    ``(I) in any individual action 
                                under this subsection, the frequency 
                                and persistence of noncompliance by the 
                                institution of higher education, third 
                                party servicer that contracts with such 
                                institution, or third party contractor 
                                and the nature of such noncompliance; 
                                or
                                    ``(II) in any class action under 
                                this subsection, in addition to the 
                                factors listed in clause (i), the 
                                financial resources of the institution 
                                of higher education, third party 
                                servicer that contracts with such 
                                institution, or third party contractor 
                                and the number of persons adversely 
                                affected.
            ``(3) Jurisdiction.--An action to enforce any liability 
        created by this subsection may be brought in any appropriate 
        United States district court without regard to the amount in 
        controversy, or in any other court of competent 
        jurisdiction.''.
    (b) Conforming Amendments.--Section 487(c), as amended by section 
102(b), is further amended--
            (1) in paragraph (1), by striking subparagraphs (G) through 
        (J);
            (2) by striking paragraphs (2) and (3); and
            (3) by redesignating paragraphs (4) through (7), as 
        paragraphs (2) through (5), respectively.

SEC. 306. SUBSTANTIAL MISREPRESENTATION PROHIBITED.

    Section 487(a) (20 U.S.C. 1094(a)), as amended by section 202(b), 
is further amended by adding at the end the following:
            ``(30) The institution will not make a substantial 
        misrepresentation, as defined in section 489A.''.
                                 <all>