Accountability in Student Loan Data Act of 2022

Bill: 117-hr-7727
Sponsor: full_name: Rep. Porter, Katie [D-CA-45]
Introduced: 2022-05-11
Policy area: Education
Latest action: action_date: 2022-05-11
text: Referred to the House Committee on Education and Labor.

Summaries:
action_date: 2022-05-11
action_desc: Introduced in House
text: <p><b>Accountability in Student Loan Data Act</b> <strong>of 2022</strong></p> <p>This bill revises the method for calculating a cohort default rate (the measurement of how many borrowers default on their federal student loans within a certain time period), and it establishes penalties for institutions of higher education that have a certain percentage of graduates who default on their student loans.</p>

tv_txt: I 117th CONGRESS 2d Session H. R. 7727 IN THE HOUSE OF REPRESENTATIVES May 11, 2022 Ms. Porter introduced the following bill; which was referred to the Committee on Education and Labor A BILL To amend the Higher Education Act of 1965 to require that institutions of higher education maintain certain adjusted cohort default rates to participate in programs under title IV of such Act, and for other purposes.

1. Short title This Act may be cited as the Accountability in Student Loan Data Act of 2022 . 2. Progress period status Section 103 of the Higher Education Act of 1965 ( 20 U.S.C. 1003 ) is amended— (1) by redesignating paragraphs (14) through (24) as paragraphs (15) through (25), respectively; and (2) by inserting after paragraph (13) the following: (14) Progress period status The term progress period status means the status of an institution of higher education that is determined by the Secretary to be in danger of failing to meet title IV eligibility criteria relating to student debt because the institution has an adjusted cohort default rate of not less than 10 percent and not more than 15 percent. . 3. Consumer information Section 132 of the Higher Education Act of 1965 ( 20 U.S.C. 1015a ) is amended in subsection (i)(1)(T), by striking rate, and inserting rate and adjusted cohort default rate, . 4. Federal Pell Grants (a) Higher Education Act Section 401(j) of the Higher Education Act of 1965 ( 20 U.S.C. 1070a(j) ) is amended— (1) in paragraph (1), by inserting before the period the following: , or if such institution of higher education is subject to an ineligibility determination under section 435(a)(9) ; and (2) in paragraph (2), by inserting , final adjusted cohort default rate, or on-time repayment rate, before determination . (b) FAFSA Simplification Act (1) Amendment Section 401(j) of the Higher Education Act of 1965 ( 20 U.S.C. 1070a(j) ), as amended by section 703 of the FAFSA Simplification Act (title VII of division FF of Public Law 116–260 ), is amended— (A) in paragraph (1), by inserting before the period the following: , or if such institution of higher education is subject to an ineligibility determination under section 435(a)(9) ; and (B) in paragraph (2), by inserting , final adjusted cohort default rate, or on-time repayment rate, before determination . (2) Effective date The amendment made by paragraph (1) shall take effect as if included in section 703 of the FAFSA Simplification Act (title VII of division FF of Public Law 116–260 ) on the date of enactment of such Act. 5. Disbursement of student loans Section 428G of the Higher Education Act of 1965 ( 20 U.S.C. 1078–7(a) ) is amended— (1) in subsection (a), by adding at the end the following: (5) Adjusted cohort default rate Beginning on the date on which the final adjusted cohort default rates are published by the Secretary for not less than 3 fiscal years under section 435(m), an institution whose adjusted cohort default rate (as determined under section 435(m)) for each of the 3 most recent fiscal years for which data are available is less than 5 percent may disburse any loan made, insured, or guaranteed under this part in a single installment for any period of enrollment that is not more than 1 semester, 1 trimester, 1 quarter, or 4 months. ; and (2) in subsection (e), by inserting before the period the following: or, beginning on the date on which the final adjusted cohort default rates are published by the Secretary for fiscal year 2021 under section 435(m), an adjusted cohort default rate (as determined under section 435(m)) of less than 2 percent . 6. Cohort default rates (a) Ineligibility based on high default rates (1) In general Section 435(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1085(a) ) is amended— (A) in paragraph (7)(A), by adding at the end the following: (iii) Default management plan The default management plan required under clause (i) may not include placing students in forbearance as a means of reducing the cohort default rate or the adjusted cohort default rate of the institution. ; and (B) by adding at the end the following: (9) Ineligibility based on high adjusted cohort default rates (A) In general Except as provided in subparagraphs (B) and (D), beginning on the date that is one year after the date on which the final adjusted cohort default rates are published by the Secretary for not less than 3 fiscal years, in a case in which one of the following determinations is made with respect to an institution, such institution shall be ineligible to participate in a program under this title for the fiscal year for which the determination is made and for the two succeeding fiscal years: (i) The institution’s adjusted cohort default rate is greater than 20 percent for each of the three most recent fiscal years for which the final adjusted cohort default rates are published. (ii) With respect to the six most recent fiscal years for which the final adjusted cohort default rates are published— (I) the institution’s adjusted cohort default rate is greater than 15 percent for each such fiscal year; and (II) the Secretary determines that, during such 6-year period, the institution has not made adequate progress in meeting standards for student achievement established by the relevant accrediting agency or association pursuant to section 496(a)(5)(A). (iii) With respect to the eight most recent fiscal years for which the final adjusted cohort default rates are published— (I) the institution’s adjusted cohort default rate is greater than 10 percent for each such fiscal year; and (II) the Secretary determines that, during such 8-year period, the institution has not made adequate progress in meeting standards for student achievement established by the relevant accrediting agency or association pursuant to section 496(a)(5)(A). (B) Exceptions for certain categories of educational programs With respect to an institution that loses eligibility to participate in a program under this title in accordance with subparagraph (A)(ii), such institution may request and be granted an exception to such loss of eligibility for a category of educational programs at such institution by demonstrating to the Secretary that the adjusted cohort default rate for the category of educational programs is 15 percent or less for each fiscal year of the 6-year period on which such loss of eligibility for the institution is based. (C) Determination of the adjusted cohort rate for a category of educational programs In determining the adjusted cohort default rate for a category of educational programs for purposes of this paragraph— (i) subsection (m) shall be applied— (I) in paragraph (1)— (aa) in subparagraph (A), by substituting received for enrollment in the category of educational programs for which such rate is being determined for received for attendance at the institution ; and (bb) in subparagraph (E)(i)(II), by substituting, percentage of students enrolled in the category of educational programs for which such rate is being determined for percentage of students enrolled at the institution ; and (II) as if the following were added at the end of paragraph (2): (E) In the case of a student who has received a loan for enrollment in more than one category of educational programs, the student (and such student’s subsequent repayment or default) is attributed to the last category of educational programs in which such student was enrolled. . (D) Transition exception (i) In general A covered institution with an adjusted cohort default rate that is greater than 20 percent for the first fiscal year for which such rates are published by the Secretary may request that any determination of such covered institution’s ineligibility under subparagraph (A) not be based on the adjusted cohort default rate of such covered institution for any or all of the first 3 fiscal years for which such rates are published by the Secretary. (ii) Requirement To be granted a request under clause (i), a covered institution shall submit to the Secretary a default management plan as specified in paragraph (7). (iii) Definition of covered institution In this subparagraph, the term covered institution means— (I) a public institution of higher education; (II) a part B institution (as defined in section 322); or (III) a private, nonprofit institution of higher education at which not less than 45 percent of the total student enrollment consists of low-income students (as such term is defined in section 419N(b)(7)). (E) Category of educational programs defined The term category of educational programs , when used with respect to an institution, means one of the following: (i) The educational programs at the institution leading to an undergraduate, non-degree credential. (ii) The educational programs at the institution leading to an associate’s degree. (iii) The educational programs at the institution leading to a bachelor’s degree. (iv) The educational programs at the institution leading to a graduate, non-degree credential. (v) The educational program at the institution leading to a graduate degree. (10) Application of adjusted cohort default rate Beginning on the date on which the final adjusted cohort default rates are published by the Secretary for not less than 3 fiscal years— (A) paragraph (1) shall be applied by substituting paragraph (9) for paragraph (2) ; (B) paragraph (3) shall be applied by substituting adjusted cohort default rate, calculated in accordance with subsection (m)(1)(D), is greater than 20 percent for any 3 consecutive fiscal years for cohort default rate, calculated in accordance with subsection (m), is equal to or greater than the threshold percentage specified in paragraph (2)(B)(iv) for any two consecutive fiscal years ; (C) paragraph (4) shall be applied— (i) in subparagraph (C), by substituting adjusted cohort default rate is greater than 15 percent for cohort default rate equals or exceeds 20 percent ; and (ii) in the matter following subparagraph (C), by substituting adjusted cohort default rate to reflect the percentage of defaulted loans in the representative sample that are required to be excluded pursuant to subsection (m)(1)(B) for cohort default rate to reflect the percentage of defaulted loans in the representative sample that are required to be excluded pursuant to subsection (m)(1)(B) ; (D) paragraph (5)(A) shall be applied by substituting paragraph (9) for paragraph (2) ; and (E) paragraph (7) shall be applied— (i) in subparagraph (A)(i)— (I) in the matter preceding subclause (I), by substituting adjusted cohort default rate is greater than 20 percent for cohort default rate is equal to or greater than the threshold percentage specified in paragraph (2)(B)(iv) ; and (II) in subclauses (I) and (II), by substituting adjusted cohort default rate for cohort default rate ; and (ii) in subparagraph (B)(i), by substituting adjusted cohort default rate is greater than 20 percent for cohort default rate is equal to or greater than the threshold percentage specified in paragraph (2)(B)(iv) . . (2) Conforming amendments Section 435(a)(2) of the Higher Education Act of 1965 ( 20 U.S.C. 1085(a) ) is amended— (A) in the paragraph heading, by adding at the end the following: before fiscal year 2021 ; and (B) in subparagraph (B)(iv), by striking and any succeeding fiscal year and inserting through fiscal year 2020 . (b) Adjusted cohort default rate defined Section 435(m)(1) of the Higher Education Act of 1965 ( 20 U.S.C. 1085(m)(1) ) is amended by adding at the end the following: (D) (i) With respect to a cohort default rate calculated for an institution under this paragraph for fiscal year 2021 and for each succeeding fiscal year, such cohort default rate shall be adjusted as follows: (I) In determining the number of current and former students at an institution who enter repayment for such fiscal year— (aa) any such student who is in nonmandatory forbearance for such fiscal year for a period of greater than 18 months but less than 36 months shall not be counted as entering repayment for such fiscal year; (bb) such a student shall be counted as entering repayment for the first fiscal year for which the student ceases to be in a period of forbearance and otherwise meets the requirements for being in repayment; and (cc) any such student who is in a period of forbearance for three or more years shall be counted as in default and included in the institution’s total number of students in default. (II) Such rate shall be multiplied by the percentage of students enrolled at the institution for such fiscal year who are borrowing a loan under part D of this title. (ii) The result obtained under this subparagraph for an institution shall be referred to in this Act as the adjusted cohort default rate . . (c) Publication of adjusted cohort default rate Section 435(m) of the Higher Education Act of 1965 ( 20 U.S.C. 1085(m) ) is further amended by adding at the end the following: (5) Beginning on the date on which the final adjusted cohort default rates for fiscal year 2021 are made available for publication by the Secretary, paragraph (4) shall be applied by substituting adjusted cohort default for cohort default each place it appears. . 7. Adjusted cohort default rate Section 487(a)(14) of the Higher Education Act of 1965 is amended by adding at the end the following: (D) Beginning on the date on which the final adjusted cohort default rates are published by the Secretary for fiscal year 2021 under section 435(m), subparagraph (C) shall be applied by substituting adjusted cohort default rate in excess of 5 percent for cohort default rate in excess of 10 percent each place it appears. . 8. Program review and data Section 498A of the Higher Education Act of 1965 ( 20 U.S.C. 1099c–1 ) is amended in subsection (a)(2), by striking subparagraph (A) and inserting the following: (A) institutions with an adjusted cohort default rate for loans under part D of this title in excess of 18 percent or which places such institutions in the highest 25 percent of such institutions; . 9. Assistance to progress period institutions Part H of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1099a et seq. ) is amended by adding at the end the following: 498C. Assistance to progress period institutions (a) In general The Secretary shall provide grants and technical assistance to covered progress period institutions in accordance with this section. (b) Authorized activities Grants and assistance provided under this section shall be used to improve student achievement (as described in section 496(a)(5)(A)) at covered progress period institutions. (c) Duration Grants and assistance may be provided under this section for a period of not less than one year and not more than three years. (d) Conditions (1) Benchmarks (A) In general To continue to receive support under this section after the first year in which such support is provided, an institution must show progress, as determined by the Secretary, toward meeting the standards for student achievement established by the relevant accrediting agency or association pursuant to section 496(a)(5)(A). (B) Considerations In determining the progress of an institution under subparagraph (A), the Secretary may take into consideration extenuating circumstances that may have contributed to the poor performance of the institution in the first year of the review period. (2) Deadline for compliance An institution that does not achieve an adjusted cohort default rate of less than 10 percent after receiving support under this section for three consecutive years shall be ineligible to receive further support under this section. (3) Prohibition An institution shall be ineligible to receive further support under this section if, while the institution was receiving such support, the total enrollment of low-income students (as such term is defined in section 419N(b)(7)) at the institution decreased by 10 percent or more. (e) Covered progress period institution In this section, the term covered progress period institution means— (1) a public institution of higher education that is determined to be in progress period status; (2) a part B institution (as defined in section 322) that is determined to be in progress period status; or (3) a private, nonprofit institution of higher education— (A) that is determined to be in progress period status; and (B) at which not less than 45 percent of the total student enrollment consists of low-income students (as such term is defined in section 419N(b)(7)). (f) Funding (1) In general There are appropriated such funds as the Secretary, using the formula described in paragraph (2), determines necessary to meet the needs of all eligible institutions under this subsection. (2) Formula Not later than 1 year after the date of the enactment of this section, the Secretary shall establish through negotiated rulemaking a formula to determine the— (A) proportional amount of institutional need under this section; and (B) total amount of institutional need under this section. (3) Special rule Such formula must at minimum take into consideration the severity of the problem, size of the institution, institutional resources, historical underfunding, and the number of low-income students (as such term is defined in section 419N(b)(7)) being served. .