PROTECT Students Act of 2025

Bill: 119-s-994
Sponsor: full_name: Sen. Durbin, Richard J. [D-IL]
Introduced: 2025-03-12
Policy area: Education
Latest action: action_date: 2025-03-12
text: Read twice and referred to the Committee on Health, Education, Labor, and Pensions. (text: CR S1706-1715)

Summaries:

tv_txt: II 119th CONGRESS 1st Session S. 994 IN THE SENATE OF THE UNITED STATES March 12, 2025 Mr. Durbin (for himself, Ms. Warren , and Mr. Merkley ) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To provide for accountability in higher education.

1. Short title This Act may be cited as the Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025 or the PROTECT Students Act of 2025 . 2. Table of contents The table of contents for this Act is as follows: Sec. 1. Short title. Sec. 2. Table of contents. Sec. 3. References. TITLE I—Student and taxpayer protections Sec. 101. Gainful employment and financial value transparency. Sec. 102. Borrower defense and substantial misrepresentations. Sec. 103. Closed school discharge. Sec. 104. Prohibition on institutions limiting student legal action. Sec. 105. Incentive compensation. TITLE II—Ensuring integrity at institutions of higher education and institutional contractors Sec. 201. Updating Federal oversight of third-party servicers. Sec. 202. Job placement rates. Sec. 203. Allocation of tuition and fee revenue by title IV institutions. Sec. 204. Past performance. Sec. 205. Recoupment. TITLE III—Improving oversight Sec. 301. Enforcement in the Office of Federal Student Aid. Sec. 302. For-Profit Education Oversight Coordination Committee. Sec. 303. Establishment and maintenance of complaint resolution and tracking system. Sec. 304. Reforms to eligibility and certification procedures. Sec. 305. State oversight. Sec. 306. Accrediting agency oversight. Sec. 307. Mandatory spending for administrative costs of operating the student aid programs. TITLE IV—Improving access to student and taxpayer information Sec. 401. Reporting and disclosures from institutions of higher education. Sec. 402. Transparency of oversight activities. 3. References Except as otherwise expressly provided in this Act, wherever in this Act an amendment or repeal is expressed in terms of an amendment to, or a repeal of, a section or other provision, the reference shall be considered to be made to that section or other provision of the Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. ). I Student and taxpayer protections 101. Gainful employment and financial value transparency (a) Defining gainful employment programs (1) Additional institutions Section 101(b) ( 20 U.S.C. 1001(b) ) is amended in paragraph (1), by inserting , including that meets the standards for debt-to-earnings and earnings premium in section 498C, after gainful employment in a recognized occupation . (2) Proprietary institution of higher education Section 102(b)(1)(A)(i) ( 20 U.S.C. 1002(b)(1)(A)(i) ) is amended, by inserting , including that meets the standards for debt-to-earnings and earnings premium in section 498C after gainful employment in a recognized occupation . (3) Postsecondary vocational institution Section 102(c)(1)(A) ( 20 U.S.C. 1002(c)(1)(A) ) is amended, by inserting , including that meets the standards for debt-to-earnings and earnings premium in section 498C after gainful employment in a recognized occupation . (4) Eligible program Section 481(b)(1)(A)(i) ( 20 U.S.C. 1088(b)(1)(A)(i) ) is amended, by inserting , including that meets the standards for debt-to-earnings and earnings premium in section 498C after gainful employment in a recognized profession . (b) Debt-to-Earnings and earnings premium Subpart 3 of part H of title IV ( 20 U.S.C. 1099c et seq. ) is amended by adding at the end the following: 498C. Debt-to-earnings and earnings premium (a) Definitions In this section: (1) Annual debt-to-earnings rate The term annual debt-to-earnings rate means the rate that is calculated for a cohort of students by taking the annual loan payment for such cohort, as calculated by the Secretary, divided by the median annual earnings for such cohort. (2) Annual loan payment The term annual loan payment means, for a cohort of students, as defined by the Secretary, who completed an eligible program, their total annual payment on loans borrowed to enroll in the institution that offered the eligible program, measured not less than 2 and not more than 4 years after their completion. (3) Discretionary debt-to-earnings rate The term discretionary debt-to-earnings rate means the rate that is calculated for a cohort of students by taking the annual loan payment for such cohort, as calculated by the Secretary, divided by the discretionary earnings for such cohort. (4) Discretionary earnings The term discretionary earnings means, for a cohort of students, as defined by the Secretary, who completed an eligible program, the median annual earnings minus the amount that is 150 percent of the poverty level for an individual, as determined by the Department of Health and Human Services. (5) Earnings premium The term earnings premium means the amount by which the median annual earnings exceed the median earnings for working adults with not more than a high school diploma, as determined using data from the Bureau of the Census— (A) in the State where the institution that provides the eligible program is located; or (B) if fewer than half of the students in the eligible program are from the State where the institution that provides the eligible program is located, or if the institution is a foreign institution, nationally. (6) Median annual earnings The term median annual earnings means, for a cohort of students, as defined by the Secretary, who completed an eligible program, the midpoint of their annual earnings measured not less than 2 and not more than 4 years after their completion. (b) Standards (1) In general An eligible program does not meet the standards for debt-to-earnings or earnings premium if it fails the debt-to-earnings rates or fails the earnings premium, as described in paragraph (2), in 2 out of any 3 consecutive years. (2) Failing An eligible program— (A) fails the debt-to-earnings rates if it has— (i) a discretionary debt-to-earnings rate equal to or greater than 20 percent; and (ii) an annual debt-to-earnings rate equal to or greater than 8 percent; and (B) fails the earnings premium if it has an earnings premium of zero or a negative amount. (c) Process (1) Data match In order to ensure compliance with paragraph (2), the Commissioner of the Internal Revenue Service, the Commissioner of the Social Security Administration, and the head of any other Federal agency that administers the database of individual-level earnings data shall, in coordination with the Secretary, timely ensure secure, annual data matches of earnings data with Department of Education data to produce the median annual earnings of each eligible program. (2) Requirements of the secretary The Secretary shall— (A) on an annual calendar year basis— (i) for each eligible program— (I) calculate for each award year the discretionary debt-to-earnings rate, the annual debt-to-earnings rate, and the earnings premium for the program; and (II) publish the discretionary debt-to-earnings rate, the annual debt-to-earnings rate, and the earnings premium for the eligible program for each award year on a website established and maintained by the Secretary; (ii) for each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation or a graduate or professional degree program offered by an institution of higher education described in section 101(a), issue a notice of determination not later than 45 days after completing the data match described in paragraph (1), informing the institution that provides the program— (I) of the final discretionary debt-to-earnings rate, the annual debt-to-earnings rate, and the earnings premium for the program, which may not be appealed by the institution unless the institution believes that the Secretary erred in the calculation of any such measure; (II) of the final determination regarding whether the program fails the debt-to-earnings rates or fails the earnings premium, as described in subsection (b)(2); (III) whether the program does not meet the standards for debt-to-earnings or earnings premium as described in subsection (b)(1) or could not meet such standards in the next year if it fails the debt-to-earnings rates or fails the earnings premium, as described in subsection (b)(2), in such next year; and (IV) whether the institution is required to provide warnings to enrolled students and prospective students of the program’s failure, or risk of failure, to meet the standards, as determined under subclause (III); and (iii) for each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings and earnings premium as described in subsection (b)(1), enforce the consequences under subsection (d); and (B) develop processes to verify, on an annual calendar year basis— (i) that each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation or a graduate or professional degree program offered by an institution of higher education described in section 101(a), provides the warning described in subparagraph (A)(ii)(IV), if applicable; and (ii) that each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings or earnings premium as described in subsection (b)(1), does not receive funds as described in subsection (d). (d) Consequences of not meeting standards (1) No disbursement of funds for enrollment in ineligible programs An institution may not disburse program funds under this title to students enrolled in a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings and earnings premium as described in this section. (2) Time period to reestablish eligibility An institution may not seek to reestablish the eligibility of a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings and earnings premium as described in this section or establish the eligibility of a program of training to prepare students for gainful employment in a recognized occupation that is substantially similar to the program that did not meet such standards until the date that is 3 years after the date of the notice of determination issued under subsection (c)(2)(A)(ii) that the program of training to prepare students for gainful employment in a recognized occupation does not meet the standards. (e) Regulations The Secretary shall issue regulations to carry out this section not later than 1 year after the date of enactment of the Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025 , except that such regulations shall not be subject to the requirements of sections 482 or 492. . 102. Borrower defense and substantial misrepresentations (a) Borrower defense to repayment Section 455(h) ( 20 U.S.C. 1087e(h) ) is amended to read as follows: (h) Borrower defenses (1) In general Notwithstanding any other provision of State or Federal law, the Secretary shall discharge a covered loan in repayment made to a borrower with a defense to repayment of the loan, as described in this section. (2) Definitions In this subsection: (A) Repayment The term repayment means the period after any in-school deferment or grace period and before a loan is paid in full other than by a consolidation loan made under this title, including, without limitation, a loan in default. (B) Covered loan The term covered loan means a loan made, insured, or guaranteed under this title that has an outstanding balance comprised in whole or in part by repayment obligations incurred to cover the cost of attendance at an institution of higher education. (3) Basis for defense to repayment (A) In general For purposes of discharge under this section, a borrower defense to repayment is established when the Secretary concludes by a preponderance of the evidence that a qualifying act, omission, or event occurred, and the student whose cost of attendance was paid in whole or in part by the proceeds of a covered loan suffered detriment in the nature and degree warranting a borrower defense discharge. (B) Qualifying acts, omissions, or events A qualifying act, omission, or event includes without limitation any of the following: (i) The institution, one of its representatives, or a third-party servicer of the institution made a substantial misrepresentation (as described in section 481(g)), directly or indirectly, to the borrower in connection with the borrower’s decision to attend, or to continue attending, the institution or the borrower’s decision to take out a covered loan. (ii) The institution failed to perform its obligations under the terms of a contract with the student and such obligation was undertaken as consideration or in exchange for the borrower’s decision to attend, or to continue attending, the institution, for the borrower’s decision to take out a covered loan, or for funds disbursed in connection with a covered loan. (iii) The institution engaged in aggressive and deceptive recruitment conduct or tactics in connection with the borrower’s decision to attend, or to continue attending, the institution or the borrower’s decision to take out a covered loan. Aggressive and deceptive recruitment tactics or conduct include actions by the institution, any of its representatives, or any entity, organization, or person with whom the institution has an agreement to provide educational programs, marketing, recruitment, or lead generation services that pressure a student to make enrollment or loan-related decisions, take unreasonable advantage of a student’s lack of knowledge, discourage a student or prospective student from consulting an advisor prior to making enrollment or loan-related decisions, use threatening or abusive language, or repeatedly engage in unsolicited contact. (iv) The borrower, whether as an individual or as a member of a class, or a governmental agency has obtained against the institution a favorable judgment based on State or Federal law in a court or administrative tribunal of competent jurisdiction based on the institution’s act or omission relating to the making of a covered loan, or the provision of educational services for which the loan was provided, notwithstanding any possible appeal. (v) The Secretary sanctioned or otherwise took adverse action against the institution at which the borrower enrolled, based on the institution’s acts or omissions that could give rise to a borrower defense under clause (i), (ii), or (iii). (vi) The institution committed any act or omission that relates to the making of the covered loan for enrollment at the institution or the provision of educational services for which the covered loan was provided that would give rise to a cause of action against the institution under applicable State law without regard to any statute of limitations. (C) Determination whether detriment warrants discharge In determining whether the nature and degree of detriment warrants a borrower defense discharge, the Secretary shall consider the totality of the circumstances, including the nature and degree of detriment shown by previous recipients of borrower defense discharge, and drawing all inferences and presumptions warranted by the evidence under the circumstances. (4) Effect of discharge To effectuate a borrower defense discharge of a covered loan in repayment, the Secretary shall carry out the following: (A) Discharge all amounts owed to the Secretary, including interest and fees, on the covered loan, subject to the limitation in paragraph (5). In the case of a covered loan that is a Federal Direct Consolidation Loan or a Federal Consolidation Loan under section 428C comprised only in part of repayment obligations incurred to cover the cost of attendance at the institution whose acts or omissions are the basis of the discharge, the Secretary may discharge less than the total amount of the covered loan when loan account records clearly establish the portion of the covered loan not subject to the defense to repayment. (B) Reimburse all payments previously made to the Secretary on the covered loan, subject to the limitation in paragraph (5). (C) For borrowers in default, determine that the borrower is not in default on the covered loan and therefore not ineligible to receive assistance under this title on the basis of default on the covered loan. (D) Update or delete adverse reports the Secretary previously made to consumer reporting agencies regarding the covered loan. (E) Remove the discharged covered loan and any grant made under this title related to the student’s attendance at the institution whose acts are omissions are the basis of the discharge from the borrower’s loan history for purposes of calculating eligibility for further grants and loans under this title. (5) Limitation on discharge and reimbursement The Secretary may reduce the amount of discharge and reimbursement provided for in paragraph (4) if the borrower received a money payment from the institution or related entity in compensation for the acts or omissions forming the basis of the borrower defense. In deciding whether a reduction is warranted, and in what amount, the Secretary shall consider the extent to which the payment received by the borrower compensated for non-economic damages, out-of-pocket expenses, or payments previously made directly to the institution, and whether the borrower has non-Federal student loans as a result of attending the institution. The Secretary may not reduce the amount of discharge and reimbursement provided for in a covered loan in paragraph (4) because the borrower received funds from a State tuition recovery fund. (6) Finality A borrower defense discharge is final upon the Secretary’s notification to the borrower. The Secretary may not thereafter revoke or reduce the amount of discharge or reimbursement, absent a finding of fraud on the part of the borrower. (7) Group process Where substantial misrepresentations are widespread, the Secretary shall seek to assess the eligibility of all potentially affected borrowers as a group or in multiple groups to expedite the process. If such discharges are approved, the Secretary shall discharge the covered loans of all eligible borrowers in the group, in accordance with the processes in this section and without requiring application materials, to the extent practicable. (8) Regulations The Secretary may promulgate regulations or otherwise prescribe procedures in relation to borrower defense discharge, consistent with the provisions of this section. Nothing in this section modifies or displaces existing powers, authorities, and obligations of the Secretary, including obligations imposed under chapter 5 of title 5, United States Code (commonly known as the Administrative Procedures Act ). . (b) Substantial misrepresentation Section 481 ( 20 U.S.C. 1088 ) is amended by adding at the end the following: (g) Substantial misrepresentation In this title, the term substantial misrepresentation , when used with respect to an institution of higher education, includes— (1) any statement about the nature of the institution’s educational program, its financial charges, or the employability or earnings of its graduates that is false, erroneous, or has the likelihood or tendency to mislead under the circumstances, on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment; and (2) any omission of fact, such as the concealment, suppression, or absence of material information about the nature of the institution’s educational program, its financial charges, the employability or earnings of its graduates, the availability of enrollment openings in the student’s desired program, the factors that would prevent an applicant from meeting the legal or other requirements to be employed, licensed, or certified in the field for which the training is provided which a reasonable person would have considered in making a decision to attend, or to continue attending, the institution or to take out a covered loan. . 103. Closed school discharge Section 437(c)(1) ( 20 U.S.C. 1087(c)(1) ) is amended to read as follows: (1) In general (A) In general If a borrower who received, on or after January 1, 1986, a loan made, insured, or guaranteed under this part and the student borrower, or the student on whose behalf a parent borrowed, is unable to complete the program in which such student is enrolled due to the closure of the institution or if such student’s eligibility to borrow under this part was falsely certified by the eligible institution or was falsely certified as a result of a crime of identity theft, or if the institution failed to make a refund of loan proceeds which the institution owed to such student’s lender, then the Secretary shall discharge the borrower’s liability on the loan (including interest and collection fees) by repaying the amount owed on the loan. (B) Additional discharge (i) In general In addition to the authorization of discharge under subparagraph (A), the Secretary shall discharge a borrower's (including an endorser's) liability on a Federal Direct Loan made under part D if— (I) the institution at which the borrower who took the loan (or on whose behalf it was taken or endorsed) was enrolled, ceased to provide educational instruction as a whole, or ceased to provide instruction in the programs in which more than 50 percent of the students were enrolled; or (II) the borrower who took the loan (or on whose behalf it was taken or endorsed) was enrolled in an institution at any time within the period not earlier than 180 days before the date of the closure of the institution. (ii) Extension of 180 days The Secretary may extend the 180 day period described in clause (i)(II) in cases where exceptional circumstances are demonstrated, including if— (I) the institution was placed on probation or order to show cause or approval was withdrawn or terminated by an accrediting agency or association or an institution's institutional accreditor, or a State authorizing or licensing authority; (II) the institution was placed on Heightened Cash Monitoring status by the Department or was placed on Provisional Program Participation Approval status, or the institution's participation in a program under this title was terminated by the Department; (III) the institution was found to have violated Federal or State law related to enrolling or providing education services to students by a Federal or State Government agency, or is the subject of a Federal or State court judgment that the institution violated laws related to enrolling or providing education services to students; (IV) the teach-out plan (as required under section 487(f)) of the borrower's educational program exceeds the 180 day period described in clause (i)(II); (V) the institution responsible for the teach-out of the borrower's educational program fails to perform the material terms of the teach-out plan (as required under section 487(f)), such that the borrower does not have a reasonable opportunity to complete the borrower's program of study; and (VI) the institution permanently closed all or most of its in-person locations while maintaining online programs or permanently closed many programs. (C) No application requirement A borrower who took a loan (or on whose behalf it was taken or endorsed) that is eligible for discharge under this paragraph due to institutional closure is entitled to discharge without an application or statement from the borrower 1 year after the institution's closure date if the student did not complete the program at the institution. (D) Pursing claims After discharging liability on a loan under this paragraph, the Secretary shall pursue any claim available to a borrower against the institution and its affiliates and principals or settle the loan obligation pursuant to the financial responsibility authority under subpart 3 of part H. . 104. 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 ). (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) ) is amended by adding at the end the following: (30) The institution— (A) 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; and (B) will provide written notification to students enrolled at the institution that any limitation or restriction on the ability of a student to pursue a claim, individually or with others, against an institution in court contained in any enrollment or other agreement with a student will not be enforced. . (c) 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 section 455(h) for such violation, or any remedies otherwise available to the individual under law and equity. (B) Violations A violation described in this subparagraph is any of the following: (i) A substantial misrepresentation, including a substantial omission of fact. (ii) A violation of section 487(a)(20) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(20) ). (iii) A violation of the default rate regulations promulgated by the Secretary under section 435(m)(3) of the Higher Education Act of 1965 ( 20 U.S.C. 1085(m)(3) ). (iv) A violation of the program integrity regulations promulgated by the Secretary under the Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. ), including regulations promulgated to carry out section 102, section 455, and part H of such Act. (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 an 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 the 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 subclause (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. (d) Prohibition on transcript withholding Section 487(a) ( 20 U.S.C. 1094(a) ), as amended by subsection (b), is further amended by adding at the end the following: (31) The institution— (A) will not withhold official transcripts related to a balance owed by the student to the institution; and (B) will provide an official transcript to a student upon request by the student. . 105. Incentive compensation (a) Incentive compensation (1) Revocation Example 2–B of Question 2 of the Department of Education Dear Colleague Letter GEN–11–05 (March 17, 2011) is revoked. (2) Prohibition The Department of Education may not issue a regulation or subregulatory guidance that would establish an exception to the prohibition provided in section 487(a)(20) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(20) ). (b) Institutional compliance with the incentive compensation ban Section 487(a)(20) ( 20 U.S.C. 1094(a)(20) ) is amended— (1) by striking The institution and inserting (A) The institution ; and (2) by adding at the end the following: (B) Not later than 1 year after the date of enactment of the Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025 , the institution shall attest to the Secretary that the institution is in compliance with subparagraph (A) notwithstanding the guidance provided in Department of Education Example 2–B of Question 2 of Dear Colleague Letter GEN–11–05 (March 17, 2011), in such form as required by the Secretary. If the institution is not in compliance as of the date of enactment of the Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025 , the Secretary shall revoke the institution’s program participation agreement under this section. (C) Following the attestation required under subparagraph (B), the institution shall annually provide verification from an independent auditor that the institution is in compliance with subparagraph (A). . II Ensuring integrity at institutions of higher education and institutional contractors 201. Updating Federal oversight of third-party servicers Section 481(c)(1) ( 20 U.S.C. 1088(c)(1) ) is amended by inserting , including related to the delivery of funds under this title, recruitment or retention of students, compliance with cohort default rate (as defined in section 435(m)) requirements, the development and delivery of instructional content, and other applicable activities as described by the Secretary after title . 202. Job placement rates (a) Definition Section 481 ( 20 U.S.C. 1088 ), as amended by section 102(b), is further amended by adding at the end the following: (h) Job placement rates The Secretary shall establish a single definition of job placement rate for purposes of this Act that ensures consistent determinations across institutions and accrediting agencies regarding when students are placed in a job, to improve accuracy and minimize the opportunity for misleading or deceptive information. . (b) Program participation agreement Section 487(a)(8) ( 20 U.S.C. 1094(a)(8) ) is amended to read as follows: (8) In the case of an institution that advertises or discloses job placement rates to prospective students or that is required to provide regular reporting of job placement rates to an accrediting agency, State authorizer, or other regulator, the institution will utilize the definition provided under section 481(h), and shall make available to prospective students, at or before the time of application— (A) the most recent available data concerning employment statistics, graduation statistics, the methodology used by the institution to calculate the job placement rate, and any other information necessary to substantiate the truthfulness of the advertisements or disclosures, and (B) relevant State licensing requirements of the State in which such institution is located for any job for which the course of instruction is designed to prepare such prospective students. . (c) Accrediting agency recognition Section 496(a)(5)(A) ( 20 U.S.C. 1099b(a)(5)(A) ) is amended by inserting , as defined pursuant to section 481(h) before the semicolon. (d) Nonapplicability of rulemaking requirements The amendments made under this section shall not be subject to the requirements provided under section 492 ( 20 U.S.C. 1098a ). 203. Allocation of tuition and fee revenue by title IV institutions Section 498(c) ( 20 U.S.C. 1099c(c) ) is amended by inserting at the end the following: (7) Requirement to spend revenue (A) In general (i) Beginning in academic year 2026–2027 and in each academic year thereafter through 2031–2032, each institution of higher education, in order to be eligible to participate in programs under this title, shall spend an amount equal to not less than 30 percent of their tuition and fee revenue (net of allowances and discounts) on instruction. (ii) Beginning in academic year 2027–2028 and in each academic year thereafter through 2030–2031, the Secretary shall assess the data described in subparagraph (B) and issue a report that identifies the following: (I) The total amount of spending on instruction for each institution. (II) The total amount of spending on student services for each institution, excluding advertising, recruiting, marketing, compensation of executives or officers, lobbying, and other pre-enrollment expenses, consistent with section 132(l). (III) Tuition and fee revenue (net of allowances and discounts) for each institution. (IV) The median increase in total spending on student services and instruction combined relative to spending on instruction relative to tuition and fee revenue (net of allowances and discounts). (V) Other relevant information the Secretary determines appropriate to include. (iii) In academic year 2031–2032, the Secretary shall issue a regulation that establishes a minimum threshold percentage for institutional spending on instruction and student services combined that shall be— (I) not less than 30 percent; and (II) consistent with the median increase in total spending, as identified under clause (ii)(IV) averaged across academic years 2028–2029, 2029–2030, and 2030–2031. (iv) Beginning in academic year 2031–2032 and in each academic year thereafter, each institution of higher education, in order to be eligible to participate in programs under this title, shall spend an amount equal to not less than the threshold percentage established under clause (iii) of their tuition and fee revenue (net of allowances and discounts) on instruction and student services combined. (B) Reporting from institutions The Secretary shall use data from reports received and definitions established under section 132(l) to carry out this paragraph. (C) Warnings The Secretary shall— (i) establish through regulation appropriate thresholds for an institution of higher education that meets the spending requirements under clauses (i) and (iv) of subparagraph (A), but which is at risk of missing such thresholds; and (ii) require each institution of higher education that is at risk of missing such thresholds to provide warnings to prospective students and enrolled students of the institution regarding the low instructional spending. (D) Regulations The Secretary shall issue such regulations as determined necessary by the Secretary to ensure compliance with the requirements of this paragraph, taking into consideration cost and convenience. . 204. Past performance Section 487(a)(16) ( 20 U.S.C. 1094(a)(16) ) is amended by inserting at the end the following: (C) The institution will not knowingly employ an individual who was an owner, director, officer, or employee who exercised substantial control over an institution that owes a liability. (D) The institution will not knowingly— (i) employ an individual who was— (I) an owner, director, officer, or employee of an institution that has— (aa) been found to have engaged in fraud, misuse of funds, or any material violation of law; or (bb) had its participation in programs under this title terminated, its certification revoked, or its application for certification or recertification for participation in such programs denied; or (II) a 10 percent-or-higher equity owner, director, officer, principal, or executive of, or contractor affiliated with, another institution in any year in which the other institution incurred a loss of Federal funds, as determined by the Secretary, in excess of 5 percent of the other institution’s annual funds under this title; or (ii) contract with any institution, third-party servicer, individual, agency, or organization that has, or whose owners, officers, or employees have— (I) been found to have engaged in fraud, misuse of funds, or any material violation of law; (II) had its participation in programs under this title terminated, its certification revoked, or its application for certification or recertification for participation in such programs denied; or (III) been a 10 percent-or-higher equity owner, director, officer, principal, executive of, or contractor affiliated with, another institution in any year in which the other institution incurred a loss of Federal funds, as determined by the Secretary, in excess of 5 percent of the other institution’s annual funds under this title. . 205. Recoupment (a) Clarifying the authority To recoup liabilities from title IV institutions Section 487(c)(1) ( 20 U.S.C. 1094(c)(1) ) is amended by striking subparagraph (F) and inserting the following: (F) the limitation, suspension, or termination of the participation in any program under this title of an eligible institution, the recoupment of liabilities established pursuant to section 493E, or the imposition of a civil penalty under paragraph (3)(B) whenever the Secretary has determined, after reasonable notice and opportunity for hearing, that such institution 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, except that 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. . (b) Recoupment of liabilities Part G of title IV ( 20 U.S.C. 1088 et seq. ) is amended by adding at the end the following: 493E. Recoupment (a) In general The Secretary shall assess liabilities and seek to recoup funds provided under this title from an institution of higher education as a result of student loan discharges, findings from program reviews or compliance audits, or due to other forms of misconduct or noncompliance. (b) Waiver authority The Secretary may waive some or all of the liabilities described in subsection (a) based on the individual circumstances of the institution. . (c) Owner signatures Section 498(b) of the Higher Education Act of 1965 ( 20 U.S.C. 1099c(b) ) is amended— (1) in paragraph (4), by striking and after the semicolon; (2) in paragraph (5), by striking the period at the end and inserting ; and ; and (3) by adding at the end the following: (6) requires both an authorized representative of the institution and, if applicable, an authorized representative of any entity with ownership and substantial control over the institution to sign the program participation agreement, as described under section 487, for the institution, which shall ensure that the institution and its owner, if applicable, agree to repay any liabilities assessed against the institution by the Secretary. . III Improving oversight 301. Enforcement in the Office of Federal Student Aid (a) 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 loan servicers; (B) investigate and coordinate investigations of potential or actual misconduct of institutions of higher education, third-party servicers that contract with such institutions, and loan servicers, including engaging in a regular program of secret shopping at online and campus-based institutions of higher education; (C) develop and implement a written policy for the enforcement of the ban on prohibited incentive compensation not less than annually, which may include automatic triggers for inquiries by the Department or regular secret shopper or audit-based investigations, and shall update such policy as needed; and (D) 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 487(c)(1)(I), 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 487(c)(3)(B). (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 124; 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 loan servicers. (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, and third-party servicers that contract with such institutions, 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, and third-party servicers that contract with such institutions, 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 or a third-party servicer that contracts with such institution from participation in 1 or more programs under title IV (in accordance with section 487), or provisionally certify such participation (in accordance with section 498(h)); (B) impose a civil penalty in accordance with section 487(c)(3)(B); (C) for a student loan servicer, obtain all relief, including any penalties and suspension or termination of the agreement, provided in the loan servicer agreement to the contract of the servicer; or (D) 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). . (b) Extend subpoena power To assist with investigations Section 490A(a) ( 20 U.S.C. 1097a(a) ) is amended to read as follows: (a) Authority To assist the Secretary in the conduct of investigations of possible violations of the provisions of this title, the Secretary is authorized to— (1) require by subpoena the production of information, documents, reports, answers, records, accounts, papers, and other documentary evidence pertaining to participation in any program under this title, the production of which may be required from any place in a State; and (2) require by subpoena oral testimony by any person, including any legal entity, concerning information pertaining to participation in any title IV program, the appearance for which may be required at any place in a State. . (c) Program reviews Section 498A of the Higher Education Act of 1965 ( 20 U.S.C. 1099c–1 ) is amended— (1) in subsection (a)— (A) in the matter preceding paragraph (1), by striking and financial responsibility and inserting , financial responsibility, and other eligibility-related ; and (B) in paragraph (2)— (i) by redesignating subparagraphs (A) through (F) as subparagraphs (B) through (G), respectively; (ii) by inserting before subparagraph (B), as so redesignated, the following: (A) identified as high-risk institutions based on a risk-review process developed by the Department that shall include risk factors, including— (i) significant changes in enrollment; (ii) high volumes of student complaints or borrower defense claims; (iii) indicators of issues related to financial capability; (iv) low completion rates; (v) indications of misleading or deceptive practices, aggressive recruiting, or substantial misrepresentation; (vi) significant completion gaps between students of different demographic groups; or (vii) other indicators of risk to students or taxpayers; ; and (iii) in subparagraph (G), as so redesignated, by striking or financial responsibility and inserting , financial responsibility, or other eligibility-related ; (2) in subsection (d), by striking criminal investigative training and inserting criminal and civil investigative training (including training in identifying misrepresentations in marketing and recruitment materials) ; (3) by redesignating subsection (e) as subsection (f); and (4) by inserting after subsection (d) the following: (e) Program reviews Program reviews shall, at minimum, include a review of all— (1) recruiting and marketing materials, including scripts and training materials provided to institution and third-party servicer staff involved in recruiting, admissions, or financial aid; (2) consumer complaints held by the institution and consumer agencies, borrower defense claims, the institution’s response to such complaints or claims, and any related investigative materials; (3) actions against the institution by State or Federal regulators or enforcement agencies, including State authorizing agencies and State attorneys general, or through qui tam actions; and (4) actions against the institution by accreditors. . (d) Enhanced civil penalties Section 487(c)(3)(B) of the Higher Education Act ( 20 U.S.C. 1094(c)(3)(B) ) is amended— (1) in clause (i)— (A) by inserting or its third-party servicer after eligible institution ; and (B) by striking $25,000 for each violation or misrepresentation and inserting $100,000 for each violation or misrepresentation, or— (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, the amount of the contract with the institution. ; (2) by redesignating clause (ii) as clause (iii); (3) by inserting after clause (i) the following: (ii) The Secretary may consider each time a substantial misrepresentation is viewed or experienced, including static or standing misrepresentations, as a separate violation or misrepresentation. ; and (4) by adding at the end the following: (iv) For the purpose of determining the amount of civil penalties under this subsection, any violation by a particular institution will accrue against all institutions or affiliates with common ownership. . 302. For-Profit Education Oversight Coordination Committee Part B of title I ( 20 U.S.C. 1011 et seq. ) is amended by adding at the end the following: 124. For-Profit Education Oversight Coordination Committee (a) Establishment of committee (1) In general 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 of higher education to— (i) improve enforcement of applicable Federal laws; (ii) increase accountability of for-profit institutions of higher education 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 of higher education. (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 of higher education. (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 authorizing agencies, State attorneys general, and State approving agencies designated under section 3671 of title 38, United States Code) with respect to improving oversight and accountability of for-profit institutions of higher education. (F) Develop best practices and consistency among Federal and State agencies in the dissemination of consumer information regarding for-profit institutions of higher education to ensure that students, parents, and other stakeholders have easy access to such information. (3) Chairperson The Secretary of Education or the designee of the Secretary shall serve as the Chairperson of the Committee. (b) 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 (a)(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 authorizing agencies, State attorneys general, State approving agencies designated under section 3671 of title 38, United States Code, veterans service organizations, and consumer advocates to carry out the purposes described in subsection (a)(2). (c) 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. . 303. Establishment and maintenance of complaint resolution and tracking system (a) Complaint tracking system Title I ( 20 U.S.C. 1001 et seq. ) is amended by adding at the end the following: F Complaint tracking system 161. Complaint tracking system (a) Definitions In this section: (1) Complainant The term complainant means an individual making a complaint, or report of suspicious activity, through the complaint tracking system. (2) Complaint tracking system The term complaint tracking system means the tracking system established under subsection (b). (3) Third-party servicer The term third-party servicer has the meaning given the term in section 481(c). (b) In general The Secretary shall— (1) establish and operate, in coordination with the Student Loan Ombudsman, 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 or reports of suspicious activity 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 or third-party servicers; and (C) the recruiting and marketing practices of institutions of higher education or third-party servicers; and (2) ensure that— (A) complaints or reports submitted by students, borrowers of student loans, staff of loan servicers, institutions of higher education, or third-party servicers, or the general public— (i) may remain anonymous if the complainant so chooses, including by providing complainants with an option for the individual complaint to not be reported to the loan servicer, institution, or third-party servicer, as the case may be; and (ii) may describe problems that are systematic in nature and not associated with a particular student or institution; (B) complaints and reports are provided to the loan servicers, institutions of higher education, or third-party servicers that are the subject of such complaints or reports; (C) such loan servicer, institution of higher education, or third-party servicer provides a timely response to the complainant; and (D) the complaint tracking system has the capacity to retrieve, search, and categorize complaints or reports for purposes of identifying problematic trends and systemic practices. (c) Handling of complaints or reports (1) In general 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 timely response to individuals who file a complaint or report of suspicious activity in the complaint tracking system. (2) Timely response to complaints The Secretary shall provide a response to a complainant not more than 90 days after receiving the complaint, or report of suspicious activity, through the 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; (B) any responses received by the Secretary from the loan servicer, institution of higher education, or third-party servicer; and (C) any additional actions that the Secretary has taken, or plans to take, in response to the complaint or report. (3) Timely response to Secretary by institution of higher education or servicer (A) Notice If the Secretary determines that it is necessary, the Secretary shall— (i) notify a loan servicer, institution of higher education, or third-party servicer that is the subject of a complaint, or report of suspicious activity, through the complaint tracking system regarding the complaint or report; and (ii) directly address and resolve the complaint or report in the system. (B) Institution or servicer response Not later than 60 days after receiving a notice under subparagraph (A), a loan servicer, institution of higher education, or third-party servicer shall provide a response to the Secretary concerning the complaint or report, including— (i) the steps that have been taken by the loan servicer, institution, or third-party servicer to respond to the complaint or report; (ii) all responses received by the loan servicer, institution, or third-party servicer from the complainant; and (iii) any additional actions that the loan servicer, institution, or third-party servicer has taken, or plans to take, in response to the complaint or report. (C) Further investigation In the event that a complaint or report received by the complaint tracking system is not adequately resolved or addressed by the responses of the loan servicer, institution of higher education, or third-party servicer under subparagraph (B), the Secretary may— (i) ask additional questions of such loan servicer, institution, or third-party servicer; or (ii) seek additional information from or action by the loan servicer, institution, or third-party servicer. (4) Provision of information (A) In general A loan servicer, institution of higher education, or third-party servicer shall, in a timely manner, comply with a request by the Secretary for information in the control or possession of such loan servicer, institution, or third-party servicer, respectively, concerning a complaint or report of suspicious activity received by the Secretary under the complaint tracking system, including supporting written documentation, subject to subparagraph (B). (B) Exceptions A loan servicer, institution of higher education, or third-party servicer shall not be required to make available under this paragraph— (i) any nonpublic or confidential information, including any confidential commercial information; (ii) any information collected by the loan servicer, institution, or third-party servicer 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 A loan servicer, institution of higher education, or third party 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. (d) Transparency (1) Data publication The Secretary shall, on an annual basis, publish data on the website of the Department that shall include, for each loan servicer, institution, and third-party servicer— (A) the number of complaints and reports received; (B) the types of complaints and reports received; (C) information about the resolution of the complaints and reports; and (D) if the complainant consents, the narrative content of the complaint or report. (2) Report Each year, the Secretary shall prepare and submit to the authorizing committees a report describing— (A) the types and nature of complaints or reports the Secretary has received under the complaint tracking system; (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 or third-party servicers; (D) any concerning trends or systemic practices identified; (E) any legislative recommendations that the Secretary determines are necessary to better assist students and families regarding the activities described in subsection (c)(1); and (F) the loan servicers, institutions of higher education, and third-party servicers with the highest volume of complaints and reports, as determined by the Secretary. . (b) Program participation agreement requirement Section 487(a) ( 20 U.S.C. 1094(a) ) is amended by adding at the end the following: (32) The institution will comply with any requirement under section 161, or any other requirement by the Department, to provide information or responses with respect to a complaint or report of suspicious activity about the institution. . 304. Reforms to eligibility and certification procedures (a) Eligibility and certification procedures Section 498 ( 20 U.S.C. 1099c ) is amended— (1) in subsection (a)— (A) by striking For purposes and inserting the following: (1) In general For purposes ; (B) by striking status, and and inserting status, ; (C) by inserting , and the institution’s compliance with all other eligibility requirements in accordance with paragraph (2), after an institution of higher education ; and (D) by adding at the end the following: (2) Compliance (A) In general In making a determination of institutional eligibility under this section, the Secretary shall— (i) require that an institution demonstrate compliance with each provision required under this title in order to receive a full, non-provisional certification of eligibility for purposes of this section; (ii) reflect that an institution is not entitled to continued participation in programs under this title absent a demonstration of full compliance; and (iii) determine that an institution is not eligible for participation in programs under this title if it is not in full compliance with section 487(a)(16). ; and (2) in subsection (f)— (A) by striking The Secretary shall ensure and inserting the following: (1) In general The Secretary shall ensure ; and (B) by striking The personnel and inserting the following: The Secretary shall not automatically certify or recertify an institution for participation in a program under this title as a result of delay in conducting a full review of the institution’s application. (2) Site visits The personnel . (b) Provisional certification of high-Risk institutions Section 498 ( 20 U.S.C. 1099c ) is amended— (1) in subsection (h)— (A) in paragraph (1)(B)— (i) in clause (ii), by striking or after the semicolon; (ii) in clause (iii), by striking the period at the end and inserting a semicolon; and (iii) by adding at the end the following: (iv) the institution has violated any requirement of this title; (v) the institution has violated the terms of its program participation agreement under section 487; or (vi) the Secretary determines that the institution’s continued participation in programs under this title poses a significant risk to students and taxpayers. ; (B) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; and (C) by inserting after paragraph (1) the following: (2) Additional conditions The Secretary shall require a provisionally certified institution to comply with such additional conditions as the Secretary determines necessary or appropriate based on the circumstances of the institution, as specified in the institution’s program participation agreement under section 487. ; (2) by redesignating subsections (i), (j), and (k) as subsections (j), (k), and (l), respectively; and (3) by inserting after subsection (h) the following: (i) Termination action If an institution that is provisionally certified under subsection (h) is unable to meet its responsibilities under its program participation agreement or is in violation of any requirement established under this title (including if the institution has engaged in substantial misrepresentations), or if a final administrative finding or judicial judgment determines that the institution violated a State or Federal consumer protection law or regulation, the Secretary may terminate the institution’s participation in the programs under this title. . (c) Program participation agreement claims (1) False claims Section 487(c) ( 20 U.S.C. 1094(c) ) is amended by adding at the end the following: (8) False claims (A) In general An institution that submits a misrepresentation or false claim on an application for funds under this title, or knowingly (as defined in section 3729 of title 31, United States Code) fails to comply with the requirements of the program participation agreement under this section, shall be subject to sections 3729 through 3733 of such title. (B) Amount of damages For purposes of section 3729(a) of title 31, United States Code, the amount of damages that the Government sustains because of the act of the institution described in subparagraph (A) shall be the total amount of funds distributed to the institution for loans made to students under part D during the period beginning on the date of the submission of the application or the failure to comply (as the case may be) and ending on the date on which a final decision finding a violation of section 3729 of such Code is made. . (2) Certification of compliance Paragraph (21) of section 487(a) ( 20 U.S.C. 1094(a)(21) ) is amended to read as follows: (21) The institution— (A) acknowledges that the agreement certifies the institution's compliance with all terms of the program participation agreement and all applicable Federal laws and regulations that govern an institution's eligibility to receive funds under this title; (B) agrees that any violation of the terms of a program participation agreement or any other Federal law or regulation described in subparagraph (A) constitutes material noncompliance with a condition of payment; and (C) will meet the requirements established by the Secretary and accrediting agencies or associations, and will provide evidence to the Secretary that the institution has the authority to operate within a State. . 305. State oversight (a) In general Section 101 ( 20 U.S.C. 1001 ) is amended— (1) in subsection (a)— (A) by redesignating paragraphs (3), (4), and (5) as paragraphs (4), (5), and (6), respectively; and (B) by inserting after paragraph (2) the following: (3) if providing education through distance education or correspondence in a State in which the institution is not located— (A) meets the requirements of such State for offering postsecondary education; or (B) if the institution is authorized by a State pursuant to an interstate reciprocity agreement— (i) the institution must have fewer than 200 students in such State enrolled annually; (ii) the agreement must allow States to enforce all non-registration and non-fee laws with respect to out-of-State institutions; and (iii) decisions regarding eligibility to participate in the reciprocity agreement and the standards that apply to participating institutions shall be made exclusively by representatives of member State regulatory agencies or State attorneys general offices; ; and (2) in subsection (b)(1), by striking paragraphs (1), (2), (4), and (5) of subsection (a) and inserting paragraphs (1), (2), (3), (5), and (6) of subsection (a) . (b) Conforming amendments Section 102 ( 20 U.S.C. 1002 ) is amended— (1) in subsection (a)(2)(A), by striking section 101(a)(4) each place the term appears and inserting section 101(a)(5) ; (2) in subsection (b)(1)— (A) in subparagraph (B), by striking paragraphs (1) and (2) of section 101(a) and inserting paragraphs (1), (2), and (3) of section 101(a) ; and (B) in subparagraph (C), by striking paragraph (4) of section 101(a) and inserting paragraph (5) of section 101(a) ; and (3) in subsection (c)(1)(B), by striking requirements of paragraphs (1), (2), (4), and (5) of section 101(a) and inserting requirements of paragraphs (1), (2), (3), (5), and (6) of section 101(a) . 306. Accrediting agency oversight Section 496(c) (( 20 U.S.C. 1099b(c) ) is amended— (1) in paragraph (8), by striking and after the semicolon; (2) in paragraph (9)(B), by striking the period at the end and inserting ; and ; and (3) by adding at the end the following: (10) (A) assesses the risk to students of any institution or program, including assessing the risk to students and institutions of any program managed by a third-party servicer, in accordance with factors provided by the Secretary; (B) effectively determines whether each such institution or program warrants additional oversight or action; and (C) provides adequate monitoring of the quality and risk of such institutions or programs. . 307. Mandatory spending for administrative costs of operating the student aid programs Paragraph (3) of section 458(a) ( 20 U.S.C. 1087h(a)(3) ) is amended to read as follows: (3) Funds for administrative costs (A) In general Each fiscal year, there shall be available to the Secretary from funds not otherwise appropriated, funds to be obligated for administrative costs under this part, including the costs of the student loan program under this part, except that the total expenditures by the Secretary under this subparagraph shall not exceed 5 percent of the amount of the average outstanding Federal student loan portfolio under this part for the preceding fiscal year. (B) Availability Funds made available under subparagraph (A) shall remain available until expended. The Secretary is authorized to use funds available under this paragraph for a fiscal year for a subsequent fiscal year. (C) Budget No funds may be expended under this paragraph unless the Secretary includes in the annual budget request of the Department to Congress a detailed description of— (i) the specific activities for which the funds made available by this paragraph have been used in the most recent fiscal year; (ii) the activities and costs planned for the fiscal year for which the request is made; and (iii) the projection of activities and costs for the fiscal year immediately following the fiscal year for which administrative expenses under this paragraph are made available. . IV Improving access to student and taxpayer information 401. Reporting and disclosures from institutions of higher education (a) Gainful employment and financial value transparency disclosures and warnings Section 498C, as added by section 101(b), is amended— (1) by redesignating subsection (e) as subsection (f); and (2) by inserting after subsection (d) the following: (e) Disclosures and warnings (1) In general For each gainful employment program or graduate or professional degree program of an institution that does not meet the standards described in subsection (b), the institution shall— (A) provide warnings to prospective students and enrolled students of the institution regarding the failing program status in a manner specified by the Secretary; and (B) shall require prospective students to acknowledge receipt of the warning. (f) Disclosure An institution of higher education shall provide the link to the website described in subsection (c)(2)(A)(ii) to prospective and enrolled students in a manner specified by the Secretary. . (b) Instructional spending data and disclosures Section 132 ( 20 U.S.C. 1015a ) is amended— (1) by redesignating subsection (l) as subsection (n); and (2) by inserting after subsection (k) the following: (l) Investments in instruction and student services (1) Institutional expenditures (A) In general The Secretary shall establish definitions for calculating instructional expenditures that shall separately account for the expenditures of an institution of higher education on each of the following: (i) Instruction. (ii) Student services. (iii) Marketing. (iv) Recruitment. (v) Advertising. (vi) Lobbying. (B) Exclusions Expenditures on instruction and student services, as defined in accordance with clauses (i) and (ii) of subparagraph (A), shall not include expenditures on marketing, recruitment, advertising, compensation of executives or officers, or lobbying, or other pre-enrollment expenditures. (2) Reporting Each institution of higher education receiving Federal funds under title IV shall report to the Secretary— (A) the total dollar amount of title IV funds received by the institution; (B) the proportion of title IV funds spent on recruitment activities and marketing activities; (C) the proportion of title IV funds spent on instruction and student services; and (D) for each program of education or division of the institution for which the tuition is charged, the price of tuition relative to the institution’s allocation of revenues to spending on instruction and student services. (3) Disclosures by the Department of Education The Secretary shall make the disclosures reported under paragraph (2) publicly available on the College Navigator website. . (c) Transparency of online programs Section 132 ( 20 U.S.C. 1015a ), as amended by subsection (b), is further amended by inserting after subsection (l), as added by subsection (b)(2), the following: (m) Improving transparency for online and contracted programs (1) Annual reporting requirements for third-party servicer activities Each institution of higher education that receives Federal funds under title IV shall report annually to the Secretary— (A) the name of each third-party servicer with which the institution contracts; and (B) for each such third-party servicer— (i) the names of any programs for which each such third-party servicer is contracted to provide support; (ii) the services each such third-party servicer is contracted to offer for each program; (iii) the number of students enrolled in any program for which the third-party servicer is contracted to provide services; (iv) whether the third-party servicer administers or provides any private or institutional student loan products; and (v) the third-party servicer’s total expenditures on advertising, marketing, and recruiting on behalf of the institution. (2) Disclosure requirements If an institution of higher education receiving Federal funds under title IV contracts with a third-party servicer to offer one or more programs of education, and such third-party servicer provides recruitment activities, retention activities, or similar activities (as specified by the Secretary) for the program— (A) the institution and third-party servicer shall prominently disclose for each such program of education, in a manner specified by the Secretary and using language developed by the Secretary, the nature of the relationship between the institution and third-party servicer— (i) in advertisements; (ii) in marketing materials; and (iii) on the website of the institution; and (B) individuals who are employed by the third-party servicer to provide admissions, recruitment, retention, or advising activities shall prominently disclose to prospective or enrolled students that the individuals are employees of that third-party servicer and not the institution, including in any communication about the program of education. (3) Annual reporting requirements for online education Each institution of higher education receiving Federal funds under title IV shall report annually to the Secretary— (A) the institution’s expenditures on activities to secure enrollments for each online, on-campus, and hybrid program, and its total expenditures for all activities of the institution; (B) the status of each student receiving Federal student aid as enrolled online, on-campus, or in a combination of both modalities, sufficient for the Secretary to calculate the total student enrollment, retention and completion rates, student loan borrowing levels, student loan repayment outcomes, and median earnings for each such program; and (C) the annual net price charged for each such program. . (d) Disclosure of material facts for proprietary institutions Section 498(c) ( 20 U.S.C. 1099c(c) ), as amended by section 203, is further amended by adding at the end the following: (8) (A) The Secretary shall require each proprietary institution of higher education (as defined in section 102(c)) to file promptly with the Secretary— (i) all public filings that the institution files with the Securities and Exchange Commission that include references to matters that affect students, including— (I) mergers and acquisitions; (II) changes of ownership; (III) changes of leadership and board membership; (IV) school or campus closings; (V) civil lawsuits; (VI) law enforcement actions, investigations, subpoenas, and demand letters; and (VII) material change in financial status; and (ii) in the case of an institution that is not required to make disclosures to the Securities and Exchange Commission, notifications regarding matters that affect students similar to the filings described in clause (i), in a form and manner determined by the Secretary. (B) The Secretary shall promptly make all information received under subparagraph (A) available on the website of the Department. . 402. Transparency of oversight activities (a) Borrower defense claims and discharges data Section 455(h) ( 20 U.S.C. 1087e(h) ), as amended by section 102(a), is further amended— (1) by redesignating paragraph (8) as paragraph (9); and (2) by inserting after paragraph (7) the following: (8) Transparency The Secretary shall make publicly available, and keep regularly updated, information regarding the number of borrower defense claims filed and discharges granted, disaggregated by institution of attendance, State of residence as of the date of the claim, student loan servicer, and the amount of discharge and reimbursement, based on increments of not less than $10,000. . (b) 90/10 rule transparency Paragraph (3) of section 487(d) ( 20 U.S.C. 1094(d)(3) ) is amended— (1) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively, and adjusting the margins appropriately; (2) by striking The Secretary and inserting the following: (A) Public disclosure of failure to meet requirements The Secretary ; and (3) by adding at the end the following: (B) Public disclosure of 90/10 data (i) In general The Secretary shall publicly disclose on the website of the Department the data provided by proprietary institutions for purposes of this subsection (referred to in this subparagraph as the 90/10 database ) in a prompt, comprehensive, and user-friendly manner. (ii) Temporary omissions If any data for a proprietary of institution required to be disclosed under clause (i) is omitted because of issues unresolved at a given deadline of the Secretary, the Secretary shall— (I) include, in the 90/10 database on the College Navigator website, a notice that the information is omitted for such proprietary institution and a clear explanation of the reason for the delay; and (II) timely amend the 90/10 database to include the information required to be disclosed for the relevant reporting period. . (c) Change of ownership and conversion transparency Section 498(j) ( 20 U.S.C. 1099c(j) ), as redesignated by section 304(b)(2), is further amended by adding at the end the following: (5) The Secretary shall promptly disclose on the website of the Department— (A) any application for a change of ownership of an institution or for a conversion of an institution from proprietary to nonprofit status; and (B) any decision by the Secretary regarding approval or disapproval of a change of ownership application, or an application for conversion from proprietary to nonprofit status, and all external communications describing or explaining those decisions. . (d) Transparency in financial standing of institutions Section 498(c) ( 20 U.S.C. 1099c(c) ), as amended by section 401(d), is further amended by adding at the end the following: (9) The Secretary shall promptly post on the Department website, for all institutions participating in a program under this title— (A) the annual audited financial statements submitted by each institution under this section and a list of any institutions that have failed to timely submit audited financial statements; (B) (i) the terms, amounts, and withdrawals for letters of credit and other sureties required of institutions of higher education under paragraph (3), including by providing updates as new financial guarantees are required and as changes are made to existing agreements; and (ii) all external communications between institutions of higher education and the Department describing or implementing the Secretary's requirements or determinations regarding financial guarantees under paragraph (3); and (C) (i) each decision of the Secretary as to the imposition or removal of heightened cash monitoring status and other financial protections regarding an institution; and (ii) all external communications between institutions of higher education and the Department describing or implementing such decisions. . (e) Institutional participation in the title IV programs Section 498 ( 20 U.S.C. 1099c ) is amended by adding at the end the following: (m) Transparency The Secretary shall post on the Department website the full program participation agreement under section 487 for each institution that enters into such an agreement and shall indicate if the institution is on provisional, temporary provisional, or expired certification status. . (f) Accrediting agency transparency Section 496 ( 20 U.S.C. 1099b ) is amended— (1) in subsection (o)— (A) by inserting after Regulations .— the following: (1) In general ; and (B) by adding at the end the following: (2) Disclosures (A) In general The Secretary shall publicly disclose on the Department's website— (i) all of the Department’s draft and final accrediting agency or association recognition reports, and monitoring reports and investigations of any accrediting agency or association, under this section; and (ii) the reports and accompanying exhibits that each accreditation agency or association submits to the Department in the course of recognition and re-recognition reviews under this section. (B) Disclosure requirements The Secretary shall disclose the information required under subparagraph (A) promptly, so that members of the public may thoroughly and timely respond via public comment in the course of Department reviews of accrediting agencies and associations. ; and (2) by adding at the end the following: (r) Transparency of accrediting agency or association actions (1) In general An accrediting agency or association recognized by the Secretary under this section shall promptly post on the website of the accrediting agency or association and shall submit to the Department, all communications sent from the accrediting agency or association to an institution explaining, or informing an institution of, an action taken by the agency with respect to the institution, including— (A) to impose or remove a status of probation, warning, concern, stipulation, or reporting, or similar status; (B) to impose or revoke a show cause order; or (C) to impose or revoke a limitation, suspension, or termination action. (2) No redaction The communication posted and submitted under paragraph (1) shall be without redaction, except for personally identifiable information. (3) Disclosure by the Secretary The Secretary shall promptly publicly disclose on the website of the Department all communications submitted pursuant to paragraph (1). .