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Q: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Internet Equity and Education Act of
2001''.

SEC. 2. EXCEPTION TO 50 PERCENT CORRESPONDENCE COURSE LIMITATIONS.

(a) Definition of Institution of Higher Education for Title IV
Purposes.--Section 102(a) of the Higher Education Act of 1965 (20
U.S.C. 1002(a)) is amended by adding at the end the following new
paragraph:
''(7) Exception to limitation based on course of study.--
Courses offered via telecommunications (as defined in section
484(l)(4)) shall not be considered to be correspondence courses
for purposes of subparagraph (A) or (B) of paragraph (3) for
any institution that--
''(A) is participating in either or both of the
loan programs under part B or D of title IV on the date
of enactment of the Internet Equity and Education Act
of 2001;
''(B) has a cohort default rate (as determined
under section 435(m)) for each of the 3 most recent
fiscal years for which data are available that is less
than 10 percent; and
''(C)(i) has notified the Secretary, in a form and
manner prescribed by the Secretary (including such
information as the Secretary may require to meet the
requirements of clause (ii)), of the election by such
institution to qualify as an institution of higher
education by means of the provisions of this paragraph;
and
''(ii) the Secretary has not, within 90 days after
such notice, and the receipt of any information
required under clause (i), notified the institution
that the election by such institution would pose a
significant risk to Federal funds and the integrity of
programs under title IV.''.
(b) Definition of Eligible Student.--Section 484(l)(1) of the
Higher Education Act of 1965 (20 U.S.C. 1091(l)(1)) is amended by
adding at the end the following new subparagraph:
''(C) Exception to 50 percent limitation.--
Notwithstanding the 50 percent limitation in
subparagraph (A), a student enrolled in a course of
instruction described in such subparagraph shall not be
considered to be enrolled in correspondence courses if
the student is enrolled in an institution that--
''(i) is participating in either or both of
the loan programs under part B or D of title IV
on the date of enactment of the Internet Equity
and Education Act of 2001;
''(ii) has a cohort default rate (as
determined under section 435(m)) for each of
the 3 most recent fiscal years for which data
are available that is less than 10 percent; and
''(iii)(I) has notified the Secretary, in
form and manner prescribed by the Secretary
(including such information as the Secretary
may require to meet the requirements of
subclause (II)), of the election by such
institution to qualify its students as eligible
students by means of the provisions of this
subparagraph; and
''(II) the Secretary has not, within 90
days after such notice, and the receipt of any
information required under subclause (I),
notified the institution that the election by
such institution would pose a significant risk
to Federal funds and the integrity of programs
under title IV.''.

SEC. 3. DEFINITION OF ACADEMIC YEAR.

Section 481(a) of the Higher Education Act of 1965 (20 U.S.C.
1088(a)) is amended by adding at the end the following new paragraph:
''(3) For the purposes of any eligible program, a week of
instruction is defined as a week in which at least one day of regularly
scheduled instruction or examinations occurs, or at least one day of
study for final examinations occurs after the last scheduled day of
classes. For an educational program using credit hours, but not using a
semester, trimester, or quarter system, an institution of higher
education shall notify the Secretary, in the form and manner prescribed
by the Secretary, if the institution plans to offer an eligible program
of instruction of less than 12 hours of regularly scheduled
instruction, examinations, or preparation for examinations for a week
of instructional time.''.

SEC. 4. INCENTIVE COMPENSATION.

(a) Amendment.--Part G of title IV of the Higher Education Act of
1965 is amended by inserting after section 484B (20 U.S.C. 1091b) the
following new section:

''SEC. 484C. INCENTIVE COMPENSATION PROHIBITED.

''(a) Prohibition.--No institution of higher education
participating in a program under this title shall make any payment of a
commission, bonus, or other incentive payment, based directly on
success in securing enrollments or financial aid, to any person or
entity directly engaged in student recruiting or admission activities,
or making decisions regarding the award of student financial
assistance, except that this section shall not apply to the recruitment
of foreign students residing in foreign countries who are not eligible
to receive Federal student assistance.
''(b) Exceptions.--Subsection (a) does not apply to payment of a
commission, bonus, or other incentive payment--
''(1) pursuant to any contract with any third-party service
provider that has no control over eligibility for admission or
enrollment or the awarding of financial aid at the institution
of higher education, provided that no employee of the third-
party service provider is paid a commission, bonus, or other
incentive payment based directly on success in securing
enrollments or financial aid; or
''(2) to persons or entities for success in securing
agreements, contracts, or commitments from employers to provide
financial support for enrollment by their employees in an
institution of higher education or for activities that may lead
to such agreements, contracts, or commitments.
''(c) Exception for Fixed Compensation.--For purposes of subsection
(a), a person shall not be treated as receiving incentive compensation
when such person receives a fixed compensation that is paid regularly
for services and that is adjusted no more frequently than every six
months.''.
(b) Conforming Amendment.--Paragraph (20) of section 487(a) of the
Higher Education Act of 1965 (20 U.S.C. 1094(a)(20)) is repealed.
(c) Technical Amendment.--Section 487(c)(1) of the Higher Education
Act of 1965 (20 U.S.C. 1094(c)(1)) is amended by striking ''paragraph
(2)(B)'' each place it appears in subparagraphs (F) and (H) and
inserting ''paragraph (3)(B)''.

SEC. 5. EVALUATION AND REPORT.

(a) Information from Institutions.--
(1) Institutions covered by requirement.--The requirements
of paragraph (2) apply to any institution of higher education
that--
(A) has notified the Secretary of Education of an
election to qualify for the exception to limitation
based on course of study in section 102(a)(7) of the
Higher Education Act of 1965 (20 U.S.C. 1002(a)(7)) or
the exception to the 50 percent limitation in section
484(l)(1)(C) of such Act (20 U.S.C. 1091(l)(1)(C));
(B) has notified the Secretary under section
481(a)(3) of such Act (20 U.S.C. 1088(a)(3)); or
(C) contracts with outside parties for--
(i) the delivery of distance education
programs;
(ii) the delivery of programs offered in
nontraditional formats; or
(iii) the purpose of securing the
enrollment of students.
(2) Requirements.--Any institution of higher education to
which this paragraph applies shall comply, on a timely basis,
with the Secretary of Education's reasonable requests for
information on changes in--
(A) the amount or method of instruction offered;
(B) the types of programs or courses offered;
(C) enrollment by type of program or course;
(D) the amount and types of grant, loan, or work
assistance provided under title IV of the Higher
Education Act of 1965 that is received by students
enrolled in programs conducted in nontraditional
formats; and
(E) outcomes for students enrolled in such courses
or programs.
(b) Report by Secretary Required.--The Secretary of Education shall
conduct by grant or contract a study of, and by March 31, 2003, submit
to the Congress, a report on--
(1) the effect that the amendments made by this Act have
had on--
(A) the ability of institutions of higher education
to provide distance learning opportunities to students;
and
(B) program integrity;
(2) with respect to distance education or correspondence
education courses at institutions of higher education to which
the information requirements of subsection (a)(2) apply,
changes from year-to-year in--
(A) the amount or method of instruction offered and
the types of programs or courses offered;
(B) the number and type of students enrolled in
distance education or correspondence education courses;
(C) the amount of student aid provided to such
students, in total and as a percentage of the
institution's revenue; and
(D) outcomes for students enrolled in distance
education or correspondence education courses,
including graduation rates, job placement rates, and
loan delinquencies and defaults;
(3) any reported and verified claim of inducement to
participate in the student financial aid programs and any
violation of the Higher Education Act of 1965, including any
actions taken by the Department of Education against the
violator; and
(4) any further improvements that should be made to the
provisions amended by this Act (and related provisions), in
order to accommodate nontraditional educational opportunities
in the Federal student assistance programs while ensuring the
integrity of those programs.

SEC. 6. LEARNING ANYTIME ANYWHERE PARTNERSHIPS.

Section 420J of the Higher Education Act of 1965 (20 U.S.C. 1070f-
6) is amended by adding at the end the following new sentence: ''If for
any fiscal year funds are not appropriated pursuant to this section,
funds available under part B of title VII, relating to the Fund for the
Improvement of Postsecondary Education, may be made available for
continuation grants for any grant recipient under this subpart.''.

SEC. 7. IMPLEMENTATION.

(a) No Delay in Effective Date.--Section 482(c) of the Higher
Education Act of 1965 (20 U.S.C. 1089(c)) shall not apply to the
amendments made by this Act.
(b) Implementing Regulations.--Section 492 of the Higher Education
Act of 1965 (20 U.S.C. 1098a) shall not apply to the amendments made by
sections 2 and 3 of this Act.

Passed the House of Representatives October 10, 2001.

Attest:

JEFF TRANDAHL,

Clerk.
A:
Internet Equity and Education Act of 2001 - Amends the Higher Education Act of 1965 (HEA) to exempt courses offered through telecommunications from certain limitations on student financial assistance with respect to correspondence courses. (Such limitations include the 50-percent rule, requiring that an institution provide at least 50 percent of its instruction in person.) Allows such exemption if the institution of higher education (IHE) offering such course through telecommunications: (1) is participating in the guaranteed or the direct student loan program; and (2) has a cohort default rate of less than ten percent for each of the three most recent fiscal years for which data are available; and (3) has notified the Secretary of Education of its election to qualify for such exemption, and then has not been notified by the Secretary that such election would pose a significant risk to Federal funds under HEA title IV (Student Assistance).(Sec. 3) Defines a week of instruction, with respect to an academic year for HEA student aid programs, as one in which at least one day of regularly scheduled instruction or examinations occurs, or at least one day of study for final examinations occurs after the last scheduled day of classes. (Such revised definition eliminates a 12-hour rule requiring students to spend at least 12 hours a week in class if enrolled in courses that are not on a semester, trimester, or quarter system.) Requires an IHE to notify the Secretary if it plans to offer an eligible program of instruction of less than 12 hours of regularly scheduled instruction, examinations, or preparation for examinations for a week of instructional time (for educational programs using credit hours, but not using a semester, trimester, or quarter system).(Sec. 4) Revises a prohibition, for IHEs that participate in HEA student assistance programs, against making incentive payments based on success in securing enrollments or financial aid to any person or entity engaged in student recruiting or admission activities, or making decisions regarding the award of student financial assistance. Prohibits such payments only if they are: (1) based directly on such success; and (2) made to a person or entity directly engaged in such activities. Exempts from such prohibition: (1) recruitment of foreign students not eligible to receive Federal student assistance (as does current law); (2) incentive payments under any contract with a third-party service provider with no control over eligibility for admission or enrollment or awarding of financial aid at the IHE, if no employee of that provider is given an incentive payment based directly on success in securing enrollments or financial aid; (3) incentive payments to persons or entities for success in securing (or activities leading to) agreements, contracts, or commitments from employers to provide financial support for enrollment of their employees in an IHE; and (4) persons receiving fixed compensation paid regularly for services and adjusted no more frequently than every six months.(Sec. 5) Requires certain information to be provided to the Secretary by IHEs that have: (1) notified the Secretary of their election to qualify for an exception to a limitation on course of study or to the 50 percent limitation on instruction that is not in person; (2) notified the Secretary of plans to offer an eligible program of instruction of less than 12 hours; or (3) contracts with outside parties for delivery of distance education programs or programs offered in nontraditional formats or for securing enrollment of students.Directs the Secretary to evaluate and report on: (1) the effect of this Act on IHE ability to provide distance learning opportunities and on program integrity; (2) specified types of changes with respect to distance education or correspondence courses at IHEs subject to information requirements under this Act; (3) claims of inducements to participate in student financial aid programs, HEA violations, and Federal actions against violators; and (4) any further revisions to accommodate nontraditional educational opportunities in Federal student assistance programs while ensuring program integrity.(Sec. 6) Authorizes funds to be made available for the Learning Anytime Anywhere Partnerships program from the Fund for Improvement of Postsecondary Education if for any fiscal year funds are not appropriated for such program.