Detailed Instructions: In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.
Q: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Federal Accountability and
Institutional Reform in Education Act of 1995''.

SEC. 2. FINDINGS.

The Congress finds that--
(1) the Federal Government is reducing spending in all
areas, including postsecondary education;
(2) reductions in postsecondary education spending fall on
students, schools, State loan guaranty agencies and lenders;
(3) the administration of postsecondary education is the
responsibility of the Department of Education; and
(4) reforms should be made to postsecondary education
programs to provide greater accountability from the Department,
educational institutions, lenders, and guarantee agencies and
to enhance institutional compliance with Department policies.

SEC. 3. STUDENT LOAN COHORT DEFAULT MANAGEMENT REFORMS.

(a) Administrative and Fiscal Procedures.--Section 428(c)(2)(A) of
the Higher Education Act of 1965 is amended by striking ''proof that
reasonable attempts were made'' and inserting ''proof that the
institution was contacted and other reasonable attempts were made''
(b) Reimbursement.--Section 428(c)(2)(G) of the Higher Education
Act of 1965 is amended by striking ''certifies to the Secretary that
diligent attempts have been made'' and inserting ''demonstrates to the
Secretary that diligent attempts, including direct contact with the
institution have been made.''.
(c) Limitation.--Section 428 of the Higher Education Act of 1965 is
amended by adding at the end the following:
''(o) Limitation.--Notwithstanding any other provision of this
section, the Secretary shall not reimburse or permit any eligible
lender, servicer, or guaranty agency (or its affiliates) who previously
filed a claim for reimbursement on a loan to retain any proceeds from
rehabilitation of a defaulted loan to the extent that such funds, when
added to the amount of prior reimbursement under this section, exceed
100 percent of the original principal of the loan.''.
(d) Notice to Secretary and Payment of Loss.--Section 430(a) of the
Higher Education Act of 1965 is amended--
(1) by inserting ''all'' after ''required to meet''; and
(2) by inserting ''the institution was contacted and
other'' after ''submit proof that''.
(e) Annual Report.--Section 430 of the Higher Education Act of 1965
is amended by adding at the end the following:
''(f) Annual Report.--The Secretary shall report annually to
Congress that lenders, servicers and guaranty agencies have attested to
their compliance with servicing and due diligence requirements, under
both statute and regulation. The Secretary shall also provide
information on the successful practices of low-default lenders,
servicers and guaranty agencies to other financial, servicing and
guaranty institutions participating in this title to encourage
duplication of successful servicing and collection programs.''.
(f) Circumstances.--Section 435(a)(2) of the Higher Education Act
of 1965 is amended by adding at the end the following:
''(D) The circumstances referred to in subparagraph (A)(ii)
shall be uniformly applied to all eligible institutions and
shall require that such an institution meet the following
criteria:
''(i) Not less than 50 percent of the students
enrolled in eligible programs qualify for an award
under subpart 1 of part A of title IV.
''(ii) The institution's student completion rate,
as calculated under the Student Right to Know
provisions of this title, is 60 percent or greater.
''(iii) The initial job placement rate of program
graduates is 60 percent or greater.''.
(g) Cohort Default Rate.--Section 435(m)(1)(B) of the Higher
Education Act of 1965 is amended by striking ''paid claims'' and
inserting ''properly paid claims as required in section 430 of this
Act''.

SEC. 4. ELIGIBLE INSTITUTION REFORM.

Section 481 (b) of the Higher Education Act of 1965 is amended--
(1) by inserting before the period at the end of the first
sentence the following: ''on the basis of a review by the
institution's independent auditor using generally accepted
accounting principles''; and
(2) by inserting before the second sentence the following:
''For the purposes of paragraph (6), revenues from sources that are not
derived from funds under this title include revenues from programs of
education or training that do not meet the definition of an eligible
program in subsection (e), but are provided on a contractual basis
under Federal, State or local training programs, to business and
industry, or to other eligible applicants. For the purposes of
determining whether an institution meets the requirements of paragraph
(6), the Secretary shall not consider the financial information of any
institution for a fiscal year that began on or before April 30,
1994.''.

SEC. 5. ACCOUNTING PROCEDURES FOR INSTITUTIONAL PROGRAM PARTICIPATION.

Section 498(c) of the Higher Education Act of 1965 is amended by
inserting '', based on an audited financial statement using any
generally accepted accounting principles'' after ''is able''.
A:
Federal Accountability and Institutional Reform in Education Act of 1995 - Amends the Higher Education Act of 1965 (HEA) to revise the accountability provisions and reform certain programs of such Act.
(Sec. 3) Revises provisions for student loan cohort default management. Requires proof that the institution was contacted, under certain administrative and fiscal procedures. Requires, under certain reimbursement provisions, a demonstration (rather than a certification) to the Secretary of Education that diligent attempts, including direct contact with the institution, have been made.
Prohibits the Secretary from reimbursing or permitting any eligible lender, servicer, or guaranty agency (or its affiliates) who previously filed a claim for reimbursement on a loan to retain any proceeds from rehabilitation of a defaulted loan to the extent that such funds, when added to the amount of prior reimbursement, exceed the whole amount of the original principal of the loan. Revises provisions relating to notice to the Secretary, payment of loss, and cohort default rate.
Directs the Secretary to: (1) report annually to the Congress that lenders, servicers and guaranty agencies have attested to their compliance with servicing and due diligence requirements; and (2) provide information on the successful practices of low-default lenders, servicers, and guaranty agencies to other financial, servicing, and guaranty institutions participating in HEA student aid programs, to encourage duplication of successful servicing and collection programs. Requires that certain mitigating circumstances, which allow an institution to continue in the student loan insurance program despite its having a high default rate, be uniformly applied to all eligible institutions, requiring that they meet the following criteria: (1) at least 50 percent of the students enrolled in eligible programs qualify for a Pell grant; (2) an institution's student completion rate is 60 percent or greater; and (3) the initial job placement rate of program graduates is 60 percent or greater.
(Sec. 4) Revises the definition of proprietary institution of higher education, for purposes of eligibility for HEA student aid programs.
Requires, for purposes of the requirement that such an institution have at least 15 percent of its revenues from sources that are not derived from funds provided under HEA student aid programs, a review by the institution's independent auditor using generally accepted accounting principles. Requires further that revenues from sources that are not derived from HEA student aid program funds include revenues from programs of education or training that do not meet the definition of an eligible program, but are provided on a contractual basis under Federal, State, or local training programs, to business and industry, or to other eligible applicants. Prohibits the Secretary from considering the financial information of any institution for a fiscal year that began on or before April 30, 1994.
(Sec. 5) Revises accounting procedures for institutional program participation to require that specified information be based on an audited financial statement using any generally accepted accounting principles.