Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025 or the PROTECT Students Act of 2025
This bill sets forth provisions to address financial predatory practices in higher education, including by establishing additional protections for students and student loan borrowers.
Specifically, the bill provides statutory authority for Department of Education (ED) regulations related to gainful employment, borrower defense to repayment, and closed school discharges. For example, ED's 2023 gainful employment regulations specify that ED considers a career education program to be preparing students for gainful employment if it meets specified debt-to-earnings or earnings premium measures.
Additionally, the bill prohibits institutions of higher education (IHEs) that participate in federal student aid programs from taking specified actions, such as (1) restricting students' ability to pursue claims against IHEs in court, and (2) withholding official transcripts because of a balance owed by the student.
The bill requires IHEs to spend at least 30% of their tuition and fee revenue on instruction.
The bill also includes additional oversight measures, such as
The bill makes funding available to ED for the administrative costs of operating student aid programs.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2899 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 2899
To provide for accountability in higher education.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 10, 2025
Mr. Takano (for himself, Ms. Lee of Nevada, Mr. Krishnamoorthi, Ms.
Waters, and Ms. Adams) introduced the following bill; which was
referred to the Committee on Education and Workforce, and in addition
to the Committee on the Judiciary, for a period to be subsequently
determined by the Speaker, in each case for consideration of such
provisions as fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To provide for accountability in higher education.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 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''.
SEC. 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.
SEC. 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.).
TITLE I--STUDENT AND TAXPAYER PROTECTIONS
SEC. 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:
``SEC. 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.''.
SEC. 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.''.
SEC. 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.''.
SEC. 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.''.
SEC. 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).''.
TITLE II--ENSURING INTEGRITY AT INSTITUTIONS OF HIGHER EDUCATION AND
INSTITUTIONAL CONTRACTORS
SEC. 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''.
SEC. 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).
SEC. 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.''.
SEC. 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.''.
SEC. 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:
``SEC. 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.''.
TITLE III--IMPROVING OVERSIGHT
SEC. 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.''.
SEC. 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:
``SEC. 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.''.
SEC. 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:
``PART F--COMPLAINT TRACKING SYSTEM
``SEC. 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.''.
SEC. 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.''.
SEC. 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)''.
SEC. 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.''.
SEC. 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.''.
TITLE IV--IMPROVING ACCESS TO STUDENT AND TAXPAYER INFORMATION
SEC. 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.''.
SEC. 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).''.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Education and Workforce, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Education and Workforce, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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