Bill Summary
This legislation amends the Higher Education Act of 1965 to introduce changes to eligibility requirements for institutions of higher education. It establishes a new section, 455(r), which states that institutions with a cohort repayment rate of 15% or less will be ineligible for federal programs starting in fiscal year 2022. The legislation also outlines a process for institutions to appeal this decision and requires risk-sharing payments if they continue to participate during the appeal. Additionally, it creates a College Opportunity Bonus Program to award grants to eligible institutions with a strong record of making college more affordable for low- and moderate-income students. The grants are funded by risk-sharing payments received by the Secretary of Education. The legislation also amends the Education Sciences Reform Act of 2002 to include information on student service expenditures and resources.
Possible Impacts
1. Students from low- and moderate-income families may have limited access to federal programs for higher education if their chosen institution has a cohort repayment rate of 15% or less, as outlined in the proposed legislation. This could make it more difficult for them to afford college and pursue their career goals.
2. Institutions of higher education that have a strong track record of making college more affordable and accessible for low-income students may receive grants through the College Opportunity Bonus Program, as established in the legislation. This could potentially benefit students from low-income backgrounds and improve their chances of success in higher education.
3. The proposed legislation also requires institutions to provide information on their student service expenditures and resources, excluding certain expenses such as marketing and athletic programs. This could provide transparency for students and their families in understanding the resources available to them for academic and support services at a particular institution.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 1525 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 1525
To amend the Higher Education Act of 1965 to provide for institutional
ineligibility based on low cohort repayment rates and to require risk-
sharing payments of institutions of higher education.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 16, 2019
Mrs. Shaheen (for herself and Mr. Young) introduced the following bill;
which was read twice and referred to the Committee on Health,
Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to provide for institutional
ineligibility based on low cohort repayment rates and to require risk-
sharing payments of institutions of 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 ``Student Protection and Success
Act''.
SEC. 2. INSTITUTIONAL INELIGIBILITY BASED ON LOW COHORT REPAYMENT RATE.
(a) In General.--Section 455 of the Higher Education Act of 1965
(20 U.S.C. 1087e) is amended by adding at the end the following:
``(r) Ineligibility Due to Low Cohort Repayment Rate.--
``(1) In general.--Beginning with fiscal year 2022 and each
succeeding fiscal year, an institution that has a cohort
repayment rate that is equal to or less than 15 percent shall
not be eligible to participate in a program under this part for
such fiscal year and for the 2 succeeding fiscal years.
``(2) Appeals.--
``(A) In general.--An institution may appeal the
loss of eligibility under this subsection to the
Secretary within 30 days of receiving notification from
the Secretary of the loss of eligibility under this
subsection.
``(B) Continued participation.--During an appeal
under subparagraph (A), the Secretary may permit the
institution to continue to participate in a program
under this part if the institution demonstrates to the
satisfaction of the Secretary that the Secretary's
calculation of its cohort repayment rate is not
accurate, and that recalculation would increase its
cohort repayment rate to be more than 15 percent.
``(C) Required payment.--If an institution
continues to participate in a program under this part,
and the institution's appeal of the loss of eligibility
is unsuccessful, the institution shall be required to
pay to the Secretary an amount equal to the amount of
loans made by the Secretary under this part to
borrowers attending, or planning to attend, that
institution during the pendency of such appeal and the
interest, special allowance, reinsurance, and any
related payments made by the Secretary (or which the
Secretary is obligated to make) with respect to such
loans.
``(3) Cohort repayment rate.--
``(A) In general.--In this subsection, the term
`cohort repayment rate' means, for any fiscal year
beginning with fiscal year 2022--
``(i) in the case in which 30 or more
borrowers at the institution enter repayment on
Federal Direct Stafford Loans, Federal Direct
Unsubsidized Stafford Loans, Federal Direct
PLUS Loans, or Federal Direct Consolidation
Loans, received for attendance at the
institution, the percentage of those borrowers
who are not in default and who make at least a
one dollar reduction on their initial student
loan principal balance before the end of the
second fiscal year following the fiscal year in
which the borrowers entered repayment, except
as provided in subparagraph (B); and
``(ii) in the case in which less than 30
borrowers at the institution enter repayment on
Federal Direct Stafford Loans, Federal Direct
Unsubsidized Stafford Loans, Federal Direct
PLUS Loans, or Federal Direct Consolidation
Loans, received for attendance at the
institution, the percentage of those borrowers
plus all of the borrowers at the institution
who entered repayment on such loans (or on the
portion of a loan made under section 428C that
is used to repay any such loans) in the 3
fiscal years preceding the fiscal year for
which the determination is made, who are not in
default and who make at least a one dollar
reduction on their initial student loan
principal balance before the end of the second
fiscal year following the year in which the
borrowers entered repayment, except as provided
in subparagraph (B).
``(B) Exception.--The `cohort repayment rate'
calculation under subparagraph (A) shall not include in
the calculation a borrower who is--
``(i) in deferment on repayment of a loan
described in subparagraph (A) due to study in
an approved graduate fellowship program or in
an approved rehabilitation training program for
the disabled;
``(ii) in deferment on repayment of a loan
described in subparagraph (A) during a period
of at least half-time enrollment in college or
a career school;
``(iii) in deferment on repayment of a loan
described in subparagraph (A) during a period
of service qualifying for loan discharge or
cancellation under part E;
``(iv) in deferment on repayment of a loan
described in subparagraph (A) due to active
duty military service of the borrower during a
war, military operation, or national emergency;
``(v) in deferment on repayment of a loan
described in subparagraph (A) during the 13
months following the conclusion of qualifying
active duty military service by the borrower,
or until the borrower returns to enrollment on
at least a half-time basis, whichever is
earlier, if the borrower is a member of the
National Guard or other reserve component of
the Armed Forces and was called or ordered to
active duty while enrolled at least half-time
at an eligible school or within 6 months of
having been enrolled at least half-time;
``(vi) in mandatory forbearance on
repayment of a loan described in subparagraph
(A) for the full fiscal year; or
``(vii) serving as a volunteer under the
Peace Corps Act (22 U.S.C. 2501 et seq.) or the
Domestic Volunteer Service Act of 1973 (42
U.S.C. 4950 et seq.).
``(C) Publication of repayment rates.--The
Secretary shall publish the cohort repayment rates for
institutions determined under this subsection.
``(4) Notification.--Beginning with the first fiscal year
for which data are available after the date of enactment of the
Student Protection and Success Act and each succeeding fiscal
year until fiscal year 2022, the Secretary shall notify each
institution that has a cohort repayment rate that is equal to
or less than 15 percent that the institution risks losing
eligibility to participate in a program under this part.''.
(b) Ineligibility in Other Programs.--
(1) Pell grants.--Section 401(j) of the Higher Education
Act of 1965 (20 U.S.C. 1070a(j)) is amended--
(A) in the heading, by striking ``Based on Default
Rates'';
(B) in paragraph (1), by inserting ``until fiscal
year 2022'' after ``succeeding fiscal year'';
(C) in paragraph (2), by inserting ``or cohort
repayment rate determination'' after ``default rate
determination''; and
(D) by adding at the end the following:
``(3) Ineligibility based on low cohort repayment rates.--
No institution of higher education shall be an eligible
institution for purposes of this subpart if such institution of
higher education is ineligible to participate in a program
under part D due to a low cohort repayment rate, as determined
under section 455(r).''.
(2) Student loan insurance program.--Section 435(a) of the
Higher Education Act of 1965 (20 U.S.C. 1085(a)) is amended--
(A) in paragraph (2)--
(i) in the heading, by striking ``based on
high default rates'';
(ii) in subparagraph (A), by striking ``An
institution'' and inserting ``Until fiscal year
2022, an institution''; and
(iii) by adding at the end the following:
``(E) No institution of higher education shall be an
eligible institution for purposes of this part if such
institution of higher education is ineligible to participate in
a program under part D due to a low cohort repayment rate, as
determined under section 455(r).''; and
(B) in paragraph (6)(A), by inserting ``and until
fiscal year 2022,'' after ``July 1, 1999,''.
(3) Federal perkins loans.--Section 462 of the Higher
Education Act of 1965 (20 U.S.C. 1087bb) is amended--
(A) in subsection (a)--
(i) in paragraph (1), by inserting ``or the
institution is ineligible to participate in a
program under part D due to a low cohort
repayment rate, as determined under section
455(r)'' after ``subsection (f)''; and
(ii) in paragraph (2)(D), by inserting ``or
the institution is ineligible to participate in
a program under part D due to a low cohort
repayment rate, as determined under section
455(r)'' after ``subsection (f)'';
(B) in subsection (b)--
(i) in paragraph (2), by inserting ``or the
institution is ineligible to participate in a
program under part D due to a low cohort
repayment rate, as determined under section
455(r)'' after ``subsection (f)''; and
(ii) in paragraph (3), by inserting ``or
the institution is ineligible to participate in
a program under part D due to a low cohort
repayment rate, as determined under section
455(r)'' after ``subsection (f)'';
(C) in subsection (e)--
(i) in paragraph (2), by inserting ``until
fiscal year 2022,'' after ``succeeding fiscal
year''; and
(ii) in paragraph (3)--
(I) in subparagraph (A), by
inserting ``until fiscal year 2022,''
after ``any succeeding fiscal year'';
and
(II) by adding at the end the
following:
``(F) Low cohort repayment rates.--An institution
that is ineligible to participate in a program under
part D due to a low cohort repayment rate, as
determined under section 455(r), shall not be eligible
to participate in a program under this part.''; and
(D) in subsection (f)(2), by inserting ``until
fiscal year 2022,'' after ``subsequent years''.
SEC. 3. COLLEGE OPPORTUNITY BONUS PROGRAM.
Subpart 1 of part A of title IV of the Higher Education Act of 1965
(20 U.S.C. 1070a et seq.) is amended by adding at the end the
following:
``SEC. 401B. COLLEGE OPPORTUNITY BONUS PROGRAM.
``(a) Program Authority.--
``(1) In general.--Beginning with fiscal year 2022 and each
succeeding fiscal year, the Secretary shall award grants to
eligible institutions of higher education that are distributed
under a formula determined by the Secretary under subsection
(d).
``(2) Eligible institution.--In this section, the term
`eligible institution of higher education' means an institution
of higher education that has a cohort repayment rate (as
defined in section 455(r)(3)) that is greater than 25 percent.
``(b) Grants.--The Secretary shall award grants to eligible
institutions of higher education that the Secretary determines have a
strong record of making college more affordable and increasing college
access and success for low-income and moderate-income students.
``(c) Uses of Funds.--Each eligible institution of higher education
that receives a grant under this section may use the grant funds to
support reforms to further increase college access and success for low-
and moderate-income students, by making key investments and adopting
best practices, including by considering best practices reported under
section 5 of the Student Protection and Success Act, and by--
``(1) awarding additional need-based financial aid to
students enrolled at the institution who are eligible to
receive a Federal Pell Grant;
``(2) enhancing academic and student support services; and
``(3) establishing or expanding accelerated learning
opportunities.
``(d) Amount of Grant Funds.--
``(1) In general.--Each eligible institution of higher
education that receives a grant under this section shall
receive annual grant funds based on a formula determined by the
Secretary that equally considers--
``(A) the number and percentage of students
enrolled at the institution who are eligible to receive
a Federal Pell Grant;
``(B) the cohort repayment rate (as defined in
section 455(r)(3)) of students enrolled at the
institution who are eligible to receive a Federal Pell
Grant; and
``(C) the institution's student service
expenditures as a percentage of the institution's
student service resources.
``(2) Cap.--Each eligible institution of higher education
that receives a grant under this section shall receive grant
funds for a fiscal year in an amount that is not more than 2.5
percent of the amount equal to the eligible institution's total
annual revenues and investment returns less auxiliary
enterprise revenues and hospital revenues, as defined in the
IPEDS Finance Survey, for the most recent fiscal year upon
which the eligible institution's audited financial reports are
available.
``(e) Supplement Not Supplant.--Funds made available under this
section shall be used to supplement, and not supplant--
``(1) other State funds that States would otherwise expend
to carry out activities under this section to improve college
affordability and graduate additional low- and moderate-income
students; and
``(2) institutional funds that eligible institutions of
higher education receiving a grant under this section would
otherwise expend to carry out activities under this section to
improve college affordability and graduate additional low- and
moderate-income students.
``(f) Funding.--The grant program under this section shall be
funded only with risk-sharing payments received by the Secretary under
section 454(d).''.
SEC. 4. RISK-SHARING PAYMENTS.
Section 454 of the Higher Education Act of 1964 (20 U.S.C. 1087d)
is amended--
(1) in subsection (a)--
(A) in paragraph (5), by striking ``and'';
(B) in paragraph (6), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(7) provide that the institution accepts the
institutional risk-sharing requirements under subsection (d),
if applicable.''; and
(2) by adding at the end the following:
``(d) Institutional Risk-Sharing Based on Cohort Nonrepayment Loan
Balances.--
``(1) In general.--Beginning with fiscal year 2022 and each
succeeding fiscal year, each institution of higher education
participating in the direct student loan program under this
part shall remit to the Secretary, at such times as the
Secretary may specify, a risk-sharing payment based on the
cohort nonrepayment loan balance of the institution, as
determined under paragraph (2).
``(2) Determination of risk-sharing payments.--
``(A) Determination of cohort loan balance.--The
cohort loan balance of an institution for a fiscal year
equals the total principal amount of all loans made
under this part to attend such institution for the
cohort of borrowers who entered repayment, deferment,
or forbearance on such loans in the third preceding
fiscal year for which the determination is made.
``(B) Determination of cohort nonrepayment loan
balance.--
``(i) In general.--The cohort nonrepayment
loan balance of an institution for a fiscal
year equals, from the total amount of the loans
described in subparagraph (A), the total loan
balance of those borrowers who have not made at
least a 1 dollar reduction in their principal
balance in the 3 consecutive fiscal years since
their loans entered repayment, deferment, or
forbearance.
``(ii) Exception.--The cohort nonrepayment
loan balance calculation under clause (i) shall
not take into consideration a borrower who
was--
``(I) in deferment on repayment of
a loan described in subparagraph (A) in
the 3 consecutive fiscal years
described in clause (i) due to study in
an approved graduate fellowship program
or in an approved rehabilitation
training program for the disabled;
``(II) in deferment on repayment of
a loan described in subparagraph (A) in
the 3 consecutive fiscal years
described in clause (i) during which
time the borrower was in a period of at
least half-time enrollment in college
or a career school;
``(III) in deferment on repayment
of a loan described in subparagraph (A)
in the 3 consecutive fiscal years
described in clause (i) during which
time the borrower was in a period of
service qualifying for loan discharge
or cancellation under part E;
``(IV) in deferment on repayment of
a loan described in subparagraph (A) in
the 3 consecutive fiscal years
described in clause (i) during which
time the borrower was on active duty
military service during a war, military
operation, or national emergency;
``(V) in mandatory forbearance on
repayment of a loan described in
subparagraph (A) for the full fiscal
year; or
``(VI) serving as a volunteer under
the Peace Corps Act (22 U.S.C. 2501 et
seq.) or the Domestic Volunteer Service
Act of 1973 (42 U.S.C. 4950 et seq.),
during the 3 consecutive fiscal years
described in clause (i).
``(C) Determination of payment.--
``(i) In general.--
``(I) In general.--Except as
provided in subclause (II), the risk-
sharing payment of an institution for a
fiscal year equals 2 percent of the
amount determined under clause (ii).
``(II) Cap.--The risk-sharing
payment of an institution for a fiscal
year shall not be more than 2.5 percent
of the amount equal to the
institution's total annual revenues and
investment returns less auxiliary
enterprise revenues and hospital
revenues, as defined in the IPEDS
Finance Survey, for the most recent
fiscal year upon which the
institution's audited financial reports
are available.
``(ii) Amount based on cohort nonrepayment
loan balance and unemployment rate.--
``(I) In general.--The amount under
this clause is determined by
subtracting the amount determined under
subclause (II) from the cohort
nonrepayment loan balance determined
under subparagraph (B).
``(II) Amount based on unemployment
rate.--The amount under this subclause
is determined by multiplying the
average national unemployment rate, as
defined by the Bureau of Labor
Statistics, for the 3 previous fiscal
years from the date of the
determination by the cohort loan
balance determined under subparagraph
(A).
``(3) Notification.--Beginning with the first fiscal year
for which data are available after the date of enactment of the
Student Protection and Success Act and each succeeding fiscal
year until fiscal year 2022, the Secretary shall notify each
institution of higher education participating in the direct
student loan program under this part of what the risk-sharing
payment based on the cohort nonrepayment loan balance of the
institution, as determined under paragraph (2), would be for
such institution if such provision were in effect.''.
SEC. 5. REPORT.
Not later than 6 months after the date of enactment of the Student
Protection and Success Act, the Secretary of Education shall submit to
Congress a report--
(1) on best practices for institutions of higher education
to improve repayment rates; and
(2) that makes recommendations on how institutions of
higher education can improve repayment rates, with a particular
emphasis on institutions that serve a high proportion of low-
income students.
SEC. 6. STUDENT SERVICE EXPENDITURES AND RESOURCES.
Section 153(a)(1)(I) of the Education Sciences Reform Act of 2002
(20 U.S.C. 9543(a)(1)(I)) is amended to read as follows:
``(I) the financing and management of education,
including data on revenues and expenditures, and
information regarding--
``(i) student service expenditures, that--
``(I) includes instruction,
information technology, and other
activities whose primary purpose is to
contribute to students' emotional and
physical well-being and to their
intellectual, cultural, and social
development inside and outside the
context of the formal instructional
program; and
``(II) does not include
expenditures on marketing, recruitment,
or intercollegiate athletic programs;
``(ii) student service resources, which is
a measure of an institution's resources that
could reasonably be allocated towards student
service expenditures, including net tuition
revenues, State and local appropriations,
endowment income, and revenues related to
student housing and food services less
expenditures on student housing, food services,
and the operations and maintenance of a plant;
and
``(iii) recruitment and marketing
expenditures;''.
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