Student Protection and Success Act

II 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, Edu- cation, Labor, and Pensions A BILL To amend the Higher Education Act of 1965 to provide for institutional ineligibility based on low cohort repay- ment rates and to require risk-sharing payments of insti- tutions of higher education. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Student Protection and 4 Success Act’’. 5 VerDate Sep 11 2014 20:34 May 28, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 2 •S 1525 IS SEC. 2. INSTITUTIONAL INELIGIBILITY BASED ON LOW CO- 1 HORT REPAYMENT RATE. 2 (a) IN GENERAL.—Section 455 of the Higher Edu- 3 cation Act of 1965 (20 U.S.C. 1087e) is amended by add- 4 ing at the end the following: 5 ‘‘(r) INELIGIBILITY DUE TO LOW COHORT REPAY- 6 MENT RATE.— 7 ‘‘(1) IN GENERAL.—Beginning with fiscal year 8 2022 and each succeeding fiscal year, an institution 9 that has a cohort repayment rate that is equal to or 10 less than 15 percent shall not be eligible to partici- 11 pate in a program under this part for such fiscal 12 year and for the 2 succeeding fiscal years. 13 ‘‘(2) APPEALS.— 14 ‘‘(A) IN GENERAL.—An institution may 15 appeal the loss of eligibility under this sub- 16 section to the Secretary within 30 days of re- 17 ceiving notification from the Secretary of the 18 loss of eligibility under this subsection. 19 ‘‘(B) CONTINUED PARTICIPATION.—Dur- 20 ing an appeal under subparagraph (A), the Sec- 21 retary may permit the institution to continue to 22 participate in a program under this part if the 23 institution demonstrates to the satisfaction of 24 the Secretary that the Secretary’s calculation of 25 its cohort repayment rate is not accurate, and 26 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 3 •S 1525 IS that recalculation would increase its cohort re- 1 payment rate to be more than 15 percent. 2 ‘‘(C) REQUIRED PAYMENT.—If an institu- 3 tion continues to participate in a program 4 under this part, and the institution’s appeal of 5 the loss of eligibility is unsuccessful, the institu- 6 tion shall be required to pay to the Secretary an 7 amount equal to the amount of loans made by 8 the Secretary under this part to borrowers at- 9 tending, or planning to attend, that institution 10 during the pendency of such appeal and the in- 11 terest, special allowance, reinsurance, and any 12 related payments made by the Secretary (or 13 which the Secretary is obligated to make) with 14 respect to such loans. 15 ‘‘(3) COHORT REPAYMENT RATE.— 16 ‘‘(A) IN GENERAL.—In this subsection, the 17 term ‘cohort repayment rate’ means, for any 18 fiscal year beginning with fiscal year 2022— 19 ‘‘(i) in the case in which 30 or more 20 borrowers at the institution enter repay- 21 ment on Federal Direct Stafford Loans, 22 Federal Direct Unsubsidized Stafford 23 Loans, Federal Direct PLUS Loans, or 24 Federal Direct Consolidation Loans, re- 25 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 4 •S 1525 IS ceived for attendance at the institution, the 1 percentage of those borrowers who are not 2 in default and who make at least a one 3 dollar reduction on their initial student 4 loan principal balance before the end of the 5 second fiscal year following the fiscal year 6 in which the borrowers entered repayment, 7 except as provided in subparagraph (B); 8 and 9 ‘‘(ii) in the case in which less than 30 10 borrowers at the institution enter repay- 11 ment on Federal Direct Stafford Loans, 12 Federal Direct Unsubsidized Stafford 13 Loans, Federal Direct PLUS Loans, or 14 Federal Direct Consolidation Loans, re- 15 ceived for attendance at the institution, the 16 percentage of those borrowers plus all of 17 the borrowers at the institution who en- 18 tered repayment on such loans (or on the 19 portion of a loan made under section 428C 20 that is used to repay any such loans) in 21 the 3 fiscal years preceding the fiscal year 22 for which the determination is made, who 23 are not in default and who make at least 24 a one dollar reduction on their initial stu- 25 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 5 •S 1525 IS dent loan principal balance before the end 1 of the second fiscal year following the year 2 in which the borrowers entered repayment, 3 except as provided in subparagraph (B). 4 ‘‘(B) EXCEPTION.—The ‘cohort repayment 5 rate’ calculation under subparagraph (A) shall 6 not include in the calculation a borrower who 7 is— 8 ‘‘(i) in deferment on repayment of a 9 loan described in subparagraph (A) due to 10 study in an approved graduate fellowship 11 program or in an approved rehabilitation 12 training program for the disabled; 13 ‘‘(ii) in deferment on repayment of a 14 loan described in subparagraph (A) during 15 a period of at least half-time enrollment in 16 college or a career school; 17 ‘‘(iii) in deferment on repayment of a 18 loan described in subparagraph (A) during 19 a period of service qualifying for loan dis- 20 charge or cancellation under part E; 21 ‘‘(iv) in deferment on repayment of a 22 loan described in subparagraph (A) due to 23 active duty military service of the borrower 24 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 6 •S 1525 IS during a war, military operation, or na- 1 tional emergency; 2 ‘‘(v) in deferment on repayment of a 3 loan described in subparagraph (A) during 4 the 13 months following the conclusion of 5 qualifying active duty military service by 6 the borrower, or until the borrower returns 7 to enrollment on at least a half-time basis, 8 whichever is earlier, if the borrower is a 9 member of the National Guard or other re- 10 serve component of the Armed Forces and 11 was called or ordered to active duty while 12 enrolled at least half-time at an eligible 13 school or within 6 months of having been 14 enrolled at least half-time; 15 ‘‘(vi) in mandatory forbearance on re- 16 payment of a loan described in subpara- 17 graph (A) for the full fiscal year; or 18 ‘‘(vii) serving as a volunteer under the 19 Peace Corps Act (22 U.S.C. 2501 et seq.) 20 or the Domestic Volunteer Service Act of 21 1973 (42 U.S.C. 4950 et seq.). 22 ‘‘(C) PUBLICATION OF REPAYMENT 23 RATES.—The Secretary shall publish the cohort 24 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 7 •S 1525 IS repayment rates for institutions determined 1 under this subsection. 2 ‘‘(4) NOTIFICATION.—Beginning with the first 3 fiscal year for which data are available after the date 4 of enactment of the Student Protection and Success 5 Act and each succeeding fiscal year until fiscal year 6 2022, the Secretary shall notify each institution that 7 has a cohort repayment rate that is equal to or less 8 than 15 percent that the institution risks losing eli- 9 gibility to participate in a program under this 10 part.’’. 11 (b) INELIGIBILITY IN OTHER PROGRAMS.— 12 (1) PELL GRANTS.—Section 401(j) of the High- 13 er Education Act of 1965 (20 U.S.C. 1070a(j)) is 14 amended— 15 (A) in the heading, by striking ‘‘BASED ON 16 DEFAULT RATES’’; 17 (B) in paragraph (1), by inserting ‘‘until 18 fiscal year 2022’’ after ‘‘succeeding fiscal year’’; 19 (C) in paragraph (2), by inserting ‘‘or co- 20 hort repayment rate determination’’ after ‘‘de- 21 fault rate determination’’; and 22 (D) by adding at the end the following: 23 ‘‘(3) INELIGIBILITY BASED ON LOW COHORT 24 REPAYMENT RATES.—No institution of higher edu- 25 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 8 •S 1525 IS cation shall be an eligible institution for purposes of 1 this subpart if such institution of higher education 2 is ineligible to participate in a program under part 3 D due to a low cohort repayment rate, as deter- 4 mined under section 455(r).’’. 5 (2) STUDENT LOAN INSURANCE PROGRAM.— 6 Section 435(a) of the Higher Education Act of 1965 7 (20 U.S.C. 1085(a)) is amended— 8 (A) in paragraph (2)— 9 (i) in the heading, by striking ‘‘BASED 10 ON HIGH DEFAULT RATES’’; 11 (ii) in subparagraph (A), by striking 12 ‘‘An institution’’ and inserting ‘‘Until fis- 13 cal year 2022, an institution’’; and 14 (iii) by adding at the end the fol- 15 lowing: 16 ‘‘(E) No institution of higher education shall be 17 an eligible institution for purposes of this part if 18 such institution of higher education is ineligible to 19 participate in a program under part D due to a low 20 cohort repayment rate, as determined under section 21 455(r).’’; and 22 (B) in paragraph (6)(A), by inserting ‘‘and 23 until fiscal year 2022,’’ after ‘‘July 1, 1999,’’. 24 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 9 •S 1525 IS (3) FEDERAL PERKINS LOANS.—Section 462 of 1 the Higher Education Act of 1965 (20 U.S.C. 2 1087bb) is amended— 3 (A) in subsection (a)— 4 (i) in paragraph (1), by inserting ‘‘or 5 the institution is ineligible to participate in 6 a program under part D due to a low co- 7 hort repayment rate, as determined under 8 section 455(r)’’ after ‘‘subsection (f)’’; and 9 (ii) in paragraph (2)(D), by inserting 10 ‘‘or the institution is ineligible to partici- 11 pate in a program under part D due to a 12 low cohort repayment rate, as determined 13 under section 455(r)’’ after ‘‘subsection 14 (f)’’; 15 (B) in subsection (b)— 16 (i) in paragraph (2), by inserting ‘‘or 17 the institution is ineligible to participate in 18 a program under part D due to a low co- 19 hort repayment rate, as determined under 20 section 455(r)’’ after ‘‘subsection (f)’’; and 21 (ii) in paragraph (3), by inserting ‘‘or 22 the institution is ineligible to participate in 23 a program under part D due to a low co- 24 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 10 •S 1525 IS hort repayment rate, as determined under 1 section 455(r)’’ after ‘‘subsection (f)’’; 2 (C) in subsection (e)— 3 (i) in paragraph (2), by inserting 4 ‘‘until fiscal year 2022,’’ after ‘‘succeeding 5 fiscal year’’; and 6 (ii) in paragraph (3)— 7 (I) in subparagraph (A), by in- 8 serting ‘‘until fiscal year 2022,’’ after 9 ‘‘any succeeding fiscal year’’; and 10 (II) by adding at the end the fol- 11 lowing: 12 ‘‘(F) LOW COHORT REPAYMENT RATES.— 13 An institution that is ineligible to participate in 14 a program under part D due to a low cohort re- 15 payment rate, as determined under section 16 455(r), shall not be eligible to participate in a 17 program under this part.’’; and 18 (D) in subsection (f)(2), by inserting ‘‘until 19 fiscal year 2022,’’ after ‘‘subsequent years’’. 20 SEC. 3. COLLEGE OPPORTUNITY BONUS PROGRAM. 21 Subpart 1 of part A of title IV of the Higher Edu- 22 cation Act of 1965 (20 U.S.C. 1070a et seq.) is amended 23 by adding at the end the following: 24 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 11 •S 1525 IS ‘‘SEC. 401B. COLLEGE OPPORTUNITY BONUS PROGRAM. 1 ‘‘(a) PROGRAM AUTHORITY.— 2 ‘‘(1) IN GENERAL.—Beginning with fiscal year 3 2022 and each succeeding fiscal year, the Secretary 4 shall award grants to eligible institutions of higher 5 education that are distributed under a formula de- 6 termined by the Secretary under subsection (d). 7 ‘‘(2) ELIGIBLE INSTITUTION.—In this section, 8 the term ‘eligible institution of higher education’ 9 means an institution of higher education that has a 10 cohort repayment rate (as defined in section 11 455(r)(3)) that is greater than 25 percent. 12 ‘‘(b) GRANTS.—The Secretary shall award grants to 13 eligible institutions of higher education that the Secretary 14 determines have a strong record of making college more 15 affordable and increasing college access and success for 16 low-income and moderate-income students. 17 ‘‘(c) USES OF FUNDS.—Each eligible institution of 18 higher education that receives a grant under this section 19 may use the grant funds to support reforms to further 20 increase college access and success for low- and moderate- 21 income students, by making key investments and adopting 22 best practices, including by considering best practices re- 23 ported under section 5 of the Student Protection and Suc- 24 cess Act, and by— 25 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS 12 •S 1525 IS ‘‘(1) awarding additional need-based financial 1 aid to students enrolled at the institution who are el- 2 igible to receive a Federal Pell Grant; 3 ‘‘(2) enhancing academic and student support 4 services; and 5 ‘‘(3) establishing or expanding accelerated 6 learning opportunities. 7 ‘‘(d) AMOUNT OF GRANT FUNDS.— 8 ‘‘(1) IN GENERAL.—Each eligible institution of 9 higher education that receives a grant under this 10 section shall receive annual grant funds based on a 11 formula determined by the Secretary that equally 12 considers— 13 ‘‘(A) the number and percentage of stu- 14 dents enrolled at the institution who are eligible 15 to receive a Federal Pell Grant; 16 ‘‘(B) the cohort repayment rate (as defined 17 in section 455(r)(3)) of students enrolled at the 18 institution who are eligible to receive a Federal 19 Pell Grant; and 20 ‘‘(C) the institution’s student service ex- 21 penditures as a percentage of the institution’s 22 student service resources. 23 ‘‘(2) CAP.—Each eligible institution of higher 24 education that receives a grant under this section 25 VerDate Sep 11 2014 19:42 May 25, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1525.IS S1525 tkelley on DSKBCP9HB2PROD with BILLS [Text truncated for display. 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