DAVIE Act

I 116TH CONGRESS 1ST SESSION H. R. 3369 To close the GI Bill loophole and update the 80/20 rule for proprietary institutions of higher education. IN THE HOUSE OF REPRESENTATIVES JUNE 19, 2019 Ms. SHALALA (for herself, Ms. WASSERMAN SCHULTZ, Mr. MOULTON, Mr. CISNEROS, Ms. HOULAHAN, Ms. MUCARSEL-POWELL, Mr. LUJA´N, and Ms. SHERRILL) introduced the following bill; which was referred to the Committee on Education and Labor A BILL To close the GI Bill loophole and update the 80/20 rule for proprietary institutions 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 ‘‘Defending All Veterans 4 in Education Act’’ or the ‘‘DAVIE Act’’. 5 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 2 •HR 3369 IH SEC. 2. CLOSING THE GI BILL LOOPHOLE AND UPDATING 1 THE 80/20 RULE FOR PROPRIETARY INSTITU- 2 TIONS OF HIGHER EDUCATION. 3 (a) IN GENERAL.—Section 102(b) of the Higher 4 Education Act of 1965 (20 U.S.C. 1002(b)), is further 5 amended— 6 (1) in paragraph (1)— 7 (A) in subparagraph (D), by striking 8 ‘‘and’’ after the semicolon; 9 (B) in subparagraph (E), by striking the 10 period at the end and inserting ‘‘; and’’; and 11 (C) by adding at the end the following: 12 ‘‘(F) meets the requirements of paragraph 13 (2).’’; 14 (2) by redesignating paragraph (2) as para- 15 graph (3); and 16 (3) by inserting after paragraph (1) the fol- 17 lowing: 18 ‘‘(2) REVENUE SOURCES.— 19 ‘‘(A) IN GENERAL.—In order to qualify as 20 a proprietary institution of higher education 21 under this subsection, an institution shall derive 22 not less than 20 percent of the institution’s rev- 23 enues from sources other than Federal funds, 24 as calculated in accordance with subparagraphs 25 (B) and (C). 26 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 3 •HR 3369 IH ‘‘(B) FEDERAL FUNDS.—In this para- 1 graph, the term ‘Federal funds’ means any 2 Federal funds provided, under this Act or any 3 other Federal law, through a grant, contract, 4 subsidy, loan, guarantee, insurance, or other 5 means to a proprietary institution, including 6 Federal funds disbursed or delivered to an insti- 7 tution or on behalf of a student or to a student 8 to be used to attend the institution, except that 9 such term shall not include any monthly hous- 10 ing stipend provided under the Post-9/11 Edu- 11 cational Assistance Program under chapter 33 12 of title 38, United States Code. 13 ‘‘(C) IMPLEMENTATION OF NON-FEDERAL 14 REVENUE REQUIREMENT.—In making calcula- 15 tions under subparagraph (A), an institution of 16 higher education shall— 17 ‘‘(i) use the cash basis of accounting; 18 ‘‘(ii) consider as revenue only those 19 funds generated by the institution from— 20 ‘‘(I) tuition, fees, and other insti- 21 tutional charges for students enrolled 22 in programs eligible for assistance 23 under title IV; 24 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 4 •HR 3369 IH ‘‘(II) activities conducted by the 1 institution that are necessary for the 2 education and training of the institu- 3 tion’s students, if such activities are— 4 ‘‘(aa) conducted on campus 5 or at a facility under the control 6 of the institution; 7 ‘‘(bb) performed under the 8 supervision of a member of the 9 institution’s faculty; and 10 ‘‘(cc) required to be per- 11 formed by all students in a spe- 12 cific educational program at the 13 institution; and 14 ‘‘(III) a contractual arrangement 15 with a Federal agency for the purpose 16 of providing job training to low-in- 17 come individuals who are in need of 18 such training; 19 ‘‘(iii) presume that any Federal edu- 20 cation assistance funds that are disbursed 21 or delivered to an institution on behalf of 22 a student or directly to a student will be 23 used to pay the student’s tuition, fees, or 24 other institutional charges, regardless of 25 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 5 •HR 3369 IH whether the institution credits such funds 1 to the student’s account or pays such 2 funds directly to the student, except to the 3 extent that the student’s tuition, fees, or 4 other institutional charges are satisfied 5 by— 6 ‘‘(I) grant funds provided by an 7 outside source that— 8 ‘‘(aa) has no affiliation with 9 the institution; and 10 ‘‘(bb) shares no employees, 11 executives, or board members 12 with the institution; 13 ‘‘(II) funds provided under a con- 14 tractual arrangement with a Federal, 15 State, or local government agency for 16 the purpose of providing job training 17 to low-income individuals who are in 18 need of that training; or 19 ‘‘(III) institutional scholarships 20 described in clause (v); 21 ‘‘(iv) include no loans made by an in- 22 stitution of higher education as revenue to 23 the school, except for payments made by 24 students on such loans; 25 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 6 •HR 3369 IH ‘‘(v) include a scholarship provided by 1 the institution— 2 ‘‘(I) only if the scholarship is in 3 the form of monetary aid based upon 4 the academic achievements or finan- 5 cial need of students, disbursed to 6 qualified student recipients during 7 each fiscal year from an established 8 restricted account; and 9 ‘‘(II) only to the extent that 10 funds in that account represent des- 11 ignated funds, or income earned on 12 such funds, from an outside source 13 that— 14 ‘‘(aa) has no affiliation with 15 the institution; and 16 ‘‘(bb) shares no employees, 17 executives, or board members 18 with the institution; and 19 ‘‘(vi) exclude from revenues— 20 ‘‘(I) the amount of funds the in- 21 stitution received under part C of title 22 IV, unless the institution used those 23 funds to pay a student’s institutional 24 charges; 25 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 7 •HR 3369 IH ‘‘(II) the amount of funds the in- 1 stitution received under subpart 4 of 2 part A of title IV; 3 ‘‘(III) the amount of funds pro- 4 vided by the institution as matching 5 funds for any Federal program; 6 ‘‘(IV) the amount of Federal edu- 7 cation assistance funds provided to 8 the institution to pay institutional 9 charges for a student that were re- 10 funded or returned; and 11 ‘‘(V) the amount charged for 12 books, supplies, and equipment, unless 13 the institution includes that amount 14 as tuition, fees, or other institutional 15 charges. 16 ‘‘(D) REPORT TO CONGRESS.—Not later 17 than July 1, 2020, and by July 1 of each suc- 18 ceeding year, the Secretary shall submit to the 19 authorizing committees a report that contains, 20 for each proprietary institution of higher edu- 21 cation that receives assistance under title IV 22 and as provided in the audited financial state- 23 ments submitted to the Secretary by each insti- 24 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 8 •HR 3369 IH tution pursuant to the requirements of section 1 487(c)— 2 ‘‘(i) the amount and percentage of 3 such institution’s revenues received from 4 Federal education assistance funds; and 5 ‘‘(ii) the amount and percentage of 6 such institution’s revenues received from 7 other sources.’’. 8 (b) REPEAL OF EXISTING REQUIREMENTS.—Section 9 487 of the Higher Education Act of 1965 (20 U.S.C. 10 1094) is amended— 11 (1) in subsection (a)— 12 (A) by striking paragraph (24); 13 (B) by redesignating paragraphs (25) 14 through (29) as paragraphs (24) through (28), 15 respectively; 16 (C) in paragraph (24)(A)(ii) (as redesig- 17 nated by subparagraph (B)), by striking ‘‘sub- 18 section (e)’’ and inserting ‘‘subsection (d)’’; and 19 (D) in paragraph (26) (as redesignated by 20 subparagraph (B)), by striking ‘‘subsection (h)’’ 21 and inserting ‘‘subsection (g)’’; 22 (2) by striking subsection (d); 23 (3) by redesignating subsections (e) through (j) 24 as subsections (d) through (i), respectively; 25 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 9 •HR 3369 IH (4) in subsection (d) (as redesignated by para- 1 graph (3)), by striking ‘‘(a)(25)’’ and inserting 2 ‘‘(a)(24)’’; 3 (5) in subsection (f)(1) (as redesignated by 4 paragraph (3)), by striking ‘‘subsection (e)(2)’’ and 5 inserting ‘‘subsection (d)(2)’’; and 6 (6) in subsection (g)(1) (as redesignated by 7 paragraph (3)), by striking ‘‘subsection (a)(27)’’ in 8 the matter preceding subparagraph (A) and insert- 9 ing ‘‘subsection (a)(26)’’. 10 (c) CONFORMING AMENDMENTS.—The Higher Edu- 11 cation Act of 1965 (20 U.S.C. 1001 et seq.) is amended— 12 (1) in section 152 (20 U.S.C. 1019a)— 13 (A) in subsection (a)(1)(A), by striking 14 ‘‘subsections (a)(27) and (h) of section 487’’ 15 and inserting ‘‘subsections (a)(26) and (g) of 16 section 487’’; and 17 (B) in subsection (b)(1)(B)(i)(I), by strik- 18 ing ‘‘section 487(e)’’ and inserting ‘‘section 19 487(d)’’; 20 (2) in section 153(c)(3) (20 U.S.C. 21 1019b(c)(3)), by striking ‘‘section 487(a)(25)’’ each 22 place the term appears and inserting ‘‘section 23 487(a)(24)’’; 24 VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS 10 •HR 3369 IH (3) in section 496(c)(3)(A) (20 U.S.C. 1 1099b(c)(3)(A)), by striking ‘‘section 487(f)’’ and 2 inserting ‘‘section 487(e)’’; and 3 (4) in section 498(k)(1) (20 U.S.C. 4 1099c(k)(1)), by striking ‘‘section 487(f)’’ and in- 5 serting ‘‘section 487(e)’’. 6 SEC. 3. EFFECTIVE DATE. 7 The amendments made by section 2 shall take effect 8 one year after the date of the enactment of this Act. 9 Æ VerDate Sep 11 2014 22:26 Jun 24, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\H3369.IH H3369 kjohnson on DSK79L0C42 with BILLS