PROTECT Students Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 3512 To protect students of institutions of higher education and the taxpayer investment in institutions of higher education by improving oversight and accountability of institutions of higher education, particularly for- profit colleges, improving protections for students and borrowers, and ensuring the integrity of postsecondary education programs, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JUNE 26, 2019 Mrs. LEE of Nevada (for herself, Ms. DELAURO, Mr. HORSFORD, Mrs. TRAHAN, Mr. PAPPAS, Mr. CISNEROS, Ms. SCANLON, Mr. COHEN, and Ms. PORTER) introduced the following bill; which was referred to the Committee on Education and Labor, 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 protect students of institutions of higher education and the taxpayer investment in institutions of higher edu- cation by improving oversight and accountability of insti- tutions of higher education, particularly for-profit col- leges, improving protections for students and borrowers, and ensuring the integrity of postsecondary education programs, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 2 •HR 3512 IH SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 1 (a) SHORT TITLE.—This Act may be cited as the 2 ‘‘Preventing Risky Operations from Threatening the Edu- 3 cation and Career Trajectories of Students Act of 2019’’ 4 or the ‘‘PROTECT Students Act of 2019’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. Sec. 2. References. Sec. 3. Effective date. Sec. 4. Definitions. TITLE I—FOR-PROFIT INSTITUTIONS Sec. 101. Closing the GI Bill loophole and restoring the 85/15 rule for for-prof- it institutions. Sec. 102. Process for for-profit institutions to convert to nonprofit or public status. Sec. 103. For-Profit Education Oversight Coordination Committee. TITLE II—STUDENT AND BORROWER PROTECTIONS Sec. 201. Gainful employment programs. Sec. 202. Prohibition on institutions limiting student legal action. Sec. 203. Enforcement unit established in the Office of Federal Student Aid. Sec. 204. Establishment and maintenance of complaint resolution and tracking system. Sec. 205. Borrower defense to repayment. TITLE III—ENSURING INTEGRITY AT INSTITUTIONS OF HIGHER EDUCATION Sec. 301. Restrictions on sources of funds for recruiting and marketing activi- ties. Sec. 302. Strengthening the incentive compensation ban. Sec. 303. Definition of nonprofit institution of higher education. Sec. 304. Definition of public institution of higher education. Sec. 305. Enhanced civil penalties, State enforcement, and private right of ac- tion. Sec. 306. Substantial misrepresentation prohibited. SEC. 2. REFERENCES. 8 Except as otherwise expressly provided, whenever in 9 this Act an amendment or repeal is expressed in terms 10 of an amendment to, or repeal of, a section or other provi- 11 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 3 •HR 3512 IH sion, the reference shall be considered to be made to a 1 section or other provision of the Higher Education Act of 2 1965 (20 U.S.C. 1001 et seq.). 3 SEC. 3. EFFECTIVE DATE. 4 Except as otherwise specified, this Act, and the 5 amendments made by this Act, shall take effect beginning 6 on July 1, 2020. 7 SEC. 4. DEFINITIONS. 8 (a) IN GENERAL.—Section 103 (20 U.S.C. 1003) is 9 amended— 10 (1) by redesignating paragraphs (15) through 11 (22), (23), and (24) as paragraphs (17) through 12 (24), (26), and (27); 13 (2) by inserting after paragraph (14) the fol- 14 lowing: 15 ‘‘(16) REVENUE SHARING ARRANGEMENTS.— 16 The term ‘revenue sharing arrangement’ means an 17 arrangement between an institution of higher edu- 18 cation and a third party contractor under which— 19 ‘‘(A) the third party contractor provides, 20 exclusively or nonexclusively, educational prod- 21 ucts or services to prospective students or stu- 22 dents attending the institution of higher edu- 23 cation; and 24 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 4 •HR 3512 IH ‘‘(B) the third party contractor or institu- 1 tion of higher education pays a fee or provides 2 other material benefits, including revenue- or 3 profit-sharing, to the institution of higher edu- 4 cation or third party contractor in connection 5 with the educational products or services pro- 6 vided to prospective students or students at- 7 tending the institution of higher education.’’; 8 and 9 (3) by inserting after paragraph (24), as redes- 10 ignated by paragraph (1), the following: 11 ‘‘(25) THIRD PARTY CONTRACTOR.—The term 12 ‘third party contractor’ means any State, person, or 13 entity that enters into a contract or agreement, in- 14 cluding a revenue sharing arrangement, with an eli- 15 gible institution of higher education to act on the in- 16 stitution’s behalf, including any entity that— 17 ‘‘(A) sells the names of prospective stu- 18 dents (also known as a ‘lead generator’); or 19 ‘‘(B) offers services including recruiting, fi- 20 nancial aid packaging, curriculum development, 21 facilities management, hiring and oversight of 22 faculty, and the provision of student services 23 representatives, job placement counselors, or 24 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 5 •HR 3512 IH other employees (also known as an ‘online pro- 1 gram manager’).’’. 2 (b) RENAMING PROPRIETARY INSTITUTIONS FOR- 3 PROFIT INSTITUTIONS.— 4 (1) IN GENERAL.—Section 102 (20 U.S.C. 5 1002) is amended— 6 (A) in subsection (a)(1)(A), by striking 7 ‘‘proprietary institution’’ and inserting ‘‘for- 8 profit institution’’; and 9 (B) in subsection (b)— 10 (i) in the subsection heading, by strik- 11 ing ‘‘PROPRIETARY’’ and inserting ‘‘FOR- 12 PROFIT’’; 13 (ii) in the matter preceding subpara- 14 graph (A) of paragraph (1), by striking 15 ‘‘proprietary’’ and inserting ‘‘for-profit’’; 16 and 17 (iii) in paragraph (2), by striking 18 ‘‘proprietary’’ each place the term appears 19 and inserting ‘‘for-profit’’. 20 (2) CONFORMING AMENDMENTS.— 21 (A) DEPARTMENT OF EDUCATION ORGANI- 22 ZATION ACT.—The Department of Education 23 Organization Act (20 U.S.C. 3401 et seq.) is 24 amended— 25 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 6 •HR 3512 IH (i) in section 219 (20 U.S.C. 3426)— 1 (I) in the section heading, by 2 striking ‘‘PROPRIETARY’’ and insert- 3 ing ‘‘FOR-PROFIT’’; 4 (II) by striking ‘‘Proprietary’’ 5 each place the term appears and in- 6 serting ‘‘For-Profit’’; and 7 (III) by striking ‘‘proprietary’’ 8 each place the term appears and in- 9 serting ‘‘for-profit’’; and 10 (ii) in section 1, by striking the item 11 relating to section 219 in the table of con- 12 tents and inserting the following: 13 ‘‘219. Liaison for For-Profit Institutions of Higher Education.’’. (B) HIGHER EDUCATION ACT OF 1965.— 14 The Act (20 U.S.C. 1001 et seq.) is amended— 15 (i) in each of sections 435 and 16 443(b)(8), by striking ‘‘proprietary’’ each 17 place the term appears and inserting ‘‘for- 18 profit’’; and 19 (ii) in section 807(d)(1)(A)(iii), by 20 striking ‘‘proprietary’’ and inserting ‘‘for- 21 profit’’. 22 (C) SCIENTIFIC AND ADVANCED-TECH- 23 NOLOGY ACT OF 1992.—Section 3(j)(2)(B) of 24 the Scientific and Advanced-Technology Act of 25 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 7 •HR 3512 IH 1992 (20 U.S.C. 1862i(j)(2)(B)) is amended by 1 striking ‘‘proprietary institution’’ and inserting 2 ‘‘for-profit institution’’. 3 (3) REFERENCES.— 4 (A) PROPRIETARY INSTITUTION.—Any ref- 5 erence to a proprietary institution, as defined in 6 section 102(b) of the Higher Education Act of 7 1965 (20 U.S.C. 1002) on the day before the 8 date of enactment of this Act, in any law, rule, 9 regulation, certificate, directive, instruction, or 10 other official paper in force on the date of en- 11 actment of this Act shall be considered to refer 12 and apply to a for-profit institution, as defined 13 in section 102(b) of the Higher Education Act 14 of 1965 (20 U.S.C. 1002(b)), as amended by 15 this Act. 16 (B) LIAISON.—Any reference to the Liai- 17 son for Proprietary Institutions of Higher Edu- 18 cation in any law, rule, regulation, certificate, 19 directive, instruction, or other official paper in 20 force on the date of enactment of this Act shall 21 be considered to refer and apply to the Liaison 22 for For-Profit Institutions of Higher Education 23 established under section 219 of the Depart- 24 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 8 •HR 3512 IH ment of Education Organization Act (20 U.S.C. 1 3401), as amended by this Act. 2 TITLE I—FOR-PROFIT 3 INSTITUTIONS 4 SEC. 101. CLOSING THE GI BILL LOOPHOLE AND RESTOR- 5 ING THE 85/15 RULE FOR FOR-PROFIT INSTI- 6 TUTIONS. 7 (a) IN GENERAL.—Section 102(b) (20 U.S.C. 1002), 8 as amended by section 4(b), is further amended— 9 (1) in paragraph (1)— 10 (A) in subparagraph (D), by striking 11 ‘‘and’’ after the semicolon; 12 (B) in subparagraph (E), by striking the 13 period at the end and inserting ‘‘; and’’; and 14 (C) by adding at the end the following: 15 ‘‘(F) meets the requirements of paragraph 16 (2).’’; 17 (2) by redesignating paragraph (2) as para- 18 graph (3); and 19 (3) by inserting after paragraph (1) the fol- 20 lowing: 21 ‘‘(2) REVENUE SOURCES.— 22 ‘‘(A) IN GENERAL.—In order to qualify as 23 a for-profit institution of higher education 24 under this subsection, an institution shall derive 25 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 9 •HR 3512 IH not less than 15 percent of the institution’s rev- 1 enues from sources other than Federal edu- 2 cation assistance funds, as calculated in accord- 3 ance with subparagraphs (B) and (C). 4 ‘‘(B) FEDERAL EDUCATION ASSISTANCE 5 FUNDS.—In this paragraph, the term ‘Federal 6 education assistance funds’ means any Federal 7 financial assistance provided, under this Act or 8 any other Federal law, through a grant, con- 9 tract, subsidy, loan, guarantee, insurance, or 10 other means to an institution of higher edu- 11 cation, including Federal financial assistance 12 that is disbursed or delivered to an institution 13 or on behalf of a student or to a student to be 14 used to attend the institution, except that such 15 term shall not include any monthly housing sti- 16 pend provided under the Post-9/11 Veterans 17 Educational Assistance Program under chapter 18 33 of title 38, United States Code. 19 ‘‘(C) IMPLEMENTATION OF NON-FEDERAL 20 REVENUE REQUIREMENT.—In making calcula- 21 tions under subparagraph (A), an institution of 22 higher education shall— 23 ‘‘(i) use the cash basis of accounting; 24 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 10 •HR 3512 IH ‘‘(ii) consider as revenue only those 1 funds generated by the institution from— 2 ‘‘(I) tuition, fees, and other insti- 3 tutional charges for students enrolled 4 in programs eligible for assistance 5 under title IV; 6 ‘‘(II) activities conducted by the 7 institution that are necessary for the 8 education and training of the institu- 9 tion’s students, if such activities are— 10 ‘‘(aa) conducted on campus 11 or at a facility under the control 12 of the institution; 13 ‘‘(bb) performed under the 14 supervision of a member of the 15 institution’s faculty; and 16 ‘‘(cc) required to be per- 17 formed by all students in a spe- 18 cific educational program at the 19 institution; and 20 ‘‘(III) a contractual arrangement 21 with a Federal agency for the purpose 22 of providing job training to low-in- 23 come individuals who are in need of 24 such training; 25 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 11 •HR 3512 IH ‘‘(iii) presume that any Federal edu- 1 cation assistance funds that are disbursed 2 or delivered to an institution on behalf of 3 a student or directly to a student will be 4 used to pay the student’s tuition, fees, or 5 other institutional charges, regardless of 6 whether the institution credits such funds 7 to the student’s account or pays such 8 funds directly to the student, except to the 9 extent that the student’s tuition, fees, or 10 other institutional charges are satisfied 11 by— 12 ‘‘(I) grant funds provided by an 13 outside source 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; 19 ‘‘(II) funds provided under a con- 20 tractual arrangement with a Federal, 21 State, or local government agency for 22 the purpose of providing job training 23 to low-income individuals who are in 24 need of that training; or 25 VerDate Sep 11 2014 23:18 Jul 10, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3512.IH H3512 jbell on DSK3GLQ082PROD with BILLS 12 •HR 3512 IH ‘‘(III) institutional scholarships 1 described in clause (v); 2 ‘‘(iv) include no loans made by an in- 3 stitution of higher education as revenue to 4 the school, except for payments made by 5 students on such loans; 6 ‘‘(v) include a scholarship provided by 7 the institution— 8 ‘‘(I) only if the scholarship is in 9 the form of monetary aid based upon 10 the academic achievements or finan- 11 cial need of students, disbursed to 12 qualified student recipients during 13 each fiscal year from an established 14 restricted account; and 15 ‘‘(II) only to the extent that 16 funds in that account represent des- 17 ignated funds, or income earned on 18 such funds, from an outside source 19 that— 20 ‘‘(aa) has no affiliation with 21 the institution; and 22 ‘‘(bb) shares no employees, 23 executives, or board members 24 with the institut [Text truncated for display. 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