[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 4565 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
2d Session
S. 4565
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
June 18, 2024
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), as amended by the FAFSA Simplification Act (title
VII of division FF of Public Law 116-260) and the FAFSA Simplification
Act Technical Corrections Act (Public Law 117-103), is amended by
adding at the end the following:
``(q) Ineligibility Due to Low Cohort Repayment Rate.--
``(1) In general.--Beginning with fiscal year 2027 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 2027--
``(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 2027, 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.--The Higher Education Act of 1965 (20
U.S.C. 1001 et seq.), as amended by the FAFSA Simplification
Act (title VII of division FF of Public Law 116-260) and the
FAFSA Simplification Act Technical Corrections Act (Public Law
117-103), is amended in section 401(j)--
(A) in the heading, by striking ``Based on Default
Rates'';
(B) in paragraph (1), by inserting ``until fiscal
year 2027'' 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(q).''.
(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
2027, 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(q).''; and
(B) in paragraph (6)(A), by inserting ``and until
fiscal year 2027,'' 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(q)'' 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(q)'' 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(q)'' 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(q)'' after ``subsection (f)'';
(C) in subsection (e)--
(i) in paragraph (2), by inserting ``until
fiscal year 2027,'' after ``succeeding fiscal
year''; and
(ii) in paragraph (3)--
(I) in subparagraph (A), by
inserting ``until fiscal year 2027,''
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(q), shall not be eligible
to participate in a program under this part.''; and
(D) in subsection (f)(2), by inserting ``until
fiscal year 2027,'' 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 2027 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(q)(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(q)(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'' after the
semicolon;
(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 2027 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