HR 1048 — DETERRENT Act

changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

 HIGHER EDUCATION ACT OF 1965

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TITLE I--GENERAL PROVISIONS

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PART B--ADDITIONAL GENERAL PROVISIONS

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[SEC. 117. DISCLOSURES OF FOREIGN GIFTS.

 [(a) Disclosure Report.--Whenever any institution is owned or 
controlled by a foreign source or receives a gift from or 
enters into a contract with a foreign source, the value of 
which is $250,000 or more, considered alone or in combination 
with all other gifts from or contracts with that foreign source 
within a calendar year, the institution shall file a disclosure 
report with the Secretary on January 31 or July 31, whichever 
is sooner.
 [(b) Contents of Report.--Each report to the Secretary 
required by this section shall contain the following:
 [(1) For gifts received from or contracts entered 
 into with a foreign source other than a foreign 
 government, the aggregate dollar amount of such gifts 
 and contracts attributable to a particular country. The 
 country to which a gift is attributable is the country 
 of citizenship, or if unknown, the principal residence 
 for a foreign source who is a natural person, and the 
 country of incorporation, or if unknown, the principal 
 place of business, for a foreign source which is a 
 legal entity.
 [(2) For gifts received from or contracts entered 
 into with a foreign government, the aggregate amount of 
 such gifts and contracts received from each foreign 
 government.
 [(3) In the case of an institution which is owned or 
 controlled by a foreign source, the identity of the 
 foreign source, the date on which the foreign source 
 assumed ownership or control, and any changes in 
 program or structure resulting from the change in 
 ownership or control.
 [(c) Additional Disclosures for Restricted and Conditional 
Gifts.--Notwithstanding the provisions of subsection (b), 
whenever any institution receives a restricted or conditional 
gift or contract from a foreign source, the institution shall 
disclose the following:
 [(1) For such gifts received from or contracts 
 entered into with a foreign source other than a foreign 
 government, the amount, the date, and a description of 
 such conditions or restrictions. The report shall also 
 disclose the country of citizenship, or if unknown, the 
 principal residence for a foreign source which is a 
 natural person, and the country of incorporation, or if 
 unknown, the principal place of business for a foreign 
 source which is a legal entity.
 [(2) For gifts received from or contracts entered 
 into with a foreign government, the amount, the date, a 
 description of such conditions or restrictions, and the 
 name of the foreign government.
 [(d) Relation to Other Reporting Requirements.--
 [(1) State requirements.--If an institution described 
 under subsection (a) is within a State which has 
 enacted requirements for public disclosure of gifts 
 from or contracts with a foreign source that are 
 substantially similar to the requirements of this 
 section, a copy of the disclosure report filed with the 
 State may be filed with the Secretary in lieu of a 
 report required under subsection (a). The State in 
 which the institution is located shall provide to the 
 Secretary such assurances as the Secretary may require 
 to establish that the institution has met the 
 requirements for public disclosure under State law if 
 the State report is filed.
 [(2) Use of other federal reports.--If an institution 
 receives a gift from, or enters into a contract with, a 
 foreign source, where any other department, agency, or 
 bureau of the executive branch requires a report 
 containing requirements substantially similar to those 
 required under this section, a copy of the report may 
 be filed with the Secretary in lieu of a report 
 required under subsection (a).
 [(e) Public Inspection.--All disclosure reports required by 
this section shall be public records open to inspection and 
copying during business hours.
 [(f) Enforcement.--
 [(1) Court orders.--Whenever it appears that an 
 institution has failed to comply with the requirements 
 of this section, including any rule or regulation 
 promulgated under this section, a civil action may be 
 brought by the Attorney General, at the request of the 
 Secretary, in an appropriate district court of the 
 United States, or the appropriate United States court 
 of any territory or other place subject to the 
 jurisdiction of the United States, to request such 
 court to compel compliance with the requirements of 
 this section.
 [(2) Costs.--For knowing or willful failure to comply 
 with the requirements of this section, including any 
 rule or regulation promulgated thereunder, an 
 institution shall pay to the Treasury of the United 
 States the full costs to the United States of obtaining 
 compliance, including all associated costs of 
 investigation and enforcement.
 [(g) Regulations.--The Secretary may promulgate regulations 
to carry out this section.
 [(h) Definitions.--For the purpose of this section--
 [(1) the term ``contract'' means any agreement for 
 the acquisition by purchase, lease, or barter of 
 property or services by the foreign source, for the 
 direct benefit or use of either of the parties;
 [(2) the term ``foreign source'' means--
 [(A) a foreign government, including an 
 agency of a foreign government;
 [(B) a legal entity, governmental or 
 otherwise, created solely under the laws of a 
 foreign state or states;
 [(C) an individual who is not a citizen or a 
 national of the United States or a trust 
 territory or protectorate thereof; and
 [(D) an agent, including a subsidiary or 
 affiliate of a foreign legal entity, acting on 
 behalf of a foreign source;
 [(3) the term ``gift'' means any gift of money or 
 property;
 [(4) the term ``institution'' means any institution, 
 public or private, or, if a multicampus institution, 
 any single campus of such institution, in any State, 
 that--
 [(A) is legally authorized within such State 
 to provide a program of education beyond 
 secondary school;
 [(B) provides a program for which the 
 institution awards a bachelor's degree (or 
 provides not less than a 2-year program which 
 is acceptable for full credit toward such a 
 degree) or more advanced degrees; and
 [(C) is accredited by a nationally recognized 
 accrediting agency or association and to which 
 institution Federal financial assistance is 
 extended (directly or indirectly through 
 another entity or person), or which institution 
 receives support from the extension of Federal 
 financial assistance to any of the 
 institution's subunits; and
 [(5) the term ``restricted or conditional gift or 
 contract'' means any endowment, gift, grant, contract, 
 award, present, or property of any kind which includes 
 provisions regarding--
 [(A) the employment, assignment, or 
 termination of faculty;
 [(B) the establishment of departments, 
 centers, research or lecture programs, or new 
 faculty positions;
 [(C) the selection or admission of students; 
 or
 [(D) the award of grants, loans, 
 scholarships, fellowships, or other forms of 
 financial aid restricted to students of a 
 specified country, religion, sex, ethnic 
 origin, or political opinion.]

SEC. 117. DISCLOSURES OF FOREIGN GIFTS.

 (a) Disclosure Reports.--
 (1) Aggregate gifts and contract disclosures.--An 
 institution shall file with the Secretary, in 
 accordance with subsection (b)(1), a disclosure report 
 on July 31 of the calendar year immediately following 
 any calendar year in which--
 (A) the institution receives a gift from, or 
 enters into a contract with, a foreign source 
 (other than a foreign country of concern or 
 foreign entity of concern)--
 (i) the value of which is $50,000 or 
 more, considered alone or in 
 combination with all other gifts from, 
 or contracts with, that foreign source 
 within the calendar year; or
 (ii) the value of which is 
 undetermined; or
 (B) the institution--
 (i) receives a gift from a foreign 
 country of concern or foreign entity of 
 concern; or
 (ii) upon receiving a waiver under 
 section 117A to enter into a contract 
 with such a country or entity, enters 
 into such contract, without regard to 
 the value of such gift or contract.
 (2) Foreign source ownership or control 
 disclosures.--Notwithstanding paragraph (1), in the 
 case of an institution that is substantially controlled 
 (as described in section 668.174(c)(3) of title 34, 
 Code of Federal Regulations) (or successor 
 regulations)) by a foreign source, the institution 
 shall file with the Secretary, in accordance with 
 subsection (b)(2), a disclosure report on July 31 of 
 each year.
 (3) Treatment of affiliated entities.--For purposes 
 of this section, any gift to, or contract with, an 
 affiliated entity of an institution shall be considered 
 a gift to, or contract with, respectively, such 
 institution.
 (b) Contents of Report.--
 (1) Gifts and contracts.--Each report to the 
 Secretary required under subsection (a)(1) shall 
 contain the following:
 (A) With respect to a gift received from, or 
 a contract entered into with, any foreign 
 source--
 (i) the terms of such gift or 
 contract, including--
 (I) the name of the 
 individual, department, or 
 other entity at the institution 
 receiving the gift or carrying 
 out the contract on behalf of 
 the institution;
 (II) the foreign source's 
 intended purpose of such gift 
 or contract, or, in the absence 
 of such a purpose, the manner 
 in which the institution 
 intends to use such gift or 
 contract; and
 (III) in the case of a 
 restricted or conditional gift 
 or contract, a description of 
 the restrictions or conditions 
 of such gift or contract;
 (ii) with respect to a gift--
 (I) the total fair market 
 dollar amount or dollar value 
 of the gift, as of the date of 
 submission of such report; and
 (II) the date on which the 
 institution received such gift;
 (iii) with respect to a contract--
 (I) the total fair market 
 dollar amount or dollar value 
 of the contract, as of the date 
 of submission of such report;
 (II) the date on which the 
 institution enters into such 
 contract;
 (III) the date on which such 
 contract first takes effect;
 (IV) if the contract has a 
 termination date, such 
 termination date; and
 (V) an assurance that the 
 institution will--
 (aa) maintain an 
 unredacted copy of the 
 contract until the 
 latest of--
 (AA) the date 
 that is 5 years 
 after the date 
 on which such 
 contract first 
 takes effect;
 (BB) the date 
 on which the 
 contract 
 terminates; or
 (CC) the last 
 day of any 
 period that 
 applicable 
 State law 
 requires a copy 
 of such 
 contract to be 
 maintained; and
 (bb) upon request of 
 the Secretary during an 
 investigation under 
 section 117D(a)(1), 
 produce such an 
 unredacted copy of the 
 contract; and
 (iv) an assurance that in a case in 
 which information is required to be 
 disclosed under this section with 
 respect to a gift or contract that is 
 not in English, such information is 
 translated into English in accordance 
 with subsection (c).
 (B) With respect to a gift received from, or 
 a contract entered into with, a foreign source 
 that is a foreign government (other than the 
 government of a foreign country of concern)--
 (i) the name of such foreign 
 government;
 (ii) the department, agency, office, 
 or division of such foreign government 
 that approved such gift or contract, as 
 applicable; and
 (iii) the physical mailing address of 
 such department, agency, office, or 
 division.
 (C) With respect to a gift received from, or 
 contract entered into with, a foreign source 
 (other than a foreign government subject to the 
 requirements of subparagraph (B))--
 (i) the legal name of the foreign 
 source, or, if such name is not 
 available, a statement certified by a 
 compliance officer in accordance with 
 section 117D(c) that the institution 
 has reasonably attempted to obtain such 
 name;
 (ii) in the case of a foreign source 
 that is a natural person, the country 
 of citizenship of such person, or, if 
 such country is not known, the 
 principal country of residence of such 
 person;
 (iii) in the case of a foreign source 
 that is a legal entity, the country in 
 which such entity is incorporated, or, 
 if such information is not available, 
 the principal place of business of such 
 entity;
 (iv) the physical mailing address of 
 such foreign source, or, if such 
 address is not available, a statement 
 certified by a compliance officer in 
 accordance with section 117D(c) that 
 the institution has reasonably 
 attempted to obtain such address; and
 (v) any affiliation of the foreign 
 source to an organization that is 
 designated as a foreign terrorist 
 organization pursuant to section 219 of 
 the Immigration and Nationality Act (8 
 U.S.C. 1189).
 (D) With respect to a contract entered into 
 with a foreign source that is a foreign country 
 of concern or a foreign entity of concern--
 (i) a complete and unredacted text of 
 the original contract, and if such 
 original contract is not in English, a 
 translated copy in accordance with 
 subsection (c);
 (ii) a copy of the waiver received 
 under section 117A for such contract; 
 and
 (iii) the statement submitted by the 
 institution for purposes of receiving 
 such a waiver under section 117A(b)(2).
 (2) Foreign source ownership or control.--Each report 
 to the Secretary required under subsection (a)(2) shall 
 contain--
 (A) the legal name and address of the foreign 
 source that owns or controls the institution;
 (B) the date on which the foreign source 
 assumed ownership or control; and
 (C) any changes in program or structure 
 resulting from the change in ownership or 
 control.
 (c) Translation Requirements.--Any information required to 
be disclosed under this section with respect to a gift or 
contract that is not in English shall be translated, for 
purposes of such disclosure, by a person that is not an 
affiliated entity or agent of the foreign source involved with 
such gift or contract.
 (d) Public Inspection.--
 (1) Database requirement.--Beginning not later than 
 May 31 of the calendar year following the date of 
 enactment of the DETERRENT Act, the Secretary shall--
 (A) establish and maintain a searchable 
 database on a website of the Department, under 
 which all reports submitted under this section 
 (including any report submitted under this 
 section before the date of enactment of the 
 DETERRENT Act)--
 (i) are made publicly available (in 
 electronic and downloadable format), 
 including any information provided in 
 such reports (other than the 
 information prohibited from being 
 publicly disclosed pursuant to 
 paragraph (2));
 (ii) can be individually identified 
 and compared; and
 (iii) are searchable and sortable--
 (I) by the institution that 
 filed such report;
 (II) by the date on which the 
 institution filed such report;
 (III) by the date on which 
 the institution received the 
 gift which is the subject of 
 the report;
 (IV) by the date on which the 
 institution enters into the 
 contract which is the subject 
 of the report;
 (V) by the date on which such 
 contract first takes effect;
 (VI) by the attributable 
 country of such gift or 
 contract;
 (VII) by the name of the 
 foreign source (other than a 
 foreign source that is a 
 natural person);
 (VIII) by the information 
 described in subparagraph 
 (C)(i); and
 (IX) by the information 
 described in subparagraph 
 (C)(ii);
 (B) not later than 30 days after receipt of a 
 disclosure report under this section, include 
 such report in such database;
 (C) indicate, as part of the public record of 
 a report included in such database, whether the 
 report is with respect to a gift received from, 
 or a contract entered into with--
 (i) a foreign source that is a 
 foreign government; or
 (ii) a foreign source that is not a 
 foreign government; and
 (D) with respect to a disclosure report that 
 does not include the name or address of a 
 foreign source, indicate, as part of the public 
 record of such report included in such 
 database, that such report did not include such 
 information.
 (2) Name and address of foreign source.--The 
 Secretary shall not disclose the name or address of a 
 foreign source that is a natural person (other than the 
 attributable country of such foreign source) included 
 in a disclosure report--
 (A) as part of the public record of such 
 disclosure report described in paragraph (1); 
 or
 (B) in response to a request under section 
 552 of title 5, United States Code (commonly 
 known as the ``Freedom of Information Act''), 
 pursuant to subsection (b)(3) of such section.
 (e) Interagency Information Sharing.--Not later than 30 days 
after receiving a disclosure report from an institution in 
compliance with this section, the Secretary shall transmit an 
unredacted copy of such report (that includes the name and 
address of a foreign source disclosed in such report) to the 
Director of the Federal Bureau of Investigation, the Director 
of National Intelligence, the Director of the Central 
Intelligence Agency, the Secretary of State, the Secretary of 
Defense, the Attorney General, the Secretary of Commerce, the 
Secretary of Homeland Security, the Secretary of Energy, the 
Director of the National Science Foundation, and the Director 
of the National Institutes of Health.
 (f) Definitions.--In this section:
 (1) Affiliated entity.--The term ``affiliated 
 entity'', when used with respect to an institution, 
 means an entity or organization that operates primarily 
 for the benefit of, or under the auspices of, such 
 institution, including a foundation of the institution 
 or a related entity (such as any educational, cultural, 
 or language entity).
 (2) Attributable country.--The term ``attributable 
 country'' means--
 (A) the country of citizenship of a foreign 
 source who is a natural person, or, if such 
 country is unknown, the principal residence (as 
 applicable) of such foreign source; or
 (B) the country of incorporation of a foreign 
 source that is a legal entity, or, if such 
 country is unknown, the principal place of 
 business (as applicable) of such foreign 
 source.
 (3) Contract.--The term ``contract''--
 (A) means--
 (i) any agreement for the acquisition 
 by purchase, lease, or barter of 
 property or services by the foreign 
 source;
 (ii) any affiliation, agreement, or 
 similar transaction with a foreign 
 source that involves the use or 
 exchange of an institution's name, 
 likeness, time, services, or resources; 
 and
 (iii) any agreement for the 
 acquisition by purchase, lease, or 
 barter, of property or services from a 
 foreign source (other than an arms-
 length agreement for such acquisition 
 from a foreign source that is not a 
 foreign country of concern or a foreign 
 entity of concern); and
 (B) does not include an agreement made 
 between an institution and a foreign source 
 regarding any payment of one or more elements 
 of a student's cost of attendance (as such term 
 is defined in section 472), unless such an 
 agreement is made for more than 15 students or 
 is made under a restricted or conditional 
 contract.
 (4) Foreign source.--The term ``foreign source'' 
 means--
 (A) a foreign government, including an agency 
 of a foreign government;
 (B) a legal entity, governmental or 
 otherwise, created under the laws of a foreign 
 state or states;
 (C) a legal entity, governmental or 
 otherwise, substantially controlled (as 
 described in section 668.174(c)(3) of title 34, 
 Code of Federal Regulations) (or successor 
 regulations)) by a foreign source;
 (D) a natural person who is not a citizen or 
 a national of the United States or a trust 
 territory or protectorate thereof;
 (E) an agent of a foreign source, including--
 (i) a subsidiary or affiliate of a 
 foreign legal entity, acting on behalf 
 of a foreign source;
 (ii) a person that operates primarily 
 for the benefit of, or under the 
 auspices of, a foreign source, 
 including a foundation or a related 
 entity (such as any educational, 
 cultural, or language entity); and
 (iii) a person who is an agent of a 
 foreign principal (as such term is 
 defined in section 1 of the Foreign 
 Agents Registration Act of 1938 (22 
 U.S.C. 611)); and
 (F) an international organization (as such 
 term is defined in the International 
 Organizations Immunities Act (22 U.S.C. 288)).
 (5) Gift.--The term ``gift''--
 (A) means any gift of money, property, 
 resources, staff, or services; and
 (B) does not include--
 (i) any payment of one or more 
 elements of a student's cost of 
 attendance (as such term is defined in 
 section 472) to an institution by, or 
 scholarship from, a foreign source who 
 is a natural person, acting in their 
 individual capacity and not as an agent 
 for, at the request or direction of, or 
 on behalf of, any person or entity 
 (except the student), made for not more 
 than 15 students, and that is not made 
 under a restricted or conditional 
 contract with such foreign source; or
 (ii) assignment or license of 
 registered industrial and intellectual 
 property rights, such as patents, 
 utility models, trademarks, or 
 copyrights, or technical assistance, 
 that are not associated with a category 
 listed in the Commerce Control List 
 maintained by the Bureau of Industry 
 and Security of the Department of 
 Commerce and set forth in Supplement 
 No. 1 to part 774 of title 15, Code of 
 Federal Regulations (or successor 
 regulations); or
 (iii) decorations (as such term is 
 defined in section 7342(a) of title 5, 
 United States Code).
 (6) Restricted or conditional gift or contract.--The 
 term ``restricted or conditional gift or contract'' 
 means any endowment, gift, grant, contract, award, 
 present, or property of any kind which includes 
 provisions regarding--
 (A) the employment, assignment, or 
 termination of faculty;
 (B) the establishment of departments, 
 centers, institutes, instructional programs, 
 research or lecture programs, or new faculty 
 positions;
 (C) the selection, admission, or education of 
 students;
 (D) the award of grants, loans, scholarships, 
 fellowships, or other forms of financial aid 
 restricted to students of a specified country, 
 religion, sex, ethnic origin, or political 
 opinion; or
 (E) any other restriction on the use of a 
 gift or contract.

SEC. 117A. PROHIBITION ON CONTRACTS WITH CERTAIN FOREIGN ENTITIES AND 
 COUNTRIES.

 (a) In General.--An institution shall not enter into a 
contract with a foreign country of concern or a foreign entity 
of concern.
 (b) Waivers.--
 (1) In general.--A waiver issued under this section 
 to an institution with respect to a contract shall 
 only--
 (A) waive the prohibition under subsection 
 (a) for a 1-year period; and
 (B) apply to the terms and conditions of the 
 proposed contract submitted as part of the 
 request for such waiver.
 (2) Submission.--
 (A) First waiver requests.--
 (i) In general.--An institution that 
 desires to enter into a contract with a 
 foreign entity of concern or a foreign 
 country of concern may submit to the 
 Secretary, not later than 120 days 
 before the institution enters into such 
 a contract, a request to waive the 
 prohibition under subsection (a) with 
 respect to such contract.
 (ii) Contents of waiver request.--A 
 waiver request submitted by an 
 institution under clause (i) shall 
 include--
 (I) the complete and 
 unredacted text of the proposed 
 contract for which the waiver 
 is being requested, and if such 
 original contract is not in 
 English, a translated copy of 
 the text into English (in a 
 manner that complies with 
 section 117(c)); and
 (II) a statement that--
 (aa) is certified by 
 a compliance officer of 
 the institution 
 designated in 
 accordance with section 
 117D(c); and
 (bb) includes 
 information that 
 demonstrates that such 
 contract--
 (AA) is for 
 the benefit of 
 the 
 institution's 
 mission and 
 students; and
 (BB) will 
 promote the 
 security, 
 stability, and 
 economic 
 vitality of the 
 United States.
 (B) Renewal waiver requests.--
 (i) In general.--An institution that, 
 pursuant to a waiver issued under this 
 section, has entered into a contract, 
 the term of which is longer than the 1-
 year waiver period and the terms and 
 conditions of which remain the same as 
 the proposed contract submitted as part 
 of the request for such waiver may 
 submit, not later than 120 days before 
 the expiration of such waiver period, a 
 request for a renewal of such waiver 
 for an additional 1-year period (which 
 shall include any information requested 
 by the Secretary).
 (ii) Termination.--If the institution 
 fails to submit a request under clause 
 (i) or is not granted a renewal under 
 such clause, such institution shall 
 terminate such contract on the last day 
 of the original 1-year waiver period.
 (3) Waiver issuance.--The Secretary--
 (A) not later than 60 days before an 
 institution enters into a contract pursuant to 
 a waiver request under paragraph (2)(A), or 
 before a contract described in paragraph 
 (2)(B)(i) is renewed pursuant to a renewal 
 request under such paragraph, shall notify the 
 institution--
 (i) if the waiver or renewal will be 
 issued by the Secretary; and
 (ii) in a case in which the waiver or 
 renewal will be issued, the date on 
 which the 1-year waiver period starts; 
 and
 (B) may only issue a waiver under this 
 section to an institution if the Secretary 
 determines, in consultation with each 
 individual listed in section 117(e), that the 
 contract for which the waiver is being 
 requested--
 (i) is for the benefit of the 
 institution's mission and students; and
 (ii) will promote the security, 
 stability, and economic vitality of the 
 United States.
 (4) Disclosure.--Not less than 2 weeks prior to 
 issuing a waiver under paragraph (2), the Secretary 
 shall notify the authorizing committees of the intent 
 to issue the waiver, including a justification for the 
 waiver.
 (c) Designation During Contract Term.--In the case of an 
institution that enters into a contract with a foreign source 
that is not a foreign country of concern or a foreign entity of 
concern but which, during the term of such contract, is 
designated as a foreign country of concern or foreign entity of 
concern, such institution shall terminate such contract not 
later than 60 days after the Secretary notifies the institution 
of such designation.
 (d) Contracts Prior to Date of Enactment.--
 (1) In general.--In the case of an institution that 
 has entered into a contract with a foreign country of 
 concern or foreign entity of concern prior to the date 
 of enactment of the DETERRENT Act--
 (A) the institution shall as soon as 
 practicable, but not later than 30 days after 
 such date of enactment, submit to the Secretary 
 a waiver request in accordance with clause (ii) 
 of subsection (b)(2)(A); and
 (B) the Secretary shall, upon receipt of the 
 request submitted under such clause, issue a 
 waiver to the institution for a period 
 beginning on the date on which the waiver is 
 issued and ending on the sooner of--
 (i) the date that is 1 year after the 
 date of enactment of the DETERRENT Act; 
 or
 (ii) the date on which the contract 
 terminates.
 (2) Renewal.--An institution that has entered into a 
 contract described in paragraph (1), the term of which 
 is longer than the waiver period described in 
 subparagraph (B) of such paragraph and the terms and 
 conditions of which remain the same as the contract 
 submitted as part of the request required under 
 subparagraph (A) of such paragraph, may submit a 
 request for renewal of the waiver issued under such 
 paragraph in accordance with subsection (b)(2)(B).
 (e) Contract Defined.--The term ``contract'' has the meaning 
given such term in section 117(f).

SEC. 117B. INSTITUTIONAL POLICY REGARDING FOREIGN GIFTS AND CONTRACTS 
 TO FACULTY AND STAFF.

 (a) Requirement to Maintain Policy and Database.--Beginning 
not later than 90 days after the date of enactment of the 
DETERRENT Act, each institution described in subsection (b) 
shall maintain--
 (1) a policy requiring covered individuals employed 
 at the institution to disclose in a report to such 
 institution on July 31 of each calendar year that 
 begins after the year in which such enactment date 
 occurs--
 (A) any gift received from a foreign source 
 in the previous calendar year, the value of 
 which is greater than the minimal value (as 
 such term is defined in section 7342(a) of 
 title 5, United States Code) or is of 
 undetermined value, and including the date on 
 which the gift was received;
 (B) any contract with a foreign source (other 
 than a foreign country of concern or foreign 
 entity of concern) entered into or in effect 
 during the previous calendar year, the value of 
 which is $5,000 or more, considered alone or in 
 combination with all other contracts with that 
 foreign source within the calendar year, and 
 including the date on which such contract is 
 entered into, the date on which the contract 
 first takes effect, and, as applicable, the 
 date on which such contract terminates;
 (C) any contract with a foreign source (other 
 than a foreign country of concern or foreign 
 entity of concern) entered into or in effect 
 during the previous calendar year that has an 
 undetermined monetary value, and including the 
 date on which such contract is entered into, 
 the date on which the contract first takes 
 effect, and, as applicable, the date on which 
 such contract terminates; and
 (D) any contract entered into or in effect 
 with a foreign country of concern or foreign 
 entity of concern during the previous calendar 
 year, the value of which is $0 or more or which 
 has an undetermined monetary value, and 
 including--
 (i) the date on which such contract 
 is entered into;
 (ii) the date on which the contract 
 first takes effect;
 (iii) if the contract has a 
 termination date, such termination 
 date; and
 (iv) the full text of such contract 
 and any addenda;
 (2) a publicly available and searchable database (in 
 electronic and downloadable format), on a website of 
 the institution, of the information required to be 
 disclosed under paragraph (1) (other than the name or 
 any other personally identifiable information of a 
 covered individual) that--
 (A) makes available the information disclosed 
 under paragraph (1) (other than the name or any 
 other personally identifiable information of a 
 covered individual) beginning on the date that 
 is 30 days after receipt of the report under 
 such paragraph containing such information and 
 until the latest of--
 (i) the date that is 5 years after 
 the date on which--
 (I) a gift referred to in 
 paragraph (1)(A) is received; 
 or
 (II) a contract referred to 
 in subparagraph (B), (C) or (D) 
 of paragraph (1) first takes 
 effect; or
 (ii) the date on which a contract 
 referred to in subparagraph (B), (C) or 
 (D) of paragraph (1) terminates; and
 (B) is searchable and sortable--
 (i) if the subject of the disclosure 
 is a gift, by the date on which the 
 gift is received;
 (ii) if the subject of the disclosure 
 is a contract--
 (I) by the date on which such 
 contract is entered into; and
 (II) by the date on which 
 such contract first takes 
 effect;
 (iii) by the attributable country 
 with respect to which information is 
 being disclosed;
 (iv) by the narrowest of the 
 department, school, or college of the 
 institution, as applicable, for which 
 the individual making the disclosure 
 works; and
 (v) by the name of the foreign source 
 (other than a foreign source who is a 
 natural person); and
 (3) an effective plan to identify and manage 
 potential information gathering by foreign sources 
 through espionage targeting covered individuals that 
 may arise from gifts received from, or contracts 
 entered into with, a foreign source, including through 
 the use of--
 (A) periodic communications;
 (B) accurate reporting under paragraph (2) of 
 the information required to be disclosed under 
 paragraph (1); and
 (C) enforcement of the policy described in 
 paragraph (1); and
 (4) for purposes of investigations under section 
 117D(a)(1) or responses to requests under section 552 
 of title 5, United States Code (commonly known as the 
 ``Freedom of Information Act''), a record of the names 
 of the individuals making disclosures under paragraph 
 (1).
 (b) Institutions.--An institution shall be subject to the 
requirements of this section if such institution--
 (1) is an eligible institution for the purposes of 
 any program authorized under title IV; and
 (2)(A) received more than $50,000,000 in Federal 
 funds in any of the previous five calendar years to 
 support (in whole or in part) research and development 
 (as determined by the institution and measured by the 
 Higher Education Research and Development Survey of the 
 National Center for Science and Engineering 
 Statistics); or
 (B) receives funds under title VI.
 (c) Definitions.--In this section--
 (1) the terms ``attributable country'', ``foreign 
 source'', and ``gift'' have the meanings given such 
 terms in section 117(f);
 (2) the term ``contract'' means--
 (A) any agreement for the acquisition by 
 purchase, lease, or barter of property or 
 services by the foreign source;
 (B) any affiliation, agreement, or similar 
 transaction with a foreign source that involves 
 the use or exchange of an institution's name, 
 likeness, time, services, or resources; and
 (C) any agreement for the acquisition by 
 purchase, lease, or barter, of property or 
 services from a foreign source (other than an 
 arms-length agreement for such acquisition from 
 a foreign source that is not a foreign country 
 of concern or a foreign entity of concern); and
 (3) the term ``covered individual''--
 (A) has the meaning given such term in 
 section 223(d) of the William M. (Mac) 
 Thornberry National Defense Authorization Act 
 for Fiscal Year 2021 (42 U.S.C. 6605); and
 (B) shall be interpreted in accordance with 
 the Guidance for Implementing National Security 
 Presidential Memorandum 33 (NSPM-33) on 
 National Security Strategy for United States 
 Government-Supported Research and Development 
 published by the Subcommittee on Research 
 Security and the Joint Committee on the 
 Research Environment in January 2022 (or any 
 successor guidance).

SEC. 117C. INVESTMENT DISCLOSURE REPORT.

 (a) Investment Disclosure Report.--A specified institution 
shall file a disclosure report in accordance with subsection 
(b) with the Secretary on each July 31 immediately following 
any calendar year in which the specified institution purchases, 
sells, or holds (directly or indirectly through any chain of 
ownership) one or more investments of concern.
 (b) Contents of Report.--Each report to the Secretary 
required by subsection (a) shall contain, with respect to the 
calendar year preceding the calendar year in which such report 
is filed, the following information:
 (1) A list of the investments of concern purchased, 
 sold, or held during such calendar year.
 (2) The aggregate fair market value of all 
 investments of concern held as of the close of such 
 calendar year.
 (3) The combined value of all investments of concern 
 sold over the course of such calendar year, as measured 
 by the fair market value of such investments at the 
 time of the sale.
 (4) The combined value of all capital gains from such 
 sales of investments of concern.
 (c) Treatment of Certain Pooled Investments.--
 (1) Pooled investment classification.--
 (A) In general.--For purposes of this 
 section, except as provided in subparagraph 
 (B), a specified interest acquired by a 
 specified institution in a regulated investment 
 company, exchange traded fund, or any other 
 pooled investment that holds an investment of 
 concern shall be treated as an investment of 
 concern and shall be reported pursuant to 
 paragraph (2)(A).
 (B) Certification of pooled investment.--
 Notwithstanding subparagraph (A), such 
 specified interest shall not be subject to 
 subparagraph (A) if the Secretary certifies, 
 pursuant to paragraph (2)(B), that such pooled 
 investment is not holding an investment of 
 concern.
 (2) Procedures.--The Secretary, after consultation 
 with the Secretary of the Treasury and the Securities 
 and Exchange Commission, shall establish procedures 
 under which a pooled investment described in paragraph 
 (1)--
 (A) shall be reported in accordance with the 
 requirements of subsection (b); and
 (B) may be certified under paragraph (1)(B) 
 as not holding an investment of concern.
 (d) Treatment of Related Organizations.--For purposes of this 
section, assets held by any related organization (as defined in 
section 4968(d)(2) of the Internal Revenue Code of 1986) with 
respect to a specified institution shall be treated as held by 
such specified institution, except that--
 (1) such assets shall not be taken into account with 
 respect to more than 1 specified institution; and
 (2) unless such organization is controlled by such 
 institution or is described in section 509(a)(3) of the 
 Internal Revenue Code of 1986 with respect to such 
 institution, assets which are not intended or available 
 for the use or benefit of such specified institution 
 shall not be taken into account.
 (e) Valuation of Debt.--For purposes of this section, the 
fair market value of any debt shall be the principal amount of 
such debt.
 (f) Regulations.--The Secretary, after consultation with the 
Secretary of the Treasury and the Securities and Exchange 
Commission, may issue such regulations or other guidance as may 
be necessary or appropriate to carry out the purposes of this 
section, including regulations or other guidance providing for 
the proper application of this section with respect to certain 
regulated investment companies, exchange traded funds, and 
pooled investments.
 (g) Database Requirement.--Beginning not later than May 31 of 
the calendar year following the date of enactment of the 
DETERRENT Act, the Secretary shall--
 (1) establish and maintain a searchable database on a 
 website of the Department, under which all reports 
 submitted under this section--
 (A) are made publicly available (in 
 electronic and downloadable format), including 
 any information provided in such reports;
 (B) can be individually identified and 
 compared; and
 (C) are searchable and sortable; and
 (2) not later than 30 days after receipt of a 
 disclosure report under this section, include such 
 report in such database.
 (h) Definitions.--In this section:
 (1) Investment of concern.--
 (A) In general.--The term ``investment of 
 concern'' means any specified interest with 
 respect to any of the following:
 (i) A foreign country of concern.
 (ii) A foreign entity of concern.
 (B) Specified interest.--The term ``specified 
 interest'' means, with respect to any entity--
 (i) stock or any other equity or 
 profits interest of such entity;
 (ii) debt issued by such entity; and
 (iii) any contract or derivative with 
 respect to any property described in 
 clause (i) or (ii).
 (2) Specified institution.--
 (A) In general.--The term ``specified 
 institution'', as determined with respect to 
 any calendar year, means an institution that--
 (i) is not a public institution; and
 (ii) at the close of such calendar 
 year, holds--
 (I) assets (other than those 
 assets which are used directly 
 in carrying out the 
 institution's exempt purpose) 
 the aggregate fair market value 
 of which is in excess of 
 $6,000,000,000; and
 (II) investments of concern 
 the aggregate fair market value 
 of which is in excess of 
 $250,000,000.
 (B) References to certain terms.--For the 
 purpose of applying the definition under 
 subparagraph (A), the terms ``aggregate fair 
 market value'' and ``assets which are used 
 directly in carrying out the institution's 
 exempt purpose'' shall be applied in the same 
 manner as such terms are applied for the 
 purposes of section 4968(b)(1)(D) of the 
 Internal Revenue Code of 1986.

SEC. 117D. ENFORCEMENT; SINGLE POINT-OF-CONTACT; INSTITUTIONAL 
 REQUIREMENTS.

 (a) Enforcement.--
 (1) Investigation.--The Secretary (acting through the 
 General Counsel of the Department) shall conduct 
 investigations of possible violations of sections 117, 
 117A, 117B, 117C, and subsection (c) of this section by 
 institutions and, whenever it appears that an 
 institution has knowingly or willfully failed to comply 
 with a requirement of any of such provisions (including 
 any rule or regulation promulgated under any such 
 provision), shall request that the Attorney General 
 bring a civil action in accordance with paragraph (2).
 (2) Civil action.--Whenever it appears that an 
 institution has knowingly or willfully failed to comply 
 with a requirement of any of the provisions listed in 
 paragraph (1) (including any rule or regulation 
 promulgated under any such provision) based on an 
 investigation under such paragraph, a civil action 
 shall be brought by the Attorney General, at the 
 request of the Secretary, in an appropriate district 
 court of the United States, or the appropriate United 
 States court of any territory or other place subject to 
 the jurisdiction of the United States, to request such 
 court to compel compliance with the requirement of the 
 provision that has been violated.
 (3) Costs and other fines.--An institution that is 
 compelled to comply with a requirement of a provision 
 listed in paragraph (1) pursuant to paragraph (2) 
 shall--
 (A) pay to the Treasury of the United States 
 the full costs to the United States of 
 obtaining compliance with the requirement of 
 such provision, including all associated costs 
 of investigation and enforcement; and
 (B) if applicable, be subject to the 
 applicable fines described in paragraph (4).
 (4) Fines for violations.--The Secretary shall impose 
 a fine on an institution that is compelled to comply 
 with a requirement of a section listed in paragraph (1) 
 pursuant to paragraph (2) as follows:
 (A) Section 117.--
 (i) First-time violations.--In the 
 case of an institution that is 
 compelled to comply with a requirement 
 of section 117 pursuant to a civil 
 action described in paragraph (2), and 
 that has not previously been compelled 
 to comply with any such requirement 
 pursuant to such a civil action, the 
 Secretary shall impose a fine on the 
 institution for such violation as 
 follows:
 (I) In the case of an 
 institution that knowingly or 
 willfully fails to comply with 
 a reporting requirement under 
 subsection (a)(1) of section 
 117, such fine shall be in an 
 amount that is--
 (aa) for each gift or 
 contract with 
 determinable value that 
 is the subject of such 
 a failure to comply, 
 the greater of--
 (AA) $50,000; 
 or
 (BB) the 
 monetary value 
 of such gift or 
 contract; or
 (bb) for each gift or 
 contract of no value or 
 of indeterminable 
 value, not less than 1 
 percent and not more 
 than 10 percent of the 
 total amount of Federal 
 funds received by the 
 institution under this 
 Act for the most recent 
 fiscal year.
 (II) In the case of an 
 institution that knowingly or 
 willfully fails to comply with 
 the reporting requirement under 
 subsection (a)(2) of section 
 117, such fine shall be in an 
 amount that is not less than 10 
 percent of the total amount of 
 Federal funds received by the 
 institution under this Act for 
 the most recent fiscal year.
 (ii) Subsequent violations.--In the 
 case of an institution that has 
 previously been compelled to comply 
 with a requirement of section 117 
 pursuant to a civil action described in 
 paragraph (2), and is subsequently 
 compelled to comply with such a 
 requirement pursuant to a subsequent 
 civil action described in paragraph 
 (2), the Secretary shall impose a fine 
 on the institution as follows:
 (I) In the case of an 
 institution that knowingly or 
 willfully fails to comply with 
 a reporting requirement under 
 subsection (a)(1) of section 
 117, such fine shall be in an 
 amount that is--
 (aa) for each gift or 
 contract with 
 determinable value that 
 is the subject of such 
 a failure to comply, 
 the greater of--
 (AA) 
 $100,000; or
 (BB) twice 
 the monetary 
 value of such 
 gift or 
 contract; or
 (bb) for each gift or 
 contract of no value or 
 of indeterminable 
 value, not less than 5 
 percent and not more 
 than 10 percent of the 
 total amount of Federal 
 funds received by the 
 institution under this 
 Act for the most recent 
 fiscal year.
 (II) In the case of an 
 institution that knowingly or 
 willfully fails to comply with 
 a reporting requirement under 
 subsection (a)(2) of section 
 117, such fine shall be in an 
 amount that is not less than 20 
 percent of the total amount of 
 Federal funds received by the 
 institution under this Act for 
 the most recent fiscal year.
 (B) Section 117a.--
 (i) First-time violations.--In the 
 case of an institution that is 
 compelled to comply with a requirement 
 of section 117A pursuant to a civil 
 action described in paragraph (2), and 
 that has not previously been compelled 
 to comply with any such requirement 
 pursuant to such a civil action, the 
 Secretary shall impose a fine on the 
 institution in an amount that is not 
 less than 5 percent and not more than 
 10 percent of the total amount of 
 Federal funds received by the 
 institution under this Act for the most 
 recent fiscal year.
 (ii) Subsequent violations.--In the 
 case of an institution that has 
 previously been compelled to comply 
 with a requirement of section 117A 
 pursuant to a civil action described in 
 paragraph (2), and is subsequently 
 compelled to comply with such a 
 requirement pursuant to a subsequent 
 civil action described in paragraph 
 (2), the Secretary shall impose a fine 
 on the institution in an amount that is 
 not less than 20 percent of the total 
 amount of Federal funds received by the 
 institution under this Act for the most 
 recent fiscal year.
 (C) Section 117b.--
 (i) First-time violations.--In the 
 case of an institution that is 
 compelled to comply with a requirement 
 of section 117B pursuant to a civil 
 action described in paragraph (2), and 
 that has not previously been compelled 
 to comply with any such requirement 
 pursuant to such a civil action, the 
 Secretary shall impose a fine on the 
 institution for such violation in an 
 amount that is the greater of--
 (I) $250,000; or
 (II) the total amount of 
 gifts or contracts that the 
 institution is compelled to 
 report pursuant to such civil 
 action.
 (ii) Subsequent violations.--In the 
 case of an institution that has 
 previously been compelled to comply 
 with a requirement of section 117B 
 pursuant to a civil action described in 
 paragraph (2), and is subsequently 
 compelled to comply with such a 
 requirement pursuant to a subsequent 
 civil action described in paragraph 
 (2), the Secretary shall impose a fine 
 on the institution in an amount that is 
 the greater of--
 (I) $500,000; or
 (II) twice the total amount 
 of gifts or contracts that the 
 institution is compelled to 
 report pursuant to such civil 
 action.
 (D) Section 117c.--
 (i) First-time violations.--In the 
 case of an institution that is 
 compelled to comply with a requirement 
 of section 117C pursuant to a civil 
 action described in paragraph (2), and 
 that has not previously been compelled 
 to comply with any such requirement 
 pursuant to such a civil action, the 
 Secretary shall impose a fine on the 
 institution in an amount that is not 
 less than 50 percent and not more than 
 100 percent of the sum of--
 (I) the aggregate fair market 
 value of all investments of 
 concern held by such 
 institution as of the close of 
 the final calendar year for 
 which the institution is 
 compelled to comply with such 
 requirement pursuant to such 
 civil action; and
 (II) the combined value of 
 all investments of concern sold 
 over the course of all the 
 calendar years for which the 
 institution is compelled to 
 comply with such requirement 
 pursuant to such civil action, 
 as measured by the fair market 
 value of such investments at 
 the time of the sale.
 (ii) Subsequent violations.--In the 
 case of an institution that has 
 previously been compelled to comply 
 with a requirement of section 117C 
 pursuant to a civil action described in 
 paragraph (2), and is subsequently 
 compelled to comply with such a 
 requirement pursuant to a subsequent 
 civil action described in paragraph 
 (2), the Secretary shall impose a fine 
 on the institution in an amount that is 
 not less than 100 percent and not more 
 than 200 percent of the sum of--
 (I) the aggregate fair market 
 value of all investments of 
 concern held by such 
 institution as of the close of 
 the final calendar year for 
 which the institution is 
 compelled to comply with such 
 requirement pursuant to such 
 subsequent civil action; and
 (II) the combined value of 
 all investments of concern over 
 the course of all the calendar 
 years for which the institution 
 is compelled to comply with 
 such requirement pursuant to 
 such subsequent civil action, 
 as measured by the fair market 
 value of such investments at 
 the time of the sale.
 (E) Ineligibilty for waiver.--In the case of 
 an institution that is fined pursuant to 
 subparagraph (A)(ii), (B)(ii), (C)(ii), or 
 (D)(ii), the Secretary shall prohibit the 
 institution from obtaining a waiver, or a 
 renewal of a waiver, under section 117A.
 (b) Single Point-of-contact at the Department.--The Secretary 
shall maintain a single point-of-contact at the Department to--
 (1) receive and respond to inquiries and requests for 
 technical assistance from institutions regarding 
 compliance with the requirements of sections 117, 117A, 
 117B, 117C, and subsection (c) of this section;
 (2) coordinate and implement technical improvements 
 to the database described in section 117(d)(1), 
 including--
 (A) improving upload functionality by 
 allowing for batch reporting, including by 
 allowing institutions to upload one file with 
 all required information into the database;
 (B) publishing and maintaining a database 
 users guide annually, including information on 
 how to edit an entry and how to report errors;
 (C) creating a standing user group (to which 
 chapter 10 of title 5, United States Code, 
 shall not apply) to discuss possible database 
 improvements, which group shall--
 (i) include at least--
 (I) 3 members representing 
 public institutions with high 
 or very high levels of research 
 activity (as defined by the 
 National Center for Education 
 Statistics);
 (II) 2 members representing 
 private, nonprofit institutions 
 with high or very high levels 
 of research activity (as so 
 defined);
 (III) 2 members representing 
 proprietary institutions of 
 higher education (as defined in 
 section 102(b)); and
 (IV) 2 members representing 
 area career and technical 
 education schools (as defined 
 in subparagraph (C) or (D) of 
 section 3(3) of the Carl D. 
 Perkins Career and Technical 
 Education Act of 2006 (20 
 U.S.C. 2302(3))); and
 (ii) meet at least twice a year with 
 officials from the Department to 
 discuss possible database improvements;
 (D) publishing, on a publicly available 
 website, recommended database improvements 
 following each meeting described in 
 subparagraph (C)(ii); and
 (E) responding, on a publicly available 
 website, to each recommendation published under 
 subparagraph (D) as to whether or not the 
 Department will implement the recommendation, 
 including the rationale for either approving or 
 rejecting the recommendation;
 (3) provide, every 90 days after the date of 
 enactment of the DETERRENT Act, status updates on any 
 pending or completed investigations and civil actions 
 under subsection (a)(1) to--
 (A) the authorizing committees; and
 (B) any institution that is the subject of 
 such investigation or action;
 (4) maintain, on a publicly accessible website--
 (A) a full comprehensive list of all foreign 
 countries of concern and foreign entities of 
 concern; and
 (B) the date on which the last update was 
 made to such list; and
 (5) not later than 7 days after making an update to 
 the list maintained under paragraph (4)(A), notify each 
 institution required to comply with the sections listed 
 in paragraph (1) of such update.
 (c) Institutional Requirements for Compliance Officers and 
Institutional Policy Requirements.--
 (1) In general.--An institution that is required to 
 file a report under section 117 or 117C, that is 
 seeking a waiver under section 117A, or that is subject 
 to the requirements of section 117B, shall, not later 
 than the earlier of the date on which the institution 
 files the first report under such a section, requests 
 the institution's first waiver under section 117A, or 
 first fulfills the requirements of section 117C--
 (A) establish an institutional policy that 
 the institution shall follow in meeting the 
 requirements of sections 117, 117A, 117B, and 
 117C; and
 (B) designate and maintain at least one, but 
 not more than three, current employees or 
 legally authorized agents of such institution 
 to serve as compliance officers to carry out 
 the requirements listed in paragraph (2).
 (2) Duties of compliance officers.--A compliance 
 officer designated by an institution under paragraph 
 (1)(B) shall certify--
 (A) whenever the institution is required to 
 file a report under section 117 or 117C--
 (i) the institution's accurate 
 compliance with the reporting 
 requirements under such section;
 (ii) that the institution, in filing 
 such report under section 117 or 117C--
 (I) followed the 
 institutional policy 
 established under paragraph 
 (1)(A) applicable to such 
 section; and
 (II) conducted good faith 
 efforts and reasonable due 
 diligence to ensure that 
 accurate information is 
 provided in such report, 
 including with respect to the 
 valuations of any assets that 
 are disclosed in a report 
 submitted under section 117C; 
 and
 (iii) in the case of a report under 
 section 117, any statements by the 
 institution required to be certified by 
 such an officer under clause (i) or 
 (iv) of section 117(b)(1)(C); and
 (B) whenever the institution requests a 
 waiver under section 117A--
 (i) that the institution--
 (I) is in compliance with the 
 requirements of such section; 
 and
 (II) followed the 
 institutional policy 
 established under paragraph 
 (1)(A) applicable to such 
 section; and
 (ii) the statement by the institution 
 required to be certified by such an 
 officer under section 
 117A(b)(2)(A)(ii)(II); and
 (C) whenever the institution is subject to 
 the requirements of section 117B, that the 
 institution--
 (i) is in compliance with the 
 requirements of such section; and
 (ii) followed the institutional 
 policy established under paragraph 
 (1)(A) applicable to such section.
 (d) Definitions.--For purposes of sections 117, 117A, 117B, 
117C, and this section:
 (1) Foreign country of concern.--The term ``foreign 
 country of concern'' means the following:
 (A) Any covered nation defined in section 
 4872 of title 10, United States Code.
 (B) Any country the Secretary, in 
 consultation with the Secretary of Defense, the 
 Secretary of State, and the Director of 
 National Intelligence, determines, for purposes 
 of sections 117, 117A, 117B, 117C, or this 
 section, to be engaged in conduct that is 
 detrimental to the national security or foreign 
 policy of the United States.
 (2) Foreign entity of concern.--The term ``foreign 
 entity of concern'' has the meaning given such term in 
 section 10612(a) of the Research and Development, 
 Competition, and Innovation Act (42 U.S.C. 19221(a)) 
 and includes a foreign entity that is identified on the 
 list published under section 1286(c)(8)(A) of the John 
 S. McCain National Defense Authorization Act for Fiscal 
 Year 2019 (10 U.S.C. 22 4001 note; Public Law 115-232).
 (3) Institution.--The term ``institution'' means an 
 institution of higher education (as such term is 
 defined in section 102, other than an institution 
 described in subsection (a)(1)(C) of such section).

 * * * * * * *

TITLE IV--STUDENT ASSISTANCE

 * * * * * * *

Part G--General Provisions Relating to Student Assistance Programs

 * * * * * * *

SEC. 487. PROGRAM PARTICIPATION AGREEMENTS.

 (a) Required for Programs of Assistance; Contents.--In order 
to be an eligible institution for the purposes of any program 
authorized under this title, an institution must be an 
institution of higher education or an eligible institution (as 
that term is defined for the purpose of that program) and 
shall, except with respect to a program under subpart 4 of part 
A, enter into a program participation agreement with the 
Secretary. The agreement shall condition the initial and 
continuing eligibility of an institution to participate in a 
program upon compliance with the following requirements:
 (1) The institution will use funds received by it for 
 any program under this title and any interest or other 
 earnings thereon solely for the purpose specified in 
 and in accordance with the provision of that program.
 (2) The institution shall not charge any student a 
 fee for processing or handling any application, form, 
 or data required to determine the student's eligibility 
 for assistance under this title or the amount of such 
 assistance.
 (3) The institution will establish and maintain such 
 administrative and fiscal procedures and records as may 
 be necessary to ensure proper and efficient 
 administration of funds received from the Secretary or 
 from students under this title, together with 
 assurances that the institution will provide, upon 
 request and in a timely fashion, information relating 
 to the administrative capability and financial 
 responsibility of the institution to--
 (A) the Secretary;
 (B) the appropriate guaranty agency; and
 (C) the appropriate accrediting agency or 
 association.
 (4) The institution will comply with the provisions 
 of subsection (c) of this section and the regulations 
 prescribed under that subsection, relating to fiscal 
 eligibility.
 (5) The institution will submit reports to the 
 Secretary and, in the case of an institution 
 participating in a program under part B or part E, to 
 holders of loans made to the institution's students 
 under such parts at such times and containing such 
 information as the Secretary may reasonably require to 
 carry out the purpose of this title.
 (6) The institution will not provide any student with 
 any statement or certification to any lender under part 
 B that qualifies the student for a loan or loans in 
 excess of the amount that student is eligible to borrow 
 in accordance with sections 425(a), 428(a)(2), and 
 428(b)(1) (A) and (B).
 (7) The institution will comply with the requirements 
 of section 485.
 (8) In the case of an institution that advertises job 
 placement rates as a means of attracting students to 
 enroll in the institution, the institution will make 
 available to prospective students, at or before the 
 time of application (A) the most recent available data 
 concerning employment statistics, graduation 
 statistics, and any other information necessary to 
 substantiate the truthfulness of the advertisements, 
 and (B) relevant State licensing requirements of the 
 State in which such institution is located for any job 
 for which the course of instruction is designed to 
 prepare such prospective students.
 (9) In the case of an institution participating in a 
 program under part B or D, the institution will inform 
 all eligible borrowers enrolled in the institution 
 about the availability and eligibility of such 
 borrowers for State grant assistance from the State in 
 which the institution is located, and will inform such 
 borrowers from another State of the source for further 
 information concerning such assistance from that State.
 (10) The institution certifies that it has in 
 operation a drug abuse prevention program that is 
 determined by the institution to be accessible to any 
 officer, employee, or student at the institution.
 (11) In the case of any institution whose students 
 receive financial assistance pursuant to section 
 484(d), the institution will make available to such 
 students a program proven successful in assisting 
 students in obtaining a certificate of high school 
 equivalency.
 (12) The institution certifies that--
 (A) the institution has established a campus 
 security policy; and
 (B) the institution has complied with the 
 disclosure requirements of section 485(f).
 (13) The institution will not deny any form of 
 Federal financial aid to any student who meets the 
 eligibility requirements of this title on the grounds 
 that the student is participating in a program of study 
 abroad approved for credit by the institution.
 (14)(A) The institution, in order to participate as 
 an eligible institution under part B or D, will develop 
 a Default Management Plan for approval by the Secretary 
 as part of its initial application for certification as 
 an eligible institution and will implement such Plan 
 for two years thereafter.
 (B) Any institution of higher education which changes 
 ownership and any eligible institution which changes 
 its status as a parent or subordinate institution 
 shall, in order to participate as an eligible 
 institution under part B or D, develop a Default 
 Management Plan for approval by the Secretary and 
 implement such Plan for two years after its change of 
 ownership or status.
 (C) This paragraph shall not apply in the case of an 
 institution in which (i) neither the parent nor the 
 subordinate institution has a cohort default rate in 
 excess of 10 percent, and (ii) the new owner of such 
 parent or subordinate institution does not, and has 
 not, owned any other institution with a cohort default 
 rate in excess of 10 percent.
 (15) The institution acknowledges the authority of 
 the Secretary, guaranty agencies, lenders, accrediting 
 agencies, the Secretary of Veterans Affairs, and the 
 State agencies under subpart 1 of part H to share with 
 each other any information pertaining to the 
 institution's eligibility to participate in programs 
 under this title or any information on fraud and abuse.
 (16)(A) The institution will not knowingly employ an 
 individual in a capacity that involves the 
 administration of programs under this title, or the 
 receipt of program funds under this title, who has been 
 convicted of, or has pled nolo contendere or guilty to, 
 a crime involving the acquisition, use, or expenditure 
 of funds under this title, or has been judicially 
 determined to have committed fraud involving funds 
 under this title or contract with an institution or 
 third party servicer that has been terminated under 
 section 432 involving the acquisition, use, or 
 expenditure of funds under this title, or who has been 
 judicially determined to have committed fraud involving 
 funds under this title.
 (B) The institution will not knowingly contract with 
 or employ any individual, agency, or organization that 
 has been, or whose officers or employees have been--
 (i) convicted of, or pled nolo contendere or 
 guilty to, a crime involving the acquisition, 
 use, or expenditure of funds under this title; 
 or
 (ii) judicially determined to have committed 
 fraud involving funds under this title.
 (17) The institution will complete surveys conducted 
 as a part of the Integrated Postsecondary Education 
 Data System (IPEDS) or any other Federal postsecondary 
 institution data collection effort, as designated by 
 the Secretary, in a timely manner and to the 
 satisfaction of the Secretary.
 (18) The institution will meet the requirements 
 established pursuant to section 485(g).
 (19) The institution will not impose any penalty, 
 including the assessment of late fees, the denial of 
 access to classes, libraries, or other institutional 
 facilities, or the requirement that the student borrow 
 additional funds, on any student because of the 
 student's inability to meet his or her financial 
 obligations to the institution as a result of the 
 delayed disbursement of the proceeds of a loan made 
 under this title due to compliance with the provisions 
 of this title, or delays attributable to the 
 institution.
 (20) The institution will not provide any commission, 
 bonus, or other incentive payment based directly or 
 indirectly on success in securing enrollments or 
 financial aid to any persons or entities engaged in any 
 student recruiting or admission activities or in making 
 decisions regarding the award of student financial 
 assistance, except that this paragraph shall not apply 
 to the recruitment of foreign students residing in 
 foreign countries who are not eligible to receive 
 Federal student assistance.
 (21) The institution will meet the requirements 
 established by the Secretary and accrediting agencies 
 or associations, and will provide evidence to the 
 Secretary that the institution has the authority to 
 operate within a State.
 (22) The institution will comply with the refund 
 policy established pursuant to section 484B.
 (23)(A) The institution, if located in a State to 
 which section 4(b) of the National Voter Registration 
 Act of 1993 (42 U.S.C. 1973gg-2(b)) does not apply, 
 will make a good faith effort to distribute a mail 
 voter registration form, requested and received from 
 the State, to each student enrolled in a degree or 
 certificate program and physically in attendance at the 
 institution, and to make such forms widely available to 
 students at the institution.
 (B) The institution shall request the forms from the 
 State 120 days prior to the deadline for registering to 
 vote within the State. If an institution has not 
 received a sufficient quantity of forms to fulfill this 
 section from the State within 60 days prior to the 
 deadline for registering to vote in the State, the 
 institution shall not be held liable for not meeting 
 the requirements of this section during that election 
 year.
 (C) This paragraph shall apply to general and special 
 elections for Federal office, as defined in section 
 301(3) of the Federal Election Campaign Act of 1971 (2 
 U.S.C. 431(3)), and to the elections for Governor or 
 other chief executive within such State).
 (D) The institution shall be considered in 
 compliance with the requirements of 
 subparagraph (A) for each student to whom the 
 institution electronically transmits a message 
 containing a voter registration form acceptable 
 for use in the State in which the institution 
 is located, or an Internet address where such a 
 form can be downloaded, if such information is 
 in an electronic message devoted exclusively to 
 voter registration.
 (24) In the case of a proprietary institution of 
 higher education (as defined in section 102(b)), such 
 institution will derive not less than ten percent of 
 such institution's revenues from sources other than 
 Federal funds that are disbursed or delivered to or on 
 behalf of a student to be used to attend such 
 institution (referred to in this paragraph and 
 subsection (d) as ``Federal education assistance 
 funds''), as calculated in accordance with subsection 
 (d)(1), or will be subject to the sanctions described 
 in subsection (d)(2).
 (25) In the case of an institution that participates 
 in a loan program under this title, the institution 
 will--
 (A) develop a code of conduct with respect to 
 such loans with which the institution's 
 officers, employees, and agents shall comply, 
 that--
 (i) prohibits a conflict of interest 
 with the responsibilities of an 
 officer, employee, or agent of an 
 institution with respect to such loans; 
 and
 (ii) at a minimum, includes the 
 provisions described in subsection (e);
 (B) publish such code of conduct prominently 
 on the institution's website; and
 (C) administer and enforce such code by, at a 
 minimum, requiring that all of the 
 institution's officers, employees, and agents 
 with responsibilities with respect to such 
 loans be annually informed of the provisions of 
 the code of conduct.
 (26) The institution will, upon written request, 
 disclose to the alleged victim of any crime of violence 
 (as that term is defined in section 16 of title 18, 
 United States Code), or a nonforcible sex offense, the 
 report on the results of any disciplinary proceeding 
 conducted by such institution against a student who is 
 the alleged perpetrator of such crime or offense with 
 respect to such crime or offense. If the alleged victim 
 of such crime or offense is deceased as a result of 
 such crime or offense, the next of kin of such victim 
 shall be treated as the alleged victim for purposes of 
 this paragraph.
 (27) In the case of an institution that has entered 
 into a preferred lender arrangement, the institution 
 will at least annually compile, maintain, and make 
 available for students attending the institution, and 
 the families of such students, a list, in print or 
 other medium, of the specific lenders for loans made, 
 insured, or guaranteed under this title or private 
 education loans that the institution recommends, 
 promotes, or endorses in accordance with such preferred 
 lender arrangement. In making such list, the 
 institution shall comply with the requirements of 
 subsection (h).
 (28)(A) The institution will, upon the request of an 
 applicant for a private education loan, provide to the 
 applicant the form required under section 128(e)(3) of 
 the Truth in Lending Act (15 U.S.C. 1638(e)(3)), and 
 the information required to complete such form, to the 
 extent the institution possesses such information.
 (B) For purposes of this paragraph, the term 
 ``private education loan'' has the meaning given such 
 term in section 140 of the Truth in Lending Act.
 (29) The institution certifies that the institution--
 (A) has developed plans to effectively combat 
 the unauthorized distribution of copyrighted 
 material, including through the use of a 
 variety of technology-based deterrents; and
 (B) will, to the extent practicable, offer 
 alternatives to illegal downloading or peer-to-
 peer distribution of intellectual property, as 
 determined by the institution in consultation 
 with the chief technology officer or other 
 designated officer of the institution.
 (30)(A) An institution will comply with the 
 requirements of sections 117, 117A, 117B, 117C, and 
 117D(c).
 (B) In the case of an institution described in 
 subparagraph (C), the institution will--
 (i) be ineligible to participate in the 
 programs authorized by this title for a period 
 of not less than 2 institutional fiscal years; 
 and
 (ii) in order to regain eligibility to 
 participate in such programs, demonstrate 
 compliance with all requirements of each such 
 section for not less than 2 institutional 
 fiscal years after the institutional fiscal 
 year in which such institution became 
 ineligible.
 (C) An institution described in this subparagraph is 
 an institution that--
 (i) has been subject to 3 separate civil 
 actions described in section 117D(a)(2) that 
 have each resulted in the institution being 
 compelled to comply with one or more 
 requirements of section 117, 117A, 117B, 117C, 
 or 117D(c); and
 (ii) pursuant to section 117D(a)(4)(E), is 
 prohibited from obtaining a waiver, or a 
 renewal of a waiver, under section 117A.
 (b) Hearings.--(1) An institution that has received written 
notice of a final audit or program review determination and 
that desires to have such determination reviewed by the 
Secretary shall submit to the Secretary a written request for 
review not later than 45 days after receipt of notification of 
the final audit or program review determination.
 (2) The Secretary shall, upon receipt of written notice under 
paragraph (1), arrange for a hearing and notify the institution 
within 30 days of receipt of such notice the date, time, and 
place of such hearing. Such hearing shall take place not later 
than 120 days from the date upon which the Secretary notifies 
the institution.
 (c) Audits; Financial Responsibility; Enforcement of 
Standards.--(1) Notwithstanding any other provisions of this 
title, the Secretary shall prescribe such regulations as may be 
necessary to provide for--
 (A)(i) except as provided in clauses (ii) and (iii), 
 a financial audit of an eligible institution with 
 regard to the financial condition of the institution in 
 its entirety, and a compliance audit of such 
 institution with regard to any funds obtained by it 
 under this title or obtained from a student or a parent 
 who has a loan insured or guaranteed by the Secretary 
 under this title, on at least an annual basis and 
 covering the period since the most recent audit, 
 conducted by a qualified, independent organization or 
 person in accordance with standards established by the 
 Comptroller General for the audit of governmental 
 organizations, programs, and functions, and as 
 prescribed in regulations of the Secretary, the results 
 of which shall be submitted to the Secretary and shall 
 be available to cognizant guaranty agencies, eligible 
 lenders, State agencies, and the appropriate State 
 agency notifying the Secretary under subpart 1 of part 
 H, except that the Secretary may modify the 
 requirements of this clause with respect to 
 institutions of higher education that are foreign 
 institutions, and may waive such requirements with 
 respect to a foreign institution whose students receive 
 less than $500,000 in loans under this title during the 
 award year preceding the audit period;
 (ii) with regard to an eligible institution which is 
 audited under chapter 75 of title 31, United States 
 Code, deeming such audit to satisfy the requirements of 
 clause (i) for the period covered by such audit; or
 (iii) at the discretion of the Secretary, with regard 
 to an eligible institution (other than an eligible 
 institution described in section 102(a)(1)(C)) that has 
 obtained less than $200,000 in funds under this title 
 during each of the 2 award years that precede the audit 
 period and submits a letter of credit payable to the 
 Secretary equal to not less than \1/2\ of the annual 
 potential liabilities of such institution as determined 
 by the Secretary, deeming an audit conducted every 3 
 years to satisfy the requirements of clause (i), except 
 for the award year immediately preceding renewal of the 
 institution's eligibility under section 498(g);
 (B) in matters not governed by specific program 
 provisions, the establishment of reasonable standards 
 of financial responsibility and appropriate 
 institutional capability for the administration by an 
 eligible institution of a program of student financial 
 aid under this title, including any matter the 
 Secretary deems necessary to the sound administration 
 of the financial aid programs, such as the pertinent 
 actions of any owner, shareholder, or person exercising 
 control over an eligible institution;
 (C)(i) except as provided in clause (ii), a 
 compliance audit of a third party servicer (other than 
 with respect to the servicer's functions as a lender if 
 such functions are otherwise audited under this part 
 and such audits meet the requirements of this clause), 
 with regard to any contract with an eligible 
 institution, guaranty agency, or lender for 
 administering or servicing any aspect of the student 
 assistance programs under this title, at least once 
 every year and covering the period since the most 
 recent audit, conducted by a qualified, independent 
 organization or person in accordance with standards 
 established by the Comptroller General for the audit of 
 governmental organizations, programs, and functions, 
 and as prescribed in regulations of the Secretary, the 
 results of which shall be submitted to the Secretary; 
 or
 (ii) with regard to a third party servicer that is 
 audited under chapter 75 of title 31, United States 
 Code, such audit shall be deemed to satisfy the 
 requirements of clause (i) for the period covered by 
 such audit;
 (D)(i) a compliance audit of a secondary market with 
 regard to its transactions involving, and its servicing 
 and collection of, loans made under this title, at 
 least once a year and covering the period since the 
 most recent audit, conducted by a qualified, 
 independent organization or person in accordance with 
 standards established by the Comptroller General for 
 the audit of governmental organizations, programs, and 
 functions, and as prescribed in regulations of the 
 Secretary, the results of which shall be submitted to 
 the Secretary; or
 (ii) with regard to a secondary market that is 
 audited under chapter 75 of title 31, United States 
 Code, such audit shall be deemed to satisfy the 
 requirements of clause (i) for the period covered by 
 the audit;
 (E) the establishment, by each eligible institution 
 under part B responsible for furnishing to the lender 
 the statement required by section 428(a)(2)(A)(i), of 
 policies and procedures by which the latest known 
 address and enrollment status of any student who has 
 had a loan insured under this part and who has either 
 formally terminated his enrollment, or failed to re-
 enroll on at least a half-time basis, at such 
 institution, shall be furnished either to the holder 
 (or if unknown, the insurer) of the note, not later 
 than 60 days after such termination or failure to re-
 enroll;
 (F) the limitation, suspension, or termination of the 
 participation in any program under this title of an 
 eligible institution, or the imposition of a civil 
 penalty under paragraph (3)(B) whenever the Secretary 
 has determined, after reasonable notice and opportunity 
 for hearing, that such institution has violated or 
 failed to carry out any provision of this title, any 
 regulation prescribed under this title, or any 
 applicable special arrangement, agreement, or 
 limitation, except that no period of suspension under 
 this section shall exceed 60 days unless the 
 institution and the Secretary agree to an extension or 
 unless limitation or termination proceedings are 
 initiated by the Secretary within that period of time;
 (G) an emergency action against an institution, under 
 which the Secretary shall, effective on the date on 
 which a notice and statement of the basis of the action 
 is mailed to the institution (by registered mail, 
 return receipt requested), withhold funds from the 
 institution or its students and withdraw the 
 institution's authority to obligate funds under any 
 program under this title, if the Secretary--
 (i) receives information, determined by the 
 Secretary to be reliable, that the institution 
 is violating any provision of this title, any 
 regulation prescribed under this title, or any 
 applicable special arrangement, agreement, or 
 limitation,
 (ii) determines that immediate action is 
 necessary to prevent misuse of Federal funds, 
 and
 (iii) determines that the likelihood of loss 
 outweighs the importance of the procedures 
 prescribed under subparagraph (D) for 
 limitation, suspension, or termination,
 except that an emergency action shall not exceed 30 
 days unless limitation, suspension, or termination 
 proceedings are initiated by the Secretary against the 
 institution within that period of time, and except that 
 the Secretary shall provide the institution an 
 opportunity to show cause, if it so requests, that the 
 emergency action is unwarranted;
 (H) the limitation, suspension, or termination of the 
 eligibility of a third party servicer to contract with 
 any institution to administer any aspect of an 
 institution's student assistance program under this 
 title, or the imposition of a civil penalty under 
 paragraph (3)(B), whenever the Secretary has 
 determined, after reasonable notice and opportunity for 
 a hearing, that such organization, acting on behalf of 
 an institution, has violated or failed to carry out any 
 provision of this title, any regulation prescribed 
 under this title, or any applicable special 
 arrangement, agreement, or limitation, except that no 
 period of suspension under this subparagraph shall 
 exceed 60 days unless the organization and the 
 Secretary agree to an extension, or unless limitation 
 or termination proceedings are initiated by the 
 Secretary against the individual or organization within 
 that period of time; and
 (I) an emergency action against a third party 
 servicer that has contracted with an institution to 
 administer any aspect of the institution's student 
 assistance program under this title, under which the 
 Secretary shall, effective on the date on which a 
 notice and statement of the basis of the action is 
 mailed to such individual or organization (by 
 registered mail, return receipt requested), withhold 
 funds from the individual or organization and withdraw 
 the individual or organization's authority to act on 
 behalf of an institution under any program under this 
 title, if the Secretary--
 (i) receives information, determined by the 
 Secretary to be reliable, that the individual 
 or organization, acting on behalf of an 
 institution, is violating any provision of this 
 title, any regulation prescribed under this 
 title, or any applicable special arrangement, 
 agreement, or limitation,
 (ii) determines that immediate action is 
 necessary to prevent misuse of Federal funds, 
 and
 (iii) determines that the likelihood of loss 
 outweighs the importance of the procedures 
 prescribed under subparagraph (F), for 
 limitation, suspension, or termination,
 except that an emergency action shall not exceed 30 
 days unless the limitation, suspension, or termination 
 proceedings are initiated by the Secretary against the 
 individual or organization within that period of time, 
 and except that the Secretary shall provide the 
 individual or organization an opportunity to show 
 cause, if it so requests, that the emergency action is 
 unwarranted.
 (2) If an individual who, or entity that, exercises 
substantial control, as determined by the Secretary in 
accordance with the definition of substantial control in 
subpart 3 of part H, over one or more institutions 
participating in any program under this title, or, for purposes 
of paragraphs (1) (H) and (I), over one or more organizations 
that contract with an institution to administer any aspect of 
the institution's student assistance program under this title, 
is determined to have committed one or more violations of the 
requirements of any program under this title, or has been 
suspended or debarred in accordance with the regulations of the 
Secretary, the Secretary may use such determination, 
suspension, or debarment as the basis for imposing an emergency 
action on, or limiting, suspending, or terminating, in a single 
proceeding, the participation of any or all institutions under 
the substantial control of that individual or entity.
 (3)(A) Upon determination, after reasonable notice and 
opportunity for a hearing, that an eligible institution has 
engaged in substantial misrepresentation of the nature of its 
educational program, its financial charges, or the 
employability of its graduates, the Secretary may suspend or 
terminate the eligibility status for any or all programs under 
this title of any otherwise eligible institution, in accordance 
with procedures specified in paragraph (1)(D) of this 
subsection, until the Secretary finds that such practices have 
been corrected.
 (B)(i) Upon determination, after reasonable notice and 
opportunity for a hearing, that an eligible institution--
 (I) has violated or failed to carry out any provision 
 of this title or any regulation prescribed under this 
 title; or
 (II) has engaged in substantial misrepresentation of 
 the nature of its educational program, its financial 
 charges, and the employability of its graduates,
the Secretary may impose a civil penalty upon such institution 
of not to exceed $25,000 for each violation or 
misrepresentation.
 (ii) Any civil penalty may be compromised by the Secretary. 
In determining the amount of such penalty, or the amount agreed 
upon in compromise, the appropriateness of the penalty to the 
size of the institution of higher education subject to the 
determination, and the gravity of the violation, failure, or 
misrepresentation shall be considered. The amount of such 
penalty, when finally determined, or the amount agreed upon in 
compromise, may be deducted from any sums owing by the United 
States to the institution charged.
 (4) The Secretary shall publish a list of State agencies 
which the Secretary determines to be reliable authority as to 
the quality of public postsecondary vocational education in 
their respective States for the purpose of determining 
eligibility for all Federal student assistance programs.
 (5) The Secretary shall make readily available to appropriate 
guaranty agencies, eligible lenders, State agencies notifying 
the Secretary under subpart 1 of part H, and accrediting 
agencies or associations the results of the audits of eligible 
institutions conducted pursuant to paragraph (1)(A).
 (6) The Secretary is authorized to provide any information 
collected as a result of audits conducted under this section, 
together with audit information collected by guaranty agencies, 
to any Federal or State agency having responsibilities with 
respect to student financial assistance, including those 
referred to in subsection (a)(15) of this section.
 (7) Effective with respect to any audit conducted under this 
subsection after December 31, 1988, if, in the course of 
conducting any such audit, the personnel of the Department of 
Education discover, or are informed of, grants or other 
assistance provided by an institution in accordance with this 
title for which the institution has not received funds 
appropriated under this title (in the amount necessary to 
provide such assistance), including funds for which 
reimbursement was not requested prior to such discovery or 
information, such institution shall be permitted to offset that 
amount against any sums determined to be owed by the 
institution pursuant to such audit, or to receive reimbursement 
for that amount (if the institution does not owe any such 
sums).
 (d) Implementation of Non-Federal Revenue Requirement.--
 (1) Calculation.--In making calculations under 
 subsection (a)(24), a proprietary institution of higher 
 education shall--
 (A) use the cash basis of accounting, except 
 in the case of loans described in subparagraph 
 (D)(i) that are made by the proprietary 
 institution of higher education;
 (B) consider as revenue only those funds 
 generated by the institution from--
 (i) tuition, fees, and other 
 institutional charges for students 
 enrolled in programs eligible for 
 assistance under this title;
 (ii) activities conducted by the 
 institution that are necessary for the 
 education and training of the 
 institution's students, if such 
 activities are--
 (I) conducted on campus or at 
 a facility under the control of 
 the institution;
 (II) performed under the 
 supervision of a member of the 
 institution's faculty; and
 (III) required to be 
 performed by all students in a 
 specific educational program at 
 the institution; and
 (iii) funds paid by a student, or on 
 behalf of a student by a party other 
 than the institution, for an education 
 or training program that is not 
 eligible for funds under this title, if 
 the program--
 (I) is approved or licensed 
 by the appropriate State 
 agency;
 (II) is accredited by an 
 accrediting agency recognized 
 by the Secretary; or
 (III) provides an industry-
 recognized credential or 
 certification;
 (C) presume that any Federal education 
 assistance funds that are disbursed or 
 delivered to or on behalf of a student will be 
 used to pay the student's tuition, fees, or 
 other institutional charges, regardless of 
 whether the institution credits those funds to 
 the student's account or pays those funds 
 directly to the student, except to the extent 
 that the student's tuition, fees, or other 
 institutional charges are satisfied by--
 (i) grant funds provided by non-
 Federal public agencies or private 
 sources independent of the institution;
 (ii) funds provided under a 
 contractual arrangement with a Federal, 
 State, or local government agency for 
 the purpose of providing job training 
 to low-income individuals who are in 
 need of that training;
 (iii) funds used by a student from 
 savings plans for educational expenses 
 established by or on behalf of the 
 student and which qualify for special 
 tax treatment under the Internal 
 Revenue Code of 1986; or
 (iv) institutional scholarships 
 described in subparagraph (D)(iii);
 (D) include institutional aid as revenue to 
 the school only as follows:
 (i) in the case of loans made by a 
 proprietary institution of higher 
 education on or after July 1, 2008 and 
 prior to July 1, 2012, the net present 
 value of such loans made by the 
 institution during the applicable 
 institutional fiscal year accounted for 
 on an accrual basis and estimated in 
 accordance with generally accepted 
 accounting principles and related 
 standards and guidance, if the loans--
 (I) are bona fide as 
 evidenced by enforceable 
 promissory notes;
 (II) are issued at intervals 
 related to the institution's 
 enrollment periods; and
 (III) are subject to regular 
 loan repayments and 
 collections;
 (ii) in the case of loans made by a 
 proprietary institution of higher 
 education on or after July 1, 2012, 
 only the amount of loan repayments 
 received during the applicable 
 institutional fiscal year, excluding 
 repayments on loans made and accounted 
 for as specified in clause (i); and
 (iii) in the case of scholarships 
 provided by a proprietary institution 
 of higher education, only those 
 scholarships provided by the 
 institution in the form of monetary aid 
 or tuition discounts based upon the 
 academic achievements or financial need 
 of students, disbursed during each 
 fiscal year from an established 
 restricted account, and only to the 
 extent that funds in that account 
 represent designated funds from an 
 outside source or from income earned on 
 those funds;
 (E) in the case of each student who receives 
 a loan on or after July 1, 2008, and prior to 
 July 1, 2011, that is authorized under section 
 428H or that is a Federal Direct Unsubsidized 
 Stafford Loan, treat as revenue received by the 
 institution from sources other than funds 
 received under this title, the amount by which 
 the disbursement of such loan received by the 
 institution exceeds the limit on such loan in 
 effect on the day before the date of enactment 
 of the Ensuring Continued Access to Student 
 Loans Act of 2008; and
 (F) exclude from revenues--
 (i) the amount of funds the 
 institution received under part C, 
 unless the institution used those funds 
 to pay a student's institutional 
 charges;
 (ii) the amount of funds the 
 institution received under subpart 4 of 
 part A;
 (iii) the amount of funds provided by 
 the institution as matching funds for a 
 program under this title;
 (iv) the amount of funds provided by 
 the institution for a program under 
 this title that are required to be 
 refunded or returned; and
 (v) the amount charged for books, 
 supplies, and equipment, unless the 
 institution includes that amount as 
 tuition, fees, or other institutional 
 charges.
 (2) Sanctions.--
 (A) Ineligibility.--A proprietary institution 
 of higher education that fails to meet a 
 requirement of subsection (a)(24) for two 
 consecutive institutional fiscal years shall be 
 ineligible to participate in the programs 
 authorized by this title for a period of not 
 less than two institutional fiscal years. To 
 regain eligibility to participate in the 
 programs authorized by this title, a 
 proprietary institution of higher education 
 shall demonstrate compliance with all 
 eligibility and certification requirements 
 under section 498 for a minimum of two 
 institutional fiscal years after the 
 institutional fiscal year in which the 
 institution became ineligible.
 (B) Additional enforcement.--In addition to 
 such other means of enforcing the requirements 
 of this title as may be available to the 
 Secretary, if a proprietary institution of 
 higher education fails to meet a requirement of 
 subsection (a)(24) for any institutional fiscal 
 year, then the institution's eligibility to 
 participate in the programs authorized by this 
 title becomes provisional for the two 
 institutional fiscal years after the 
 institutional fiscal year in which the 
 institution failed to meet the requirement of 
 subsection (a)(24), except that such 
 provisional eligibility shall terminate--
 (i) on the expiration date of the 
 institution's program participation 
 agreement under this subsection that is 
 in effect on the date the Secretary 
 determines that the institution failed 
 to meet the requirement of subsection 
 (a)(24); or
 (ii) in the case that the Secretary 
 determines that the institution failed 
 to meet a requirement of subsection 
 (a)(24) for two consecutive 
 institutional fiscal years, on the date 
 the institution is determined 
 ineligible in accordance with 
 subparagraph (A).
 (3) Publication on college navigator website.--The 
 Secretary shall publicly disclose on the College 
 Navigator website--
 (A) the identity of any proprietary 
 institution of higher education that fails to 
 meet a requirement of subsection (a)(24); and
 (B) the extent to which the institution 
 failed to meet such requirement.
 (4) Report to congress.--Not later than July 1, 2009, 
 and July 1 of each succeeding year, the Secretary shall 
 submit to the authorizing committees a report that 
 contains, for each proprietary institution of higher 
 education that receives assistance under this title, as 
 provided in the audited financial statements submitted 
 to the Secretary by each institution pursuant to the 
 requirements of subsection (a)(24)--
 (A) the amount and percentage of such 
 institution's revenues received from sources 
 under this title; and
 (B) the amount and percentage of such 
 institution's revenues received from other 
 sources.
 (e) Code of Conduct Requirements.--An institution of higher 
education's code of conduct, as required under subsection 
(a)(25), shall include the following requirements:
 (1) Ban on revenue-sharing arrangements.--
 (A) Prohibition.--The institution shall not 
 enter into any revenue-sharing arrangement with 
 any lender.
 (B) Definition.--For purposes of this 
 paragraph, the term ``revenue-sharing 
 arrangement'' means an arrangement between an 
 institution and a lender under which--
 (i) a lender provides or issues a 
 loan that is made, insured, or 
 guaranteed under this title to students 
 attending the institution or to the 
 families of such students; and
 (ii) the institution recommends the 
 lender or the loan products of the 
 lender and in exchange, the lender pays 
 a fee or provides other material 
 benefits, including revenue or profit 
 sharing, to the institution, an officer 
 or employee of the institution, or an 
 agent.
 (2) Gift ban.--
 (A) Prohibition.--No officer or employee of 
 the institution who is employed in the 
 financial aid office of the institution or who 
 otherwise has responsibilities with respect to 
 education loans, or agent who has 
 responsibilities with respect to education 
 loans, shall solicit or accept any gift from a 
 lender, guarantor, or servicer of education 
 loans.
 (B) Definition of gift.--
 (i) In general.--In this paragraph, 
 the term ``gift'' means any gratuity, 
 favor, discount, entertainment, 
 hospitality, loan, or other item having 
 a monetary value of more than a de 
 minimus amount. The term includes a 
 gift of services, transportation, 
 lodging, or meals, whether provided in 
 kind, by purchase of a ticket, payment 
 in advance, or reimbursement after the 
 expense has been incurred.
 (ii) Exceptions.--The term ``gift'' 
 shall not include any of the following:
 (I) Standard material, 
 activities, or programs on 
 issues related to a loan, 
 default aversion, default 
 prevention, or financial 
 literacy, such as a brochure, a 
 workshop, or training.
 (II) Food, refreshments, 
 training, or informational 
 material furnished to an 
 officer or employee of an 
 institution, or to an agent, as 
 an integral part of a training 
 session that is designed to 
 improve the service of a 
 lender, guarantor, or servicer 
 of education loans to the 
 institution, if such training 
 contributes to the professional 
 development of the officer, 
 employee, or agent.
 (III) Favorable terms, 
 conditions, and borrower 
 benefits on an education loan 
 provided to a student employed 
 by the institution if such 
 terms, conditions, or benefits 
 are comparable to those 
 provided to all students of the 
 institution.
 (IV) Entrance and exit 
 counseling services provided to 
 borrowers to meet the 
 institution's responsibilities 
 for entrance and exit 
 counseling as required by 
 subsections (b) and (l) of 
 section 485, as long as--
 (aa) the 
 institution's staff are 
 in control of the 
 counseling, (whether in 
 person or via 
 electronic 
 capabilities); and
 (bb) such counseling 
 does not promote the 
 products or services of 
 any specific lender.
 (V) Philanthropic 
 contributions to an institution 
 from a lender, servicer, or 
 guarantor of education loans 
 that are unrelated to education 
 loans or any contribution from 
 any lender, guarantor, or 
 servicer that is not made in 
 exchange for any advantage 
 related to education loans.
 (VI) State education grants, 
 scholarships, or financial aid 
 funds administered by or on 
 behalf of a State.
 (iii) Rule for gifts to family 
 members.--For purposes of this 
 paragraph, a gift to a family member of 
 an officer or employee of an 
 institution, to a family member of an 
 agent, or to any other individual based 
 on that individual's relationship with 
 the officer, employee, or agent, shall 
 be considered a gift to the officer, 
 employee, or agent if--
 (I) the gift is given with 
 the knowledge and acquiescence 
 of the officer, employee, or 
 agent; and
 (II) the officer, employee, 
 or agent has reason to believe 
 the gift was given because of 
 the official position of the 
 officer, employee, or agent.
 (3) Contracting arrangements prohibited.--
 (A) Prohibition.--An officer or employee who 
 is employed in the financial aid office of the 
 institution or who otherwise has 
 responsibilities with respect to education 
 loans, or an agent who has responsibilities 
 with respect to education loans, shall not 
 accept from any lender or affiliate of any 
 lender any fee, payment, or other financial 
 benefit (including the opportunity to purchase 
 stock) as compensation for any type of 
 consulting arrangement or other contract to 
 provide services to a lender or on behalf of a 
 lender relating to education loans.
 (B) Exceptions.--Nothing in this subsection 
 shall be construed as prohibiting--
 (i) an officer or employee of an 
 institution who is not employed in the 
 institution's financial aid office and 
 who does not otherwise have 
 responsibilities with respect to 
 education loans, or an agent who does 
 not have responsibilities with respect 
 to education loans, from performing 
 paid or unpaid service on a board of 
 directors of a lender, guarantor, or 
 servicer of education loans;
 (ii) an officer or employee of the 
 institution who is not employed in the 
 institution's financial aid office but 
 who has responsibility with respect to 
 education loans as a result of a 
 position held at the institution, or an 
 agent who has responsibility with 
 respect to education loans, from 
 performing paid or unpaid service on a 
 board of directors of a lender, 
 guarantor, or servicer of education 
 loans, if the institution has a written 
 conflict of interest policy that 
 clearly sets forth that officers, 
 employees, or agents must recuse 
 themselves from participating in any 
 decision of the board regarding 
 education loans at the institution; or
 (iii) an officer, employee, or 
 contractor of a lender, guarantor, or 
 servicer of education loans from 
 serving on a board of directors, or 
 serving as a trustee, of an 
 institution, if the institution has a 
 written conflict of interest policy 
 that the board member or trustee must 
 recuse themselves from any decision 
 regarding education loans at the 
 institution.
 (4) Interaction with borrowers.--The institution 
 shall not--
 (A) for any first-time borrower, assign, 
 through award packaging or other methods, the 
 borrower's loan to a particular lender; or
 (B) refuse to certify, or delay certification 
 of, any loan based on the borrower's selection 
 of a particular lender or guaranty agency.
 (5) Prohibition on offers of funds for private 
 loans.--
 (A) Prohibition.--The institution shall not 
 request or accept from any lender any offer of 
 funds to be used for private education loans 
 (as defined in section 140 of the Truth in 
 Lending Act), including funds for an 
 opportunity pool loan, to students in exchange 
 for the institution providing concessions or 
 promises regarding providing the lender with--
 (i) a specified number of loans made, 
 insured, or guaranteed under this 
 title;
 (ii) a specified loan volume of such 
 loans; or
 (iii) a preferred lender arrangement 
 for such loans.
 (B) Definition of opportunity pool loan.--In 
 this paragraph, the term ``opportunity pool 
 loan'' means a private education loan made by a 
 lender to a student attending the institution 
 or the family member of such a student that 
 involves a payment, directly or indirectly, by 
 such institution of points, premiums, 
 additional interest, or financial support to 
 such lender for the purpose of such lender 
 extending credit to the student or the family.
 (6) Ban on staffing assistance.--
 (A) Prohibition.--The institution shall not 
 request or accept from any lender any 
 assistance with call center staffing or 
 financial aid office staffing.
 (B) Certain assistance permitted.--Nothing in 
 paragraph (1) shall be construed to prohibit 
 the institution from requesting or accepting 
 assistance from a lender related to--
 (i) professional development training 
 for financial aid administrators;
 (ii) providing educational counseling 
 materials, financial literacy 
 materials, or debt management materials 
 to borrowers, provided that such 
 materials disclose to borrowers the 
 identification of any lender that 
 assisted in preparing or providing such 
 materials; or
 (iii) staffing services on a short-
 term, nonrecurring basis to assist the 
 institution with financial aid-related 
 functions during emergencies, including 
 State-declared or federally declared 
 natural disasters, federally declared 
 national disasters, and other localized 
 disasters and emergencies identified by 
 the Secretary.
 (7) Advisory board compensation.--Any employee who is 
 employed in the financial aid office of the 
 institution, or who otherwise has responsibilities with 
 respect to education loans or other student financial 
 aid of the institution, and who serves on an advisory 
 board, commission, or group established by a lender, 
 guarantor, or group of lenders or guarantors, shall be 
 prohibited from receiving anything of value from the 
 lender, guarantor, or group of lenders or guarantors, 
 except that the employee may be reimbursed for 
 reasonable expenses incurred in serving on such 
 advisory board, commission, or group.
 (f) Institutional Requirements for Teach-Outs.--
 (1) In general.--In the event the Secretary initiates 
 the limitation, suspension, or termination of the 
 participation of an institution of higher education in 
 any program under this title under the authority of 
 subsection (c)(1)(F) or initiates an emergency action 
 under the authority of subsection (c)(1)(G) and its 
 prescribed regulations, the Secretary shall require 
 that institution to prepare a teach-out plan for 
 submission to the institution's accrediting agency or 
 association in compliance with section 496(c)(3), the 
 Secretary's regulations on teach-out plans, and the 
 standards of the institution's accrediting agency or 
 association.
 (2) Teach-out plan defined.--In this subsection, the 
 term ``teach-out plan'' means a written plan that 
 provides for the equitable treatment of students if an 
 institution of higher education ceases to operate 
 before all students have completed their program of 
 study, and may include, if required by the 
 institution's accrediting agency or association, an 
 agreement between institutions for such a teach-out 
 plan.
 (g) Inspector General Report on Gift Ban Violations.--The 
Inspector General of the Department shall--
 (1) submit an annual report to the authorizing 
 committees identifying all violations of an 
 institution's code of conduct that the Inspector 
 General has substantiated during the preceding year 
 relating to the gift ban provisions described in 
 subsection (e)(2); and
 (2) make the report available to the public through 
 the Department's website.
 (h) Preferred Lender List Requirements.--
 (1) In general.--In compiling, maintaining, and 
 making available a preferred lender list as required 
 under subsection (a)(27), the institution will--
 (A) clearly and fully disclose on such 
 preferred lender list--
 (i) not less than the information 
 required to be disclosed under section 
 153(a)(2)(A);
 (ii) why the institution has entered 
 into a preferred lender arrangement 
 with each lender on the preferred 
 lender list, particularly with respect 
 to terms and conditions or provisions 
 favorable to the borrower; and
 (iii) that the students attending the 
 institution, or the families of such 
 students, do not have to borrow from a 
 lender on the preferred lender list;
 (B) ensure, through the use of the list of 
 lender affiliates provided by the Secretary 
 under paragraph (2), that--
 (i) there are not less than three 
 lenders of loans made under part B that 
 are not affiliates of each other 
 included on the preferred lender list 
 and, if the institution recommends, 
 promotes, or endorses private education 
 loans, there are not less than two 
 lenders of private education loans that 
 are not affiliates of each other 
 included on the preferred lender list; 
 and
 (ii) the preferred lender list under 
 this paragraph--
 (I) specifically indicates, 
 for each listed lender, whether 
 the lender is or is not an 
 affiliate of each other lender 
 on the preferred lender list; 
 and
 (II) if a lender is an 
 affiliate of another lender on 
 the preferred lender list, 
 describes the details of such 
 affiliation;
 (C) prominently disclose the method and 
 criteria used by the institution in selecting 
 lenders with which to enter into preferred 
 lender arrangements to ensure that such lenders 
 are selected on the basis of the best interests 
 of the borrowers, including--
 (i) payment of origination or other 
 fees on behalf of the borrower;
 (ii) highly competitive interest 
 rates, or other terms and conditions or 
 provisions of loans under this title or 
 private education loans;
 (iii) high-quality servicing for such 
 loans; or
 (iv) additional benefits beyond the 
 standard terms and conditions or 
 provisions for such loans;
 (D) exercise a duty of care and a duty of 
 loyalty to compile the preferred lender list 
 under this paragraph without prejudice and for 
 the sole benefit of the students attending the 
 institution, or the families of such students;
 (E) not deny or otherwise impede the 
 borrower's choice of a lender or cause 
 unnecessary delay in loan certification under 
 this title for those borrowers who choose a 
 lender that is not included on the preferred 
 lender list; and
 (F) comply with such other requirements as 
 the Secretary may prescribe by regulation.
 (2) Lender affiliates list.--
 (A) In general.--The Secretary shall maintain 
 and regularly update a list of lender 
 affiliates of all eligible lenders, and shall 
 provide such list to institutions for use in 
 carrying out paragraph (1)(B).
 (B) Use of most recent list.--An institution 
 shall use the most recent list of lender 
 affiliates provided by the Secretary under 
 subparagraph (A) in carrying out paragraph 
 (1)(B).
 (i) Definitions.--For the purpose of this section:
 (1) Agent.--The term ``agent'' has the meaning given 
 the term in section 151.
 (2) Affiliate.--The term ``affiliate'' means a person 
 that controls, is controlled by, or is under common 
 control with another person. A person controls, is 
 controlled by, or is under common control with another 
 person if--
 (A) the person directly or indirectly, or 
 acting through one or more others, owns, 
 controls, or has the power to vote five percent 
 or more of any class of voting securities of 
 such other person;
 (B) the person controls, in any manner, the 
 election of a majority of the directors or 
 trustees of such other person; or
 (C) the Secretary determines (after notice 
 and opportunity for a hearing) that the person 
 directly or indirectly exercises a controlling 
 interest over the management or policies of 
 such other person's education loans.
 (3) Education loan.--The term ``education loan'' has 
 the meaning given the term in section 151.
 (4) Eligible institution.--The term ``eligible 
 institution'' means any such institution described in 
 section 102 of this Act.
 (5) Officer.--The term ``officer'' has the meaning 
 given the term in section 151.
 (6) Preferred lender arrangement.--The term 
 ``preferred lender arrangement'' has the meaning given 
 the term in section 151.
 (j) Construction.--Nothing in the amendments made by the 
Higher Education Amendments of 1992 shall be construed to 
prohibit an institution from recording, at the cost of the 
institution, a hearing referred to in subsection (b)(2), 
subsection (c)(1)(D), or subparagraph (A) or (B)(i) of 
subsection (c)(2), of this section to create a record of the 
hearing, except the unavailability of a recording shall not 
serve to delay the completion of the proceeding. The Secretary 
shall allow the institution to use any reasonable means, 
including stenographers, of recording the hearing.

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