HR 6472 — Territorial Student Access to Higher Education Act

changes in existing law made by 
the bill, as reported, are shown as follows (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 C--COST OF HIGHER EDUCATION

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SEC. 135A. IN-STATE TUITION RATES FOR CERTAIN RESIDENTS OF GUAM, THE 
 COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS, 
 AMERICAN SAMOA, AND THE UNITED STATES VIRGIN 
 ISLANDS.

 (a) In General.--A public institution of higher education 
that receives assistance under this Act shall not charge a 
covered individual tuition or fees for attendance at such 
institution at a rate that is greater than the rate charged for 
residents of the State in which such institution is located.
 (b) Covered Individual.--In this section, the term ``covered 
individual'' means an individual who--
 (1) is a resident of Guam, the Commonwealth of the 
 Northern Mariana Islands, American Samoa, or the United 
 States Virgin Islands; and
 (2) is a national of the United States (as such term 
 is defined in section 101(a) of the Immigration and 
 Nationality Act (8 U.S.C. 1101(a))).

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 TITLE IV--STUDENT ASSISTANCE

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Part G--General Provisions Relating to Student Assistance Programs

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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) The institution will comply with the 
 requirements of section 135A, as applicable.
 (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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