,i  #aacth ,,congress  #b;d ,session    
,h4 ,r4 #eefe  ,,in ,,the ,,house ,,of  
,,representatives  ,september #ah1 #bjad
 ,mr4 ,carney introduced the following  
bill2 which was referred to the         
,committee on ,education and the        
,workforce  ,a ,,bill  ,to provide for  
institutional risk-sharing in the       
,federal student loan programs4  #a4    
,short title ,this ,act may be cited as 
the ,protect ,student ,borrowers ,act4  
#b4 ,purpose ,the purpose of this ,act  
is to protect student borrowers by      
requiring institutions of higher        
education to assume some of the risk of 
default for student loans under part ,d 
of title ,,iv of the ,higher ,education 
,act of #aife 7#bj ,u4,s4,c4 #ajhg;a et 
seq474  #c4 ,institutional rebates to   
the ,department of ,education for       
defaulted loans ,section #ded of the    
,higher ,education ,act of #aifd 7#bj   
,u4,s4,c4 #ajhg;d7 is amended--  7#a7 in
 subsection 7a7--  7,a7 in paragraph    
7#e71 by striking and2  7,b7 in         

paragraph 7#f7 by striking the period at
 the end and inserting 2 and2 and  7,c7 
by adding at the end the following3     
7#g7 provide that the institution       
accepts the institutional risk-sharing  
requirements under subsection 7d71 if   
applicable4  2 and  7#b7 by adding at   
the end the following3  7d7             
,institutional risk-,sharing for student
 loan defaults  7#a7 ,in general        
,subject to paragraph 7#c71 each        
institution of higher education         
participating in the direct student loan
 program under this part for a fiscal   
year that has a rate of participation in
 such program for all students enrolled 
at that institution for such fiscal year
 that is #be percent or higher shall    
remit1 at such times as the ,secretary  
may specify1 a risk-sharing payment     
based on a percentage of the volume of  
student loans under this part that are  
in default1 as determined under         
paragraph 7#b74  7#b7 ,determination of 
risk-sharing payments ,subject to       

paragraph 7#c71 with respect to each    
fiscal year1 an institution of higher   
education described in paragraph 7#a7   
that has a cohort default rate 7as      
defined in section #dce7m77--  7,a7 that
 is #cj percent or higher for the most  
recent fiscal year for which data are   
available1 shall pay to the ,secretary  
for the fiscal year an amount that is   
equal to #bj percent of the total amount
 7including interest and collection     
fees7 of loans made under this part to  
students that are in default2  7,b7 that
 is lower than #cj percent but not lower
 than #be percent for the most recent   
fiscal year for which data are          
available1 shall pay to the ,secretary  
for the fiscal year an amount that is   
equal to #ae percent of the total amount
 7including interest and collection     
fees7 of loans made under this part to  
students that are in default2  7,c7 that
 is lower than #be percent but not lower
 than #bj percent for the most recent   
fiscal year for which data are          

available1 shall pay to the ,secretary  
for the fiscal year an amount that is   
equal to #aj percent of the total amount
 7including interest and collection     
fees7 of loans made under this part to  
students that are in default2 and  7,d7 
that is lower than #bj percent but not  
lower than #ae percent for the most     
recent fiscal year for which data are   
available1 shall pay to the ,secretary  
for the fiscal year an amount that is   
equal to #e percent of the total amount 
7including interest and collection fees7
 of loans made under this part to       
students that are in default4  7#c7     
,waiver and reduced risk-sharing        
payments  7,a7 ,waiver ,the ,secretary  
shall waive the risk-sharing payments   
described in paragraph 7#a7 for an      
institution described in paragraph      
7#b77;,d7 that meets the requirements of
 subparagraph 7,d74  7,b7 ,reduced      
risk-sharing payments ,if an institution
 has in place a student loan management 
plan described in subparagraph 7,d7 that

 is approved by the ,secretary1 the     
,secretary shall reduce the total annual
 amount of risk-sharing payments as     
follows3  7i7 ,with respect to an       
institution with a cohort default rate  
described in paragraph 7#b77;,a71 the   
risk-sharing payment shall be in an     
amount that is equal to #ae percent of  
the total amount 7including interest and
 collection fees7 of loans made under   
this part to students that are in       
default4  7ii7 ,with respect to an      
institution with a cohort default rate  
described in paragraph 7#b77;,b71 the   
risk-sharing payment shall be in an     
amount that is equal to #aj percent of  
the total amount 7including interest and
 collection fees7 of loans made under   
this part to students that are in       
default4  7iii7 ,with respect to an     
institution with a cohort default rate  
described in paragraph 7#b77;,c71 the   
risk-sharing payment shall be in an     
amount that is equal to #e percent of   
the total amount 7including interest and

 collection fees7 of loans made under   
this part to students that are in       
default4  7,c7 ,continuation of waiver  
or reduced payments ,an institution that
 receives a waiver under subparagraph   
7,a7 or a reduced risk-sharing payment  
under subparagraph 7,b7 may receive a   
waiver or reduced payment for a         
subsequent fiscal year only if the      
,secretary determines that the          
institution is making satisfactory      
progress in carrying out the student    
loan management plan described in       
subparagraph 7,d71 including evidence of
 the effectiveness of the individualized
 financial aid counseling for students4 
7,d7 ,student loan management plan ,an  
institution that seeks a waiver or      
reduction of its risk-sharing payment1  
shall develop and carry out a student   
loan management plan that shall include 
an analysis of the risk factors         
correlated with higher student loan     
defaults that are present at the        
institution and actions that the        

institution will take to address such   
factors4 ,such plan shall include       
individualized financial aid counseling 
for students and strategies to minimize 
student loan default and delinquency4   
7,e7 ,waiver or reduction for certain   
institutions ,in addition to the other  
risk-sharing payment waivers and        
reductions described in this paragraph1 
the ,secretary may waive or reduce      
risk-sharing payments if--  7i7 an      
institution is eligible under--  7,i7   
part ,a or part ,b of title ,,iii2 or   
7,,ii7 title ,v2 and  7ii7 the          
,secretary determines that--  7,i7 the  
institution is making satisfactory      
progress in carrying out the            
institution's student loan management   
plan described under subparagraph 7,d72 
and  7,,ii7 granting a waiver or        
reduction of risk-sharing payments would
 be in the best interest of students at 
the institution4  7#d7 ,prohibition ,an 
institution of higher education shall   
not deny admission or financial aid to a

 student based on a perception that such
 student may be at risk for defaulting  
on a loan made under this part4  7#e7   
,fund for the deposit of risk-sharing   
payments  7,a7 ,in general ,there is    
established in the ,treasury of the     
,united ,states a separate account for  
the deposit of risk-sharing payments    
collected under this subsection4 ,the   
,secretary shall deposit any payments   
collected pursuant to this subsection   
into such fund4  7,b7 ,use of funds ,of 
the amounts in the fund described in    
subparagraph 7,a71 for each fiscal      
year--  7i7 not more than #ej percent of
 such amounts shall be made available to
 the ,secretary to enter into contracts 
or cooperative agreements for           
delinquency and default prevention or   
rehabilitation under section #def7;d72  
and  7ii7 the ,secretary shall reserve  
the remainder of such amounts for a     
,federal ,pell ,grant fund that shall be
 used to offset any future shortfalls in
 funding under the ,federal ,pell ,grant

 program4  7#f7 ,applicability ,the     
,secretary shall carry out this         
subsection beginning with the cohort    
default rate for the #bjad cohort4 ,the 
#bjad cohort shall include current and  
former students who enter repayment in  
fiscal year #bjad4  7#g7 ,report to     
congress ,the ,secretary shall report on
 an annual basis to the ,committee on   
,health1 ,education1 ,labor1 and        
,pensions of the ,senate and the        
,committee on ,education and the        
,workforce of the ,house of             
,representatives the following          
information3  7,a7 ,a list of           
institutions that have been subject to  
risk-sharing payments in the previous   
year4  7,b7 ,the required risk-sharing  
payment from such institutions4  7,c7   
,the amount of risk-sharing payments    
collected from such institutions4  7,d7 
,a list of the institutions that have   
received waivers from the risk-sharing  
payment and the reason for such waiver4 
7,e7 ,a list of the institutions that   

have received reductions in the required
 risk-sharing payment4  7,f7 ,the use of
 funds deposited from risk-sharing      
payments1 including a list of any       
contracts or cooperative agreements for 
delinquency and default prevention or   
rehabilitation and the amount reserved  
for the ,federal ,pell ,grant program4  
4  #d4 ,contracts and cooperative       
agreements ,section #def of the ,higher 
,education ,act of #aife 7#bj ,u4,s4,c4 
#ajhg;f7 is amended by adding at the end
 the following3  7d7 ,contracts and     
cooperative agreements for delinquency  
and default prevention and for default  
rehabilitation ,the ,secretary may enter
 into contracts or cooperative          
agreements for--  7#a7 statewide or     
institutionally based programs for the  
prevention of ,federal student loan     
delinquency and default at institutions 
of higher education that--  7,a7 have a 
high cohort default rate as defined     
under section #dce7m72 or  7,b7 serve   
large numbers or percentages of student 

loan borrowers who have a risk factor   
associated with higher default rates on 
,federal student loans under this title1
 such as coming from a low-income       
family1 being a first generation        
postsecondary education student1 not    
having a secondary school diploma1 or   
having previously defaulted on1 and     
rehabilitated1 a loan made under this   
title2 and  7#b7 increasing the number  
of borrowers who successfully           
rehabilitate defaulted loans4  4  #e4   
,financial responsibility ,section      
#dih7;c77#a7 of the ,higher ,education  
,act of #aife 7#bj ,u4,s4,c4            
#ajii;c7c77#a77 is amended by striking  
subparagraph 7,c7 and inserting the     
following3  7,c7 to meet all of its     
financial obligations1 including        
institutional risk-sharing payments1    
refunds of institutional charges1 and   
repayments to the ,secretary for        
liabilities and debts incurred in       
programs administered by the ,secretary4
  4