,,ii #aacth ,,congress #b;d ,session ,s4 #biic ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #aj1 #bjad ,mr4 ,murphy 7for himself and ,mr4 ,harkin7 introduced the following bill2 which was read twice and referred to the ,committee on ,health1 ,education1 ,labor1 and ,pensions ,a ,,bill ,to amend the ,higher ,education ,act of #aife to improve the determination of cohort default rates and provide for enhanced civil penalties1 and to authorize the establishment of an institutional risk-sharing commission4 #a4 ,short title ,this ,act may be cited as the ,students ,before ,profits ,act4 #b4 ,improved determination of cohort default rates ,section #dce 7#bj ,u4,s4,c4 #ajhe7 is amended-- 7#a7 in subsection 7a77#b71 by adding at the end the following3 7,e7 7i7 ,in any case where the ,secretary has determined that the institution has engaged in default manipulation1 the ,secretary-- 7,i7 shall recalculate the cohort default rate for the institution under this section using corrected data and information1 for all fiscal years for which the default manipulation has occurred2 and 7,,ii7 using the recalculated cohort default rate1 shall redetermine whether the institution is ineligible to participate in a program under this title4 7ii7 ,in this section1 the term default manipulation means engaging in a device or practice1 such as branching1 consolidation of campuses1 consolidation or manipulation of the identification codes used by the ,office of ,postsecondary ,education to designate campuses and institutions1 change of ownership or control1 serial forbearance1 or any similar device or practice 7as determined by the ,secretary7 when1 but for the device or practice1 one or more campuses of an institution of higher education would be at risk of cohort default rate sanctions under this section or student default risk sanctions under section #dhi;,a4 2 and 7#b7 in subsection 7m77#c71 by striking through the use of and all that follows through the period at the end and inserting through default manipulation44 #c4 ,institutional ,risk-,sharing ,commission 7a7 ,establishment of ,commission 7#a7 ,in general ,the ,secretary of ,education shall establish an ,institutional ,risk-,sharing ,commission 7referred to in this section as the ,commission7 whose members shall be selected by the ,secretary and comprised of the following relevant stakeholders3 7,a7 #b representatives of national or regional student advocacy organizations with a track record of engagement and expertise on issues related to college costs1 consumer protection1 and institutional accountability and an alternate member4 7,b7 #a student representative who is attending an institution of higher education on the date of the selection and an alternate member4 7,c7 #a member of the ,bureau of ,consumer ,financial ,protection with demonstrated knowledge of student loan borrowing and an alternate member4 7,d7 #b administrative officers from different types of institutions of higher education and an alternate member4 7,e7 #a higher education researcher and an alternate member4 7,f7 #a ,state postsecondary education data system director and an alternate member4 7,g7 #a representative from the ,national ,center for ,education ,statistics and an alternate member4 7,h7 #a representative from the ,government ,accountability ,office and an alternate member4 7,i7 #a representative from the ,department of the ,treasury and an alternate member4 7#b7 ,functions ,each member selected under paragraph 7#a7 shall participate for the purpose of determining agreement by majority vote on the ,commission on the report and its contents described in subsection 7b77#d74 ,each alternate member shall participate for the purpose of determining the majority vote in the absence of the member4 ,either the member or an alternate member may speak during the negotiations4 ,in the event that the ,commission is unable to form agreement on the contents of the report by majority vote1 the contents of the report shall be determined by a plurality vote4 7b7 ,study 7#a7 ,in general ,not later than #bgj days after the date that all members of the ,commission have been selected under subsection 7a71 the ,commission shall complete a study and develop recommendations for implementation of a new risk-sharing system for institutions of higher education that participate in the ,federal ,direct ,loan ,program under part ,d of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhg;a et seq47 through which institutions would be held financially accountable for poor student outcomes4 7#b7 ,content of study ,in conducting the study required under paragraph 7#a71 the ,commission shall1 at a minimum1 consider the following issues3 7,a7 ,identifying an annual measure or set of measures for the risk-sharing system that would provide the most accurate assessment of an institution's level of success or failure at providing their students with basic educational outcomes1 such as degree completion1 ability to repay loans made1 insured1 or guaranteed under title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajgj et seq471 post-graduation employment1 and post-graduation earnings4 ,such possible measures may include cohort default rates1 loan repayment rates1 graduation rates1 graduate earnings1 and other measure that the ,commission considers an accurate reflection of student outcomes1 regardless of the feasibility of access to the data required to implement collection of such measures4 7,b7 ,what specific metrics would require the lowest performing institutions to make annual payments into the risk-sharing system1 and what metrics would exempt institutions from making an annual risk-sharing payment based on performance measures that exceeded a minimum level 7which level would be identified by the ,commission74 7,c7 ,how the payments for each institution should be calculated1 including whether the use of a percentage of ,federal ,direct ,loans disbursed the year prior to identification1 the percentage of loans in default1 or any other calculation should be used4 7,d7 ,whether a sliding scale of payments should be required of institutions based on their performance on the identified measures4 7,e7 ,any legislative safeguards or mechanisms to ensure that an institution required to participate in the risk-sharing system would not pass any prospective costs directly or indirectly onto students1 or limit access to low-income students4 7,f7 ,how an institution's level of access to low-income students 7such as measured by the percentage of students enrolled at the institution who receive ,federal ,pell ,grants under subpart #a of part ,a of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajgj;a et seq477 and affordability 7as measured by average net price7 should be considered in the risk-sharing system4 7,g7 ,specifying a means for the risk-sharing system payments to go primarily towards students in default1 additional aid to low-income students1 or any other form of aid to student borrowers most in need1 including after degree completion4 7,h7 ,whether any extraordinary consideration exists that warrants allowing a waiver process through which a very limited number of institutions would be eligible to apply for a waiver from a risk-sharing payment on a yearly basis1 and under what conditions4 7#c7 ,outside recommendations ,as part of the study required under paragraph 7#a71 the ,commission shall develop a public process for soliciting recommendations for the risk-sharing system and shall consider these recommendations as part of the study4 ,the ,commission shall factor in any financial or other interests of any submitting party in weighing and considering such recommendations4 7#d7 ,report 7,a7 ,content ,not later than #ij days after completing the study required under paragraph 7#a71 the ,commission shall issue1 by majority vote1 or if unable to achieve a majority vote1 then a plurality vote1 a report regarding its recommendations for a risk-sharing system4 ,the report shall include the following3 7i7 ,a description of the ,commission's findings as to the issues described in paragraph 7#b74 7ii7 ,a data analysis using the ,commission's recommended metrics that demonstrates how each institution of higher education that participates in the ,federal ,direct ,loan ,program under part ,d of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhg;a et seq47 as of the period of the ,commission's study would fare under the proposed risk-sharing system1 including projections for the amounts of payments the lowest performing institutions would have to pay4 7iii7 ,an evaluation of the feasibility and unintended consequences of implementing the recommended risk-sharing system1 including any legislative or regulatory action needed to implement such a system4 7,b7 ,availability ,the report described in subparagraph 7,a7 shall be-- 7i7 provided to the ,secretary of ,education1 the ,committee on ,health1 ,education1 ,labor1 and ,pensions of the ,senate1 and the ,committee on ,education and the ,workforce of the ,house of ,representatives2 and 7ii7 made publicly available4 7c7 ,securing information and privacy 7#a7 ,in general ,subject to paragraph 7#b71 the ,commission may secure directly from any ,federal department or agency such information as the ,commission considers necessary to carry out its duties under this section4 ,the ,commission may request the head of any ,state or local department or agency to furnish such information to the ,commission4 7#b7 ,privacy ,any ,federal department or agency1 ,state or local department or agency1 or institution of higher education in providing information to the ,commission under this section shall not share any personally identifiable information and shall act in accordance with section #ddd of the ,general ,education ,provisions ,act 7#bj ,u4,s4,c4 #abcb;g1 commonly known as the ,family ,educational ,rights and ,privacy ,act of #aigd74 #d4 ,civil penalties ,part ,g of title ,,iv of the ,higher ,education ,act of #aife 7#bj ,u4,s4,c4 #ajhh et seq47 is amended by inserting after section #dhi the following3 #dhi;,a4 ,civil penalties and other remedies 7a7 ,definitions ,in this section3 7#a7 ,substantial misrepresentation or other serious violation ,the term substantial misrepresentation or other serious violation means any of the following3 7,a7 ,a substantial misrepresentation regarding-- 7i7 the nature of the educational program of an institution of higher education2 7ii7 the financial charges of the institution2 7iii7 the space availability in a program of the institution for which a student is considering enrollment2 7iv7 the admission requirements of the institution2 7v7 the transferability of credits from the institution2 7vi7 whether a program of the institution meets the necessary standards to qualify students to sit for licensing examinations1 or obtain certification required as a precondition for employment1 in the ,state in which the students reside2 7vii7 the passage rates of students at the institution in obtaining certification requirements2 7viii7 the passage rates of students who sit for licensing examinations2 or 7ix7 the employability of the graduates of the institution4 7,b7 ,a knowing and willful misuse of ,federal student aid from any source4 7,c7 ,a violation of section #dhg7;a77#bj74 7,d7 ,a violation of the default manipulation regulations promulgated by the ,secretary under section #dce7m77#c74 7,e7 ,failure to comply with the program review process described in section #dih;,a1 including any disclosure requirement described in paragraph 7#b7 or 7#e7 of section #dih;,a7b74 7,f7 ,a violation of the program integrity regulations promulgated by the ,secretary under this ,act4 7,g7 ,a violation of this ,act that the ,secretary has determined1 by regulation1 to be a serious violation for purposes of this section4 7#b7 ,officer of an institution of higher education ,the term officer of an institution of higher education includes the president1 chief executive officer1 and chief financial officer of an institution of higher education or their equivalents4 7b7 ,sanctions for substantial misrepresentations or serious violations 7#a7 ,civil penalties 7,a7 ,in general ,the ,secretary may impose a civil penalty upon an eligible institution upon making a determination1 after reasonable notice and opportunity for a hearing1 that an eligible institution has engaged in a substantial misrepresentation or other serious violation4 7,b7 ,amount of civil penalties ,a civil penalty imposed for a violation under subparagraph 7,a7 shall be not less than #ajj1jjj or-- 7i7 in the case of a first violation1 an amount equal to the product of #a1jjj1jjj multiplied by the institution's student default risk1 whichever is larger2 7ii7 in the case of a second violation1 an amount equal to the product of #b1jjj1jjj multiplied by the institution's student default risk1 whichever is larger2 and 7iii7 in the case of a third or subsequent violation1 an amount equal to the product of #c1jjj1jjj multiplied by the institution's student default risk1 whichever is larger4 7,c7 ,treatment of multiple institutions ,for the purpose of determining the number of violations under subparagraph 7,b71 any violation by a particular institution will accrue against all identification codes used by the ,office of ,postsecondary ,education to designate campuses and institutions affiliated with the institution1 and within the period of participation for the institution1 as defined in section #ffh4ac7;b7 of title #cd1 ,code of ,federal ,regulations1 or any successor regulation4 7c7 ,sanctions for other violations of this title ,upon determination1 after reasonable notice and opportunity for a hearing1 that an eligible institution has engaged in a violation of any other provision of this title1 including the failure to carry out any provision of this title1 that is not a significant misrepresentation or other serious violation1 the ,secretary may impose a civil penalty upon such institution of not more than #ajj1jjj 7subject to such adjustments for inflation as may be prescribed in regulation7 for each such violation4 7d7 ,civil penalties and sanctions for officers of institutions ,upon determination1 after reasonable notice and an opportunity for a hearing on the record1 that an officer of an institution of higher education that participates in a program under this title has knowingly and willfully1 or with gross negligence1 violated a provision of this title1 the ,secretary may sanction the officer4 ,such sanctions may include the following3 7#a7 ,prohibiting the institution of higher education that has employed the officer of an institution of higher education and that participates in a program under this title1 or any other institution of higher education that participates in a program under this title1 from employing the officer1 except that any such prohibition under this subsection shall not be for a period of more than #e years from the date of the determination of the violation4 7#b7 ,assessing a civil penalty against an officer of an institution of higher education who has knowingly and willfully1 or with gross negligence1 violated a provision of this title1 except that any such civil penalty under this subsection shall not be greater than the amount of the officer's compensation for each year for which the violations are determined to have occurred4 ,for purposes of this paragraph1 an officer's compensation shall include proceeds of any sales of stock and any incentive-based compensation 7including stock options awarded as compensation7 based on information required to be reported to the ,secretary or any other ,federal agency during the period in which the violations are determined to have occurred4 7e7 ,limitation1 suspension1 or termination of eligibility status 7#a7 ,in general ,upon determination1 after reasonable notice and opportunity for a hearing1 that an eligible institution has engaged in a violation of any provision of this title 7including the failure to carry out any provision of this title or any regulation prescribed under such provision7 or a violation of any applicable special arrangement1 agreement1 or limitation1 the ,secretary may limit1 suspend1 or terminate the participation in any program under this title of an eligible institution1 subject to the requirements of paragraph 7#b74 7#b7 ,suspension procedures ,no period of suspension under this section shall exceed #fj 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 time4 7f7 ,emergency action 7#a7 ,in general ,the ,secretary may take an emergency action against an institution1 under which the ,secretary shall1 effective on the date on which a notice and statement of the basis of the action is mailed to the institution 7by registered mail1 return receipt requested71 withhold funds from the institution or its students and withdraw the institution's authority to obligate funds under any program under this title1 if the ,secretary-- 7,a7 receives information1 determined by the ,secretary to be reliable1 that the institution is violating any provision of this title1 any regulation prescribed under this title1 or any applicable special arrangement1 agreement1 or limitation2 7,b7 determines that immediate action is necessary to prevent misuse of ,federal funds2 and 7,c7 determines that the likelihood of loss outweighs the importance of the procedures prescribed in subsection 7e7 for limitation1 suspension1 or termination4 7#b7 ,time limitation ,an emergency action described in paragraph 7#a7 shall not exceed #cj days unless limitation1 suspension1 or termination proceedings are initiated by the ,secretary against the institution within that period of time4 7#c7 ,opportunity to show cause ,the ,secretary shall provide an institution that is the subject of an emergency action under this subsection an opportunity to show cause1 if the institution so requests1 that the emergency action is unwarranted and should be lifted4 7g7 ,lifting of sanctions ,notwithstanding any other provision of this title1 an institution of higher education that has been sanctioned by the ,secretary under this section or any other provision of this title may not have such sanctions lifted until the ,secretary has conducted a subsequent program review under section #dih;,a and has found the institution to be in compliance with this title4 7h7 ,single course of conduct2 compromise authority 7#a7 ,same course of conduct ,for purposes of this section1 acts and omissions relating to a single course of conduct shall be treated as a single violation4 7#b7 ,compromise authority ,any civil penalty under this section may be compromised by the ,secretary4 ,in determining the amount of such penalty1 or the amount agreed upon in compromise1 the ,secretary shall consider-- 7,a7 the appropriateness of the penalty to the size of the institution of higher education subject to the determination2 and 7,b7 the gravity of the violation1 failure1 or misrepresentation4 7i7 ,collection of penalty ,the amount of any penalty under this section may be deducted from any sums owing by the ,united ,states to the institution charged4 7j7 ,disposition of amounts recovered 7#a7 ,in general ,amounts collected under this section shall be transferred to the ,secretary1 who shall determine the distribution of collected amounts1 in accordance with paragraphs 7#b7 and 7#c74 7#b7 ,use for program integrity efforts and program reviews 7,a7 ,in general ,for each fiscal year1 an amount equal to not more than #ej percent of the amounts recovered or collected under this section-- 7i7 shall be available to the ,secretary to carry out program reviews under section #dih;,a and other efforts by the ,secretary related to program integrity under part ,h2 and 7ii7 may be credited1 if applicable1 for that purpose by the ,secretary to any appropriations and funds that are available to the ,secretary for obligation at the time of collection4 7,b7 ,supplement not supplant ,amounts made available under subparagraph 7,a7 shall be used to supplement and not supplant any other amounts available to the ,secretary for the purpose described in such subparagraph4 7,c7 ,availability for funds ,any amounts collected under this section that are made available under subparagraph 7,a7 shall remain available until expended4 7#c7 ,use for student relief fund ,for each fiscal year1 an amount equal to not less than #ej percent of the amounts recovered or collected under this section shall be deposited into the ,student ,relief ,fund established under subsection 7k74 7#d7 ,report ,the ,secretary shall regularly publish1 on the website of the ,department1 a detailed description that includes-- 7,a7 the amount of funds that were distributed for the purposes described in paragraph 7#b7 and the amount used for the ,student ,relief ,fund under paragraph 7#c72 and 7,b7 how funds were distributed among the purposes described in paragraph 7#b77;,a77i74 7k7 ,student relief fund 7#a7 ,establishment ,the ,secretary shall establish a ,student ,relief ,fund 7referred to in this subsection as the ,fund7 that shall be used1 subject to the availability of funds1 to provide financial relief to any student enrolled in an institution of higher education that-- 7,a7 has failed to comply with an eligibility requirement under section #aja or #ajb or an obligation incurred under the terms of the program participation agreement under section #dhg2 or 7,b7 has been sanctioned under subsection 7b7 or 7c74 7#b7 ,determination of relief ,the ,secretary1 in consultation with ,director of the ,bureau of ,consumer ,financial ,protection-- 7,a7 shall determine the manner of relief to be provided under paragraph 7#a71 which may include tuition reimbursement or full or partial loan forgiveness2 and 7,b7 may issue regulations regarding how the amounts in the ,fund will be distributed among students eligible for the funds4 7#c7 ,treatment and availability of funds 7,a7 ,funds that are not government funds ,funds obtained by or transferred to the ,fund shall not be construed to be ,government funds or appropriated monies4 7,b7 ,amounts not subject to apportionment ,notwithstanding any other provision of law1 amounts in the ,fund shall not be subject to apportionment for purposes of chapter #ae of title #ca1 ,united ,states ,code1 or under any other authority4 7,c7 ,no fiscal year limitation ,sums deposited in the ,fund shall remain in the ,fund and be available for expenditure under this subsection without fiscal year limitation4 7#d7 ,investments 7,a7 ,amounts in fund may be invested ,the ,secretary of ,education may request the ,secretary of the ,treasury to invest the portion of the ,fund that is not1 in the discretion of the ,secretary of ,education1 required to meet the current needs of the ,fund4 7,b7 ,eligible investments ,investments shall be made by the ,secretary of the ,treasury in obligations of the ,united ,states or obligations that are guaranteed as to principal and interest by the ,united ,states1 with maturities suitable to the needs of the ,fund as determined by the ,secretary on the record4 7,c7 ,interest and proceeds credited ,the interest on1 and the proceeds from the sale or redemption of1 any obligations held in the ,fund shall be credited to the ,fund4 7#e7 ,regulations ,the ,secretary shall prescribe regulations to implement the requirements of this section within #a year after the date of enactment of the ,students ,before ,profits ,act4 7#f7 ,authorization of appropriations ,in addition to funds derived from financial penalties assessed pursuant to subsection 7j71 there are authorized to be appropriated such sums as may be necessary to carry out this subsection for fiscal year #bjae and each of the #e succeeding fiscal years4 7l7 ,state enforcement 7#a7 ,in general ,any violation of subsection 7b71 including the regulations promulgated under such subsection1 shall be a cause of action enforceable by the ,state1 through the attorney general 7or the equivalent thereof7 of the ,state1 in any district court of the ,united ,states in that ,state or in a ,state court that is located in that ,state and that has jurisdiction over the defendant4 ,the ,state may seek any relief provided under paragraph 7#d77;,b7 for such violation1 or any remedies otherwise provided under law4 7#b7 ,notice required 7,a7 ,in general ,before initiating any action in a court or other administrative or regulatory proceeding against any institution of higher education as authorized by paragraph 7#a7 to enforce any provision of this subsection1 including any regulation promulgated by the ,secretary under this subsection1 a ,state attorney general shall timely provide a copy of the complete complaint to be filed and written notice describing such action or proceeding to the ,secretary1 except as provided in subparagraph 7,b74 7,b7 ,emergency action ,if prior notice is not practicable1 the ,state attorney general shall provide a copy of the complete complaint and the notice to the ,secretary immediately upon instituting the action or proceeding4 7,c7 ,contents of notice ,the notification required under this paragraph shall1 at a minimum1 describe-- 7i7 the identity of the parties2 7ii7 the alleged facts underlying the proceeding2 and 7iii7 whether there may be a need to coordinate the prosecution of the proceeding so as not to interfere with any action1 including any rulemaking1 undertaken by the ,secretary or another ,federal agency4 7#c7 ,regulations ,the ,secretary shall prescribe regulations to implement the requirements of this subsection and periodically provide guidance in order to further coordinate actions with the ,state attorneys general4 7#d7 ,preservation of state authority 7,a7 ,state claims ,nothing in this subsection shall be construed as altering1 limiting1 or affecting the authority of a ,state attorney general or any other regulatory or enforcement agency or authority to bring an action or other regulatory proceeding arising solely under the law in effect in that ,state4 7,b7 ,relief 7i7 ,in general ,relief under this subsection may include1 without limitation-- 7,i7 rescission or reformation of contracts2 7,,ii7 refund of moneys or return of real property2 7,,iii7 restitution2 7,,iv7 disgorgement or compensation for unjust enrichment2 7,v7 payment of damages or other monetary relief pursuant to the requirements of paragraph 7#b72 7,,vi7 public notification regarding the violation1 including the costs of notification2 and 7,,vii7 limits on the activities or functions of the person4 7ii7 ,exclusion ,relief under this subsection shall not include the ability to suspend or terminate the eligibility status of an institution of higher education for programs under this title4 4