,,ii  #aafth ,,congress  #ast ,session  
,s4 #bfdj  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,october #ag1  
#bjai,mr4 ,brown 7for himself and ,ms4  
,warren7 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 make for-profit institutions   
ineligible for ,federal student aid and 
to protect the integrity of nonprofit   
institutions of higher education4  #a4  
,short title ,this ,act may be cited as 
the ,students ,not ,profits ,act of     
#bjai4  #b4 ,definition of institution  
of higher education ,the ,higher        
,education ,act of #aife 7#bj ,u4,s4,c4 
#ajja et seq47 is amended--  7#a7 in    
section #aja-- 7,a7 in subsection 7a71  
in the matter preceding paragraph 7#a71 
by striking other than title ,,iv12     
7,b7 in subsection 7b7-- 7i7 in the     
matter preceding paragraph 7#a71 by     
striking other than title ,,iv12  7ii7  

in paragraph 7#a71 by striking and after
 the semicolon2  7iii7 in paragraph     
7#b77;,b71 by striking the period at the
 end and inserting a semicolon2 and     
7iv7 by adding at the end the following3
  7#c7 a public1 nonprofit postsecondary
 vocational institution2 and  7#d7 only 
for the purposes of part ,d of title    
,,iv1 an institution outside the ,united
 ,states that is comparable to an       
institution of higher education1 as     
defined in subsection 7a71 and that has 
been approved by the ,secretary for the 
purpose of part ,d of title ,,iv1       
consistent with the requirements of     
section #deb7;d74  2  7,c7 in subsection
 7c71 by striking and section #ajb2 and 
7,d7 by adding at the end the following3
  7d7 ,requirements of courses of study 
and enrollment ,an institution shall be 
considered to meet the definition of an 
institution of higher education in      
subsection 7a7 or 7b7 only if such      
institution--  7#a7 limits enrollment of
 students in distance education courses 

offered by the institution to not more  
than #ej percent of all students        
enrolled in the institution1 unless the 
institution is a public or nonprofit    
technical institution or career and     
technical education school1 as described
 in section #c7c77;,c7 of the ,carl ,d4 
,perkins ,career and ,technical         
,education ,act of #bjjf2  7#b7 limits  
enrollment of students who are          
incarcerated to not more than #be       
percent of all students enrolled in the 
institution2  7#c7 limits enrollment of 
students who do not have a secondary    
school diploma or its recognized        
equivalent to not more than #ej percent 
of all students enrolled in the         
institution2 and  7#d7 if the           
institution offers an education or      
training program that leads to a        
certificate1 or other nondegree         
recognized credential and funds         
available under title ,,iv for students 
are used for enrollment in such         
education or program1 ensures that such 

education or program prepares students  
for gainful employment in a recognized  
occupation4  7e7 ,limitations based on  
management ,an institution shall not be 
considered to meet the definition of an 
institution of higher education in      
subsection 7a7 or 7b7 if such           
institution--  7#a7 the institution1 or 
an affiliate of the institution that has
 the power1 by contract or ownership    
interest1 to direct or cause the        
direction of the management or policies 
of the institution1 has filed for       
bankruptcy2 or  7#b7 the institution1   
the institution's owner1 the            
institution's chief executive officer1  
or any other executive officer of the   
institution--  7,a7 has been convicted  
of1 or has pled nolo contendere or      
guilty to1 a crime involving the        
acquisition1 use1 or expenditure of     
funds under title ,,iv2  7,b7 has been  
determined to have committed fraud1     
substantial misrepresentation1 or false 
certification involving funds under     

title ,,iv2 or  7,c7 has been previously
 employed at an institution receiving   
funds under title ,,iv that closed4  7f7
 ,certification ,the ,secretary shall   
certify an institution's qualification  
as an institution of higher education in
 accordance with the requirements of    
subpart #c of part ,h of title ,,iv4    
7g7 ,loss of eligibility ,an institution
 of higher education shall not be       
considered to meet the definition of an 
institution of higher education in      
subsection 7a7 or 7b7 if such           
institution is removed from eligibility 
for funds under title ,,iv as a result  
of an action pursuant to part ,h of     
title ,,iv4  7h7 ,postsecondary         
vocational institution  7#a7 ,principal 
criteria ,for the purpose of this       
section1 the term postsecondary         
vocational institution means a school   
that-- 7,a7 provides an eligible program
 of training to prepare students for    
gainful employment in a recognized      
occupation2  7,b7 meets the requirements

 of paragraphs 7#a71 7#b71 7#d71 and    
7#e7 of subsection 7a72 and  7,c7 has   
been in existence for at least #b years4
  7#b7 ,additional institutions ,the    
term postsecondary vocational           
institution also includes an educational
 institution in any ,state that1 in lieu
 of the requirement in subsection       
7a77#a71 admits as regular students     
individuals--  7,a7 who are beyond the  
age of compulsory school attendance in  
the ,state in which the institution is  
located2 or  7,b7 who will be dually or 
concurrently enrolled in the institution
 and a secondary school4  7i7           
,institution outside the united states  
7#a7 ,in general ,for the purpose of    
qualifying as an institution under      
subsection 7b77#d71 the ,secretary shall
 establish criteria by regulation for   
the approval of institutions outside the
 ,united ,states and for the            
determination that such institutions are
 comparable to an institution of higher 
education1 as defined in subsection     

#aja7;a7 7except that a graduate medical
 school1 nursing school1 or a veterinary
 school1 located outside the ,united    
,states shall not be required to meet   
the requirements of subsection 7a77#d774
 ,such criteria shall include a         
requirement that a student attending    
such school outside the ,united ,states 
is ineligible for loans made under part 
,d of title ,,iv unless--  7,a7 in the  
case of a graduate medical school       
located outside the ,united ,states--   
7i7 at least #fj percent of those       
enrolled in1 and at least #fj percent of
 the graduates of1 the graduate medical 
school outside the ,united ,states were 
not persons described in section        
#dhd7;a77#e7 in the year preceding the  
year for which a student is seeking a   
loan under part ,d of title ,,iv2 and   
7ii7 at least #ge percent of the        
individuals who were students or        
graduates of the graduate medical school
 outside the ,united ,states or ,canada 
7both nationals of the ,united ,states  

and others7 taking the examinations     
administered by the ,educational        
,commission for ,foreign ,medical       
,graduates received a passing score in  
the year preceding the year for which a 
student is seeking a loan under part ,d 
of title ,,iv2  7,b7 in the case of a   
veterinary school located outside the   
,united ,states that does not meet the  
requirements of subsection 7a77#d71 the 
institution's students complete their   
clinical training at an approved        
veterinary school located in the ,united
 ,states2 or  7,c7 in the case of a     
nursing school located outside of the   
,united ,states-- 7i7 the nursing school
 has an agreement with a hospital1 or   
accredited school of nursing 7as such   
terms are defined in section #hja of the
 ,public ,health ,service ,act 7#db     
,u4,s4,c4 #bif771 located in the ,united
 ,states that requires the students of  
the nursing school to complete the      
students' clinical training at such     
hospital or accredited school of        

nursing2  7ii7 the nursing school has an
 agreement with an accredited school of 
nursing located in the ,united ,states  
providing that the students graduating  
from the nursing school located outside 
of the ,united ,states also receive a   
degree from the accredited school of    
nursing located in the ,united ,states2 
7iii7 the nursing school certifies only 
,federal ,direct ,stafford ,loans under 
section #dee7;a77#b77;,a71 ,federal     
,direct ,unsubsidized ,stafford ,loans  
under section #dee7;a77#b77;,d71 or     
,federal ,direct ,,plus ,loans under    
section #dee7;a77#b77;,b7 for students  
attending the institution2  7iv7 the    
nursing school reimburses the ,secretary
 for the cost of any loan defaults for  
current and former students included in 
the calculation of the institution's    
cohort default rate during the previous 
fiscal year2 and  7v7 not less than #ge 
percent of the individuals who were     
students or graduates of the nursing    
school1 and who took the ,national      

,council ,licensure ,examination for    
,registered ,nurses in the year         
preceding the year for which the        
institution is certifying a ,federal    
,direct ,stafford ,loan under section   
#dee7;a77#b77;,a71 a ,federal ,direct   
,unsubsidized ,stafford ,loan under     
section #dee7;a77#b77;,d71 or a ,federal
 ,direct ,,plus ,loan under section     
#dee7;a77#b77;,b71 received a passing   
score on such examination4  7#b7        
,failure to release information ,the    
failure of an institution outside the   
,united ,states to provide1 release1 or 
authorize release to the ,secretary of  
such information as may be required by  
paragraph 7#a7 shall render such        
institution ineligible for the purpose  
of part ,d of title ,,iv4  7#c7 ,special
 rule ,if1 pursuant to this subsection1 
an institution loses eligibility to     
participate in the programs under title 
,,iv1 then a student enrolled in such   
institution may1 notwithstanding such   
loss of eligibility1 continue to be     

eligible to receive a loan under part ,d
 of title ,,iv while attending such     
institution for the academic year       
succeeding the academic year in which   
such loss of eligibility occurred4  2   
7#b7 by striking section #ajb2 and  7#c7
 by redesignating section #ajc as       
section #ajb4  #c4 ,repeal of existing  
references to proprietary institutions  
,section #dhg of the ,higher ,education 
,act of #aife 7#bj ,u4,s4,c4 #ajid7 is  
amended-- 7#a7 in subsection 7a7--  7,a7
 by striking paragraph 7#bd72  7,b7 by  
redesignating paragraphs 7#be7 through  
7#bi7 as paragraphs 7#bd7 through 7#bh71
 respectively2  7,c7 in paragraph       
7#bd77;,a77ii7 7as redesignated by      
subparagraph 7,b771 by striking         
subsection 7e7 and inserting subsection 
7d72 and  7,d7 in paragraph 7#bf7 7as   
redesignated by subparagraph 7,b771 by  
striking subsection 7h7 and inserting   
subsection 7g72  7#b7 by striking       
subsection 7d72  7#c7 by redesignating  
subsections 7e7 through 7j7 as          

subsections 7d7 through 7i71            
respectively2  7#d7 in subsection       
7f77#a7 7as redesignated by paragraph   
7#c771 by striking subsection 7e77#b7   
and inserting subsection 7d77#b72 and   
7#e7 in subsection 7g77#a7 7as          
redesignated by paragraph 7#c771 by     
striking subsection 7a77#bg7 in the     
matter preceding subparagraph 7,a7 and  
inserting subsection 7a77#bf74  #d4     
,conforming amendments ,the ,higher     
,education ,act of #aife 7#bj ,u4,s4,c4 
#ajja et seq47 is amended-- 7#a7 in     
section #ajb1 as redesignated by        
subsection 7a77#c71 in paragraph        
7#e77;,b71 by striking 7as such term is 
defined in section #ajb72  7#b7 in      
section #aad-- 7,a7 in subsection 7a71  
by striking 7as defined in section      
#ajb72 and  7,b7 in subsection          
7b77#b77;,b71 by striking 7as defined in
 section #ajb72  7#c7 in section        
#acc7;b7--  7,a7 by striking paragraph  
7#e72 and  7,b7 by redesignating        
paragraphs 7#f7 through 7#i7 as         

paragraphs 7#e7 through 7#h71           
respectively2  7#d7 in section #aea7b71 
by striking 1 as such term in defined in
 section #ajb12  7#e7 in section #aeb-- 
7,a7 in subsection 7a77#a77;,a71 by     
striking subsections 7a77#bg7 and 7h7 of
 section #dhg and inserting subsections 
7a77#bf7 and 7g7 of section #dhg2 and   
7,b7 in subsection 7b77#a77;,b77i77,i71 
by striking section #dhg7;e7 and        
inserting section #dhg7;d72  7#f7 in    
section #aec7;c77#c71 by striking       
section #dhg7;a77#be7 each place the    
term appears and inserting section      
#dhg7;a77#bd72  7#g7 in section         
#dbj,l7#a71 by striking 1 as defined in 
section #ajb12  7#h7 in section         
#dce7;a77#a71 by striking 1 as defined  
in section #ajb12  7#i7 section         
#dhf7;b7--  7,a7 in paragraph 7#b71 by  
striking sections #ajb7;a77#c77;,a71    
#ajb7;a77#c77;,b72  7,b7 in paragraph   
7#c77;,b71 by striking section          
#ajb7;a77#a77;,c7 and inserting section 
#aja7;b77#d72 and  7,c7 in paragraph    

7#c77;,c71 by striking an institution of
 higher education that meets the        
requirements of subsection 7a7 of       
section #ajb1 other than the requirement
 of paragraph 7#c77;,a7 or 7#c77;,b7 of 
such subsection1 and inserting an       
institution of higher education that    
meets the requirements of section #aja1 
other than the requirement of section   
#aja7;e77#a77;,a712  7#aj7 in section   
#dhg-- 7,a7 in subsection               
7c77#a77;,a77iii71 by striking section  
#ajb7;a77#a77;,c7 and inserting section 
#aja7;b77#d72 and  7,b7 in subsection   
7i7-- 7i7 by striking paragraph 7#d72   
and  7ii7 by redesignating paragraphs   
7#e7 and 7#f7 as paragraphs 7#d7 and    
7#e71 respectively2  7#aa7 in section   
#dia7l77#b77;,a71 by striking section   
#ajb7;a77#a77;,c7 and inserting section 
#aja7;b77#d72  7#ab7 in section #dif--  
7,a7 in subsection 7c77#c77;,a71 by     
striking section #dhg7;f7 and inserting 
section #dhg7;e72  7,b7 in subsection   
7j71 by striking section #ajb and       

inserting section #aja2 and  7,c7 in    
subsection 7k71 by striking section #ajb
 and inserting section #aja2  7#ac7 in  
section #dih-- 7,a7 in subsection       
7g77#c71 by striking section            
#ajb7;a77#a77;,c7 and inserting section 
#aja7;b77#d72  7,b7 in subsection 7i71  
by striking section #ajb and inserting  
section #aja2  7,c7 in subsection 7j71  
by striking sections #ajb7;b77#a77;,e7  
and #ajb7;c77#a77;,c7 and inserting     
section #aja7;i77#a77;,c72 and  7,d7 in 
subsection 7k7-- 7i7 in paragraph 7#a71 
by striking section #dhg7;f7 and        
inserting section #dhg7;e72 and  7ii7 in
 paragraph 7#b77;,a71 by striking       
sections #ajb7;b77#a77;,e7 and          
#ajb7;c77#a77;,c7 and inserting section 
#aja7;i77#a77;,c72  7#ad7 in section    
#dih;,b7b71 by striking section         
#ajb7;a77#a77;,c7 and inserting section 
#aja7;b77#d72  7#ae7 in section         
#gda7;f77#b71 by striking section #ajb  
and inserting section #aja2 and  7#af7  
in section #hjg7;d77#a71 by striking    

subparagraph 7,a7 and inserting the     
following3  7,a7 intend to pursue a     
career in instruction at an institution 
of higher education in the ,united      
,states2 and  4  #e4 ,integrity of      
nonprofit institutions of higher        
education ,part ,b of title ,i of the   
,higher ,education ,act of #aife 7#bj   
,u4,s4,c4 #ajaa et seq47 is amended by  
adding at the end the following3  #abd4 
,integrity of nonprofit institutions of 
higher education  7a7 ,determination ,on
 determining that an institution of     
higher education meets the requirements 
under subsection 7b71 the ,secretary    
shall approve the conversion of an      
institution of higher education to a    
nonprofit institution of higher         
education4  7b7 ,application ,to be     
eligible to convert under this section  
and participate as a nonprofit          
institution of higher education under   
this ,act1 an institution of higher     
education shall submit an application to
 the ,secretary that demonstrates each  

of the following3  7#a7 ,that such      
institution of higher education is a    
nonprofit institution of higher         
education4  7#b7 ,that the assets or    
services acquired from former owners of 
such institution of higher education    
were not acquired for more than the     
value of such assets or services4  7#c7 
,that no member of the governing board  
of such institution of higher education 
7other than ex officio members serving  
at the pleasure of the remainder of the 
governing board and receiving a fixed   
salary71 or any person with the power to
 appoint or remove members of such      
governing board or any immediate family 
member of such a member of the board or 
such a person with power of appointment1
 receives any substantial direct or     
indirect economic benefit 7including a  
lease1 promissory note1 or other        
contract7 from such institution of      
higher education4  7#d7 ,that such      
institution of higher education is an   
organization described in section       

#eja7;c77#c7 of the ,internal ,revenue  
,code of #aihf and is exempt from       
taxation under section #eja7;a7 of such 
,code4  7#e7 ,subject to subsection 7c71
 that none of the core functions of the 
institution of higher education are     
under the control of1 or subject to     
significant direction from1 an entity   
that is not a public institution of     
higher education or other nonprofit     
entity4  7c7 ,presumption of significant
 direction ,for purposes of subsection  
7b77#e71 in the case of an institution1 
there shall be a conclusive presumption 
that an entity 7other than such         
institution7 exercises significant      
direction over such institution if one  
or more of the employees or owners of   
the entity serves as an officer1 member 
of the board1 or person holding similar 
authority for such institution4  7d7    
,transition period ,in the case of an   
institution of higher education approved
 for conversion under subsection 7a71   
such institution shall be subject to any

 rules and regulations that apply to    
proprietary institutions of higher      
education1 as defined in section        
#ajb7;b71 for a minimum of #e years4    
7e7 ,value ,the term value1 with respect
 to an acquisition under subsection     
7b77#b7-- 7#a7 includes the value of any
 ongoing relationship 7including any    
contract1 agreement1 lease or other     
arrangement72  7#b7 subject to paragraph
 7#c71 may be demonstrated through--    
7,a7 a third-party appraisal based on   
comparable assets acquired by1 or goods 
or services procured by1 nonprofit      
corporations in similar market          
conditions2  7,b7 an independent        
financing of the acquisition based upon 
the assets acquired2 or  7,c7 a full and
 open competition in the acquisition of 
services or assets1 as such term is     
defined in section #b4aja7;b7 of title  
#dh1 ,code of ,federal ,regulations1 as 
in effect on the date of the enactment  
of this section2 and  7#c7 shall be     
subject to such other demonstration     

process determined appropriate by the   
,secretary in a case in which the       
,secretary does not accept a            
demonstration process described in      
paragraph 7#b74  7f7 ,publication  7#a7 
,application ,before the ,secretary may 
approve the conversion of an institution
 of higher education under subsection   
7a71 the application of such institution
 submitted to the ,secretary under      
subsection 7b7 shall be published in the
 ,federal ,register with an appropriate 
notice and comment period4  7#b7        
,determination ,the ,secretary shall    
publish each determination under this   
section1 and the reasons for such       
determination1 under the ,federal       
,register4  7g7 ,public representation  
and marketing of nonprofit status ,an   
institution of higher education shall   
not promote or market itself1 in any    
manner1 as a nonprofit institution of   
higher education unless--  7#a7 in the  
case of an institution of higher        
education that seeks to convert to a    

nonprofit institution of higher         
education under this section--  7,a7 the
 ,secretary has given final approval of 
the conversion of the institution to a  
nonprofit institution of higher         
education under this section2  7,b7 an  
accrediting agency or association       
recognized by the ,secretary pursuant to
 section #dif has approved the nonprofit
 status of the institution2 and  7,c7   
the ,state has given final approval to  
the institution as a nonprofit          
institution of higher education1 as     
applicable2 and  7#b7 the ,commissioner 
of ,internal ,revenue has approved the  
institution as tax exempt for purposes  
of the ,internal ,revenue ,code of      
#aihf4  7h7 ,office ,to monitor         
nonprofit integrity ,not later than #a  
year after the date of enactment of the 
,students ,not ,profits ,act of #bjai1  
the ,secretary shall establish an office
 within the ,department with the        
expertise necessary to carry out this   
section4  #abe4 ,review of governance   

,the ,secretary shall review the        
governance of an institution of higher  
education when such institution has     
engaged in transactions or arrangements 
determined by the ,secretary as         
potential indicators of private         
inurement1 in order to promote the      
highest standards of nonprofit          
integrity4  4