,,ii  #aafth ,,congress  #ast ,session  
,s4 #ifh  ,,in ,,the ,,senate ,,of ,,the
 ,,united ,,states  ,april #a1 #bjai,mr4
 ,reed 7for himself1 ,mr4 ,durbin1 ,ms4 
,warren1 and ,mr4 ,murphy7 introduced   
the following bill2 which was read twice
 and referred to the ,committee on      
,health1 ,education1 ,labor1 and        
,pensions  ,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 ,act of
 #bjai4  #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 and after   
the semicolon2  7,b7 in paragraph 7#f71 
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 #cc 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 of such cohort 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 of such cohort    

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 of such cohort   
that are in default2 or  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 of such cohort 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 of such cohort 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 of such cohort    
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 of such cohort 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 subsection for the 
purpose of reducing student loan debt1  
delinquency1 and default4 ,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;c72  
and  7ii7 the ,secretary shall reserve  
the remainder of such amounts for a     
,federal ,pell ,grant fund that shall be
 used to increase the maximum ,federal  
,pell ,grant award available to students
 who attend an institution--  7,i7 that 
participates in the direct student loan 
program under this part2  7,,ii7 in     
which not less than #cc percent of the  
students enrolled at the institution    
have received a ,federal ,pell ,grant2  
and  7,,iii7 that has a rate of         
participation in the direct student loan
 program under this part for all        
students enrolled at that institution   
for such fiscal year that is--  7aa7 #cc
 percent or higher and such institution 
is not subject to the risk-sharing      
payments under this subsection2 or  7bb7
 less than #cc percent and such         
institution has a cohort default rate of
 less than #ae percent for the most     

recent fiscal year for which data are   
available4  7#f7 ,applicability ,the    
,secretary shall carry out this         
subsection beginning with the cohort    
default rate for the #bjai cohort4 ,the 
#bjai cohort shall include current and  
former students who enter repayment in  
fiscal year #bjai4  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 ,labor 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--  7i7 the amount   
reserved for contracts or cooperative   
agreements for delinquency and default  
prevention or rehabilitation2  7ii7 a   
list of contracts or cooperative        
agreements entered into for delinquency 
and default prevention or               
rehabilitation2  7iii7 information on   
the performance of such contracts or    
cooperative agreements2  7iv7 the amount
 reserved for the ,federal ,pell ,grant 
program2 and  7v7 a list of institutions
 for which students in attendance at the
 institution are eligible for the       
increased maximum ,federal ,pell ,grant 
under paragraph 7#e77;,b77ii7 and the   
amount of such increase4  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  7c7 ,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  #f4 ,general accountability office 
studies ,not later than #ab months after
 the date of enactment of the ,protect  
,student ,borrowers ,act of #bjai1 the  
,comptroller ,general of the ,united    
,states shall report to the ,committee  
on ,health1 ,education1 ,labor1 and     
,pensions of the ,senate and the        
,committee on ,education and ,labor of  
the ,house of ,representatives the      
results of a study that addresses the   
following3  7#a7 ,how a repayment rate  
metric could be used in place of or in  
conjunction with the cohort default rate

 for institutional eligibility and      
risk-sharing4  7#b7 ,the implications of
 using a cohort repayment rate versus   
other types of repayment rate4  7#c7    
,the considerations that should be taken
 into account before transitioning from 
the current cohort default rate metric  
to a repayment rate metric4  7#d7 ,the  
impact on risk-sharing payments and     
institutional eligibility if the cohort 
default rate were based on #e years     
instead of #c years4