Archived Information

Reauthorization of the Higher Education Act


Part G--General Provisions

DEFINITIONS
SEC. 481. Section 481 of the Act is amended--
(1) in subsection (a)--
(A) in paragraph (1)--
(i) in the matter preceding subparagraph (A)--
(I) by striking out "paragraphs (2) through (4) of this subsection," and inserting in lieu thereof "paragraphs (2) through (7),"; and
(II) by striking out "section 1201(a)--" and inserting in lieu thereof "section 101(a)--";
(ii) in subparagraph (A), by adding "and" at the end thereof;
(iii) by striking out subparagraph (B) and inserting in lieu thereof the following:
"(B) only for purposes of part B, an institution located outside the United States that--
"(i) is comparable to an institution of higher education as defined in section 101(a); and
"(ii) has been approved by the Secretary for the purpose of part B, except that the Secretary shall not approve any distance learning program or courses offered by the institution."; and
(iv) by striking out subparagraph (C);
(B) in paragraph (2)--
(i) in subparagraph (A), by striking out "paragraph (1)(C) of this section" and "section 1201(a)." and inserting in lieu thereof "paragraph (1)(B)" and "section 101(a).", respectively;
(ii) in subparagraph (B), by striking out "paragraph (1)(C)," and "section 1201(a)." and inserting in lieu thereof "paragraph (1)(B)" and "section 101(a).", respectively;
(iii) by striking out subparagraph (D); and
(iv) by redesignating subparagraph (E) as subparagraph (D);
(C) in paragraph (3)--
(i) by amending subparagraphs (A) and (B) to read as follows:
"(A) offers more than 50 percent of the institution's courses through distance learning, unless the institution provides at least a 2­year or 4­year program of instruction for which the institution awards an associate or baccalaureate degree;
"(B) enrolls 50 percent or more of its students in distance learning, unless the institution provides at least a 2­year or 4­year program of instruction for which the institution awards an associate or baccalaureate degree;";
(D) in paragraph (5), by striking out "part H." and inserting in lieu thereof "part A of title I.";
(E) in paragraph (6), by striking out "part H of this title." and inserting in lieu thereof "part A of title I."; and
(F) by adding at the end thereof the following new paragraph:
"(7) INELIGIBILITY BASED ON HIGH DEFAULT RATES.--(A)(i) An institution that has a cohort default rate that is equal to or greater than the threshold percentage specified in clause (ii) for each of the three most recent fiscal years for which data are available shall not be eligible to participate in a program under this title for the fiscal year for which the determination is made and for the two succeeding fiscal years, unless, within 30 days of receiving notification from the Secretary of the loss of eligibility under this paragraph, the institution appeals the loss of its eligibility to the Secretary. The Secretary shall issue a decision on any such appeal within 45 days after its submission. Such decision may permit the institution to continue to participate in a program under this part if--
"(I) the institution demonstrates to the satisfaction of the Secretary that the Secretary's calculation of its cohort default rate is not accurate, and that recalculation would reduce its cohort default rate for any of the three fiscal years below the threshold percentage specified in clause (ii); or
"(II) there are, in the judgment of the Secretary, exceptional mitigating circumstances that would make the application of this paragraph inequitable.
"During such appeal, the Secretary may permit the institution to continue to participate in a program under this title. If an institution continues to participate in a program under this title, and its appeal of the loss of eligibility is unsuccessful, the institution shall be required to pay to the Secretary an amount equal to the amount of all payments made by the Secretary (or which the Secretary is obligated to make) with respect to grant, loan, or work assistance awarded under this title to students attending, or planning to attend, that institution during the pendency of such appeal. In order to continue to participate during an appeal under this paragraph, the institution shall provide a letter of credit in favor of the Secretary or other third­party financial guarantees satisfactory to the Secretary in an amount determined by the Secretary to be sufficient to satisfy the institution's potential liability for such assistance under the preceding sentence.
"(ii) For purposes of determinations under clause (i), the threshold percentage is 25 percent.
"(B)(i) This paragraph shall not apply to any institution described in clause (ii), provided that any such institution that exceeds the threshold percentage in subparagraph (A)(ii) for two consecutive years shall submit to the Secretary a default management plan satisfactory to the Secretary and containing criteria designed, in accordance with the regulations of the Secretary, to demonstrate continuous improvement by the institution in its cohort default rate. If the institution fails submit the required plan, or to satisfy the criteria in the plan, the institution shall be subject to a loss of eligibility in accordance with this paragraph, except as the Secretary may otherwise specify in regulations.
"(ii) An institution is subject to clause (i) if it is--
"(I) a part B institution within the meaning of section 322(2) of this Act;
"(II) a tribally controlled community college within the meaning of section 2(a)(4) of the Tribally Controlled Community College Assistance Act of 1978; or
"(III) a Navajo Community College under the Navajo Community College Act.
"(C) An institution that--
"(i) is subject to loss of eligibility for the a program under this title pursuant to this paragraph; or
"(iii) is an institution whose cohort default rate equals or exceeds 20 percent for the most recent year for which data are available;
"may include in its appeal of such loss or rate a defense based on improper loan servicing (in addition to other defenses). In any such appeal, the Secretary shall take whatever steps are necessary to ensure that such institution has access to a representative sample (as determined by the Secretary) of the relevant loan servicing and collection records used by a guaranty agency in determining to pay a claim on a defaulted loan, for a reasonable period of time, not to exceed 30 days. The Secretary shall reduce the institution's cohort default rate to reflect the percentage of defaulted loans in the representative sample that are required to be excluded pursuant to section 435(m)(1)(B).";
(2) by amending subsection (b) to read as follows:
"(b) PROPRIETARY INSTITUTION OF HIGHER EDUCATION.--(1) For the purpose of this section, the term 'proprietary institution of higher education' means a school that--
"(A) meets the requirements of section 101(a), other than paragraph(1)(D);
"(B) has been in existence for at least 2 years; and
"(C) has at least 15 percent of its revenues from sources that are not derived from funds provided under this title, as determined in accordance with regulations prescribed by the Secretary.
"(2) Such term also includes a postsecondary educational institution that changes from a proprietary institution to a nonprofit institution, for a period of not less than two complete fiscal years following such change.";
(3) by amending subsection (c) to read as follows:
"(c) DISTANCE LEARNING.--For the purpose of any program under this title, the term 'distance learning means an educational process that is characterized by the separation, in time or place, between instructor and student. Distance learning may include courses offered principally through the use of--
"(1) television, audio, or computer transmission, such as open broadcast, closed circuit, cable, microwave, or satellite transmission;
"(2) audio or computer conferencing;
"(3) video cassettes or discs; or
"(4) correspondence.";
(4) by striking out subsection (e); and
(5) by redesignating subsection (f) as subsection (e).
MASTER CALENDAR
SEC. 482. Section 482 of the Act is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1), by inserting a comma and "in developing and distributing Federal forms," immediately after "shall"; and
(B) in paragraph (1)--
(i) in subparagraph (D), by striking out "and multiple data entry data elements" and inserting in lieu thereof a comma and "data elements,";
(ii) in subparagraph (F), by striking out "and multiple data entry"; and
(iii) in subparagraph (G), by striking out "and multiple data entry"; and
(2) by amending subsection (c) to read as follows:
"(c) DELAY OF EFFECTIVE DATE OF LATE PUBLICATIONS--(1) Except as provided in paragraph (2), any regulatory changes initiated by the Secretary that affect the calculation of awards and delivery of aid to students under this title and that have not been published in final form by November 1 prior to the start of the award year shall not become effective until the beginning of the second award year after such November 1 date.
"(2)(A) The Secretary may designate any regulatory provision that affects the calculation of awards and delivery of aid to students under this title and is published in final form after November 1 as one that an entity subject to the provision may, in its discretion, choose to implement prior to the effective date described in paragraph (1). The Secretary may specify in the designation when, and under what conditions, an entity may implement the provision prior to that effective date. The Secretary shall publish any designation under this subparagraph in the Federal Register.
"(B) If an entity chooses to implement a regulatory provision prior to the effective date described in paragraph (1), as permitted by subparagraph (A), the provision shall be effective with respect to that entity in accordance with the terms of the Secretary's designation.".
FORMS, PROCESSING AND TECHNOLOGY;
MULTI-YEAR PROMISSORY NOTE
SEC. 483. Section 483 of the Act is amended--
(1) by amending the heading thereof to read as follows: "FORMS, PROCESSING, AND TECHNOLOGY.--";
(2) by amending subsection (a) to read as follows:
"(a) FORM DEVELOPMENT AND PROCESSING.--(1) FORM REQUIREMENTS--(A) The Secretary, in cooperation with representatives of agencies and organizations involved in student financial assistance, shall produce, distribute, and process free of charge a common reporting form (which may include electronic versions of the form) to be used to determine the need (including the expected family contribution and, if appropriate, cost of attendance) and eligibility of a student for financial assistance under parts A, C, D, and E, and to determine the need (including the expected family contribution and cost of attendance) of a student for purposes of part B. The Secretary may require that the common reporting form be used for the purpose of collecting eligibility and other data for purposes of part B.
"(B) In addition to the versions of the form described in subparagraph (A), the Secretary may also approve one or more additional versions of such free form (including electronic versions) for use in combination with other forms (hereinafter referred to as a 'combined form') used by an institution of higher education or other entity for purposes such as admission or determinations with respect to financial assistance other than assistance provided under this title, if the Secretary determines that such version meets the requirements of this subsection and such other requirements, such as ensuring usability, data quality and security, as the Secretary may deem necessary. Any combined form shall clearly inform a student seeking assistance by the use of such form which portions of such form are used to determine eligibility for financial assistance under this title, and that no other portions of such form need be completed in order to apply for such assistance. The Secretary may also approve a method of transferring data from another form used by the institution or other entity to the common reporting form developed by the Secretary under subparagraph (A), if it meets such requirements as the Secretary may deem necessary. The Secretary may charge the institution or other entity a fee to offset the additional costs of approving the combined form and processing the need and eligibility information collected on such form, and the Secretary may retain such fees to offset such costs.
"(C) The Secretary may also include on the form developed or approved under this paragraph such data items, selected in consultation with the States to assist the States in awarding State student financial assistance, as the Secretary determines are appropriate for inclusion.
"(2) CHARGES TO STUDENTS AND PARENTS FOR USE OF FORM PROHIBITED.--(A) The common financial reporting form developed or approved by the Secretary under paragraph (1) shall be produced, distributed, and processed by the Secretary, or according to such procedures as may be approved by the Secretary.
"(B)(i) An institution or other entity may award student financial assistance provided under this title only if the institution or other entity determines the student's eligibility and need for such assistance through the use of the form developed or approved by the Secretary under paragraph (1).
"(3) DISTRIBUTION OF DATA.--The Secretary shall provide, without charge, the data collected using the form developed or approved under this section to institutions of higher education and States for the purposes of determining need and eligibility for institutional and State financial aid awards. Entities designated by institutions of higher education or States to receive such data shall be subject to all requirements of this section, unless such requirements are waived by the Secretary.
"(4) DATA OWNERSHIP.--(A) All data collected pursuant to this section shall be the exclusive property of the Secretary and shall not be transferred to a third party without the Secretary's express written approval.
"(B) Any entity using or processing data that is the exclusive property of the Secretary--
"(i) shall not enter into any arrangements with guarantors, lenders, secondary markets, institutions of higher education, or any other entity for the purpose of reselling or sharing of such data; and
"(ii) shall adhere to all editing, processing, and reporting requirements established by the Secretary to ensure consistency.
"(5) REIMBURSEMENT.--The Secretary may reimburse institutions, or third-party servicers for such institutions, for filing electronic applications, reapplications, or corrections thereof, at such rates as may be determined by the Secretary.";
(2) in subsection (b), by amending paragraph (1) to read as follows:
"(1) STREAMLINED REAPPLICATION.--If an institution requests that the Secretary provide, directly to the institution, the streamlined reapplication form (including electronic versions) developed or approved by the Secretary consistent with the requirements of subsection (a) for those recipients attending the institution who apply for financial assistance under this title for the academic year subsequent to the initial year in which such recipients apply, the institution shall be required to used such reapplication form.";
(3) in subsection (c), by striking out "Labor" and inserting in lieu thereof "the Workforce";
(4) by striking out subsections (e) and (f);
(5) by adding at the end thereof the following new subsections:
"(e) MULTI-YEAR PROMISSORY NOTE.--(1) Notwithstanding any other provision of this title, the Secretary shall require, for loans made under this title for periods of enrollment beginning on or after July 1, 2000, the use of a promissory note applicable to more than one academic year, more than one type of loan made under this title, or both, unless the Secretary determines that a later implementation date is required to ensure that the Department has the necessary technology and systems in place to use such promissory note and to avoid any disruption to the student aid delivery process. The Secretary is authorized to take such actions as the Secretary determines are necessary to develop and test such a promissory note, including requiring the use of the promissory note on a limited or pilot basis.
"(f) MODIFICATION TO REFLECT CHANGING TECHNOLOGY AND BUSINESS PRACTICES.--(1) Notwithstanding any other provision of law, the Secretary may, through regulation, waive or modify any statutory requirement under this title regarding the aid application and delivery processes, if the Secretary determines that such waiver or modification would better meet the needs of students and program participants, and allow the Department to employ up-to-date technology and business practices that would improve the Department's administration of the programs under this title. The Secretary shall ensure that any waiver or modification under this paragraph shall be implemented at a time and in a manner that minimizes any possible disruption to the student aid application and delivery processes.
"(2) Prior to exercising the authority in paragraph (1), the Secretary shall consult with representatives of students, institutions of higher education, and other entities involved in the aid application and delivery processes regarding their recommendations concerning what waivers or modifications may be necessary to eliminate impediments to the use of technological and other business process advancements in student aid application and delivery systems.
"(g) PAYMENT FOR DATA.--The Secretary may pay such charges as the Secretary determines are necessary to obtain data that the Secretary considers essential to the efficient administration of the programs under this title.".
STUDENT ELIGIBILITY
SEC. 484. Section 484 of the Act is amended--
(1) in subsection (b)(2), in the matter preceding subparagraph (A), by striking out "section 428A" and inserting in lieu thereof "section 428H";
(2) in subsection (d), in the matter preceding paragraph (1), by striking out "any assistance under subparts 1, 3, and 4 of part A and parts (B), (C), (D), and (E) of" and inserting in lieu thereof "any grant, loan, or work assistance under";
(3) by striking out subsection (e);
(4) in subsection (f)(1)--
(A) by striking out "No student" and inserting in lieu thereof "Except as provided in paragraph (2), no student"; and
(B) by striking out "fraudulently" each place it appears;
(5) by striking out subsections (k), (l), and (o); and
(6) by redesignating subsections (m), (n), and (p) as subsections (l), (m), and (n), respectively.
REGISTRATION OF STATE COURT JUDGMENTS
SEC. 485. Section 484A of the Act is amended­­
(1) in paragraph (2)--
(A) in subparagraph (C)--
(i) by striking out "pursuant to section 453 or 463(a)"; and
(ii) by striking out "under part D or E of" and inserting in lieu thereof "by the institution under"; and
(B) in subparagraph (D), by striking out "that has been assigned to the Secretary under this title." and inserting in lieu thereof a period; and
(2) by adding at the end thereof the following new subsection:
"(c) STATE COURT JUDGMENTS.--A judgment of a State court for the recovery of money provided as grant, loan or work assistance under this title that has been assigned or transferred to the Secretary under this title may be registered in any district court by filing a certified copy of the judgment and the assignment or other transfer to the Secretary. A judgment so registered shall have the same force and effect, and may be enforced in the same manner, as a judgment of the district court of the district in which the judgment is registered.".
REFUNDS
SEC. 486. (a) Section 484B of the Act is amended to read as follows:
"RETURN OF TITLE IV FUNDS
WHEN A STUDENT CEASES ATTENDANCE AT AN INSTITUTION
"SEC. 484B. (a)(1) RETURN OF TITLE IV FUNDS BASED ON DISBURSEMENT SCHEDULE.--If a student (other than a first-time student who withdraws within the first two weeks of the payment period, in accordance with subsection (b)) withdraws from, or otherwise fails to complete, a payment period in which he or she began attendance, any grant or loan assistance under this title, other than the amount of such assistance that is earned by the student (as calculated under paragraph (2)) as of his or her last date of attendance (as defined in subsection (e)), shall be returned in accordance with subsection (c).
"(2) CALCULATION OF AMOUNT OF ASSISTANCE EARNED.--(A) The amount of grant or loan assistance earned by a student for purposes of this section is calculated by--
"(i) determining the percentage of grant and loan assistance under this title that has been earned by the student, as described in subparagraph (B); and
"(ii) applying such percentage to the total amount of such grant and loan assistance that was disbursed (and that could have been disbursed) to the student for the payment period, as of his or her last date of attendance.
"(B) For purposes of subparagraph (A)(i), the percentage of grant or loan assistance under this title that has been earned by the student is--
"(i) equal to the percentage of the payment period completed (as determined in accordance with subsection (f) as of the student's last date of attendance, provided that such date occurs on or before the completion of 60 percent of the payment period; or
"(ii) 100 percent, if the student's last date of attendance occurs after the student has completed more than 60 percent of the payment period.
"(3) DIFFERENCES BETWEEN AMOUNTS EARNED AND AMOUNTS RECEIVED.--(A) If the student has received less grant or loan assistance than the percentage earned, as calculated under paragraph (2)(B), the difference shall be disbursed to the student according to the procedures for late disbursement specified by the Secretary in regulations.
"(B) If the student has received more grant or loan assistance than the percentage earned, as calculated under paragraph (2)(B), the excess funds shall be returned by the institution or the student, or both, as may be required under subsections (c)(1) and (2), to the programs under this title in the order specified in subsection (c)(3).
"(b) FIRST-TIME STUDENTS.--(1) Notwithstanding subsection (a), and any refund policy of the institution, or applicable to the institution, in the case of a first-time student, as defined in paragraph (2), who withdraws or otherwise ceases to attend on or after his or her first day of class within the first two weeks of the payment period--
"(A) the institution shall cancel all institutional charges to the student, except that the institution may assess--
"(i) an administrative fee of not more than $100, and
"(ii) charges for meals provided by the institution to the student prior to his or her last date of attendance; and
"(B) the institution and the student shall return all funds received for institutional charges or other educational expenses for the payment period to the sources of such funds, other than--
"(i) funds attributable to the charges described in paragraph (1)(A); and
"(ii) an amount that the student shall retain that is equal to the lesser of--
"(I) $100; or
"(ii) the amount of assistance provided to the student under this title for that payment period that exceeds the institutional charges assessed the student for that payment period.
"(2) As used in this section, the term 'first-time student'--
"(A) means a student who--
"(i) has not previously attended at least one class at the institution; or
"(ii) received a refund of 100 percent of his or her institutional charges (minus any permitted administrative fee and charges for meals) for previous attendance at the institution; and
"(B) continues to apply to such student until the student--
"(i) withdraws or otherwise ceases attendance at the institution after attending at least one class; or
"(ii) completes the payment period.
"(c) RETURN OF PROGRAM FUNDS.--(1) RESPONSIBILITY OF THE INSTITUTION.--(A) The institution shall return excess funds (described in subsection (a)(3)(B)) in the order specified in paragraph (3), up to the amount of institutional charges assessed the student.
"(B) If the institution's refund policy provides for the institution to return an amount greater than the amount calculated under subsection (a), the institution shall return such excess amount to the student.
"(2) RESPONSIBILITY OF THE STUDENT.--Any excess funds (described in subsection (a)(3)(B)) remaining after the institution has returned the amount required under paragraph (1)(A) shall be the responsibility of the student to return in the order specified in paragraph (3), except that any such funds shall be returned or repaid, as the case may be, by the student to--
"(A) a loan program under part B, D, or E, in accordance with the terms of the loan; and
"(B) a grant program under this title, as an overpayment of such grant and shall be subject to overpayment collection procedures prescribed by the Secretary.
"(3) ORDER OF RETURN OF TITLE IV FUNDS .--Excess funds returned by the institution or the student, as the case may be, in accordance with paragraph (1) or (2), respectively, shall be credited in the following order:
"(A) to outstanding balances on loans made under section 428H for the payment period for which a return of funds is required;
"(B) to outstanding balances on loans made under section 428 for the payment period for which a return of funds is required;
"(C) to outstanding balances on loans made under section 428B for the payment period which a return of funds is required;
"(D) to outstanding balances on unsubsidized loans (other than parent loans) made under part D for the payment period for which a return of funds is required;
"(E) to outstanding balances on subsidized loans made under part D for the payment period for which a return of funds is required;
"(F) to outstanding balances on parent loans made under part D for the payment period for which a return of funds is required;
"(G) to outstanding balances on loans made under part E for the payment period for which a return of funds is required;
"(H) to awards under subpart 3 of part A for the payment period for which a return of funds is required;
"(I) to awards under subpart 1 of part A for the payment period for which a return of funds is required for the payment period for which a return of funds is required; and
"(J) to other assistance provided under this title for the payment period for which a return of funds is required.
"(d) LAST DATE OF ATTENDANCE.--(1) As used in this section, the term 'last date of attendance' means the date that the student last attended the institution for academic purposes, or participated in an academically related activity, as defined by the Secretary.
"(2) In order to determine the percentage of the payment period completed, and to calculate the percentage of grant or loan assistance under this title that has been earned by the student, a student who withdraws, or otherwise ceases to attend, an institution shall be required to provide written notification of his or her withdrawal, including his or her last date of attendance, to the institution. If the student fails to provide such written notification to the institution, the student shall not earn any grant or loan assistance for purposes of the calculation under subsection (a), and all such assistance shall be returned by either the institution or the student, or both, as may be required under subsection (c).
"(3) Notwithstanding paragraph (2), a student who did not provide written notification of his or her withdrawal to an institution may earn grant and loan assistance for purposes of the calculation under subsection (a) if the institution documents a last date of attendance for the student, provided that the institution has in place, and adheres to, a written policy for documenting attendance.
"(4) For each payment period, an institution shall identify each student who has withdrawn from the institution without providing written notification of his or her withdrawal, in order to determine if any title IV funds are required to be returned under this section.
"(e) PERCENTAGE OF THE PAYMENT PERIOD COMPLETED.--For purposes of subsection (a)(2)(B), the percentage of the payment period completed is determined--
"(A) in the case of a program that is measured in credit hours, by dividing the total number of days comprising the payment period into the number of days completed in that period as of the student's last date of attendance;
"(B) in the case of a program that is measured in clock hours, by dividing the total number of clock hours comprising the payment period into the number of clock hours completed by the student in that payment period as of the student's last date of attendance; and
"(C) in the case of a program of distance learning, in accordance with regulations prescribed by the Secretary.".
(b) Section 485 of the Act is amended--
(1) by amending subsection (a)(1)(F) to read as follows:
"(F) a statement of--
"(i) the refund policy of the institution for the return of unearned tuition and fees or other refundable portion of cost, as described in subparagraph (E), and any other refund policy with which the institution is required to comply;
"(ii) the requirements for the return of assistance provided underthis title when a student does not begin attendance at an institution; and
"(iii) the requirements under section 484B for the return of grant or loan assistance provided under this title when a student withdraws from, or otherwise fails to complete , a payment period in which he or she began attendance at an institution, including a specific statement informing the student of --
"(I) his or her rights, as a first-time student, under section 484B(b), including the cancellation of all institutional charges (other than an administrative fee and certain meal charges) if he or she withdraws or otherwise ceases attendance within the first two weeks of the payment period; and last date of attendance; and
"(II) his or her responsibility to provide a written notification of withdrawal and a last date of attendance to the institution, and the consequences to the student of failing to do so;"; and
(2) in subsection (f)(1)(I), by striking out "section 1213" and inserting in lieu thereof "section 139".
REPORTING OF STUDENT OUTCOMES
SEC. 487. Section 485(a) of the Act is further amended--
(1) in paragraph (1)(L)--
(A) by inserting immediately after the subparagraph heading the clause designation "(i)"; and
(B) by adding at the end thereof "and" and the following new clause:
"(ii) in the case of a program offered by such institution that is two academic years or less and provides training to prepare students for gainful employment in a recognized occupation,--
"(I) the program completion rates for students enrolled in such program;
"(II) the percentage of students who completed such program who obtain employment, as specified in the regulations of the Secretary (and, at the institution's option, the percentage of students who enrolled in such program who obtain employment as specified in the regulations of the Secretary);
"(III) the percentage of students who completed such program who obtain employment, as specified in the regulations of the Secretary, in an occupation related to the program (and, at the institution's option, the percentage of students who enrolled in such program who obtain employment, as specified in the regulations of the Secretary, in an occupation related to the program); and
"(IV) the earnings at placement of students who completed such program;"; and
(2) in paragraph (3)--
(A) in the matter preceding subparagraph (A), by striking out "subparagraph (L) of paragraph (1) of this subsection or under subsection (e)," and "such subparagraph--" and inserting in lieu thereof "paragraph (1)(L)(i) or (ii), or subsection (e)," and "paragraph (1)(L)(i) or (ii)--", respectively; and
(B) in subparagraph (A), by striking out "shall, for any academic year beginning more than 270 days after the Secretary first prescribes final regulations pursuant to such subparagraph (L)," and inserting in lieu thereof "shall".
ELECTRONIC EXIT COUNSELING
SEC. 488. Section 485(b) of the Act is amended by adding at the end thereof the following new paragraph:
"(3) An eligible institution may provide the exit counseling required by this subsection electronically, in accordance with such conditions regarding the use of electronic exit counseling as may be specified by the Secretary.".
PROGRAM PARTICIPATION AGREEMENTS
SEC. 489. Section 487 of the Act is amended--
(1) in subsection (a)--
(A) in paragraph (3), by amending subparagraph (B) to read as follows:
"(B) the State in which the institution is located;"
(B) in paragraph (4), by striking out "subsection (b) of this section" and "fiscal eligibility." and inserting in lieu thereof "subsection (c)" and "financial responsibility.", respectively;
(C) in paragraph (15), by striking out "State review entities under subpart 1 of part H" and inserting in lieu thereof "the State in which the institution is located"; and
(D) in paragraph (21), by striking out "the Secretary, State postsecondary review entities, and accrediting agencies pursuant to part H of this title." and inserting in lieu thereof "the Secretary and accrediting agencies, under part A of title I, and the State in which the institution is located.";
(2) in subsection (c)--
(A) in paragraph (1)--
(i) in subparagraph (A)(i)--
(I) by striking out "in clause (ii)," and inserting in lieu thereof "in clauses (ii) and (iii)"; and
(II) by striking out "State agencies," through the end thereof and inserting in lieu thereof "and State agencies; or"; and
(ii) by adding at the end thereof the following new clause:
"(iii) the Secretary shall specify in regulation the requirements for the submission of financial and compliance audits by an institution outside of the United States that meets the requirements of section 481(a)(1)(B)(ii);";
(B) in paragraph (3)(B)(ii), by amending the second sentence therein to read as follows: "In determining the amount of such penalty, or the amount agreed upon in compromise, the Secretary shall consider the appropriateness of the penalty to the size and resources of the institution subject to the determination; the gravity of the violation, failure, or misrepresentation; the frequency and persistence of the violation, failure, or misrepresentation; and the amount of any losses resulting from the violation, failure, or misrepresentation.";
(C) in paragraph (4), by striking out the first comma and "after consultation with each State review entity designated under subpart 1 of part H,"; and
(D) in paragraph (5), by striking out "State review entities designated under subpart 1 of part H," and inserting in lieu thereof "State agencies,".
ALTERNATIVE PROGRAMS FOR MANAGEMENT IMPROVEMENT
SEC. 490. Section 487A of the Act is amended to read as follows:
"ALTERNATIVE PROGRAMS FOR MANAGEMENT IMPROVEMENT
"SEC. 487A. (a) QUALITY ASSURANCE PROGRAM.--(1) The Secretary is authorized to select institutions for voluntary participation in a Quality Assurance Program that provides participating institutions with an alternative management approach through which individual schools develop and implement their own comprehensive management systems to enhance program integrity in the delivery of student financial aid. These systems may include, but are not limited to, processing and disbursement of student financial aid, verification of student financial aid application data, and related student services. The Secretary shall select institutions for participation in the Quality Assurance Program on the basis of criteria that include demonstrated institutional performance and quality assurance goals, as determined by the Secretary.
"(2) The Secretary is authorized to exempt any institution participating in the Quality Assurance Program from any requirements in this title, or in any regulations prescribed under this title, that are addressed by the institution's comprehensive management system and to substitute such quality assurance requirements as the Secretary deems necessary to ensure accountability and compliance with the purposes of the programs under this title.
"(3)(A) The Secretary is authorized to determine when an institution--
"(i) that is unable to administer the Quality Assurance Program must be removed from the program; or
"(ii) desiring to cease participation in the Quality Assurance Program will be required to complete the current award year under the requirements of the program.
"(B) For purposes of subparagraph (A)(ii), "current award year" means the award year during which the participating institution indicates its intention to cease participation.
"(b) EXPERIMENTAL SITES.--(1) The Secretary is authorized to select institutions, lenders, or guaranty agencies for voluntary participation as experimental sites to evaluate results and to provide recommendations to the Secretary on the impact and effectiveness of proposed regulations or new management initiatives.
"(2) The Secretary is authorized to exempt any institution, lender, or guaranty agency participating as an experimental site from any requirements in this title, or in any regulations prescribed under this title, that would bias results.".
PERFORMANCE-BASED OVERSIGHT
SEC. 491. (a) Section 487B of the Act is redesignated as section 487C.
(b) Part G of title IV of the Act is further amended by inserting immediately after section 487A the following new section:
"PERFORMANCE-BASED OVERSIGHT
"SEC. 487B. (a) The Secretary is authorized to implement by regulation a system of oversight of the student financial aid programs authorized by this title that is based on the performance of institutions in administering those programs and the financial strength of those institutions.
"(b) As a part of the system of oversight described in subsection(a), the Secretary may waive or modify any requirement in this title, or in regulations prescribed under this title, that relates to an institution's administration of student financial aid programs. The Secretary may provide such a waiver or modification only if the Secretary determines, on the basis of the institution's performance in administering those programs and its financial strength, that the waiver or modification would pose no substantial threat to program integrity.".
WAGE GARNISHMENT;
NO ATTACHMENT OF STUDENT ASSISTANCE
SEC. 492. Section 488A of the Act is amended--
(1) In the heading thereof, striking out the period at the end thereof and inserting in lieu thereof by adding at the end thereof a semicolon and "NO ATTACHMENT OF STUDENT ASSISTANCE.";
(2) in subsection (a)(5), by striking out "and, in the case of" through the end thereof and inserting in lieu thereof "whether the deduction of 10 percent of disposable pay would impose an undue hardship on the individual, and whether a lesser amount should be withheld;";
(3) in subsection (b)--
(A) by inserting the paragraph designation "(1)" immediately after the subsection heading; and
(B) by adding at the end thereof the following new paragraph:
"(2)(A) An individual is entitled to judicial review under this paragraph of--
"(i) a determination under subsection (a)(5) by the Secretary or the guaranty agency, as the case may be; or
"(ii) a final decision issued by a hearing official under paragraph (1).
"(B) An individual that desires judicial review of such determination or decision shall file with the appropriate United States district court a petition for review of such determination or decision.
"(C) The court may modify or set aside such determination or decision only if the court finds that the determination or decision was arbitrary, capricious, an abuse of discretion, or contrary to law."; and
(4) by adding at the end thereof the following new subsection:
"(e) NO ATTACHMENT OF STUDENT ASSISTANCE.--Except as authorized in this section, notwithstanding any other provision of Federal or State law, no grant, loan, or work assistance awarded under this title, or property traceable to such assistance, shall be subject to garnishment or attachment in order to satisfy any debt owed by the student awarded such assistance, other than a debt owed to the Secretary and arising under this title.".
FLEXIBILITY
SEC. 493. Part G of title IV of the Act is further amended by inserting immediately after section 489 the following new section:
"SECRETARIAL FLEXIBILITY IN LIMITED CIRCUMSTANCES
"SEC. 489A. Notwithstanding any other provision of law, the Secretary may waive or modify the application of any statutory or regulatory provision under this title--
"(1) that the Secretary determines necessary to address the unique characteristics of a program or course of distance learning (or other nontraditional method for providing education or training to students), including prescribing new regulatory requirements exclusively for such programs or courses, and to monitor effectively such programs or courses; and
"(2) including the reallocation of program funds or the alteration of application deadlines or information requirements, as the Secretary determines necessary to address the unique circumstances of individuals who have suffered financial harm in an area declared by the President to be the site of a natural disaster, as well as to issue guidance regarding such adjustments in an expedited manner and without regard to the requirements of section 437 of the General Education Provisions Act.".
ADMINISTRATIVE SUBPOENA AUTHORITY
SEC. 494. Part G of title IV of the Act is further amended by inserting immediately after section 490 the following new section:
"ADMINISTRATIVE SUBPOENAS
SEC. 490A. (a) To assist the Secretary in the conduct of investigations of possible violations of the provisions of this title, the Secretary is authorized to require by subpoena the production of information, documents, reports, answers, records, accounts, papers, and other documentary evidence pertaining to participation in any program under this title. The production of any such records may be required from any place in a State.
"(b) In case of contumacy by, or refusal to obey a subpoena issued to, any person, the Secretary may request the Attorney General to invoke the aid of any court of the United States where such person resides or transacts business for a court order for the enforcement of this section.".
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Last updated: April 4, 2002 by [pss]

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