Archived Information

Reauthorization of the Higher Education Act


Title I--General Provisions and Program Integrity Triad Repeals;

Creation of New General Provisions and Program Integrity Title

SEC. 101. (a) REPEALS.--Title I, Part H of Title IV, and Title XII of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq., hereinafter in this Act referred to as "the Act") are repealed.
(b) NEW TITLE I.--The Act is further amended by inserting immediately after the enacting clause the following new title:

"TITLE I -- GENERAL PROVISIONS

"PART A -- DEFINITIONS; PROGRAM INTEGRITY TRIAD
"SUBPART 1 -- DEFINITIONS; STATE AUTHORIZATION OF INSTITUTIONS

"DEFINITIONS; STATE AUTHORIZATION OF INSTITUTIONS

"SEC. 101. As used in this Act:
"(a)(1) The term 'institution of higher education' means an educational institution in any State that­­
"(A) admits as regular students only persons who­­
"(i) have a high school diploma or its recognized equivalent; or
"(ii) are beyond the age of compulsory school attendance in the State in which the institution is located;
"(B) is legally authorized within such State to provide a program of education beyond secondary education;
"(C) provides an eligible program, as defined in paragraph (2);
"(D) is a public or other nonprofit institution; and
"(E) is­­
"(i) fully accredited by an accrediting agency or association recognized by the Secretary under subpart 2 to be a reliable authority as to the quality of education or training offered; or
"(ii) preaccredited by an accrediting agency or association that has been recognized by the Secretary for the granting of preaccreditation status pursuant to subpart 2.
"(2) Subject to paragraph (3), the term 'eligible program' means an educational program­­
"(A) the successful completion of which leads to an associate, baccalaureate, professional, or graduate degree;
"(B) that consists of not less than two academic years and is acceptable for full credit toward a baccalaureate degree;
"(C) that is at least--
"(i) 600 clock hours of instruction, 16 semester hours, or 24 quarter hours, offered during a minimum of 15 weeks, in the case of a program of training to prepare students for gainful employment in a recognized occupation; or
"(ii) 300 clock hours of instruction, 8 semester hours, or 12 quarter hours, offered during a minimum of 10 weeks, in the case of--
"(I) an undergraduate program that requires an associate degree or its equivalent for admission; or
"(II) a graduate or professional program; or
"(D) for purposes of parts B and D of title IV, in addition to the programs described in subparagraphs (A), (B), and (C), that is at least 300 clock hours of instruction, but less than 600 clock hours of instruction, offered during a minimum of 10 weeks, that provides training to prepare students for gainful employment in a recognized occupation.
"(3)(A) Except as provided in subparagraphs (B) and (C), in order for a program of one academic year or less that is offered by a proprietary institution of higher education (as defined in section 481(b)) and provides training to prepare students for gainful employment in a recognized occupation to be an eligible program for purposes of title IV, that program shall also--
"(i)(I) have a verified completion rate of at least 70 percent, as determined in accordance with the regulations of the Secretary;
"(II) have a verified placement rate of at least 70 percent, as determined in accordance with the regulations of the Secretary; and
"(III) satisfy such additional criteria as the Secretary may prescribe by regulation; or
"(ii) have, for students that enrolled in the program, a verified placement rate of at least 70 percent in the recognized occupation for which its students are trained, or in a related, comparable, recognized occupation, as determined in accordance with the regulations of the Secretary.
"(B) The Secretary may prescribe in regulation performance measures in addition to, or in lieu of, the requirements in subparagraph (A), with which the program shall be required to comply.
"(C) The requirements of subparagraph (A) shall be phased in as follows:
"(i) in the case of a program that meets the definition of an eligible program as in effect on the day before the date of enactment of this provision­­
"(I) the program shall be deemed to satisfy the requirements of subparagraph (A) through the first complete award year after the date of enactment of this provision;
"(II) after the first complete award year, the program shall be required to satisfy the requirements of subparagraph (A)(i)(I) in order to be deemed to satisfy the requirements of subparagraph (A) for the succeeding award year; and
"(III) after the second complete award year, the program shall be required, for each succeeding award year, to satisfy the requirements of subparagraph (A) in order to be considered an eligible program; and
"(ii) in the case of a program that does not meet the definition of an eligible program as in effect on the day before the date of enactment of this provision­­
"(I) the program shall be deemed to satisfy the requirements of subparagraph (A) for the award year in which the program is awarded initial eligibility and the succeeding award year;
"(II) after the period described in subclause (I), the program shall be required to satisfy the requirements of subparagraph (A)(i)(I) or (ii) in order to be deemed to satisfy the requirements of subparagraph (A) for the next succeeding award year; and
"(III) after the period described in subclause (II), the program shall be required, for each succeeding award year, to satisfy the requirements of subparagraph (A) in order to be considered an eligible program.
"(b) The term 'State' means a State, the Commonwealth of Puerto Rico, the District of Columbia, Guam, American Samoa, the Virgin Islands, the government of the Northern Mariana Islands, the government of the Federated States of Micronesia, the government of the Republic of Palau and the government of the Marshall Islands.
"(c) The term 'nonprofit' as applied to a school, agency, organization, or institution means a school, agency, organization, or institution owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.
"(d) The term 'secondary school' has the same meaning given that term under section 14101(25) of the Elementary and Secondary Education Act of 1965.
"(e) The term 'Secretary' means the Secretary of Education.
"(f) The term 'local educational agency' has the same meaning given that term under section 14101(18) of the Elementary and Secondary Education Act of 1965.
"(g) The term 'State educational agency' has the same meaning given that term under section 14101(28) of the Elementary and Secondary Education Act of 1965.
"(h) The term 'State higher education agency' means the officer or agency primarily responsible for the State supervision of higher education.
"(i) The term 'elementary school' has the same meaning given that term under section 14101(14) of the Elementary and Secondary Education Act of 1965.
"(j) The term 'combination of institutions of higher education' means a group of institutions of higher education that have entered into a cooperative arrangement for the purpose of carrying out a common objective, or a public or private nonprofit agency, organization, or institution designated or created by a group of institutions of higher education for the purpose of carrying out a common objective on their behalf.
"(k) The term 'gifted and talented' has the same meaning given that term under section 14101(16) of the Elementary and Secondary Education Act of 1965.
"(l) The term 'school or department of divinity' means an institution, or a department or branch of an institution, the program of instruction of which is designed for the education of students (A) to prepare them to become ministers of religion or to enter upon some other religious vocation (or to provide continuing training for any such vocation), or (B) to prepare them to teach theological subjects.
"(m) The term 'Department' means the Department of Education.
"(n) The term 'disability' has the same meaning given that term under section 3(2) of the Americans With Disabilities Act of 1990 (42 U.S.C. 12102(2)).
"(o) The term 'special education teacher' means a teacher who teaches children with disabilities as defined in the Individuals With Disabilities Education Act (20 U.S.C. 1400 et seq.).
"(p) The term 'service­learning' has the same meaning given that term under section 101(23) of the National and Community Service Act of 1990 (42 U.S.C. 12511(23)).
"SUBPART 2 -- ACCREDITING AGENCY APPROVAL

"APPROVAL OF ACCREDITING AGENCY OR ASSOCIATION
"SEC. 111. (a) STANDARDS REQUIRED.--No accrediting agency or association may be determined by the Secretary to be a reliable authority as to the quality of education or training offered for the purposes of this Act or for other Federal purposes, unless the agency or association meets standards established by the Secretary pursuant to this section. The Secretary shall, after notice and opportunity for a hearing, establish standards for such determinations. Such standards shall include an appropriate measure or measures of student achievement. Such standards shall require that--
"(1) the accrediting agency or association be a State, regional, or national agency or association and demonstrate the ability and the experience to operate as an accrediting agency or association within the State, region, or Nation, as appropriate;
"(2) the agency or association--
"(A)(i) for the purpose of participation in programs under this Act, has a voluntary membership of institutions of higher education and has as a principal purpose the accrediting of institutions of higher education; or
"(ii) for the purpose of participation in other programs administered by the Department of Education or other Federal agencies, has a voluntary membership and has as its principal purpose the accrediting of institutions of higher education or programs;
"(B) is a State agency approved by the Secretary for the purpose described in subparagraph (A); or
"(C) is an agency or association that, for the purpose of determining eligibility for student assistance under title IV, conducts accreditation through--
"(i) a voluntary membership organization of individuals participating in a profession; or
"(ii) an agency or association that has as its principal purpose the accreditation of programs within institutions that are accredited by another agency or association recognized by the Secretary;
"(3) if such agency or association is an agency or association described in--
"(A) paragraph (2)(A)(i), then such agency or association is separate and independent, both administratively and financially of any related, associated, or affiliated trade association or membership organization;
"(B) paragraph (2)(B), then such agency or association has been recognized by the Secretary on or before October 1, 1991; or
"(C) paragraph (2)(C), and such agency or association has been recognized by the Secretary on or before October 1, 1991, then such agency or association is separate and independent, both administratively and financially of any related, associated, or affiliated trade association or membership organization, but the Secretary may waive this requirement upon a demonstration that the existing relationship has not served to compromise the independence of its accreditation process;
"(4) such agency or association consistently applies and enforces standards that ensure that the courses or programs of instruction, training, or study at the institution of higher education are of sufficient quality to achieve, for the duration of the accreditation period, the stated objective for which the courses or the programs are offered;
"(5) the standards of accreditation of the agency or association assess the institution's--
"(A) curricula;
"(B) faculty;
"(C) facilities, equipment, and supplies;
"(D) fiscal and administrative capacity as appropriate to the specified scale of operations;
"(E) student support services;
"(F) recruiting and admissions practices, academic calendars, catalogs, publications, grading and advertising;
"(G) program length and tuition and fees in relation to the subject matters taught and the objectives of the degrees or credentials offered;
"(H) measures of program length in clock hours or credit hours;
"(I) success with respect to student achievement in relation to its mission, including, as appropriate, consideration of course completion, State licensing examination, and job placement rates;
"(J) default rates in the student loan programs under title IV of this Act, based on the most recent data provided by the Secretary;
"(K) record of student complaints received by, or available to, the agency or association;
"(L) compliance with its program responsibilities under title IV of this Act, including any results of financial or compliance audits, program reviews, and such other information as the Secretary may provide to the agency or association;
"(M) distance learning program or courses (if any are offered by the institution), including the institution's criteria for the selection of students, its provisions for monitoring student progress, the academic and student support services available to students, and its measures of educational outcomes; and
"(N) refund policy;
"except that subparagraphs (G), (H), (I), (J), (L), (M), and (N) shall not apply to agencies or associations described in paragraph (2)(A)(ii);
"(6) such agency or association shall apply procedures throughout the accrediting process, including evaluation and withdrawal proceedings, that comply with due process, including--
"(A) adequate specification of requirements and deficiencies at the institution of higher education or program being examined;
"(B) notice of an opportunity for a hearing by any such institution;
"(C) the right to appeal any adverse action against any such institution; and
"(D) the right to representation by counsel for any such institution;
"(7) such agency or association shall notify the Secretary, and the appropriate State entity that licenses or authorizes the institution, within 30 days of the accreditation of an institution or any final denial, withdrawal, suspension, or termination of accreditation or placement on probation of an institution, together with any other adverse action taken with respect to an institution;
"(8) such agency or association shall make available to the public, upon request, and to the Secretary and the State in which the institution of higher education is located a summary of any review resulting in a final accrediting decision involving denial, termination, or suspension of accreditation, together with the comments of the affected institution; and
"(9) such agency or association shall have in effect a fair and equitable refund policy establishing the minimum terms and conditions under which an institution of higher education accredited by the agency or association shall return unearned tuition, fees, room and board, and other charges to a student, if the student withdraws from, or otherwise fails to complete, the period of enrollment for which such charges were assessed.
"(b) SEPARATE AND INDEPENDENT DEFINED.--For the purpose of subsection (a)(3), the term 'separate and independent' means that--
"(1) the members of the postsecondary education governing body of the accrediting agency or association are not elected or selected by the board or chief executive officer of any related, associated, or affiliated trade association or membership organization;
"(2) among the membership of the board of the accrediting agency or association there shall be one public member (who is not a member of any related trade or membership organization) for each six members of the board, with a minimum of one such public member, and guidelines are established for such members to avoid conflicts of interest;
"(3) dues to the accrediting agency or association are paid separately from any dues paid to any related, associated, or affiliated trade association or membership organization; and
"(4) the budget of the accrediting agency or association is developed and determined by the accrediting agency or association without review or resort to consultation with any other entity or organization.
"(c) OPERATING PROCEDURES REQUIRED.--No accrediting agency or association may be approved by the Secretary as a reliable authority as to the quality of education or training offered by an institution seeking to participate in the programs authorized under this title, unless the agency or association--
"(1)(A) performs, at regularly established intervals, on­site inspections and reviews of institutions of higher education, with particular focus on educational quality and program effectiveness, and ensures that accreditation team members are well­trained and knowledgeable with respect to their responsibilities; and
"(B) if at least 10 percent of the institutions accredited by the agency or association have a cohort default rate for the most recent year of 20 percent or more, performs at least one unannounced on-site inspection or review, during the interval between the agency's grant of accreditation or preaccreditation to the institution or program and the expiration of the accreditation or preaccreditation period, at each institution that is accredited by the agency or association and offers vocational education;
"(2) requires that any institution of higher education subject to its jurisdiction that plans to establish a branch campus submit a business plan, including projected revenues and expenditures, prior to opening the branch campus;
"(3) agrees to conduct, as soon as practicable, but within a period of not more than 6 months of the establishment of a new branch campus or a change of ownership of an institution of higher education, an on­site visit of that branch campus or of the institution after a change of ownership;
"(4) requires that teach­out agreements among institutions are subject to approval by the accrediting agency or association, consistent with standards promulgated by such agency or association;
"(5) maintains, and makes publicly available, written materials regarding standards and procedures for accreditation, appeal procedures, and the accreditation status of each institution subject to its jurisdiction; and
"(6) discloses publicly whenever an institution of higher education subject to its jurisdiction is being considered for accreditation or reaccreditation.
"(d) LENGTH OF APPROVAL.--No accrediting agency or association may be approved by the Secretary for the purpose of this Act for a period of more than 5 years.
"(e) INITIAL ARBITRATION RULE.--The Secretary may not recognize the accreditation of any institution of higher education unless the institution of higher education agrees to submit any dispute involving the final denial, withdrawal, or termination of accreditation to initial arbitration prior to any other legal action.
"(f) JURISDICTION.--Notwithstanding any other provision of law, any civil action brought by an institution of higher education seeking accreditation from, or accredited by, an accrediting agency or association approved by the Secretary for the purpose of this title and involving the denial, withdrawal, or termination of accreditation of the institution of higher education, shall be brought in the appropriate United States district court.
"(g) LIMITATION ON SCOPE OF STANDARDS.--Nothing in this Act shall be construed to permit the Secretary to establish standards for accrediting agencies or associations that are not required by this section. Nothing in this Act shall be construed to prohibit or limit any accrediting agency or association from adopting additional standards not provided for in this section.
"(h) CHANGE OF ACCREDITING AGENCY.--The Secretary shall not recognize the accreditation of any otherwise eligible institution of higher education if the institution of higher education is in the process of changing its accrediting agency or association, unless the eligible institution submits to the Secretary all materials relating to the prior accreditation, and the Secretary determines, based upon the materials submitted by the institution, that the institution had reasonable cause for changing the accrediting agency or association.
"(i) DUAL ACCREDITATION RULE.--The Secretary shall not recognize the accreditation of any otherwise eligible institution of higher education if the institution of higher education is accredited, as an institution, by more than one accrediting agency or association, unless the institution submits to each such agency and association and to the Secretary the reasons for accreditation by more than one such agency or association and demonstrates to the Secretary reasonable cause for its accreditation by more than one agency or association. If the institution is accredited, as an institution, by more than one accrediting agency or association, the institution shall designate which agency's accreditation shall be utilized in determining the institution's eligibility for programs under this Act.
"(j) IMPACT OF LOSS OF ACCREDITATION.--An institution may not be certified or recertified under subpart 3 for purposes of title IV, or participate in any of the other programs authorized by this Act, if such institution--
"(1) is not currently accredited by any agency or association recognized by the Secretary;
"(2) has had its accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months, unless such withdrawal, revocation, or termination has been rescinded by the same accrediting agency; or
"(3) has withdrawn from accreditation voluntarily under a show cause or suspension order during the preceding 24 months, unless such order has been rescinded by the same accrediting agency.
"(k) RELIGIOUS INSTITUTION RULE.--Notwithstanding subsection (j), the Secretary shall allow an institution that has had its accreditation withdrawn, revoked, or otherwise terminated, or has voluntarily withdrawn from an accreditation agency, to remain certified as an institution of higher education under subpart 3 for a period sufficient to allow such institution to obtain alternative accreditation, if the Secretary determines that the reason for the withdrawal, revocation, or termination--
"(1) is related to the religious mission or affiliation of the institution; and
"(2) is not related to the accreditation standards provided for in this section.
"(l) LIMITATION, SUSPENSION, OR TERMINATION OF APPROVAL.--(1) The Secretary shall limit, suspend, or terminate the approval of an accrediting agency or association if the Secretary determines, after notice and opportunity for a hearing, that the accrediting agency or association has failed to apply effectively the standards, or operate according to the procedures, provided in this section.
"(2) The Secretary may determine that an accrediting agency or association has failed to apply effectively the standards provided in this section if an institution of higher education seeks and receives accreditation from the accrediting agency or association during any period in which the institution is the subject of any interim action by another accrediting agency or association, described in subsection (a)(2)(A)(i), (2)(B), or (2)(C), leading to the suspension, revocation, or termination of accreditation, or the institution has been notified of the threatened loss of accreditation, and the due process procedures required by such suspension, revocation, termination, or threatened loss have not been completed.
"(m) LIMITATION ON THE SECRETARY'S AUTHORITY.--The Secretary may recognize only accrediting agencies or associations that--
"(1) accredit institutions of higher education for the purpose of enabling such institutions to establish eligibility to participate in the programs under this Act; or
"(2) accredit institutions of higher education or higher education programs for the purpose of enabling them to establish eligibility to participate in other programs administered by the Department of Education or other Federal agencies.
"(n) INDEPENDENT EVALUATION.--(1) The Secretary shall conduct a comprehensive review and evaluation of the performance of all accrediting agencies or associations that seek recognition by the Secretary in order to determine whether such accrediting agencies or associations meet the standards established by this section. The Secretary shall conduct an independent evaluation of the information provided by such agency or association. Such evaluation shall include--
"(A) the solicitation of third­party information concerning the performance of the accrediting agency or association; and
"(B) site visits, including unannounced site visits as appropriate, at accrediting agencies and associations, and, at the Secretary's discretion, at representative member institutions.
"(2) The Secretary shall place a priority for review of accrediting agencies or associations on those agencies or associations that accredit institutions of higher education that participate most extensively in the programs authorized by this title and on those agencies or associations that have been the subject of the most complaints or legal actions.
"(3) The Secretary shall consider all available relevant information concerning the compliance of the accrediting agency or association with the standards provided for in this section, including any complaints or legal actions against such agency or association. In cases where deficiencies in the performance of an accreditation agency or association with respect to the requirements of this section are noted, the Secretary shall take these deficiencies into account in the approval process. The Secretary shall not, under any circumstances, base decisions on the approval or disapproval of accreditation agencies or associations on standards other than those contained in this section.
"(4) The Secretary shall maintain sufficient documentation to support the conclusions reached in the approval process, and, upon disapproval of any accreditation agency or association, shall make publicly available the reason for such disapproval, including reference to the specific standards under this section that have not been fulfilled.
"(o) REGULATIONS.--The Secretary shall by regulation provide procedures for the recognition of accrediting agencies or associations and for the appeal of the Secretary's decisions.
"SUBPART 3--ELIGIBILITY AND CERTIFICATION PROCEDURES

"ELIGIBILITY AND CERTIFICATION PROCEDURES
"SEC. 121. (a) GENERAL REQUIREMENT.--For purposes of qualifying institutions of higher education for participation in programs under title IV, the Secretary shall determine the legal authority to operate within a State, the accreditation status, and the administrative capability and financial responsibility of an institution of higher education in accordance with the requirements of this section.
"(b) SINGLE APPLICATION FORM.--The Secretary shall prepare and prescribe a single application form that--
"(1) requires sufficient information and documentation to determine that the requirements of eligibility, accreditation, and capability of the institution of higher education are met;
"(2) requires a specific description of the relationship between a main campus of an institution of higher education and all of its branches, including a description of the student aid processing that is performed by the main campus and that which is performed at its branches;
"(3) requires--
"(A) a description of third party servicers of an institution of higher education; and
"(B) the institution to maintain a copy of any contract with a financial aid service provider or loan servicer, and provide a copy of any such contract to the Secretary upon request; and
"(4) requires such other information as the Secretary determines will ensure compliance with the requirements of this title with respect to eligibility, accreditation, administrative capability and financial responsibility.
"(c) FINANCIAL RESPONSIBILITY STANDARDS.--(1) The Secretary shall determine whether an institution has the financial responsibility required by this subpart on the basis of whether the institution is able--
"(A) to provide the services described in its official publications and statements;
"(B) to provide the administrative resources necessary to comply with the requirements of this title; and
"(C) to meet all of its financial obligations, including (but not limited to) refunds of institutional charges and repayments to the Secretary for liabilities and debts incurred in programs administered by the Secretary.
"(2) Notwithstanding paragraph (1), if an institution fails to meet criteria prescribed by the Secretary regarding ratios that demonstrate financial responsibility, the institution shall provide the Secretary with satisfactory evidence of its financial responsibility in accordance with paragraph (3). Such criteria shall take into account any differences in generally accepted accounting principles, and the financial statements required thereunder, that are applicable to for-profit and nonprofit institutions. The Secretary shall take into account an institution's total financial circumstances in making a determination of its ability to meet the standards herein required.
"(3) The Secretary shall determine an institution that is currently eligible to participate in the programs under title IV to be financially responsible, notwithstanding the institution's failure to meet the criteria under paragraphs (1) and (2), if--
"(A) such institution submits to the Secretary third­party financial guarantees, such as letters of credit payable to the Secretary, that shall equal not less than one­half of the annual potential liabilities of such institution to--
"(i) the Secretary for funds under title IV, including loan obligations discharged pursuant to section 437; and
"(ii) students for refunds of institutional charges, including funds under title IV;
"(B) such institution has its liabilities backed by the full faith and credit of a State, or its equivalent;
"(C) such institution establishes to the satisfaction of the Secretary, with the support of a financial statement audited by an independent certified public accountant in accordance with generally accepted auditing standards, that the institution has sufficient resources to ensure against the precipitous closure of the institution, including the ability to meet all of its financial obligations (including refunds of institutional charges and repayments to the Secretary for liabilities and debts incurred in programs administered by the Secretary); or
"(D) such institution has met standards of financial responsibility, prescribed by the Secretary by regulation, that indicate a level of financial strength not less than those required in paragraph (2).
"(4) If an institution of higher education that provides a 2­year or 4­year program of instruction for which the institution awards an associate or baccalaureate degree fails to meet the ratio of current assets to current liabilities imposed by the Secretary pursuant to paragraph (2), the Secretary shall waive that particular requirement for that institution if the institution demonstrates to the satisfaction of the Secretary that--
"(A) there is no reasonable doubt as to its continued solvency and ability to deliver quality educational services;
"(B) it is current in its payment of all current liabilities, including student refunds, repayments to the Secretary, payroll, and payment of trade creditors and withholding taxes; and
"(C) it has substantial equity in school­occupied facilities, the acquisition of which was the direct cause of its failure to meet the current operating ratio requirement.
"(5) The determination as to whether an institution has met the standards of financial responsibility provided for in paragraphs (2) and (3)(C) shall be based on an audited and certified financial statement of the institution. Such audit shall be conducted by a qualified independent organization or person in accordance with standards established by the American Institute of Certified Public Accountants. Such statement shall be submitted to the Secretary at the time such institution is considered for certification or recertification under this section. If the institution is permitted to be certified (provisionally or otherwise) and such audit does not establish compliance with paragraph (2), the Secretary may require that additional audits be submitted.
"(6)(A) The Secretary shall establish requirements for the maintenance by an institution of higher education of sufficient cash reserves to ensure repayment of any required refunds.
"(B) The Secretary shall provide for a process under which the Secretary shall exempt an institution of higher education from the requirements described in subparagraph (A) if the Secretary determines that the institution--
"(i) is located in a State that has a tuition recovery fund that ensures that the institution meets the requirements of subparagraph (A);
"(ii) contributes to the fund; and
"(iii) otherwise has legal authority to operate within the State.
"(d) ADMINISTRATIVE CAPACITY STANDARD.--The Secretary is authorized--
"(1) to establish procedures and requirements relating to the administrative capacities of institutions of higher education, including--
"(A) consideration of past performance of institutions, or persons in control of such institutions, with respect to student aid programs; and
"(B) maintenance of records;
"(2) to establish such other reasonable procedures as the Secretary determines will contribute to ensuring that the institution of higher education will comply with administrative capability required by this subpart.
"(e) FINANCIAL GUARANTEES FROM OWNERS.--(1) Notwithstanding any other provision of law, the Secretary may, to the extent necessary to protect the financial interest of the United States, require--
"(A) financial guarantees from an institution participating, or seeking to participate, in a program under title IV, or from one or more individuals who the Secretary determines, in accordance with paragraph (2), exercise substantial control over such institution, or both, in an amount determined by the Secretary to be sufficient to satisfy the institution's potential liability to the Federal Government, student assistance recipients, and other program participants for funds under title IV; and
"(B) the assumption of personal liability, by one or more individuals who exercise substantial control over such institution, as determined by the Secretary in accordance with paragraph (2), for financial losses to the Federal Government, student assistance recipients, and other program participants for funds under title IV, and civil monetary penalties and criminal fines authorized under title IV.
"(2)(A) The Secretary may determine that an individual exercises substantial control over one or more institutions participating in a program under title IV if the Secretary determines that--
"(i) the individual directly or indirectly controls a substantial ownership interest in the institution;
"(ii) the individual, either alone or together with other individuals, represents, under a voting trust, power of attorney, proxy, or similar agreement, one or more persons who have, individually or in combination with the other persons represented or the individual representing them, a substantial ownership interest in the institution; or
"(iii) the individual is a member of the board of directors, the chief executive officer, or other executive officer of the institution or of an entity that holds a substantial ownership interest in the institution.
"(B) The Secretary may determine that an entity exercises substantial control over one or more institutions participating in a program under title IV if the Secretary determines that the entity directly or indirectly holds a substantial ownership interest in the institution.
"(3) For purposes of this subsection, an ownership interest is defined as a share of the legal or beneficial ownership or control of, or a right to share in the proceeds of the operation of, an institution or institution's parent corporation. An ownership interest may include, but is not limited to--
"(A) a sole proprietorship;
"(B) an interest as a tenant­in­common, joint tenant, or tenant by the entireties;
"(C) a partnership; or
"(D) an interest in a trust.
"(4) The Secretary shall not impose the requirements described in subparagraphs (A) and (B) of paragraph (1) on an institution that--
"(A) has not been subjected to a limitation, suspension, or termination action by the Secretary or a guaranty agency within the preceding 5 years;
"(B) has not had, during its 2 most recent audits of the institution's conduct of programs under title IV, an audit finding that resulted in the institution being required to repay an amount greater than 5 percent of the funds the institution received from programs under title IV for any year;
"(C) meets and has met, for the preceding 5 years, the financial responsibility standards under subsection (c); and
"(D) has not been cited during the preceding 5 years for failure to submit audits required under this subpart or under title IV in a timely fashion.
"(5) For purposes of section 487(c)(1)(I), this section shall also apply to individuals or organizations that contract with an institution to administer any aspect of an institution's student assistance program under title IV.
"(f) ACTIONS ON APPLICATIONS; SITE VISITS.--The Secretary shall ensure that prompt action is taken by the Department on any application required under subsection (b). The Secretary may establish priorities by which institutions are to receive site visits, if any, and may coordinate such visits with site visits by States, guaranty agencies, and accrediting bodies in order to eliminate duplication, and reduce administrative burden.
"(g) TIME LIMITATIONS ON, AND RENEWAL OF, ELIGIBILITY.--(1) Except as provided in paragraph (2), after the expiration of the certification of any institution, or upon a request for initial certification from an institution not previously certified, the Secretary may certify, for the purposes of any program authorized under title IV, the eligibility of each such institution for a period not to exceed 4 years. The Secretary may certify any such institution, or any category of institutions, for a lesser period, as he determines necessary.
"(2) The Secretary shall prescribe in regulation the recertification requirements applicable to an institution outside of the United States that meets the requirements of section 481(a)(1)(C) and received less than $500,000 in funds under part B of title IV for the most recent year.
"(h) PROVISIONAL CERTIFICATION OF INSTITUTIONAL ELIGIBILITY.--(1) Notwithstanding subsections (d) and (g), and subject to subsection (i)(4), the Secretary may provisionally certify an institution's eligibility to participate in programs under title IV--
"(A) for not more than one complete award year in the case of an institution of higher education seeking an initial certification; and
"(B) for not more than 3 complete award years if--
"(i) the institution's administrative capability and financial responsibility are being determined for the first time;
"(ii) there is a complete or partial change of ownership, as defined under subsection (i), of an eligible institution; or
"(iii) the Secretary determines that an institution that seeks to renew its certification is, in the judgment of the Secretary, in an administrative or financial condition that may jeopardize its ability to perform its responsibilities under a program participation agreement.
"(2) Whenever the Secretary withdraws the approval of any accrediting agency, the Secretary may, notwithstanding the withdrawal, continue the eligibility of an institution of higher education that meets the requirements of accreditation, eligibility, and certification on the day prior to such withdrawal, to participate in the programs authorized by title IV for a period not to exceed 18 months from the date of the withdrawal of approval.
"(3) If, prior to the end of a period of provisional certification under this subsection, the Secretary determines that the institution is unable to meet its responsibilities under its program participation agreement, the Secretary may revoke the institution's further participation in programs under title IV.
"(i) TREATMENT OF CHANGES OF OWNERSHIP.--(1) An eligible institution of higher education that has had a change in ownership resulting in a change of control shall not qualify to participate in programs under title IV after the change in control (except as provided in paragraph (3) or (4)) unless it establishes that it meets the requirements of section 481 (other than the requirements in subsection (b)(1)(B)) and this section after such change in control.
"(2) An action resulting in a change in control may include (but is not limited to)--
"(A) the sale of the institution or the majority of its assets;
"(B) the transfer of the controlling interest of stock of the institution or its parent corporation;
"(C) the merger of two or more eligible institutions;
"(D) the division of one or more institutions into two or more institutions;
"(E) the transfer of the controlling interest of stock of the institutions to its parent corporation; or
"(F) the transfer of the liabilities of the institution to its parent corporation.
"(3) An action that may be treated as not resulting in a change in control includes (but is not limited to)--
"(A) the sale or transfer, upon the death of an owner of an institution, of the ownership interest of the deceased in that institution to a family member or to a person holding an ownership interest in that institution; or
"(B) another action determined by the Secretary to be a routine business practice.
"(4)(A) The Secretary may provisionally certify an institution seeking approval of a change in ownership based on the preliminary review by the Secretary of a materially complete application that is received by the Secretary within 10 business days of the transaction for which the approval is sought.
"(B) A provisional certification under this paragraph shall expire no later than the end of the month following the transaction, except that if the Secretary has not issued a decision on the application for the change of ownership within that period, the Secretary may continue such provisional certification on a month-to-month basis until such decision has been issued.
"(j) TREATMENT OF BRANCHES.--(1) A branch of an eligible institution of higher education, as defined pursuant to regulations of the Secretary, shall be certified under this subpart before it may participate as part of such institution in a program under title IV, except that such branch shall not be required to meet the requirements of section 481(b)(1)(B) prior to seeking such certification. Such branch is required to be in existence at least 2 years after it has been certified by the Secretary as a branch campus participating in a program under title IV, prior to seeking certification as a main campus or free­standing institution.
"(2) The Secretary may waive the requirement of section 101(a)(1)(B)for a branch that--
"(A) is not located in a State;
"(B) is affiliated with an eligible institution; and
"(C) was participating in one or more programs under title IV on or before January 1, 1992.
"PROGRAM REVIEW; DATA
"SEC. 122. (a) GENERAL AUTHORITY.--In order to strengthen the administrative capability and financial responsibility provisions applicable to title IV, the Secretary--
"(1) shall provide for the conduct of program reviews on a systematic basis designed to include all institutions of higher education participating in programs authorized by title IV;
"(2) may give priority for program review to institutions of higher education that are--
"(A) institutions with a cohort default rate for loans under part B of title IV in excess of 25 percent, or that places such institutions in the highest 25 percent of such institutions;
"(B) institutions with a default rate in dollar volume for loans under part B of title IV that places the institutions in the highest 25 percent of such institutions;
"(C) institutions with a significant fluctuation in Federal Stafford Loan volume or Federal Pell Grant awards, or both, in the year for which the determination is made compared to the year prior to such year;
"(D) institutions reported to have deficiencies or financial aid problems by the State in which it is located, or by the appropriate accrediting agency or association;
"(E) institutions with high annual dropout rates; and
"(F) such other institutions as the Secretary deems necessary; and
"(3) shall establish and operate a central data base of information on institutional accreditation, eligibility, and certification that includes--
"(A) all information available to the Department;
"(B) all relevant information made available by the Secretary of Veterans Affairs;
"(C) all relevant information from accrediting agencies or associations;
"(D) all relevant information available from a guaranty agency; and
"(E) all relevant information available from States.
"(b) SPECIAL ADMINISTRATIVE RULES.-­In carrying out subsections (a)(1) and (2), the Secretary shall­­
"(1) establish guidelines designed to ensure uniformity of practice in the conduct of program reviews of institutions of higher education; and
"(2) take such measures as the Secretary determines necessary to ensure the uniform interpretation and application of the regulations of the Department.
"(c) AVAILABILITY OF INFORMATION.-The Secretary may make the information obtained under subsection (a)(3) readily available to all institutions of higher education, guaranty agencies, States, and other organizations participating in the programs authorized by title IV.
"(d) TRAINING.--The Secretary may provide training to personnel of the Department, including criminal investigative training, designed to improve the quality of financial and compliance audits and program reviews conducted under title IV.
"(e) SPECIAL RULE.--The provisions of section 103(b) of the Department of Education Organization Act shall not apply to Secretarial determinations made regarding the appropriate length of instruction for programs measured in clock hours.
"PART B -- GENERAL PROVISIONS

"ANTIDISCRIMINATION REQUIREMENTS
FOR INSTITUTIONS OF HIGHER EDUCATION
RECEIVING FEDERAL ASSISTANCE
"SEC. 131. (a) IN GENERAL.--Institutions of higher education receiving Federal financial assistance may not use such financial assistance, directly or indirectly, to undertake any study or project, or fulfill the terms of any contract, containing an express or implied provision that any person or persons of a particular race, religion, sex, or national origin be barred from performing such study, project, or contract, except that no institution shall be barred from conducting objective studies or projects concerning the nature, effects, or prevention of discrimination, or have its curriculum restricted on the subject of discrimination against any such person.
"(b) LIMITATIONS ON STATUTORY CONSTRUCTION.--Nothing in this Act shall be construed to limit the rights or responsibilities of any individual under the Americans With Disabilities Act of 1990 (42 U.S.C. 12101 et seq.), the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), or any other law.
"FEDERAL CONTROL OVER EDUCATION PROHIBITED
"SEC. 132. Nothing contained in this Act, or any other Act, shall be construed to authorize any department, agency, officer, or employee of the United States to exercise any direction, supervision, or control over the membership practices or internal operations of any fraternal organization, fraternity, sorority, private club or religious organization at an institution of higher education (other than a service academy or the Coast Guard Academy) that is financed exclusively by funds derived from private sources and whose facilities are not owned by such institution.
"TREATMENT OF TERRITORIES
AND TERRITORIAL STUDENT ASSISTANCE
"SEC. 133. (a) The Secretary is required to waive the eligibility criteria of any postsecondary education program administered by the Department where such criteria do not take into account the unique circumstances in Guam, the Virgin Islands, American Samoa, Palau, the Commonwealth of the Northern Mariana Islands, and the freely associated states.
"(b) Notwithstanding any other provision of law, an institution of higher education that is located in any of the freely associated states, rather than a State, shall be eligible, if otherwise qualified, for assistance under chapter 1 of subpart 2 of part A of title IV of this Act.
"NATIONAL ADVISORY COMMITTEE
ON INSTITUTIONAL QUALITY AND INTEGRITY
"SEC. 134. (a) ESTABLISHMENT.--There is established in the Department a National Advisory Committee on Institutional Quality and Integrity (hereinafter in this section referred to as the 'Committee'), which shall be composed of 15 members appointed by the Secretary from among individuals who are representatives of, or knowledgeable concerning, education and training beyond secondary education, including representatives of all sectors and types of institutions of higher education (as defined in section 481(a)), to assess the process of eligibility and certification of such institutions under subpart 3 of part A, and the provision of financial aid under title IV.
"(b) TERMS OF MEMBERS.--Terms of office of each member of the Committee shall be 3 years, except that any member appointed to fill in a vacancy occurring prior to the expiration of the term for which the member's predecessor was appointed shall be appointed for the remainder of such term.
"(c) FUNCTIONS.--The Committee shall--
"(1) advise the Secretary with respect to establishment and enforcement of the standards of accrediting agencies or associations under subpart 2 of part A;
"(2) advise the Secretary with respect to the recognition of a specific accrediting agency or association;
"(3) advise the Secretary with respect to the preparation and publication of the list of nationally recognized accrediting agencies and associations;
"(4) develop and recommend to the Secretary standards and criteria for specific categories of vocational training institutions and institutions of higher education for which there are no recognized accrediting agencies, associations, or State agencies, in order to establish the eligibility of such institutions on an interim basis for participation in federally funded programs;
"(5) advise the Secretary with respect to the eligibility and certification process for institutions of higher education under subpart 3 of part A, together with recommendations for improvements in such process;
"(6) advise the Secretary with respect to the relationship between-­
"(A) accreditation of institutions of higher education and the certification and eligibility of such institutions; and
"(B) State licensing responsibilities with respect to such institutions; and
"(7) carry out such other advisory functions relating to accreditation and institutional eligibility as the Secretary may prescribe.
"(d) MEETING PROCEDURES.--The Committee shall meet not less than twice each year at the call of the Chairperson. The date of, and agenda for, each meeting of the Committee shall be submitted in advance to the Secretary for approval. A representative of the Secretary shall be present at all meetings of the Committee.
"(e) REPORT.--The Committee shall, not later than November 30 of each year, make an annual report through the Secretary to the Congress. The annual report shall contain--
"(1) a list of the members of the Committee and their addresses;
"(2) a list of the functions of the Committee;
"(3) a list of dates and places of each meeting during the preceding fiscal year; and
"(4) a summary of the activities, findings and recommendations made by the Committee during the preceding fiscal year.
"(f) TERMINATION.--The National Advisory Committee on Institutional Quality and Integrity shall continue to exist until September 30, 2003.
"STUDENT REPRESENTATION
"SEC. 135. The Secretary shall, in appointing individuals to any commission, committee, board, panel, or other body in connection with the administration of this Act, include individuals who are, at the time of appointment, attending an institution of higher education.
"FINANCIAL RESPONSIBILITY OF FOREIGN STUDENTS
"SEC. 136. Nothing in this Act, or any other Federal law, shall be construed to prohibit any institution of higher education from requiring a student who is a foreign national (and not admitted to permanent residence in the United States) to guarantee the future payment of tuition and fees to such institution by--
"(1) making advance payment of such tuition and fees;
"(2) making deposits in an escrow account administered by such institution for such payments; or
"(3) obtaining a bond or other insurance that such payments will be made.
"DISCLOSURES OF FOREIGN CONTROL,
FOREIGN GIFTS, AND CONTRACTS WITH FOREIGN SOURCES
"SEC. 137. (a) DISCLOSURE REPORT.--Whenever any institution is owned or controlled by a foreign source, or receives a gift from, or enters into a contract with, a foreign source, the value of which is $250,000 or more, considered alone or in combination with all other gifts from or contracts with that foreign source within a calendar year, the institution shall file a disclosure report with the Secretary on January 31 or July 31, whichever is sooner.
"(b) CONTENTS OF REPORT.--Each report to the Secretary required by this section shall contain:
"(1) For gifts received from or contracts entered into with a foreign source other than a foreign government, the aggregate dollar amount of such gifts and contracts attributable to a particular country. The country to which a gift is attributable is the country of citizenship, or if unknown, the principal residence for a foreign source who is a natural person, and the country of incorporation, or if unknown, the principal place of business, for a foreign source which is a legal entity.
"(2) For gifts received from or contracts entered into with a foreign government, the aggregate amount of such gifts and contracts received from each foreign government.
"(3) In the case of an institution which is owned or controlled by a foreign source, the identity of the foreign source, the date on which the foreign source assumed ownership or control, and any changes in program or structure resulting from the change in ownership or control.
"(c) ADDITIONAL DISCLOSURES FOR RESTRICTED AND CONDITIONAL GIFTS.-- Notwithstanding subsection (b), whenever any institution receives a restricted or conditional gift or contract from a foreign source, the institution shall disclose:
"(1) For such gifts received from or contracts entered into with a foreign source other than a foreign government, the amount, the date, and a description of such conditions or restrictions. The report shall also disclose the country of citizenship, or if unknown, the principal residence for a foreign source which is a natural person, and the country of incorporation, or if unknown, the principal place of business for a foreign source which is a legal entity.
"(2) For gifts received from or contracts entered into with a foreign government, the amount, the date, a description of such conditions or restrictions, and the name of the foreign government.
"(d) RELATION TO OTHER REPORTING REQUIREMENTS.--(1) STATE REQUIREMENTS.--If an institution described under subsection (a) is within a State that has enacted requirements for public disclosure of gifts from, or contracts with, a foreign source that are substantially similar to the requirements of this section, a copy of the disclosure report filed with the State may be filed with the Secretary in lieu of a report required under subsection (a). The State in which the institution is located shall provide to the Secretary such assurances as the Secretary may require to establish that the institution has met the requirements for public disclosure under State law if the State report is filed.
"(2) USE OF OTHER FEDERAL REPORTS.--If an institution receives a gift from, or enters into a contract with, a foreign source, where any other department, agency, or bureau of the Executive Branch requires a report containing requirements substantially similar to those required under this section, a copy of this report may be filed with the Secretary in lieu of a report required under subsection (a).
"(e) PUBLIC INSPECTION.--All disclosure reports required by this section shall be public records open to inspection and copying during business hours.
"(f) ENFORCEMENT.--(1) COURT ORDERS.--Whenever it appears that an institution has failed to comply with the requirements of this section, including any rule or regulation promulgated thereunder, the Secretary may request the Attorney General to commence a civil action in an appropriate district court of the United States, or the appropriate United States court of any territory or other place subject to the jurisdiction of the United States, to request such court to compel compliance with the requirements of this section.
"(2) COSTS.--For knowing or willful failure to comply with the requirements of this section, including any rule or regulation promulgated thereunder, an institution shall pay to the Treasury of the United States the full costs to the United States of obtaining compliance, including all associated costs of investigation and enforcement.
"(g) REGULATIONS.--The Secretary may promulgate regulations to carry out the ministerial duties imposed on the Secretary by this section.
"(h) DEFINITIONS.--For the purpose of this section--
"(1) the term 'contract' means any agreement for the acquisition by purchase, lease, or barter of property or services by the foreign source, for the direct benefit or use of either of the parties;
"(2) the term 'foreign source' means--
"(A) a foreign government, including an agency of a foreign government;
"(B) a legal entity, governmental or otherwise, created solely under the laws of a foreign state or states;
"(C) an individual who is not a citizen or a national of the United States or a trust territory or protectorate thereof; or
"(D) an agent, including a subsidiary or affiliate of a foreign legal entity, acting on behalf of a foreign source;
"(3) the term 'gift' means any gift of money or property;
"(4) the term 'institution' means any institution, public or private, or, if a multicampus institution, any single campus of such institution, in any State,--
"(A) that meets the requirements of section 101(a)(2), (3)(A) and (B), and (5); and
"(B) to which Federal financial assistance is extended (directly or indirectly through another entity or person), or that receives support from the extension of Federal financial assistance to any of its subunits; and
"(5) the term 'restricted or conditional gift or contract' means any endowment, gift, grant, contract, award, present, or property of any kind which includes provisions regarding--
"(A) the employment, assignment, or termination of faculty;
"(B) the establishment of departments, centers, research or lecture programs, or new faculty positions;
"(C) the selection or admission of students; or
"(D) the award of grants, loans, scholarships, fellowships, or other forms of financial aid restricted to students of a specified country, religion, sex, ethnic origin, or political opinion.
"APPLICATION OF PEER REVIEW PROCESS
"SEC. 138. All applications submitted under this Act that require peer review shall be read by a panel of readers composed of individuals selected by the Secretary, which shall include outside readers who are not employees of the Federal Government. The Secretary shall ensure that no individual assigned under this section to review any application has any conflict of interest with regard to that application which might impair the impartiality with which that individual conducts the review under this section.
"DRUG AND ALCOHOL ABUSE POLICIES
"SEC. 139. (a) CERTIFICATION REQUIREMENTS.--Notwithstanding any other provision of law, no institution of higher education shall be eligible to receive funds or any other form of financial assistance under any Federal program, including participation in any federally funded or guaranteed student loan program, unless it certifies to the Secretary that it has adopted and has implemented a program to prevent the use of illicit drugs and the abuse of alcohol by students and employees that, at a minimum, includes--
"(1) the annual distribution to each student and employee of --
"(A) standards of conduct that clearly prohibit, at a minimum, the unlawful possession, use, or distribution of illicit drugs and alcohol by students and employees on its property or as part of any of its activities;
"(B) a description of the applicable legal sanctions under local, State, or Federal law for the unlawful possession or distribution of illicit drugs and alcohol;
"(C) a description of the health risks associated with the use of illicit drugs and the abuse of alcohol;
"(D) a description of any drug or alcohol counseling, treatment, or rehabilitation or re­entry programs that are available to employees or students; and
"(E) a clear statement that the institution will impose sanctions on students and employees (consistent with local, State, and Federal law), and a description of those sanctions, up to and including expulsion or termination of employment and referral for prosecution, for violations of the standards of conduct required by subparagraph (A); and
"(2) a biennial review by the institution of its program to--
"(A) determine its effectiveness and implement changes to the program if they are needed; and
"(B) ensure that the sanctions required by paragraph (1)(E) are consistently enforced.
"(b) AVAILABILITY TO SECRETARY AND PUBLIC OF ANNUAL DISTRIBUTIONS AND BIENNIAL REVIEWS.--Each institution of higher education that provides the certification required by subsection (a) shall, upon request, make available to the Secretary and to the public a copy of each item required by subsection (a)(1) as well as the results of the biennial review required by subsection (a)(2).
"(c) REGULATIONS; SANCTIONS.--(1) The Secretary shall publish regulations to implement and enforce the provisions of this section, including regulations that provide for--
"(A) the periodic review of a representative sample of programs required by subsection (a); and
"(B) a range of responses and sanctions for institutions of higher education that fail to implement their programs or to consistently enforce their sanctions, including information and technical assistance, the development of a compliance agreement, and the termination of any form of Federal financial assistance.
"(2) The sanctions required by subsection (a)(1)(E) may include the completion of an appropriate rehabilitation program.
"(d) PROCEDURES APPLICABLE UPON TERMINATION OF FINANCIAL ASSISTANCE.--Upon a determination by the Secretary to terminate financial assistance to any institution of higher education under this section, the institution may file an appeal with an administrative law judge before the expiration of the 30­day period beginning on the date such institution is notified of the decision to terminate financial assistance under this section. Such judge shall hold a hearing with respect to such termination of assistance before the expiration of the 45­day period beginning on the date that such appeal is filed. Such judge may extend such 45­day period upon a motion by the institution concerned. The decision of the judge with respect to such termination shall be considered to be a final agency action.
"EVALUATION AND PERFORMANCE MEASUREMENT
"SEC. 140. (a) AUTHORIZATION OF APPROPRIATIONS.--(1) There are authorized to be appropriated for fiscal year 1999, and the four succeeding fiscal years, such sums as may be necessary for the Secretary to--
"(A) carry out comprehensive evaluations of any programs authorized by this Act, and the performance of recipients of funds under this Act, as the Secretary determines appropriate;
"(B) evaluate the aggregate short­ and long­term net effects and cost efficiencies across Federal programs under this Act and related Federal postsecondary education and training programs under other Federal laws; and
"(C) assess the impacts of student financial assistance policies.
"(2) The appropriations authorized under paragraph (1) shall be in addition to any other appropriations for evaluations and related activities authorized by this Act.
"(b) PERFORMANCE GOALS AND INDICATORS.--(1) An applicant for funds under a program authorized by this Act that the Secretary determines shall be evaluated in accordance with this section shall include in its application--
"(A) in a manner consistent with the performance indicators established by the Secretary under paragraph (2), the applicant's objective, quantifiable and measurable performance goals that are to be achieved by the activities supported by such funds; and
"(B) the applicant's policies and procedures for evaluating the effectiveness of its activities in reaching those performance goals.
"(2) The Secretary shall publish performance indicators for a variety of activities under the programs authorized by this Act that the Secretary determines shall be evaluated under this section, which recipients shall use in evaluating and reporting on the effectiveness of their activities under such programs that are associated with their performance goals under paragraph (1)(A) for such activities.
"(3) The Secretary shall award funds under a program authorized by this Act to an otherwise eligible applicant only if the applicant's performance goals are sufficiently rigorous as to meet the purposes of the program and the performance indicators for the program as established by the Secretary under paragraph (2).
"(4) In the case of a continuation award for the second and succeeding years of a grant, the Secretary shall make such continuation award only after determining that the grantee is making sufficient progress toward achieving its performance goals under paragraph (1)(A).
"(c) INFORMATION COLLECTION.-The Secretary is authorized to collect such information as may reasonably be necessary to evaluate the effectiveness and operations of any program authorized by this Act that the Secretary determines shall be evaluated under this section, including the performance of any recipient of funds under such program.".

(c) STUDY OF ACCREDITING AGENCY STANDARDS FOR DISTANCE LEARNING.--(1) The Secretary of Education shall conduct a study to examine the effectiveness with which accrediting agencies and associations are developing and enforcing the distance learning standards described in section 111(a)(5) of the Higher Education Act of 1965.
(2) Not later than two years after the date of enactment, the Secretary shall prepare and submit to Congress a report on the study authorized by this subsection, together with such recommendations as are deemed appropriate.
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Last updated: April 4, 2002 by [pss]

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