Sec. 2. 85/15 rule

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Section 102(b) of the Higher Education Act of 1965 ( 20 U.S.C. 1002(b) ) is amended— in paragraph (1)— in subparagraph (D), by striking and after the semicolon; in subparagraph (E), by striking the period and inserting ; and ; and by adding at the end the following: meets the requirements of paragraph (2). ; by redesignating paragraph

(2)as paragraph (3); and by inserting after paragraph

(1)the following: In order to qualify as a proprietary institution of higher education under this subsection, an institution shall derive not less than 15 percent of the institution's revenues from sources other than Federal funds, as calculated in accordance with subparagraphs

(B)and (C). In this paragraph, the term Federal funds means any Federal financial assistance provided, under this Act or any other Federal law, through a grant, contract, subsidy, loan, guarantee, insurance, or other means to a proprietary institution, including Federal financial assistance that is disbursed or delivered to an institution or on behalf of a student or to a student to be used to attend the institution, except that such term shall not include any monthly housing stipend provided under the Post-9/11 Veterans Educational Assistance Program under chapter 33 of title 38, United States Code. In making calculations under subparagraph (A), an institution of higher education shall— use the cash basis of accounting; consider as revenue only those funds generated by the institution from— tuition, fees, and other institutional charges for students enrolled in programs eligible for assistance under title IV; activities conducted by the institution that are necessary for the education and training of the institution's students, if such activities are— conducted on campus or at a facility under the control of the institution; performed under the supervision of a member of the institution's faculty; and required to be performed by all students in a specific educational program at the institution; and a contractual arrangement with a Federal agency for the purpose of providing job training to low-income individuals who are in need of such training; presume that any Federal funds that are disbursed or delivered to an institution on behalf of a student or directly to a student will be used to pay the student's tuition, fees, or other institutional charges, regardless of whether the institution credits such funds to the student's account or pays such funds directly to the student, except to the extent that the student's tuition, fees, or other institutional charges are satisfied by— grant funds provided by an outside source that— has no affiliation with the institution; and shares no employees with the institution; and institutional scholarships described in clause (v); include no loans made by an institution of higher education as revenue to the school, except for payments made by students on such loans; include a scholarship provided by the institution— only if the scholarship is in the form of monetary aid based upon the academic achievements or financial need of students, disbursed to qualified student recipients during each fiscal year from an established restricted account; and only to the extent that funds in that account represent designated funds, or income earned on such funds, from an outside source that— has no affiliation with the institution; and shares no employees with the institution; and exclude from revenues— the amount of funds the institution received under part C of title IV, unless the institution used those funds to pay a student's institutional charges; the amount of funds the institution received under subpart 4 of part A of title IV; the amount of funds provided by the institution as matching funds for any Federal program; the amount of Federal funds provided to the institution to pay institutional charges for a student that were refunded or returned; and the amount charged for books, supplies, and equipment, unless the institution includes that amount as tuition, fees, or other institutional charges. Not later than July 1, 2016, and by July 1 of each succeeding year, the Secretary shall submit to the authorizing committees a report that contains, for each proprietary institution of higher education that receives assistance under title IV and as provided in the audited financial statements submitted to the Secretary by each institution pursuant to the requirements of section 487(c)— the amount and percentage of such institution's revenues received from Federal funds; and the amount and percentage of such institution's revenues received from other sources. . Section 487 of the Higher Education Act of 1965 ( 20 U.S.C. 1094 ) is amended— in subsection (a)— by striking paragraph (24); by redesignating paragraphs

(25)through

(29)as paragraphs

(24)through (28), respectively; in paragraph (24)(A)(ii) (as redesignated by subparagraph (B)), by striking subsection

(e)and inserting subsection

(d); and in paragraph

(26)(as redesignated by subparagraph (B)), by striking subsection

(h)and inserting subsection

(g); by striking subsection (d); by redesignating subsections

(e)through

(j)as subsections

(d)through (i), respectively; in subsection (f)(1) (as redesignated by paragraph (3)), by striking subsection (e)(2) and inserting subsection (d)(2) ; and in subsection (g)(1) (as redesignated by paragraph (3)), by striking subsection (a)(27) in the matter preceding subparagraph

(A)and inserting subsection (a)(26) . The Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. ) is amended— in section 152 ( 20 U.S.C. 1019a )— in subsection (a)(1)(A), by striking subsections (a)(27) and

(h)of section 487 and inserting subsections (a)(26) and

(g)of section 487 ; and in subsection (b)(1)(B)(i)(I), by striking section 487(e) and inserting section 487(d) ; in section 153(c)(3) ( 20 U.S.C. 1019b(c)(3) ), by striking section 487(a)(25) each place the term appears and inserting section 487(a)(24) ; in section 496(c)(3)(A) ( 20 U.S.C. 1099b(c)(3)(A) ), by striking section 487(f) and inserting section 487(e) ; and in section 498(k)(1) ( 20 U.S.C. 1099c(k)(1) ), by striking section 487(f) and inserting section 487(e) .

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Sec. 2

85/15 rule

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