Sec. 4633. On-time repayment rates
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Part G of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1088 et seq.), as amended by the preceding sections, is further amended by adding at the end the following: The term on-time repayment rate means for any fiscal year in which 30 or more current and former students at an institution have been in repayment for 3 years on any covered loan received for attendance at the institution, the percentage of such current and former students who have paid at least 90 percent of the monthly payments on such loan during such 3-year repayment period.
For any fiscal year in which fewer than 30 of an institution’s current and former students have been in repayment for 3 years, the term on-time repayment rate means the percentage of such current and former students who entered their 3rd year of repayment on any covered loan received for attendance at the institution in any of the 3 most recent fiscal years and who have paid at least 90 percent of the monthly payments on such loan during such 3-year repayment period. In the case of a student who has attended and borrowed a covered loan for attendance at more than one institution, the student (and such student's subsequent repayment or monthly payment on such loan) is attributed to each institution for attendance at which the student received such loan for which the student entered the 3rd year of repayment in the fiscal year for which the on-time repayment rate is being determined.
For purposes of determining whether a student is in repayment (or has paid a monthly payment) on a loan under section 428C or a Federal Direct Consolidation Loan, only the portion of such loan that is used to repay a covered loan received for attendance at the institution whose on-time repayment rate is being determined shall be considered for purposes of such rate. For purposes of determining the on-time repayment rate of an institution, a student shall be considered to have paid a monthly payment on a covered loan if one of the following applies:
The amount of such monthly payment has been paid not later than 30 days after the date on which such monthly payment is due, except that a monthly payment by the institution, such institution’s owner, agent, contractor, employee, or any other entity or individual affiliated with such institution made on behalf of a student who is not employed by the institution shall not be considered a paid monthly payment on such loan. The monthly payment amount due on such loan is equal to zero.
The full amount due on the loan has been repaid or the liability on the loan has been otherwise discharged under this Act. The student is in a period of deferment, other than— a deferment due to an economic hardship described section 427(a)(2)(C)(iii), 428(b)(1)(M)(iv), or 455(f)(2)(D); or a deferment due to unemployment described in section 427(a)(2)(C)(ii), 428(b)(1)(M)(ii), or 455(f)(2)(B). The student is in one of the following periods of forbearance (as applicable to loans made, insured, or guaranteed under part B or this title):
Medical or dental internship or residency forbearance under subclause
(I)of section 428(c)(3)(A)(i). National service forbearance under subclause
(III)of section 428(c)(3)(A)(i). Forbearance for active duty service in the Armed Forces under subclause
(IV)of section 428(c)(3)(A)(i). Forbearance for National Guard Duty under section 428(c)(3)(B). Forbearance due to military mobilization or other local or national emergency as authorized by the Secretary under section 685.205(b)(8) of title 34, Code of Federal Regulations (as in effect on the date of enactment of the College Affordability Act). Teacher loan forgiveness forbearance under section 682.213(e) or 685.205(a)(5) of title 34, Code of Federal Regulations (as in effect on the date of enactment of the College Affordability Act ). An institution that demonstrates to the Secretary that the institution's participation rate is equal to or less than 20 percent for any of the 3 most recent fiscal years for which data is available shall not be subject to subsection (b). For purposes of this paragraph, the term participation rate means the percentage of the institution's regular students, enrolled on at least a half-time basis, who received a covered loan for a 12-month period ending during the 6 months immediately preceding the fiscal year for which the cohort of borrowers used to calculate the institution's on-time loan repayment rate is determined. An institution shall provide the Secretary with sufficient data to determine the institution's participation rate within 30 days after receiving an initial notification of the institution’s draft on-time repayment rate. Prior to publication of a final on-time repayment rate for an institution that provides the data described in subparagraph (C), the Secretary shall notify the institution of the institution's compliance or noncompliance with subparagraph (A). Except as provided in subparagraphs
(C)and (D), beginning on the date that is one year after the date on which the final on-time repayment rates are published by the Secretary for not less than 3 fiscal years, an institution shall not be eligible to participate in a program under this title for the fiscal year for which the determination under this subparagraph is made and for the two succeeding fiscal years, if the Secretary determines the following with respect to such institution— the on-time repayment rate of such institution is less than any threshold on-time repayment rate specified under subparagraph
(B)for period determined appropriate by the Secretary for such threshold rate; and with respect to any of the 3 most recent institutional fiscal years for which the institution submits to the Secretary disclosures on the expenditures of the institution on instruction for purposes of section 132(i)(1)(AA), the amount expended by such institution on instruction for such fiscal year is less than 1/3 of the institution’s revenues derived from tuition and fees. For purposes of determinations under subparagraph (A)(i), the Secretary shall specify 1 or more threshold on-time repayment rates, which rates— shall require that a significant percentage of students who have been in repayment for 3 years on a covered loan received for attendance at an institution of higher education have paid at least 90 percent of the monthly payments on such covered loan during such 3-year repayment period; and may be applicable with respect to a period of 1 or more fiscal years, as determined appropriate for such a rate. With respect to an institution that loses eligibility to participate in a program under this title in accordance with paragraph (1), such institution may request and be granted an exception to such loss of eligibility for a category of educational programs at such institution by demonstrating to the Secretary that the on-time loan repayment rate for such category of educational programs is greater than the threshold percentage specified under paragraph (1)(B) for each fiscal year of the period on which such loss of eligibility for the institution is based. In determining the on-time loan repayment rate for a category of educational programs, subsection (a)(1) shall be applied— in subparagraph (A), by substituting received for enrollment in the category of educational programs for which such rate is being determined for received for attendance at the institution ; and as if the following were added at the end of such paragraph: In the case of a student who has received a covered loan for enrollment in more than one category of educational programs, the student (and such student's subsequent repayment or monthly payment on such covered loan) is attributed to the last category of educational programs in which such student was enrolled. . Not later than 60 days of receiving notification from the Secretary of the loss of eligibility under subparagraph (A), the institution may appeal the loss of its eligibility under subsection (c). Beginning on the date that is one year after the date on which the final on-time repayment rates are published by the Secretary for not less than 3 fiscal years, an institution shall be subject to the requirements of subparagraph (B), if the Secretary determines the following with respect to such institution— the on-time repayment rate of such institution is less than any threshold on-time repayment rate specified under paragraph (1)(B) for period determined appropriate by the Secretary for such threshold rate; and for each of the 3 most recent institutional fiscal years for which the institution submits to the Secretary disclosures on the expenditures of the institution on instruction for purposes of section 132(i)(1)(AA), the amount expended by the institution for instructional spending is greater than or equal to an amount equal to 1/3 of the amount of revenue derived from tuition and fees. An institution subject to the requirements of this subparagraph, shall— not later than 6 months after the determination under subparagraph (A), submit to the Secretary a repayment management plan which the Secretary, in the Secretary’s discretion, after consideration of the institution’s history, resources, expenditures, and targets for improving on-time repayment, determines— is acceptable and is in the best interests of students; and provides reasonable assurance that the institution will have an on-time repayment rate that exceeds the on-time threshold referred to in subparagraph (A)(i) after a reasonable period; engage an independent third-party to provide technical assistance in implementing such repayment management plan; and provide to the Secretary, on an annual basis or at such other intervals as the Secretary may require, evidence of on-time repayment rate improvement and successful implementation of such repayment management plan. The Secretary shall issue a decision on any appeal submitted by an institution under subsection (b)(1)(D) not later than 45 days after its submission. Such decision may permit the institution to continue to participate in a program under this title if— the institution demonstrates to the satisfaction of the Secretary that the Secretary's calculation of its on-time repayment rate is not accurate, and that recalculation would increase its on-time repayment rate above the applicable threshold percentage specified in subsection (b)(1)(B) for the period on which the determination of the institution’s ineligibility under subsection (b)(1)(A) was based; the institution demonstrates to the satisfaction of the Secretary that there has been improper loan servicing, which, if remedied, would increase its on-time repayment rate above the applicable threshold percentage specified in subsection (b)(1)(B) for the period on which the determination of the institution’s ineligibility under subsection (b)(1)(A) was based; there are, in the judgment of the Secretary, exceptional mitigating circumstances that would make the application of this section inequitable; for each of the 3 most recent fiscal years for which the institution submits to the Secretary disclosures on expenditures for purposes of section 132(i)(1)(AA), the sum of the expenditures on instruction and student services of the institution is equal to an amount greater than or equal to 50 percent of the institution’s revenues derived from tuition and fees, and the institution complies with the requirements of subsection (b)(2)(B). If an institution continues to participate in a program under this title, and the institution's 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 interest, special allowance, reinsurance, and any related payments made by the Secretary (or which the Secretary is obligated to make) with respect to covered loans to students attending, or planning to attend, that institution during the pendency of such appeal. During such appeal, the Secretary may permit the institution to continue to participate in a program under this title. The Secretary shall prescribe regulations designed to prevent an institution from evading the application to that institution of a on-time repayment rate determination under this section through the use of such measures as branching, consolidation, change of ownership or control, or any similar device. The Secretary shall publish not less often than once every fiscal year (by September 30 of each year) a report— for each category of institution, and for each institution for which an on-time repayment rate is determined under this section— with respect to the preceding fiscal year— the on-time repayment rate for such institution; the on-time repayment rate for each category of educational programs; and the number of students on which the rates described in clauses
(i)and
(ii)are based; and for each of the 3 most recent fiscal years for which the institution submits to the Secretary disclosures on expenditures for purposes of section 132(i)(1)(AA)— the amount of the institution’s expenditures on instruction; the amount of revenue derived from tuition and fees by the institution; and the quotient of the amount described in clause
(i)divided by the amount described in clause (ii), expressed as a percentage; and each on-time repayment rate used for calculating each of the threshold rates under subsection (b)(1)(B) for the period determined appropriate by the Secretary for such threshold rate under such subsection. In this section: The term category of educational programs has the meaning given the term in section 435(a)(9)(E). The term category of institution includes— four-year public institutions; four-year private nonprofit institutions; four-year proprietary institutions; two-year public institutions; two-year private nonprofit institutions; two-year proprietary institutions; less-than-two year public institutions; less-than-two year private nonprofit institutions; and less-than-two year proprietary institutions. The term covered loan means a loan made, insured, or guaranteed under part B or D (other than an excepted PLUS Loan or an excepted consolidation Loan). The terms excepted PLUS Loan and excepted consolidation Loan have the meanings given such terms in section 493C(a). The term student services has the meaning given the term in section 498E(a)(2). .
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Sec. 4633
On-time repayment rates
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