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Code · BILL · 116th Congress · S. 867 (Introduced in Senate) — To protect students of institutions of higher education and the taxpayer investment in institutions of higher educati... · Sec. 102

Sec. 102. Process for for-profit institutions to convert to nonprofit or public status

1,018 words·~5 min read·/bill/116/s/867/is/section-102

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Part B of title I (20 U.S.C. 1011 et seq.) is further amended by adding at the end the following: In any case where the Secretary determines that a for-profit institution of higher education, as defined in section 102(b), meets the applicable requirements of subsection (b), the Secretary shall approve the conversion of the institution of higher education to a nonprofit or public institution of higher education for not more than a 5-year period. For each for-profit institution that is converted under this section to a nonprofit or public institution of higher education, the Secretary shall— review the determination not less than once every 5 years; and at the conclusion of a review described in subparagraph (A)— in a case where the Secretary determines the institution continues to meet the requirements of this section, approve the institution’s status as a nonprofit institution of higher education or public institution of higher education for an additional period not to exceed 5 years; and in a case where the Secretary determines the institution no longer meets the requirements, classify the institution as a for-profit institution.
To be eligible to convert to a nonprofit or public institution of higher education, a for-profit institution of higher education shall submit an application to the Secretary that demonstrates that— the institution, as of the date of the application, meets the definition of a nonprofit or public institution of higher education; the institution has not acquired any other institution of higher education (as defined in section 102), or a significant portion of the assets of such other institution, for more than the value of such other institution or such assets, respectively, as determined in accordance with subsection (d); and in the case of an institution that has been acquired by another party, such institution is not controlled by such party.
A for-profit institution of higher education approved for conversion under subsection
(a)shall be subject to any rules and regulations that apply to for-profit institutions of higher education, as defined in section 102(b), for a minimum 5-year period after conversion, which may be extended by the Secretary if the Secretary identifies a reason for concern relating to the institution’s converted status. The term value , with respect to an acquisition under subsection (b)(2)— includes the value of any ongoing relationship (including any contract, agreement, lease, or other arrangement between the acquiring institution and the acquired institution) between affiliates, as defined in section 180.905 of title 2, Code of Federal Regulations, as in effect on the date of enactment of the PROTECT Students Act of 2019 ; and may be demonstrated through— third-party valuation; independent financing of the acquisition based upon the assets acquired; or full and open competition in the acquisition, as such term is defined in section 2.101(b) of title 48, Code of Federal Regulations, as in effect on the date of the enactment of the PROTECT Students Act of 2019 , of services or assets. Before the Secretary may approve the conversion of an institution of higher education under subsection (a), the Secretary shall publish the application of the institution in the Federal Register with a notice and comment period of not less than 60 days. The Secretary shall publish each determination on an application for conversion under this section, and the reasons for such determination, in the Federal Register. In carrying out this section, the Secretary may consider the nonprofit corporation status under State law or the tax exempt status of an institution of higher education under section 501(c)(3) of the Internal Revenue Code of 1986, but shall not use such statuses as the sole determining factor for approval under subsection (a). A for-profit institution of higher education that receives assistance under title IV that is seeking to convert under this section shall not promote or market itself, in any manner, as a nonprofit institution of higher education until— the Secretary has approved the conversion of the institution to a nonprofit institution under this section; the Commissioner of Internal Revenue has approved the institution as tax exempt for purposes of the Internal Revenue Code of 1986 and the institution is an organization described in clause
(ii)or
(vi)of section 170(b)(1)(A) of such Code; and a nationally recognized accrediting agency or association recognized by the Secretary pursuant to section 496 has approved the nonprofit status of the institution. . Section 487(c)(1) of the Act (20 U.S.C. 1094(c)(1)) is amended— by redesignating subparagraphs
(B)through
(I)as subparagraphs
(C)through (J), respectively; and by inserting after subparagraph
(A)the following: a requirement that an institution of higher education shall use the same qualified, independent organization or person, in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, for both the financial and compliance audits required for a given year under subparagraph (A); a requirement that the qualified, independent organization or person chosen to conduct the annual financial and compliance audits under subparagraph
(A)shall document, in the audit, any transactions or relationships that may conflict with an institution’s status as a nonprofit institution of higher education or public institution of higher education; and in accordance with section 489A, in any case where the Secretary determines, after providing an institution with reasonable notice and an opportunity for a hearing, that the institution is classified as a public institution of higher education or a nonprofit institution for purposes of this Act but is in violation of, or has failed to carry out, any requirements relating to such nonprofit or public status in accordance with paragraphs
(13)and
(15)of section 103 or section 124, a process through which the Secretary may— limit, suspend, or terminate the institution’s participation in any program under this title under section 489A(b)(1); impose a civil penalty under section 489A(c); or take an emergency action under section 498A(d) against an institution. ; Section 487(i) (20 U.S.C. 1094(i)), as redesignated by section 101(b)(3), is further amended— by striking subsection (c)(1)(D), ; and by inserting or subsection (b)(1) or
(c)of section 489A after of this section .
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Sec. 102
Process for for-profit institutions to convert to nonprofit or public status
U.S.C.§ 1011
U.S.C.§ 1094
Cites 2Cited by 0 across 0 sources
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