Sec. 302. Regulatory relief

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Section 668.28 of title 34, Code of Federal Regulations (relating to the 90/10 rule), as added or amended by the final regulations published by the Department of Education in the Federal Register on October 28, 2022 (87 Fed. Reg. 65426 et seq.), is repealed and will have no force or effect. Section 487 of the Higher Education Act of 1965 ( 20 U.S.C. 1094 ) is amended— in subsection (a), by striking paragraph (24); by striking subsection (d); and by redesignating subsections

(e)through

(j)as subsections

(d)through (i), respectively. Sections 600.10, 600.21, 668.2, 668.13, 668.43, 668.91, 668.402 through 668.409 (excluding section 668.408), and 668.601 through 668.606 of title 34, Code of Federal Regulations (relating to financial value transparency and gainful employment), as added or amended by the final regulations published by the Department of Education in the Federal Register on October 10, 2023 (88 FR 70004 et seq.), are repealed and will have no force or effect. The Secretary of Education shall not, on or after the date of enactment of this Act, promulgate or enforce any regulation or rule with respect to the definition or application of the term gainful employment for any purpose under the Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. ). Sections 600.2, 600.4, 600.20, 600.21, and 600.31 of title 34, Code of Federal Regulations (relating to changes in ownership), as added or amended by the final regulations published by the Department of Education in the Federal Register on October 28, 2022 (87 Fed. Reg. 65426 et seq.), are repealed and will have no force or effect. Section 498(i) of the Higher Education Act of 1965 ( 20 U.S.C. 1099c(i) ) is amended— in the subsection heading, by inserting after and Proposed Changes of Ownership ; Ownership in paragraph (1)— by striking

(1)An eligible institution , and inserting the following: (1)(A) An eligible institution ; by striking the requirements of section 102 (other than the requirements in subsections (b)(5) and (c)(3)) and inserting the applicable requirements of section 102 or 103(13) ; and by adding at the end the following: Prior to a change in ownership resulting in a change of control, an institution may seek a pretransaction determination about whether the institution will meet the applicable requirements of section 102 or 103(13) and this section after such proposed change in ownership by submitting to the Secretary a materially complete pretransaction review application. In reviewing applications submitted under clause (i), the Secretary shall only provide a comprehensive review of each such application, and may not provide an abbreviated or partial review. If an institution submits a materially complete pretransaction review application at least 90 days prior to the transaction and the Secretary approves the application, the subsequent change in ownership application shall also be approved and the institution shall be certified as meeting the requirements for such transaction, provided that the institution— complies with the applicable terms of this section; and the transaction resulting in a change of control does not differ materially in its terms from the transaction proposed in the pretransaction review application. ; in paragraph (2)— in subparagraph (E), by striking or at the end; in subparagraph (F), by striking the period at the end and inserting ; or ; and by adding the following at the end: in the case of a proprietary institution of higher education, a conversion to a public or other nonprofit institution of higher education. ; by adding at the end the following: Subject to subparagraph (B), when any institution submits an application for a change in ownership resulting in a change in control under this section or submits a pretransaction review application under paragraph (1)(B) (other than in the case of a conversion transaction), the institution shall be required to pay to the Secretary an administrative fee that shall— be in an amount equal to 0.15 percent of the total institutional revenue derived from this title by such institution for the most fiscal year for which data is available; and be used exclusively for expenses related to the processing of such application, and be available to the Secretary without further appropriation, exclusively for expenses related to the processing of such approval or application. In the case of a proprietary institution submitting an application for conversion, or a pretransaction review application for conversion, the institution shall be required to pay to the Secretary an administrative fee that shall— be in an amount equal to 0.30 percent of the total institutional revenue derived from this title by such institution for the most fiscal year for which data is available; and be used exclusively for expenses related to the processing of such application, and of which— 50 percent shall be available to the Secretary without further appropriation, exclusively for expenses related to the processing of such application; and 50 percent shall be remitted by the Secretary to the Commissioner of the Internal Revenue, and shall be available, without further appropriation, to the Commissioner of Internal Revenue exclusively for purposes of determining whether the institution seeking such conversion or pretransaction review is an institution exempt from tax and is otherwise in compliance with applicable requirements of the Internal Revenue Code of 1986. An institution that pays a fee under subparagraph

(A)or

(B)for a pretransaction application with respect to a proposed transaction shall not be required to pay another fee under such subparagraph for a change in ownership application with respect to such transaction. In no case may any fee remitted under subparagraph

(A)or

(B)exceed $120,000 for any transaction (or pretransaction) application, nor may the Secretary require an institution that has paid a fee under subparagraph

(B)to pay an additional fee under subparagraph (A). The Secretary shall approve or deny a materially complete application (including pretransaction reviews and conversion applications) submitted under this section as soon as practicable and not later than the 90-day period beginning on the date of receipt of such an application, except that in a case in which the Secretary determines, on a nondelegable basis, that good cause exists to not make the determination during such 90-day period, the Secretary shall notify the institution in writing detailing the reasons for a good cause extension. If the Secretary fails to approve or deny a materially complete application during the period described in subparagraph

(A)and does not find good cause for extension, the materially complete application shall be deemed approved. In no case may the Secretary grant a good cause extension under this section to an institution for more than one month at a time, or for a total of more than more than 12 months. To ensure timely submission of all relevant documentation, the Secretary may deny an application if an institution does not make a good faith effort to submit to the Secretary, in a timely manner— all relevant documentation; or a materially complete application. Upon approving or denying an application under this paragraph, the Secretary shall publish in the Federal Register the reasoning for such approval or denial, including— a copy of the approval or denial letter sent to the institution; and any analysis regarding how the Secretary determined under paragraph 7(A)(iii) that a director of the institution was an interested or disinterested party to the transaction. The Secretary shall not publish under clause

(i)any information that is otherwise exempt from disclosure under section 552 of title 5, United States Code (relating to the Freedom of Information Act), including trade secrets and commercial or financial information that is privileged or confidential. In the case of a proprietary institution that subsequent to the transaction would be owned and operated by an entity (in this paragraph referred to as the buyer ) seeking to be recognized as a public or other nonprofit institution, the buyer shall meet the definition of a nonprofit institution under section 103(13) if— the buyer pays no more than fair market value for any assets of the proprietary institution; the buyer pays no more than fair market value for any service or lease contracts, including such service and lease contracts provided by the entity selling the proprietary institution; and to prevent self-dealing in the case where one or more individuals with a substantial ownership or controlling interests in the proprietary institution will also have substantial or controlling interests in the institution seeking to be recognized as a public or other nonprofit institution (meaning that one or more individuals are on both sides of the transaction), the change of control transaction, and any substantial asset acquisition, service, or lease agreements with the proprietary institution shall be approved by a disinterested committee of directors of the entity that seeks to be recognized as a public or other nonprofit institution. For the purposes of this paragraph, parties to the transaction are entitled to a rebuttable presumption that the assets, lease contracts, and service contracts that are part of the transaction are purchased at fair market value if— the acquiring entity pays no more than fair market value for such assets, lease contracts, or service contracts; and the value of the assets, lease contracts, or service contracts are evaluated by at least one independent third-party entity hired by parties on both sides of the transaction. An institution that has been approved for conversion by the Secretary shall be subject to a monitoring period for a 5-year period beginning on the day after the date of such approval. In conducting the monitoring of the institution under this paragraph, the Secretary— shall only conduct monitoring to ensure that the institution is in compliance with the requirements of section 103(13) and paragraph

(7)of this subsection; and may require the institution to submit regular reports or conduct audits of such institution relating to such compliance. Each institution that is subject to the monitoring period under this paragraph shall remit an annual fee to the Secretary— in an amount equal to 0.15 percent of the total revenue derived from this title by such institution for the most recent fiscal year for which data is available; and that shall be exclusively for expenses related to monitoring of the institution for the period described in subparagraph (A)— of which 50 percent shall be used by the Secretary, without further appropriation, exclusively for expenses related to monitoring of the institution during such period; and of which 50 percent shall be remitted by the Secretary to the Commissioner of Internal Revenue, to be available to such Commissioner, without further appropriation, exclusively for monitoring compliance with the Internal Revenue Code of such institution during such period. An institution may not be subject to an annual fee under subparagraph

(B)for monitoring related to a conversion that exceeds $60,000. If the Secretary determines that an institution should be subject to the monitoring under this paragraph beyond the 5-year period described in subparagraph (A), the Secretary shall provide the reasons justifying an extension in writing to the institution (and in the Federal Register) at least 30 days before the expiration of such period. Any institution that is subject to monitoring under this paragraph may seek a waiver to be exempt from such monitoring (including the annual fee under subparagraph (B)) on an annual basis for any year during the monitoring period and the Secretary shall grant such waiver if there is no ongoing contractual or financial relationship between the institution and the former entity or individuals that previously owned the institution. The Secretary may grant a waiver for more than 1 year in the case where the entity that formerly owned the proprietary institution has closed or no longer exists and the Secretary determines the institution is not at risk of violating the requirements of section 103(13) or paragraph

(7)of this subsection. Any institution that submits an application for conversion shall not promote or market itself, in any manner, as a public or other nonprofit institution of higher education unless— the Secretary has provided final approval of the conversion of the institution to a public or other nonprofit institution of higher education under this section; an accrediting agency or association recognized by the Secretary pursuant to section 496 has approved such public or nonprofit status of the institution; the State has given final approval to the institution as a public or nonprofit institution of higher education, as applicable; and in the case of an institution seeking nonprofit status, the Commissioner of Internal Revenue has approved the institution as tax exempt pursuant to the Internal Revenue Code of 1986. Not later than 270 days after the date of enactment of the College Cost Reduction Act , and periodically thereafter, the Secretary shall publish (and update as necessary) in the Federal Register— descriptions of the documents and materials the Secretary expects or requires institutions of higher education to submit (including any standardized forms) as part of any pretransaction application or change in ownership application under this section, including a description of what the Secretary considers to be a materially complete application; and after at least a 30-day notice and comment period, responses to any public comments received with respect to such descriptions or updates to such descriptions. In a case in which the Secretary requests a document under this section as part of a pretransaction or change in ownership application that is not described in the Federal Register under paragraph (10), the Secretary shall— substantiate, in writing to the institution, the reasons why the Secretary is requesting such documents; and publish such reasons in the Federal Register, including whether the Secretary may request other institutions that submit applications under this section to produce similar documentation. Not later than 18 months after the date of enactment of the College Cost Reduction Act , and annually thereafter, the Secretary shall submit a report to authorizing committees, and post such report on a publicly available website regarding implementation of the amendments made to this section by such Act, including the following information: The mean and median length of time taken by the Secretary to review applications under this section during the preceding 12-month period. The number of applications approved or denied during the preceding 12-month period. For any application not processed during the 90-day period beginning on the date of receipt of the application for which the Secretary found good cause under paragraph (6)(A) to extend the deadline in which the application shall be processed, a copy of the letter sent to the institution explaining why the Secretary believed good cause existed for such extension. For any application not processed during such 90-day period, which was deemed to be automatically approved by the requirements of this section under paragraph (6)(B), the name of each institution involved and an explanation for why the application was not processed in a timely manner. Any legislative suggestions the Secretary may have to improve the application or monitoring process under this section. If the Secretary fails to submit a report under this paragraph by not later than 90 days after the deadline for such submission under subparagraph (A), the Secretary may not, for the 12-month period following such failure, spend the fees remitted by institutions under this section or remit such fees to the Commissioner unless Congress provides for such use by further appropriation. For the purposes of this subsection, the term conversion means any transaction under which— a proprietary institution is reorganized and seeks recognition as a public or other nonprofit institution; or the control of a proprietary institution is transferred as a result of a sale, donation, or other method to an entity that seeks certification under this section as a public or other nonprofit institution. . The amendments made by this section shall be apply with respect to applications submitted for change of control or conversion submitted on or after January 1, 2023. Not later than 5 years after the date of enactment of this Act, the Comptroller General shall submit to the Committee on Education and the Workforce of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate, a report on the implementation of the amendments made by this subsection, including recommendations to improve— the application process under section 498(i) of the Higher Education Act of 1965 ( 20 U.S.C. 1099c(i) ), as amended by paragraph (2), for institutions of higher education seeking a change in ownership resulting in a change in control; or the monitoring process under such section for institutions of higher education that have recently converted from being recognized as a proprietary institution to a public or other nonprofit institution. Sections 668.15, 668.23, 668.171, and 668.174 through 668.177 of title 34, Code of Federal Regulations (relating to financial responsibility), as added or amended by the final regulations published by the Department of Education in the Federal Register on October 31, 2023 (87 Fed. Reg. 74568 et seq.), are repealed and will have no force or effect. Section 498(c) of the Higher Education Act of 1965 (20 6 U.S.C. 1099c(c) ) is amended— by redesignating paragraphs (3), (4), (5), and

(6)as paragraphs (4), (5), (6), and (7), respectively; in paragraph (2)— by striking paragraph (1), if and inserting paragraph (1), the Secretary shall prescribe criteria regarding ratios that aid in the determination financial responsibility. Such ratios shall be first issued in draft form to the institution to allow for adequate review, consisting of an appeals process, by such institutions of higher education. If ; and by striking prescribed by the Secretary regarding ratios and inserting prescribed by the Secretary regarding the final ratios ; by inserting after paragraph

(2)the following: Notwithstanding paragraph (2), the Secretary shall take into account an institution’s current total financial circumstances, including any subsequent change in the institution’s overall fiscal health based on the standards in paragraph (2), when making a determination of its ability to meet the standards herein required before any subsequent action is taken under paragraph (4). If an institution meets the standards in paragraph (2), the institution shall be seen as financially responsible. ; in subparagraph

(C)of paragraph (4), as so redesignated, by striking establishes to the satisfaction of the Secretary, with and inserting establishes, with ; in paragraph (5), as so redesignated— in subparagraph (A), by inserting and after the semicolon at the end; in subparagraph (B), by striking ; and and inserting a period; and by striking subparagraph (C); in paragraph (6), as so redesignated, by striking (3)(C) and inserting (4)(C) ; and by adding at the end the following new paragraph: Not later than 18 months after the date of enactment of the College Cost Reduction Act , the Secretary shall pursue a process to update the ratios regarding financial responsibility as identified in paragraph (2). The Secretary shall report the revised ratios to— the Committee on Education and the Workforce of the House of Representatives; and the Committee on Health, Education, Labor, and Pensions of the Senate. . Section 487(a)(20) ( 20 U.S.C. 1094(a)(20) ) is amended to read as follows: The institution will not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities, or in making decisions regarding the award of student financial assistance, except that this paragraph shall not apply— to the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance; or to a third party where— the third party is providing the institution recruiting or admissions activities as part of a larger bundle of services not covered by this paragraph and which may include marketing or advertising activities that broadly disseminate or distribute widely available information; the third party does not provide any commission, bonus, or other incentive-based payments to its employees or subcontractors who are providing services to the institution covered in this paragraph; and the third party is not awarding or disbursing Federal financial aid awards. . Section 481(c) ( 20 U.S.C. 1088(c) ) is amended to read as follows: For purposes of this title, the term third party servicer — means any individual, any State, or any private, for-profit or nonprofit organization, which enters into a contract with— any eligible institution of higher education to administer, through either manual or automated processing, any aspect of such institution’s student assistance programs under this title; or any guaranty agency, or any eligible lender, to administer, through either manual or automated processing, any aspect of such guaranty agency’s or lender’s student loan programs under part B of this title, including originating, guaranteeing, monitoring, processing, servicing, or collecting loans; and does not include any individual, any State, or any private, for-profit or nonprofit organization, which conducts activities or interacts with prospective or enrolled students for the purposes of— marketing or recruiting, such as soliciting potential enrollments through the dissemination of information and advertising; assisting with the completion of applications for enrollment, such as screening pre-enrollment information and offering admission counseling; administering ability-to-benefit tests or establishing any aspect of an eligible career pathway program; conducting activities for the retention of students, such as monitoring academic engagement and conducting outreach to student regarding attendance; and providing instructional content, such as evaluating course completion, delivering mandatory tutoring, assessing student learning, including through electronic means, or developing curricula or course materials. The Secretary shall not regulate on the definition of a third party servicer . . The following regulations (including any supplement or revision to such regulations) are repealed and shall have no legal effect: Sections 674.33(g), 682.402(d), and 685.214 of title 34, Code of Federal Regulations (relating to closed school discharges), as added or amended by the final regulations published by the Department of Education in the Federal Register on November 1, 2022 (87 Fed. Reg. 65904 et seq.). Section 685.401 of title 34, Code of Federal Regulations (relating to borrower defense to repayment), as added or amended by the final regulations published by the Department of Education in the Federal Register on November 1, 2022 (87 Fed. Reg. 65904 et seq.). Sections 668.41, 685.300, and 685.304 of title 34, Code of Federal Regulations (relating to pre-dispute arbitration), as added or amended by the final regulations published by the Department of Education in the Federal Register on November 1, 2022 (87 Fed. Reg. 65904 et seq.). Sections 682.402(e), 685.215(c), and 685.215(d) of title 34, Code of Federal Regulations (relating to false certification), as added or amended by the final regulations published by the Department of Education in the Federal Register on November 1, 2022 (87 Fed. Reg. 65904 et seq.). Sections 668.16 of title 34, Code of Federal Regulations (relating to administrative capability), as added or amended by the final regulations published by the Department of Education in the Federal Register on October 31, 2023 (87 Fed. Reg. 74568 et seq.). Sections 668.13, 668.14, and 668.43 of title 34, Code of Federal Regulations (relating to certification procedures) as added or amended by the final regulations published by the Department of Education in the Federal Register on October 31, 2023 (87 Fed. Reg. 74568 et seq.). Sections 668.2, 668.32, 668.156, and 668.157 of title 34, Code of Federal Regulations (relating to ability to benefit) as added or amended by the final regulations published by the Department of Education in the Federal Register on October 31, 2023 (87 Fed. Reg. 74568 et seq.). The electronic announcement titled Establishing Personal Liability Requirements for Financial Losses Related to the Title IV Programs (GENERAL–23–11, published on March 1, 2023). Any regulations repealed by subsections

(c)through

(e)that were in effect on June 30, 2023, are restored and revived as if the repeal of such regulations under such subsections had not taken effect. The Secretary of Education may not implement any rule, regulation, policy, or executive action specified in this section (or a substantially similar rule, regulation, policy, or executive action) unless authority for such implementation is explicitly provided in an Act of Congress. Section 498A ( 20 U.S.C. 1099c–1 ) is amended by adding at the end the following: In conducting, responding to, and concluding program review activities, the Secretary shall— provide to the institution the initial report finding not later than 90 days after concluding an initial site visit; upon each receipt of an institution’s response during a program review inquiry, respond in a substantive manner within 90 days; upon each receipt of an institution’s written response to a draft final program review report, provide the final program review report and accompanying enforcement actions, if any, within 90 days; and conclude the entire program review process not later than 2 years after the initiation of a program review, unless the Secretary determines that such a review is sufficiently complex and cannot reasonably be concluded before the expiration of such 2-year period, in which case the Secretary shall promptly notify the institution of the reasons for such delay and provide an anticipated date for conclusion of the review. .

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