Sec. 30041. Agreements with institutions
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Section 454 of the Higher Education Act of 1965 ( 20 U.S.C. 1087d ) is amended— in subsection (a)— in paragraph (5), by striking and after the semicolon; by redesignating paragraph
(6)as paragraph (7); and by inserting after paragraph
(5)the following new paragraph: provide annual reimbursements to the Secretary in accordance with the requirements under subsection (d); and ; and by adding at the end the following new subsection: Beginning in award year 2028–2029, each institution of higher education participating in the direct student loan program under this part shall, for qualifying student loans, remit to the Secretary, at such time as the Secretary may specify, an annual reimbursement for each student cohort of the institution, based on the non-repayment balance of such cohort and calculated in accordance with paragraph (3). For each institution of higher education participating in the direct student loan program under this part, the Secretary shall establish student cohorts, beginning with award year 2027–2028, as follows: For each program of study at such institution, a student cohort comprised of all students who received Federal financial assistance under this title and who completed such program during such award year. For such institution, a student cohort comprised of all students who received Federal financial assistance under this title, who were enrolled in the institution during the previous award year in a program of study leading to an undergraduate credential, and who at the time the cohort is established— have not completed such program of study; and are not enrolled at the institution in any program of study leading to an undergraduate credential. For each program of study leading to a graduate credential at such institution, a student cohort comprised of all students who received Federal financial assistance under this title, who were enrolled in such program during the previous award year, and who at the time the cohort is established— have not completed such program of study; and are not enrolled in such program. For the purposes of this subsection, the term qualifying student loan means a loan made under this part on or after July 1, 2027, that— was made to a student included in a student cohort of an institution or to a parent on behalf of such a student; except in the case of a loan described in clause
(i)or
(ii)of subparagraph (C), is not included in any other student cohort of any institution of higher education; is not in— a medical or dental internship or residency forbearance described in section 428(c)(3)(A)(i)(I), section 428B(a)(2), section 428H(a), or section 685.205(a)(3) of title 34, Code of Federal Regulations; a graduate fellowship deferment described in section 455(f)(2)(A)(ii); rehabilitation training program deferment described under section 455(f)(2)(A)(ii); an in-school deferment described under section 455(f)(2)(A)(i); a cancer deferment described under section 455(f)(3); a military service deferment described under section 455(f)(2)(C); or a post-active duty student deferment described under section 493D; and is not in default. In the case of a student who completes two or more programs of study during the same award year, each qualifying student loan of the student shall be included in the student cohort for each of such program of study for such award year. A Federal Direct Consolidation loan made under this title shall not be considered a qualifying student loan for a student cohort for an award year if all of the loans included in such consolidation loan are attributable to another student cohort. If a qualifying student loan is consolidated into a consolidation loan under this title after such qualifying student loan has been included in a student cohort, the percentage of the consolidation loan that was attributable to such student cohort at the time of consolidation shall remain attributable to the student cohort for the life of the consolidation loan. For each student cohort of an institution of higher education established under this subsection, the annual reimbursement for such cohort shall be equal to— the reimbursement percentage for the cohort, determined in accordance with subparagraph (B); multiplied by the non-repayment balance for the cohort for the award year, determined in accordance with subparagraph (C). The reimbursement percentage of a student cohort of an institution shall be determined by the Secretary when the cohort is established, shall remain constant for the life of the student cohort, and shall be determined as follows: The reimbursement percentage of a completing student cohort shall be equal to the percentage determined by— subtracting from one the quotient of— the median value-added earnings of students who completed such program of study in the most recent award year for which such earnings data is available; divided by the median total price charged to students included in such cohort; and multiplying the difference determined under subclause
(I)by 100. Notwithstanding clause (i), if the median value-added earnings of a completing student cohort under clause (i)(I)(aa) is negative, the reimbursement percentage of the student cohort shall be 100 percent. Notwithstanding clause (i), if the median value-added earnings of a completing student cohort under clause (i)(I)(aa) exceeds the median total price of such cohort under clause (i)(I)(bb), the reimbursement percentage of the student cohort shall be 0 percent. The reimbursement percentage of a non-completing student cohort shall be determined based on the most recent data available in the award year in which the cohort is established, and— for an undergraduate non-completing student cohort, shall be equal to the percentage of undergraduate students who received Federal financial assistance under this title at such institution who— did not complete an undergraduate program of study at the institution within 150 percent of the program length of such program; or only in the case of a two-year institution, did not, within 6 years after first enrolling at the two-year institution, complete a program of study at a four-year institution for which a bachelor’s degree (or substantially similar credential) is awarded; and for a graduate non-completing student cohort, shall be equal to the percentage of students who received Federal financial assistance under this title at the institution for the applicable graduate program of study and who did not complete such program of study within 150 percent of the program length. For each award year, the Secretary shall determine the non-repayment loan balance for such award year for each student cohort of an institution of higher education by calculating the sum of— for loans in such cohort, the difference between the total amount of payments due from all borrowers on such loans during such year and the total amount of payments made by all such borrowers on such loans during such year; plus the total amount of interest waived, paid, or otherwise not charged by the Secretary during such year under the income-based repayment plan described in section 455(q); plus the total amount of principal and interest forgiven, cancelled, waived, discharged, repaid, or otherwise reduced by the Secretary under any act during such year that is not included in subclause
(II)and was not discharged or forgiven under section 437(a), 428J, or section 455(m). For the purpose of calculating the non-repayment loan balance of student cohorts under this paragraph, the Secretary shall— for each qualifying student loan in a student cohort that is included in another student cohort because the student who borrowed such loan completed two or more programs of study during the same award year, the sum of the amounts described in subclauses
(I)through
(III)of clause
(i)for such qualifying student loan shall be divided equally among each of the student cohorts in which such loan is included; and for each consolidation loan in a student cohort— determine the percentage of the outstanding principal balance of the consolidation loan attributable to such student cohort— at the time of that loan was included in such cohort, in the case of a loan consolidated before inclusion in such cohort; or at the time of consolidation, in the case of a loan consolidated after inclusion in such cohort; and include in the calculations under clause
(i)for such student cohort only the percentage of the sum of the amounts described in subclauses
(I)through
(III)of clause
(i)for the consolidation loan for such year that is equal to the percentage of the consolidation loan determined under item (aa). With respect to a student who received Federal financial assistance under this title and who completes a program of study, the term total price means the total amount, before Federal financial assistance under this title was applied, a student was required to pay to complete the program of study. A student’s total price shall be calculated by the Secretary as the difference between— the total amount of tuition and fees that were charged to such student before the application of any Federal financial assistance provided under this title; minus the total amount of grants and scholarships described in section 480(i) awarded to such student from non-Federal sources for such program of study. Beginning with the first award year for which reimbursements are required under this subsection, and for each succeeding award year, the Secretary shall— notify each institution of higher education of the amounts and due dates of each annual reimbursement calculated under paragraph
(3)for each student cohort of the institution within 30 days of calculating such amounts; and require the institution to remit such payments within 90 days of such notification. If an institution fails to remit to the Secretary a reimbursement for a student cohort as required under this subsection within 90 days of receiving notification from the Secretary in accordance with paragraph (4), the institution shall pay to the Secretary, in addition to such reimbursement, interest on such reimbursement payment, at a rate that is the average rate applicable to the loans in such student cohort. If an institution fails to remit to the Secretary a reimbursement for a student cohort as required under this subsection, plus interest owed in under subparagraph (A), within 12 months of receiving notification from the Secretary in accordance with paragraph (4), the institution shall be ineligible to make direct loans to any student enrolled in the program of study for which the institution has failed to make the reimbursement payments until such payment is made. If an institution fails to remit to the Secretary a reimbursement for a student cohort as required under this subsection, plus interest owed under subparagraph (A), within 18 months of receiving notification from the Secretary in accordance with paragraph (4), the institution shall be ineligible to make direct loans or award Federal Pell Grants under section 401 to any student enrolled in the institution until such payment is made. If an institution fails to remit to the Secretary a reimbursement for a student cohort as required under this subsection, plus interest owed under subparagraph (A), within 2 years of receiving notification from the Secretary in accordance with paragraph (4), the institution shall be ineligible to participate in any program under this title for a period of not less than 10 years. The Secretary shall, upon the request of an institution that voluntarily ceases to make Federal Direct loans to students enrolled in a specific program of study, reduce the amount of the annual reimbursement owed by the institution for each student cohort associated with such program by 50 percent if the institution assures the Secretary that the institution will not make Federal Direct loans to any student enrolled in such program of study (or any substantially similar program of study, as determined by the Secretary) for a period of not less than 10 award years, beginning with the first award year that begins after the date on which the Secretary reduces such reimbursement. Notwithstanding any other provision of this Act, the Secretary shall reserve the funds remitted to the Secretary as reimbursements in accordance with this subsection, and such funds shall be made available to the Secretary only for the purpose of awarding PROMISE grants in accordance with subpart 11 of part A of this title. .
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Sec. 30041
Agreements with institutions
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