| 1 | 1 | | I |
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| 2 | 2 | | 119THCONGRESS |
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| 3 | 3 | | 1 |
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| 4 | 4 | | STSESSION H. R. 2271 |
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| 5 | 5 | | To amend the Higher Education Act of 1965 to modify the application |
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| 6 | 6 | | and review process for changes of control, and for other purposes. |
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| 7 | 7 | | IN THE HOUSE OF REPRESENTATIVES |
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| 8 | 8 | | MARCH21, 2025 |
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| 9 | 9 | | Mr. O |
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| 10 | 10 | | WENSintroduced the following bill; which was referred to the Committee |
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| 11 | 11 | | on Education and Workforce |
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| 12 | 12 | | A BILL |
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| 13 | 13 | | To amend the Higher Education Act of 1965 to modify |
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| 14 | 14 | | the application and review process for changes of control, |
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| 15 | 15 | | and for other purposes. |
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| 16 | 16 | | Be it enacted by the Senate and House of Representa-1 |
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| 17 | 17 | | tives of the United States of America in Congress assembled, 2 |
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| 18 | 18 | | SECTION 1. SHORT TITLE. 3 |
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| 19 | 19 | | This Act may be cited as the ‘‘Change of Ownership 4 |
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| 20 | 20 | | and Conversion Improvement Act’’. 5 |
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| 21 | 21 | | SEC. 2. FINDINGS. 6 |
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| 22 | 22 | | Congress finds the following: 7 |
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| 23 | 23 | | (1) Institutions of higher education in the 8 |
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| 24 | 24 | | United States frequently merge with, consolidate, 9 |
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| 26 | 26 | | ssavage on LAPJG3WLY3PROD with BILLS 2 |
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| 27 | 27 | | •HR 2271 IH |
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| 28 | 28 | | and acquire other institutions that result in a 1 |
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| 29 | 29 | | change in ownership. 2 |
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| 30 | 30 | | (2) These transactions are generally good for 3 |
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| 31 | 31 | | students, as they promote innovation, drive competi-4 |
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| 32 | 32 | | tion, and prevent stagnation. 5 |
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| 33 | 33 | | (3) Changing demographics and evolving higher 6 |
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| 34 | 34 | | education enrollment patterns may lead to more 7 |
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| 35 | 35 | | mergers and acquisitions in the future. 8 |
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| 36 | 36 | | (4) Proprietary institutions that voluntarily 9 |
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| 37 | 37 | | convert to nonprofit status or are acquired by non-10 |
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| 38 | 38 | | profit and public entities can have a positive impact 11 |
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| 39 | 39 | | on students and society. 12 |
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| 40 | 40 | | (5) The Department of Education has an inter-13 |
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| 41 | 41 | | est in safeguarding Federal student aid funds and 14 |
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| 42 | 42 | | therefore should conduct thorough and comprehen-15 |
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| 43 | 43 | | sive reviews of all changes in ownership involving in-16 |
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| 44 | 44 | | stitutions of higher education. 17 |
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| 45 | 45 | | (6) These reviews are necessary to ensure that 18 |
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| 46 | 46 | | the acquiring entity has the financial and adminis-19 |
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| 47 | 47 | | trative capacity to manage the target institutions. 20 |
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| 48 | 48 | | (7) The Department of Education should con-21 |
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| 49 | 49 | | duct these reviews in a thorough and comprehensive 22 |
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| 50 | 50 | | manner but should do so as quickly as possible to 23 |
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| 51 | 51 | | promote the execution of these transactions. 24 |
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| 54 | 54 | | •HR 2271 IH |
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| 55 | 55 | | (8) As of May 2021, the Department of Edu-1 |
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| 56 | 56 | | cation had ‘‘very few staff’’ assigned to evaluate 2 |
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| 57 | 57 | | pretransaction, change of control, and conversion ap-3 |
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| 58 | 58 | | plications on a full-time basis. 4 |
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| 59 | 59 | | (9) Consequently, these transactions are proc-5 |
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| 60 | 60 | | essed by the Department of Education at an ex-6 |
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| 61 | 61 | | traordinary slow rate of speed, with some institu-7 |
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| 62 | 62 | | tions waiting up to 5 years before receiving a final 8 |
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| 63 | 63 | | determination. 9 |
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| 64 | 64 | | (10) One of the primary challenges in proc-10 |
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| 65 | 65 | | essing these applications quickly is the lack of fund-11 |
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| 66 | 66 | | ing to hire enough qualified staff. 12 |
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| 67 | 67 | | (11) Currently, general taxpayers are bearing 13 |
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| 68 | 68 | | the cost of reviewing these transactions. 14 |
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| 69 | 69 | | (12) It is in the interest of institutions and the 15 |
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| 70 | 70 | | United States to charge a fee for applications involv-16 |
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| 71 | 71 | | ing changes in ownership at institutions of higher 17 |
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| 72 | 72 | | education that are submitted to the Department of 18 |
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| 73 | 73 | | Education. 19 |
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| 74 | 74 | | (13) In consideration for the fee, the Depart-20 |
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| 75 | 75 | | ment of Education will be required to guarantee an 21 |
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| 76 | 76 | | expedited review process for all applicants, absent 22 |
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| 77 | 77 | | compelling circumstances where good cause exists 23 |
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| 78 | 78 | | for delay. 24 |
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| 81 | 81 | | •HR 2271 IH |
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| 82 | 82 | | (14) The Government Accountability Office has 1 |
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| 83 | 83 | | identified weaknesses in the Department of Edu-2 |
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| 84 | 84 | | cation’s post-transaction monitoring process, which 3 |
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| 85 | 85 | | will likewise require additional staff to be hired to 4 |
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| 86 | 86 | | conduct monitoring. 5 |
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| 87 | 87 | | (15) Institutions that have converted from pro-6 |
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| 88 | 88 | | prietary status to nonprofit status and have an on-7 |
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| 89 | 89 | | going financial relationship with the former owners 8 |
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| 90 | 90 | | of the institution are at highest risk of entering into 9 |
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| 91 | 91 | | financial arrangements that result in improper pri-10 |
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| 92 | 92 | | vate inurement. 11 |
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| 93 | 93 | | (16) These institutions should be closely mon-12 |
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| 94 | 94 | | itored for a period after these transactions occur and 13 |
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| 95 | 95 | | should be required to pay a fee to support the hiring 14 |
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| 96 | 96 | | of staff to conduct this monitoring. 15 |
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| 97 | 97 | | (17) The Government Accountability Office has 16 |
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| 98 | 98 | | likewise found weaknesses in the Internal Revenue 17 |
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| 99 | 99 | | Service review process for conversion requests and 18 |
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| 100 | 100 | | the post-transaction monitoring process. 19 |
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| 101 | 101 | | (18) In order to support a more thorough re-20 |
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| 102 | 102 | | view of these applications and to conduct moni-21 |
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| 103 | 103 | | toring, the Department of Education will remit part 22 |
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| 104 | 104 | | of the fee paid by institutions to the Internal Rev-23 |
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| 105 | 105 | | enue Service for these purposes. 24 |
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| 108 | 108 | | •HR 2271 IH |
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| 109 | 109 | | SEC. 3. MODIFYING THE APPROVAL PROCESS FOR 1 |
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| 110 | 110 | | CHANGES OF CONTROL. 2 |
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| 111 | 111 | | (a) A |
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| 112 | 112 | | MENDMENTS.—Section 498(i) of the Higher 3 |
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| 113 | 113 | | Education Act of 1965 (20 U.S.C. 1099c(i)) is amended— 4 |
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| 114 | 114 | | (1) in the subsection heading, by inserting 5 |
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| 115 | 115 | | ‘‘ |
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| 116 | 116 | | ANDPROPOSEDCHANGES OFOWNERSHIP’’ after 6 |
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| 117 | 117 | | ‘‘O |
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| 118 | 118 | | WNERSHIP’’; 7 |
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| 119 | 119 | | (2) in paragraph (1)— 8 |
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| 120 | 120 | | (A) by striking ‘‘(1) An eligible institu-9 |
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| 121 | 121 | | tion’’, and inserting the following: ‘‘(1)(A) An 10 |
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| 122 | 122 | | eligible institution’’; 11 |
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| 123 | 123 | | (B) by striking ‘‘the requirements of sec-12 |
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| 124 | 124 | | tion 102 (other than the requirements in sub-13 |
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| 125 | 125 | | sections (b)(5) and (c)(3))’’ and inserting ‘‘the 14 |
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| 126 | 126 | | applicable requirements of section 102 or 15 |
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| 127 | 127 | | 103(13)’’; and 16 |
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| 128 | 128 | | (C) by adding at the end the following: 17 |
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| 129 | 129 | | ‘‘(B)(i) Prior to a change in ownership resulting in 18 |
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| 130 | 130 | | a change of control, an institution may seek a 19 |
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| 131 | 131 | | pretransaction determination about whether the institu-20 |
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| 132 | 132 | | tion will meet the applicable requirements of section 102 21 |
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| 133 | 133 | | or 103(13) and this section after such proposed change 22 |
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| 134 | 134 | | in ownership by submitting to the Secretary a materially 23 |
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| 135 | 135 | | complete pretransaction review application. 24 |
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| 136 | 136 | | ‘‘(ii) In reviewing applications submitted under clause 25 |
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| 137 | 137 | | (i), the Secretary shall only provide a comprehensive re-26 |
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| 140 | 140 | | •HR 2271 IH |
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| 141 | 141 | | view of each such application, and may not provide an ab-1 |
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| 142 | 142 | | breviated or partial review. 2 |
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| 143 | 143 | | ‘‘(iii) If an institution submits a materially complete 3 |
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| 144 | 144 | | pretransaction review application at least 90 days prior 4 |
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| 145 | 145 | | to the transaction and the Secretary approves the applica-5 |
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| 146 | 146 | | tion, the subsequent change in ownership application shall 6 |
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| 147 | 147 | | also be approved and the institution shall be certified as 7 |
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| 148 | 148 | | meeting the requirements for such transaction, provided 8 |
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| 149 | 149 | | that the institution— 9 |
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| 150 | 150 | | ‘‘(I) complies with the applicable terms of this 10 |
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| 151 | 151 | | section; and 11 |
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| 152 | 152 | | ‘‘(II) the transaction resulting in a change of 12 |
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| 153 | 153 | | control does not differ materially in its terms from 13 |
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| 154 | 154 | | the transaction proposed in the pretransaction re-14 |
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| 155 | 155 | | view application.’’; 15 |
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| 156 | 156 | | (3) in paragraph (2)— 16 |
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| 157 | 157 | | (A) in subparagraph (E), by striking ‘‘or’’ 17 |
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| 158 | 158 | | at the end; 18 |
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| 159 | 159 | | (B) in subparagraph (F), by striking the 19 |
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| 160 | 160 | | period at the end and inserting ‘‘; or’’; and 20 |
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| 161 | 161 | | (C) by adding the following at the end: 21 |
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| 162 | 162 | | ‘‘(G) in the case of a proprietary institution of 22 |
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| 163 | 163 | | higher education, a conversion to a public or other 23 |
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| 164 | 164 | | nonprofit institution of higher education.’’; and 24 |
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| 165 | 165 | | (4) by adding at the end the following: 25 |
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| 168 | 168 | | •HR 2271 IH |
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| 169 | 169 | | ‘‘(5)(A) Subject to subparagraph (B), when any insti-1 |
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| 170 | 170 | | tution submits an application for a change in ownership 2 |
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| 171 | 171 | | resulting in a change in control under this section or sub-3 |
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| 172 | 172 | | mits a pretransaction review application under paragraph 4 |
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| 173 | 173 | | (1)(B) (other than in the case of a conversion trans-5 |
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| 174 | 174 | | action), the institution shall be required to pay to the Sec-6 |
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| 175 | 175 | | retary an administrative fee that shall— 7 |
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| 176 | 176 | | ‘‘(i) be in an amount equal to 0.15 percent of 8 |
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| 177 | 177 | | the total institutional revenue derived from this title 9 |
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| 178 | 178 | | by such institution for the most fiscal year for which 10 |
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| 179 | 179 | | data is available; and 11 |
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| 180 | 180 | | ‘‘(ii) be used exclusively for expenses related to 12 |
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| 181 | 181 | | the processing of such application, and be available 13 |
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| 182 | 182 | | to the Secretary without further appropriation, ex-14 |
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| 183 | 183 | | clusively for expenses related to the processing of 15 |
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| 184 | 184 | | such approval or application. 16 |
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| 185 | 185 | | ‘‘(B) In the case of a proprietary institution submit-17 |
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| 186 | 186 | | ting an application for conversion, or a pretransaction re-18 |
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| 187 | 187 | | view application for conversion, the institution shall be re-19 |
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| 188 | 188 | | quired to pay to the Secretary an administrative fee that 20 |
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| 189 | 189 | | shall— 21 |
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| 190 | 190 | | ‘‘(i) be in an amount equal to 0.30 percent of 22 |
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| 191 | 191 | | the total institutional revenue derived from this title 23 |
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| 192 | 192 | | by such institution for the most fiscal year for which 24 |
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| 193 | 193 | | data is available; and 25 |
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| 196 | 196 | | •HR 2271 IH |
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| 197 | 197 | | ‘‘(ii) be used exclusively for expenses related to 1 |
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| 198 | 198 | | the processing of such application, and of which— 2 |
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| 199 | 199 | | ‘‘(I) 50 percent shall be available to the 3 |
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| 200 | 200 | | Secretary without further appropriation, exclu-4 |
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| 201 | 201 | | sively for expenses related to the processing of 5 |
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| 202 | 202 | | such application; and 6 |
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| 203 | 203 | | ‘‘(II) 50 percent shall be remitted by the 7 |
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| 204 | 204 | | Secretary to the Commissioner of the Internal 8 |
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| 205 | 205 | | Revenue, and shall be available, without further 9 |
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| 206 | 206 | | appropriation, to the Commissioner of Internal 10 |
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| 207 | 207 | | Revenue exclusively for purposes of determining 11 |
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| 208 | 208 | | whether the institution seeking such conversion 12 |
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| 209 | 209 | | or pretransaction review is an institution ex-13 |
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| 210 | 210 | | empt from tax and is otherwise in compliance 14 |
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| 211 | 211 | | with applicable requirements of the Internal 15 |
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| 212 | 212 | | Revenue Code of 1986. 16 |
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| 213 | 213 | | ‘‘(C) An institution that pays a fee under subpara-17 |
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| 214 | 214 | | graph (A) or (B) for a pretransaction application with re-18 |
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| 215 | 215 | | spect to a proposed transaction shall not be required to 19 |
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| 216 | 216 | | pay another fee under such subparagraph for a change 20 |
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| 217 | 217 | | in ownership application with respect to such transaction. 21 |
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| 218 | 218 | | ‘‘(D) In no case may any fee remitted under subpara-22 |
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| 219 | 219 | | graph (A) or (B) exceed $120,000 for any transaction (or 23 |
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| 220 | 220 | | pretransaction) application, nor may the Secretary require 24 |
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| 222 | 222 | | ssavage on LAPJG3WLY3PROD with BILLS 9 |
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| 223 | 223 | | •HR 2271 IH |
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| 224 | 224 | | an institution that has paid a fee under subparagraph (B) 1 |
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| 225 | 225 | | to pay an additional fee under subparagraph (A). 2 |
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| 226 | 226 | | ‘‘(6)(A) The Secretary shall approve or deny a mate-3 |
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| 227 | 227 | | rially complete application (including pretransaction re-4 |
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| 228 | 228 | | views and conversion applications) submitted under this 5 |
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| 229 | 229 | | section as soon as practicable and not later than the 90- 6 |
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| 230 | 230 | | day period beginning on the date of receipt of such an 7 |
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| 231 | 231 | | application, except that in a case in which the Secretary 8 |
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| 232 | 232 | | determines, on a nondelegable basis, that good cause exists 9 |
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| 233 | 233 | | to not make the determination during such 90-day period, 10 |
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| 234 | 234 | | the Secretary shall notify the institution in writing detail-11 |
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| 235 | 235 | | ing the reasons for a good cause extension. 12 |
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| 236 | 236 | | ‘‘(B) If the Secretary fails to approve or deny a mate-13 |
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| 237 | 237 | | rially complete application during the period described in 14 |
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| 238 | 238 | | subparagraph (A) and does not find good cause for exten-15 |
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| 239 | 239 | | sion, the materially complete application shall be deemed 16 |
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| 240 | 240 | | approved. 17 |
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| 241 | 241 | | ‘‘(C) In no case may the Secretary grant a good cause 18 |
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| 242 | 242 | | extension under this section to an institution for more 19 |
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| 243 | 243 | | than one month at a time, or for a total of more than 20 |
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| 244 | 244 | | more than 12 months. 21 |
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| 245 | 245 | | ‘‘(D) To ensure timely submission of all relevant doc-22 |
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| 246 | 246 | | umentation, the Secretary may deny an application if an 23 |
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| 247 | 247 | | institution does not make a good faith effort to submit 24 |
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| 248 | 248 | | to the Secretary, in a timely manner— 25 |
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| 251 | 251 | | •HR 2271 IH |
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| 252 | 252 | | ‘‘(i) all relevant documentation; or 1 |
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| 253 | 253 | | ‘‘(ii) a materially complete application. 2 |
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| 254 | 254 | | ‘‘(E)(i) Upon approving or denying an application 3 |
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| 255 | 255 | | under this paragraph, the Secretary shall publish in the 4 |
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| 256 | 256 | | Federal Register the reasoning for such approval or de-5 |
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| 257 | 257 | | nial, including— 6 |
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| 258 | 258 | | ‘‘(I) a copy of the approval or denial letter sent 7 |
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| 259 | 259 | | to the institution; and 8 |
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| 260 | 260 | | ‘‘(II) any analysis regarding how the Secretary 9 |
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| 261 | 261 | | determined under paragraph 7(A)(iii) that a director 10 |
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| 262 | 262 | | of the institution was an interested or disinterested 11 |
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| 263 | 263 | | party to the transaction. 12 |
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| 264 | 264 | | ‘‘(ii) The Secretary shall not publish under clause (i) 13 |
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| 265 | 265 | | any information that is otherwise exempt from disclosure 14 |
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| 266 | 266 | | under section 552 of title 5, United States Code (relating 15 |
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| 267 | 267 | | to the Freedom of Information Act), including trade se-16 |
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| 268 | 268 | | crets and commercial or financial information that is privi-17 |
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| 269 | 269 | | leged or confidential. 18 |
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| 270 | 270 | | ‘‘(7)(A) In the case of a proprietary institution that 19 |
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| 271 | 271 | | subsequent to the transaction would be owned and oper-20 |
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| 272 | 272 | | ated by an entity (in this paragraph referred to as the 21 |
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| 273 | 273 | | ‘buyer’) seeking to be recognized as a public or other non-22 |
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| 274 | 274 | | profit institution, the buyer shall meet the definition of 23 |
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| 275 | 275 | | a nonprofit institution under section 103(13) if— 24 |
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| 278 | 278 | | •HR 2271 IH |
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| 279 | 279 | | ‘‘(i) the buyer pays no more than fair market 1 |
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| 280 | 280 | | value for any assets of the proprietary institution; 2 |
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| 281 | 281 | | ‘‘(ii) the buyer pays no more than fair market 3 |
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| 282 | 282 | | value for any service or lease contracts, including 4 |
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| 283 | 283 | | such service and lease contracts provided by the en-5 |
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| 284 | 284 | | tity selling the proprietary institution; and 6 |
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| 285 | 285 | | ‘‘(iii) to prevent self-dealing in the case where 7 |
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| 286 | 286 | | one or more individuals with a substantial ownership 8 |
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| 287 | 287 | | or controlling interests in the proprietary institution 9 |
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| 288 | 288 | | will also have substantial or controlling interests in 10 |
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| 289 | 289 | | the institution seeking to be recognized as a public 11 |
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| 290 | 290 | | or other nonprofit institution (meaning that one or 12 |
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| 291 | 291 | | more individuals are on both sides of the trans-13 |
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| 292 | 292 | | action), the change of control transaction, and any 14 |
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| 293 | 293 | | substantial asset acquisition, service, or lease agree-15 |
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| 294 | 294 | | ments with the proprietary institution shall be ap-16 |
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| 295 | 295 | | proved by a disinterested committee of directors of 17 |
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| 296 | 296 | | the entity that seeks to be recognized as a public or 18 |
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| 297 | 297 | | other nonprofit institution. 19 |
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| 298 | 298 | | ‘‘(B) For the purposes of this paragraph, parties to 20 |
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| 299 | 299 | | the transaction are entitled to a rebuttable presumption 21 |
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| 300 | 300 | | that the assets, lease contracts, and service contracts that 22 |
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| 301 | 301 | | are part of the transaction are purchased at fair market 23 |
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| 302 | 302 | | value if— 24 |
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| 305 | 305 | | •HR 2271 IH |
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| 306 | 306 | | ‘‘(i) the acquiring entity pays no more than fair 1 |
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| 307 | 307 | | market value for such assets, lease contracts, or 2 |
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| 308 | 308 | | service contracts; and 3 |
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| 309 | 309 | | ‘‘(ii) the value of the assets, lease contracts, or 4 |
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| 310 | 310 | | service contracts are evaluated by at least one inde-5 |
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| 311 | 311 | | pendent third-party entity hired by parties on both 6 |
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| 312 | 312 | | sides of the transaction. 7 |
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| 313 | 313 | | ‘‘(8)(A) An institution that has been approved for 8 |
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| 314 | 314 | | conversion by the Secretary shall be subject to a moni-9 |
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| 315 | 315 | | toring period for a 5-year period beginning on the day 10 |
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| 316 | 316 | | after the date of such approval. In conducting the moni-11 |
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| 317 | 317 | | toring of the institution under this paragraph, the Sec-12 |
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| 318 | 318 | | retary— 13 |
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| 319 | 319 | | ‘‘(i) shall only conduct monitoring to ensure 14 |
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| 320 | 320 | | that the institution is in compliance with the re-15 |
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| 321 | 321 | | quirements of section 103(13) and paragraph (7) of 16 |
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| 322 | 322 | | this subsection; and 17 |
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| 323 | 323 | | ‘‘(ii) may require the institution to submit reg-18 |
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| 324 | 324 | | ular reports or conduct audits of such institution re-19 |
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| 325 | 325 | | lating to such compliance. 20 |
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| 326 | 326 | | ‘‘(B) Each institution that is subject to the moni-21 |
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| 327 | 327 | | toring period under this paragraph shall remit an annual 22 |
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| 328 | 328 | | fee to the Secretary— 23 |
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| 329 | 329 | | ‘‘(i) in an amount equal to 0.15 percent of the 24 |
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| 330 | 330 | | total revenue derived from this title by such institu-25 |
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| 333 | 333 | | •HR 2271 IH |
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| 334 | 334 | | tion for the most recent fiscal year for which data 1 |
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| 335 | 335 | | is available; and 2 |
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| 336 | 336 | | ‘‘(ii) that shall be exclusively for expenses re-3 |
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| 337 | 337 | | lated to monitoring of the institution for the period 4 |
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| 338 | 338 | | described in subparagraph (A)— 5 |
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| 339 | 339 | | ‘‘(I) of which 50 percent shall be used by 6 |
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| 340 | 340 | | the Secretary, without further appropriation, 7 |
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| 341 | 341 | | exclusively for expenses related to monitoring of 8 |
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| 342 | 342 | | the institution during such period; and 9 |
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| 343 | 343 | | ‘‘(II) of which 50 percent shall be remitted 10 |
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| 344 | 344 | | by the Secretary to the Commissioner of Inter-11 |
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| 345 | 345 | | nal Revenue, to be available to such Commis-12 |
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| 346 | 346 | | sioner, without further appropriation, exclu-13 |
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| 347 | 347 | | sively for monitoring compliance with the Inter-14 |
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| 348 | 348 | | nal Revenue Code of such institution during 15 |
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| 349 | 349 | | such period. 16 |
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| 350 | 350 | | ‘‘(C) An institution may not be subject to an annual 17 |
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| 351 | 351 | | fee under subparagraph (B) for monitoring related to a 18 |
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| 352 | 352 | | conversion that exceeds $60,000. 19 |
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| 353 | 353 | | ‘‘(D) If the Secretary determines that an institution 20 |
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| 354 | 354 | | should be subject to the monitoring under this paragraph 21 |
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| 355 | 355 | | beyond the 5-year period described in subparagraph (A), 22 |
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| 356 | 356 | | the Secretary shall provide the reasons justifying an exten-23 |
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| 357 | 357 | | sion in writing to the institution (and in the Federal Reg-24 |
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| 358 | 358 | | ister) at least 30 days before the expiration of such period. 25 |
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| 362 | 362 | | ‘‘(E) Any institution that is subject to monitoring 1 |
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| 363 | 363 | | under this paragraph may seek a waiver to be exempt from 2 |
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| 364 | 364 | | such monitoring (including the annual fee under subpara-3 |
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| 365 | 365 | | graph (B)) on an annual basis for any year during the 4 |
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| 366 | 366 | | monitoring period and the Secretary shall grant such waiv-5 |
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| 367 | 367 | | er if there is no ongoing contractual or financial relation-6 |
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| 368 | 368 | | ship between the institution and the former entity or indi-7 |
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| 369 | 369 | | viduals that previously owned the institution. The Sec-8 |
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| 370 | 370 | | retary may grant a waiver for more than 1 year in the 9 |
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| 371 | 371 | | case where the entity that formerly owned the proprietary 10 |
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| 372 | 372 | | institution has closed or no longer exists and the Secretary 11 |
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| 373 | 373 | | determines the institution is not at risk of violating the 12 |
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| 374 | 374 | | requirements of section 103(13) or paragraph (7) of this 13 |
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| 375 | 375 | | subsection. 14 |
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| 376 | 376 | | ‘‘(9) Any institution that submits an application for 15 |
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| 377 | 377 | | conversion shall not promote or market itself, in any man-16 |
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| 378 | 378 | | ner, as a public or other nonprofit institution of higher 17 |
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| 379 | 379 | | education unless— 18 |
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| 380 | 380 | | ‘‘(A) the Secretary has provided final approval 19 |
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| 381 | 381 | | of the conversion of the institution to a public or 20 |
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| 382 | 382 | | other nonprofit institution of higher education under 21 |
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| 383 | 383 | | this section; 22 |
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| 384 | 384 | | ‘‘(B) an accrediting agency or association recog-23 |
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| 385 | 385 | | nized by the Secretary pursuant to section 496 has 24 |
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| 388 | 388 | | •HR 2271 IH |
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| 389 | 389 | | approved such public or nonprofit status of the insti-1 |
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| 390 | 390 | | tution; 2 |
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| 391 | 391 | | ‘‘(C) the State has given final approval to the 3 |
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| 392 | 392 | | institution as a public or nonprofit institution of 4 |
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| 393 | 393 | | higher education, as applicable; and 5 |
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| 394 | 394 | | ‘‘(D) in the case of an institution seeking non-6 |
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| 395 | 395 | | profit status, the Commissioner of Internal Revenue 7 |
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| 396 | 396 | | has approved the institution as tax exempt pursuant 8 |
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| 397 | 397 | | to the Internal Revenue Code of 1986. 9 |
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| 398 | 398 | | ‘‘(10) Not later than 270 days after the date of enact-10 |
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| 399 | 399 | | ment of the Change of Ownership and Conversion Im-11 |
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| 400 | 400 | | provement Act, and periodically thereafter, the Secretary 12 |
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| 401 | 401 | | shall publish (and update as necessary) in the Federal 13 |
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| 402 | 402 | | Register— 14 |
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| 403 | 403 | | ‘‘(A) descriptions of the documents and mate-15 |
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| 404 | 404 | | rials the Secretary expects or requires institutions of 16 |
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| 405 | 405 | | higher education to submit (including any standard-17 |
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| 406 | 406 | | ized forms) as part of any pretransaction application 18 |
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| 407 | 407 | | or change in ownership application under this sec-19 |
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| 408 | 408 | | tion, including a description of what the Secretary 20 |
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| 409 | 409 | | considers to be a materially complete application; 21 |
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| 410 | 410 | | and 22 |
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| 411 | 411 | | ‘‘(B) after at least a 30-day notice and com-23 |
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| 412 | 412 | | ment period, responses to any public comments re-24 |
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| 415 | 415 | | •HR 2271 IH |
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| 416 | 416 | | ceived with respect to such descriptions or updates 1 |
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| 417 | 417 | | to such descriptions. 2 |
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| 418 | 418 | | ‘‘(11) In a case in which the Secretary requests a doc-3 |
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| 419 | 419 | | ument under this section as part of a pretransaction or 4 |
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| 420 | 420 | | change in ownership application that is not described in 5 |
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| 421 | 421 | | the Federal Register under paragraph (10), the Secretary 6 |
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| 422 | 422 | | shall— 7 |
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| 423 | 423 | | ‘‘(A) substantiate, in writing to the institution, 8 |
|---|
| 424 | 424 | | the reasons why the Secretary is requesting such 9 |
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| 425 | 425 | | documents; and 10 |
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| 426 | 426 | | ‘‘(B) publish such reasons in the Federal Reg-11 |
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| 427 | 427 | | ister, including whether the Secretary may request 12 |
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| 428 | 428 | | other institutions that submit applications under this 13 |
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| 429 | 429 | | section to produce similar documentation. 14 |
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| 430 | 430 | | ‘‘(12)(A) Not later than 18 months after the date of 15 |
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| 431 | 431 | | enactment of the Change of Ownership and Conversion 16 |
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| 432 | 432 | | Improvement Act, and annually thereafter, the Secretary 17 |
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| 433 | 433 | | shall submit a report to authorizing committees, and post 18 |
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| 434 | 434 | | such report on a publicly available website regarding im-19 |
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| 435 | 435 | | plementation of the amendments made to this section by 20 |
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| 436 | 436 | | such Act, including the following information: 21 |
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| 437 | 437 | | ‘‘(i) The mean and median length of time taken 22 |
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| 438 | 438 | | by the Secretary to review applications under this 23 |
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| 439 | 439 | | section during the preceding 12-month period. 24 |
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| 443 | 443 | | ‘‘(ii) The number of applications approved or 1 |
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| 444 | 444 | | denied during the preceding 12-month period. 2 |
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| 445 | 445 | | ‘‘(iii) For any application not processed during 3 |
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| 446 | 446 | | the 90-day period beginning on the date of receipt 4 |
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| 447 | 447 | | of the application for which the Secretary found 5 |
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| 448 | 448 | | good cause under paragraph (6)(A) to extend the 6 |
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| 449 | 449 | | deadline in which the application shall be processed, 7 |
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| 450 | 450 | | a copy of the letter sent to the institution explaining 8 |
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| 451 | 451 | | why the Secretary believed good cause existed for 9 |
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| 452 | 452 | | such extension. 10 |
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| 453 | 453 | | ‘‘(iv) For any application not processed during 11 |
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| 454 | 454 | | such 90-day period, which was deemed to be auto-12 |
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| 455 | 455 | | matically approved by the requirements of this sec-13 |
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| 456 | 456 | | tion under paragraph (6)(B), the name of each insti-14 |
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| 457 | 457 | | tution involved and an explanation for why the appli-15 |
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| 458 | 458 | | cation was not processed in a timely manner. 16 |
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| 459 | 459 | | ‘‘(v) Any legislative suggestions the Secretary 17 |
|---|
| 460 | 460 | | may have to improve the application or monitoring 18 |
|---|
| 461 | 461 | | process under this section. 19 |
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| 462 | 462 | | ‘‘(B) If the Secretary fails to submit a report under 20 |
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| 463 | 463 | | this paragraph by not later than 90 days after the dead-21 |
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| 464 | 464 | | line for such submission under subparagraph (A), the Sec-22 |
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| 465 | 465 | | retary may not, for the 12-month period following such 23 |
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| 466 | 466 | | failure, spend the fees remitted by institutions under this 24 |
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| 469 | 469 | | •HR 2271 IH |
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| 470 | 470 | | section or remit such fees to the Commissioner unless 1 |
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| 471 | 471 | | Congress provides for such use by further appropriation. 2 |
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| 472 | 472 | | ‘‘(13) For the purposes of this subsection, the term 3 |
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| 473 | 473 | | ‘conversion’ means any transaction under which— 4 |
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| 474 | 474 | | ‘‘(A) a proprietary institution is reorganized 5 |
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| 475 | 475 | | and seeks recognition as a public or other nonprofit 6 |
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| 476 | 476 | | institution; or 7 |
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| 477 | 477 | | ‘‘(B) the control of a proprietary institution is 8 |
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| 478 | 478 | | transferred as a result of a sale, donation, or other 9 |
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| 479 | 479 | | method to an entity that seeks certification under 10 |
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| 480 | 480 | | this section as a public or other nonprofit institu-11 |
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| 481 | 481 | | tion.’’. 12 |
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| 482 | 482 | | (b) A |
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| 483 | 483 | | PPLICATION.—The amendments made by this 13 |
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| 484 | 484 | | section shall be apply with respect to applications sub-14 |
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| 485 | 485 | | mitted for change of control or conversion submitted on 15 |
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| 486 | 486 | | or after January 1, 2026. 16 |
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| 487 | 487 | | SEC. 4. GOVERNMENT ACCOUNTABILITY OFFICE. 17 |
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| 488 | 488 | | Not later than 5 years after the date of enactment 18 |
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| 489 | 489 | | of this Act, the Comptroller General shall submit to the 19 |
|---|
| 490 | 490 | | Committee on Education and Workforce of the House of 20 |
|---|
| 491 | 491 | | Representatives and the Committee on Health, Education, 21 |
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| 492 | 492 | | Labor, and Pensions of the Senate, a report on the imple-22 |
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| 493 | 493 | | mentation of the amendments made by this Act, including 23 |
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| 494 | 494 | | recommendations to improve— 24 |
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| 498 | 498 | | (1) the application process under section 498(i) 1 |
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| 499 | 499 | | of the Higher Education Act of 1965 (20 U.S.C. 2 |
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| 500 | 500 | | 1099c(i)), as amended by section 3, for institutions 3 |
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| 501 | 501 | | of higher education seeking a change in ownership 4 |
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| 502 | 502 | | resulting in a change in control; or 5 |
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| 503 | 503 | | (2) the monitoring process under such section 6 |
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| 504 | 504 | | for institutions of higher education that have re-7 |
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| 505 | 505 | | cently converted from being recognized as a propri-8 |
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| 506 | 506 | | etary institution to a public or other nonprofit insti-9 |
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| 507 | 507 | | tution. 10 |
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| 508 | 508 | | Æ |
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