H.R. 2271

119th CONGRESS 1st Session

To amend the Higher Education Act of 1965 to modify the application and review process for changes of control, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES · March 21, 2025 · Sponsor: Mr. Owens · Committee: Committee on Education and Workforce

Table of contents

• H.R. 2271
  • SEC. 1. Short title
  • SEC. 2. Findings
  • SEC. 3. Modifying the approval process for changes of control
  • SEC. 4. Government Accountability Office

SEC. 1. Short title

• This Act may be cited as the Change of Ownership and Conversion Improvement Act.

SEC. 2. Findings

• Congress finds the following:
  • Institutions of higher education in the United States frequently merge with, consolidate, and acquire other institutions that result in a change in ownership.
  • These transactions are generally good for students, as they promote innovation, drive competition, and prevent stagnation.
  • Changing demographics and evolving higher education enrollment patterns may lead to more mergers and acquisitions in the future.
  • Proprietary institutions that voluntarily convert to nonprofit status or are acquired by nonprofit and public entities can have a positive impact on students and society.
  • The Department of Education has an interest in safeguarding Federal student aid funds and therefore should conduct thorough and comprehensive reviews of all changes in ownership involving institutions of higher education.
  • These reviews are necessary to ensure that the acquiring entity has the financial and administrative capacity to manage the target institutions.
  • The Department of Education should conduct these reviews in a thorough and comprehensive manner but should do so as quickly as possible to promote the execution of these transactions.
  • As of May 2021, the Department of Education had assigned to evaluate pretransaction, change of control, and conversion applications on a full-time basis. very few staff
  • Consequently, these transactions are processed by the Department of Education at an extraordinary slow rate of speed, with some institutions waiting up to 5 years before receiving a final determination.
  • One of the primary challenges in processing these applications quickly is the lack of funding to hire enough qualified staff.
  • Currently, general taxpayers are bearing the cost of reviewing these transactions.
  • It is in the interest of institutions and the United States to charge a fee for applications involving changes in ownership at institutions of higher education that are submitted to the Department of Education.
  • In consideration for the fee, the Department of Education will be required to guarantee an expedited review process for all applicants, absent compelling circumstances where good cause exists for delay.
  • The Government Accountability Office has identified weaknesses in the Department of Education’s post-transaction monitoring process, which will likewise require additional staff to be hired to conduct monitoring.
  • Institutions that have converted from proprietary status to nonprofit status and have an ongoing financial relationship with the former owners of the institution are at highest risk of entering into financial arrangements that result in improper private inurement.
  • These institutions should be closely monitored for a period after these transactions occur and should be required to pay a fee to support the hiring of staff to conduct this monitoring.
  • The Government Accountability Office has likewise found weaknesses in the Internal Revenue Service review process for conversion requests and the post-transaction monitoring process.
  • In order to support a more thorough review of these applications and to conduct monitoring, the Department of Education will remit part of the fee paid by institutions to the Internal Revenue Service for these purposes.

SEC. 3. Modifying the approval process for changes of control

• (a) Amendments
  • Section 498(i) of the Higher Education Act of 1965 () is amended— 20 U.S.C. 1099c(i)
    • in the subsection heading, by inserting after ;
    • in paragraph (1)—
      • by striking (1) An eligible institution, and inserting the following: ;
      • 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
        • (B)
          • (i) 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.
          • (ii) 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.
          • (iii) 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.
      • by adding at the end the following:
    • in paragraph (2)—
      • in subparagraph (E), by striking or at the end;
      • in subparagraph (F), by striking the period at the end and inserting ; 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.
      • (5)
        • 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—
          • (i) 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
          • (ii) 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.

SEC. 4. Government Accountability Office

• Not later than 5 years after the date of enactment of this Act, the Comptroller General shall submit to the Committee on Education and 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 Act, including recommendations to improve—
  • the application process under section 498(i) of the Higher Education Act of 1965 (), as amended by section 3, for institutions of higher education seeking a change in ownership resulting in a change in control; or 20 U.S.C. 1099c(i)
  • 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.