Sponsor
Stephen Cohen
Representative · D-TN
Representative · D-TN
The bill aims to protect students and taxpayers by reducing proprietary colleges' reliance on federal aid and increasing financial transparency, but it risks disrupting student access to federal aid and imposing significant compliance and financial pressures on institutions and their communities.
Students and taxpayers: reduces incentives for some proprietary colleges to rely on Title IV funds and creates a two‑year loss of eligibility for failure, which should discourage predatory enrollment practices and protect students and federal dollars.
Students, taxpayers, and the public: requires annual Secretary reporting (based on audited financials), increasing transparency about how much federal student aid institutions receive.
Students, institutions, and the Department of Education: sets a clear, predictable effective date (the second July 1 after enactment) and an implementation window so schools and the Secretary can prepare guidance and comply before the rule applies.
Students at affected proprietary institutions: could lose access to federal Pell and loan aid for at least two years if their school fails the test, disrupting enrollment and progress toward degrees or credentials.
Communities, students, and staff: proprietary colleges that lose federal revenue risk cutting programs, laying off staff, or closing, harming local economies and access to education.
Schools and students: new cash‑basis calculations, detailed inclusion/exclusion rules, and audited financial statement requirements will raise administrative and audit costs for institutions, costs that may be passed to students through higher tuition or reduced services.
Based on analysis of 3 sections of legislative text.
Requires for‑profit colleges to earn at least 15% of revenues from non‑Federal sources to remain eligible for Title IV funds and mandates annual audited revenue reporting by the Department of Education.
Official title: To amend the Higher Education Act of 1965 regarding proprietary institutions of higher education in order to protect students and taxpayers.
Introduced June 17, 2025 by Stephen Cohen · Last progress June 17, 2025
Requires for-profit (proprietary) colleges that participate in federal student aid programs to earn at least 15% of their revenue from non‑Federal sources (an “85/15” cash‑basis test). Institutions that fail the test become ineligible for Title IV funds for two institutional fiscal years, must meet conditions to regain eligibility, and the Department of Education must publish annual audited revenue breakdowns for each proprietary school starting the third full award year after enactment.