Sponsors (8)
The bill increases transparency and seeks to curb proprietary colleges’ dependence on federal student aid—protecting taxpayers and aiming to improve institutional behavior—but risks disrupting students’ access to aid, reducing financing options for low‑income students, and raising costs or compliance burdens for institutions.
Students and taxpayers: reduces the risk that proprietary colleges rely predominantly on Title IV federal aid (by enforcing a non‑Federal revenue threshold and making failing schools ineligible), which can promote institutional financial stability and lower wasteful federal spending.
Taxpayers and state governments: increases transparency by requiring annual Department of Education reports showing each proprietary institution’s share of revenue from Federal aid versus other sources using audited financials.
Students: narrows and clarifies the treatment of institution‑made loans and certain income‑share / alternative financing agreements, reducing opportunities for institutions to mask dependence on federal aid through revenue‑gaming.
Students: some proprietary institutions could lose Title IV eligibility, causing enrolled students to lose access to federal aid and potentially interrupting or derailing their education.
Students (and taxpayers indirectly): institutions may raise tuition or fees or reduce programs/staff to replace lost federal revenue or meet the 15% non‑Federal threshold, increasing costs and reducing services.
Low‑income students: some third‑party or alternative financing arrangements that currently help lower‑income students attend may be disallowed or counted unfavorably, reducing accessible financing options.
Based on analysis of 3 sections of legislative text.
Introduced June 18, 2025 by Richard Joseph Durbin · Last progress June 18, 2025
Requires for‑profit (proprietary) colleges that participate in federal student aid to get at least 15% of their revenue from non‑Federal sources (an “85/15” test). It defines what counts as Federal education assistance and non‑Federal revenue, sets detailed cash‑basis accounting rules and inclusions/exclusions, creates penalties for institutions that fail the test, and requires annual reporting by the Department of Education. The changes take effect on the second full award year after enactment.