Institutional ineligibility based on low cohort repayment rate

(a) In general Section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e) is amended by adding at the end the following: (r) Ineligibility due to low cohort repayment rate (1) In general Beginning with fiscal year 2028 and each succeeding fiscal year, an institution that has a cohort repayment rate that is equal to or less than 15 percent shall not be eligible to participate in a program under this part for such fiscal year and for the 2 succeeding fiscal years. (2) Appeals (A) In general An institution may appeal the loss of eligibility under this subsection to the Secretary within 30 days of receiving notification from the Secretary of the loss of eligibility under this subsection. (B) Continued participation During an appeal under subparagraph (A), the Secretary may permit the institution to continue to participate in a program under this part if the institution demonstrates to the satisfaction of the Secretary that the Secretary's calculation of its cohort repayment rate is not accurate, and that recalculation would increase its cohort repayment rate to be more than 15 percent. (C) Required payment If an institution continues to participate in a program under this part, and the institution's appeal of the loss of eligibility is unsuccessful, the institution shall be required to pay to the Secretary an amount equal to the amount of loans made by the Secretary under this part to borrowers attending, or planning to attend, that institution during the pendency of such appeal and the interest, special allowance, reinsurance, and any related payments made by the Secretary (or which the Secretary is obligated to make) with respect to such loans. (3) Cohort repayment rate (A) In general In this subsection, the term cohort repayment rate means, for any fiscal year beginning with fiscal year 2028— (i) in the case in which 30 or more borrowers at the institution enter repayment on Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans, or Federal Direct Consolidation Loans, received for attendance at the institution, the percentage of those borrowers who are not in default and who make at least a one dollar reduction on their initial student loan principal balance before the end of the second fiscal year following the fiscal year in which the borrowers entered repayment, except as provided in subparagraph (B); and (ii) in the case in which less than 30 borrowers at the institution enter repayment on Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans, or Federal Direct Consolidation Loans, received for attendance at the institution, the percentage of those borrowers plus all of the borrowers at the institution who entered repayment on such loans (or on the portion of a loan made under section 428C that is used to repay any such loans) in the 3 fiscal years preceding the fiscal year for which the determination is made, who are not in default and who make at least a one dollar reduction on their initial student loan principal balance before the end of the second fiscal year following the year in which the borrowers entered repayment, except as provided in subparagraph (B). (B) Exception The cohort repayment rate calculation under subparagraph (A) shall not include in the calculation a borrower who is— (i) in deferment on repayment of a loan described in subparagraph (A) due to study in an approved graduate fellowship program or in an approved rehabilitation training program for the disabled; (ii) in deferment on repayment of a loan described in subparagraph (A) during a period of at least half-time enrollment in college or a career school; (iii) in deferment on repayment of a loan described in subparagraph (A) during a period of service qualifying for loan discharge or cancellation under part E; (iv) in deferment on repayment of a loan described in subparagraph (A) due to active duty military service of the borrower during a war, military operation, or national emergency; (v) in deferment on repayment of a loan described in subparagraph (A) during the 13 months following the conclusion of qualifying active duty military service by the borrower, or until the borrower returns to enrollment on at least a half-time basis, whichever is earlier, if the borrower is a member of the National Guard or other reserve component of the Armed Forces and was called or ordered to active duty while enrolled at least half-time at an eligible school or within 6 months of having been enrolled at least half-time; (vi) in mandatory forbearance on repayment of a loan described in subparagraph (A) for the full fiscal year; or (vii) serving as a volunteer under the Peace Corps Act (22 U.S.C. 2501 et seq.) or the Domestic Volunteer Service Act of 1973 (42 U.S.C. 4950 et seq.). (C) Publication of repayment rates The Secretary shall publish the cohort repayment rates for institutions determined under this subsection. (4) Notification Beginning with the first fiscal year for which data are available after the date of enactment of the Student Protection and Success Act and each succeeding fiscal year until fiscal year 2028, the Secretary shall notify each institution that has a cohort repayment rate that is equal to or less than 15 percent that the institution risks losing eligibility to participate in a program under this part.. (b) Ineligibility in other programs (1) Pell grants Section 401(j) of the Higher Education Act of 1965 (20 U.S.C. 1070a(j)) is amended— (A) in the heading, by striking based on default rates; (B) in paragraph (1), by inserting until fiscal year 2028 after succeeding fiscal year; (C) in paragraph (2), by inserting or cohort repayment rate determination after default rate determination; and (D) by adding at the end the following: (3) Ineligibility based on low cohort repayment rates No institution of higher education shall be an eligible institution for purposes of this subpart if such institution of higher education is ineligible to participate in a program under part D due to a low cohort repayment rate, as determined under section 455(r).. (2) Student loan insurance program Section 435(a) of the Higher Education Act of 1965 (20 U.S.C. 1085(a)) is amended— (A) in paragraph (2)— (i) in the heading, by striking based on high default rates; (ii) in subparagraph (A), by striking An institution and inserting Until fiscal year 2028, an institution; and (iii) by adding at the end the following: (E) No institution of higher education shall be an eligible institution for purposes of this part if such institution of higher education is ineligible to participate in a program under part D due to a low cohort repayment rate, as determined under section 455(r).; and (B) in paragraph (6)(A), by inserting and until fiscal year 2028, after July 1, 1999,. (3) Federal Perkins Loans Section 462 of the Higher Education Act of 1965 (20 U.S.C. 1087bb) is amended— (A) in subsection (a)— (i) in paragraph (1), by inserting or the institution is ineligible to participate in a program under part D due to a low cohort repayment rate, as determined under section 455(r) after subsection (f); and (ii) in paragraph (2)(D), by inserting or the institution is ineligible to participate in a program under part D due to a low cohort repayment rate, as determined under section 455(r) after subsection (f); (B) in subsection (b)— (i) in paragraph (2), by inserting or the institution is ineligible to participate in a program under part D due to a low cohort repayment rate, as determined under section 455(r) after subsection (f); and (ii) in paragraph (3), by inserting or the institution is ineligible to participate in a program under part D due to a low cohort repayment rate, as determined under section 455(r) after subsection (f); (C) in subsection (e)— (i) in paragraph (2), by inserting until fiscal year 2028, after succeeding fiscal year; and (ii) in paragraph (3)— (I) in subparagraph (A), by inserting until fiscal year 2028, after any succeeding fiscal year; and (II) by adding at the end the following: (F) Low cohort repayment rates An institution that is ineligible to participate in a program under part D due to a low cohort repayment rate, as determined under section 455(r), shall not be eligible to participate in a program under this part.; and (D) in subsection (f)(2), by inserting until fiscal year 2028, after subsequent years.