College opportunity bonus program

Subpart 1 of part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070a et seq.) is amended by adding at the end the following: 401B. College opportunity bonus program (a) Program authority (1) In general Beginning with fiscal year 2028 and each succeeding fiscal year, the Secretary shall award grants to eligible institutions of higher education that are distributed under a formula determined by the Secretary under subsection (d). (2) Eligible institution In this section, the term eligible institution of higher education means an institution of higher education that has a cohort repayment rate (as defined in section 455(r)(3)) that is greater than 25 percent. (b) Grants The Secretary shall award grants to eligible institutions of higher education that the Secretary determines have a strong record of making college more affordable and increasing college access and success for low-income and moderate-income students. (c) Uses of funds Each eligible institution of higher education that receives a grant under this section may use the grant funds to support reforms to further increase college access and success for low- and moderate-income students, by making key investments and adopting best practices, including by considering best practices reported under section 5 of the Student Protection and Success Act, and by— (1) awarding additional need-based financial aid to students enrolled at the institution who are eligible to receive a Federal Pell Grant; (2) enhancing academic and student support services; and (3) establishing or expanding accelerated learning opportunities. (d) Amount of grant funds (1) In general Each eligible institution of higher education that receives a grant under this section shall receive annual grant funds based on a formula determined by the Secretary that equally considers— (A) the number and percentage of students enrolled at the institution who are eligible to receive a Federal Pell Grant; (B) the cohort repayment rate (as defined in section 455(r)(3)) of students enrolled at the institution who are eligible to receive a Federal Pell Grant; and (C) the institution’s student service expenditures as a percentage of the institution’s student service resources. (2) Cap Each eligible institution of higher education that receives a grant under this section shall receive grant funds for a fiscal year in an amount that is not more than 2.5 percent of the amount equal to the eligible institution's total annual revenues and investment returns less auxiliary enterprise revenues and hospital revenues, as defined in the IPEDS Finance Survey, for the most recent fiscal year upon which the eligible institution’s audited financial reports are available. (e) Supplement not supplant Funds made available under this section shall be used to supplement, and not supplant— (1) other State funds that States would otherwise expend to carry out activities under this section to improve college affordability and graduate additional low- and moderate-income students; and (2) institutional funds that eligible institutions of higher education receiving a grant under this section would otherwise expend to carry out activities under this section to improve college affordability and graduate additional low- and moderate-income students. (f) Funding The grant program under this section shall be funded only with risk-sharing payments received by the Secretary under section 454(e)..