Enforcement in the Office of Federal Student Aid

(a) Enforcement unit established in the Office of Federal Student Aid Section 141 (20 U.S.C. 1018) is amended— (1) by redesignating subsections (g) through (i) as subsections (h) through (j), respectively; and (2) by inserting after subsection (f) the following: (g) Enforcement unit (1) In general The Chief Operating Officer, in consultation with the Secretary, shall establish an enforcement unit within the PBO (referred to in this section as the enforcement unit). (2) Appointment (A) Chief enforcement officer The Chief Operating Officer, in consultation with the Secretary, shall appoint a Chief Enforcement Officer as a senior manager, in accordance with subsection (e), to perform the functions described in this subsection. The Chief Enforcement Officer shall report solely and directly to the Chief Operating Officer. (B) Bonus Notwithstanding subsection (e), the Chief Enforcement Officer may receive a bonus, separately determined from the methodology which applies to the calculation of bonuses for other senior managers, based upon the Chief Operating Officer’s evaluation of the Chief Enforcement Officer’s performance in relation to the goals set forth in a performance agreement related to the specific duties of the enforcement unit. (3) Duties The enforcement unit shall— (A) receive, process, and analyze allegations and complaints regarding the potential violation of Federal or State law (including civil and criminal law) or other unfair, deceptive, or abusive acts or practices, by institutions of higher education, third-party servicers that contract with such institutions, and loan servicers; (B) investigate and coordinate investigations of potential or actual misconduct of institutions of higher education, third-party servicers that contract with such institutions, and loan servicers, including engaging in a regular program of secret shopping at online and campus-based institutions of higher education; (C) develop and implement a written policy for the enforcement of the ban on prohibited incentive compensation not less than annually, which may include automatic triggers for inquiries by the Department or regular secret shopper or audit-based investigations, and shall update such policy as needed; and (D) enforce compliance with laws governing Federal student financial assistance programs under title IV, including through the use of an emergency action in accordance to section 487(c)(1)(I), the limitation, suspension, or termination of the participation of an eligible institution in a program under title IV, or the imposition of a civil penalty in accordance with section 487(c)(3)(B). (4) Coordination and staffing The enforcement unit shall— (A) coordinate with relevant Federal and State agencies and oversight bodies, including the For-Profit Education Oversight Coordination Committee established under section 124; and (B) hire staff, (including by appointing not more than 10 individuals in positions of excepted service, as described in subsection (h)(3)) with such expertise as is necessary to conduct investigations, respond to allegations and complaints, and enforce compliance with laws governing Federal student financial assistance programs under title IV. (5) Divisions (A) In general The enforcement unit shall have separate divisions with the following focus areas: (i) An investigations division to investigate potential or actual misconduct at institutions of higher education, third-party servicers that contract with such institutions, and loan servicers. (ii) A division focused on evaluating the claims of borrowers who assert a defense to repayment of Federal student loans, or groups of borrowers who qualify to assert such a defense to repayment, under section 455(h). (iii) A division focused on oversight of the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, the reporting of crime and fire statistics by institutions of higher education, and the oversight and enforcement of section 120 (relating to drug and alcohol abuse prevention). (iv) A division to administer the Secretary’s authority to fine, limit, suspend, terminate, or take action against institutions of higher education, and third-party servicers that contract with such institutions, participating in the Federal student financial assistance programs under title IV. (v) A division that administers a program of compliance monitoring and oversight of institutions of higher education, and third-party servicers that contract with such institutions, including systems and procedures to support the eligibility, certification, and oversight of program participants, for all institutions of higher education participating in the Federal student financial assistance programs under title IV. (vi) Any other division that the Chief Enforcement Officer, in coordination with the Chief Operating Officer and the Secretary, determines is necessary. (B) Reporting The staff of each division described in subparagraph (A) shall report to the Chief Enforcement Officer. (6) Actions recommended The Chief Enforcement Officer may recommend, as appropriate to the particular circumstance, that the Chief Operating Officer— (A) terminate, suspend, or limit an institution of higher education or a third-party servicer that contracts with such institution from participation in 1 or more programs under title IV (in accordance with section 487), or provisionally certify such participation (in accordance with section 498(h)); (B) impose a civil penalty in accordance with section 487(c)(3)(B); (C) for a student loan servicer, obtain all relief, including any penalties and suspension or termination of the agreement, provided in the loan servicer agreement to the contract of the servicer; or (D) make a recommendation to the Secretary about whether to approve or deny the claims of borrowers, including groups of borrowers, who assert a defense to repayment in accordance with section 455(h).. (b) Extend subpoena power To assist with investigations Section 490A(a) (20 U.S.C. 1097a(a)) is amended to read as follows: (a) Authority To assist the Secretary in the conduct of investigations of possible violations of the provisions of this title, the Secretary is authorized to— (1) require by subpoena the production of information, documents, reports, answers, records, accounts, papers, and other documentary evidence pertaining to participation in any program under this title, the production of which may be required from any place in a State; and (2) require by subpoena oral testimony by any person, including any legal entity, concerning information pertaining to participation in any title IV program, the appearance for which may be required at any place in a State.. (c) Program reviews Section 498A of the Higher Education Act of 1965 (20 U.S.C. 1099c–1) is amended— (1) in subsection (a)— (A) in the matter preceding paragraph (1), by striking and financial responsibility and inserting, financial responsibility, and other eligibility-related; and (B) in paragraph (2)— (i) by redesignating subparagraphs (A) through (F) as subparagraphs (B) through (G), respectively; (ii) by inserting before subparagraph (B), as so redesignated, the following: (A) identified as high-risk institutions based on a risk-review process developed by the Department that shall include risk factors, including— (i) significant changes in enrollment; (ii) high volumes of student complaints or borrower defense claims; (iii) indicators of issues related to financial capability; (iv) low completion rates; (v) indications of misleading or deceptive practices, aggressive recruiting, or substantial misrepresentation; (vi) significant completion gaps between students of different demographic groups; or (vii) other indicators of risk to students or taxpayers;; and (iii) in subparagraph (G), as so redesignated, by striking or financial responsibility and inserting, financial responsibility, or other eligibility-related; (2) in subsection (d), by striking criminal investigative training and inserting criminal and civil investigative training (including training in identifying misrepresentations in marketing and recruitment materials); (3) by redesignating subsection (e) as subsection (f); and (4) by inserting after subsection (d) the following: (e) Program reviews Program reviews shall, at minimum, include a review of all— (1) recruiting and marketing materials, including scripts and training materials provided to institution and third-party servicer staff involved in recruiting, admissions, or financial aid; (2) consumer complaints held by the institution and consumer agencies, borrower defense claims, the institution’s response to such complaints or claims, and any related investigative materials; (3) actions against the institution by State or Federal regulators or enforcement agencies, including State authorizing agencies and State attorneys general, or through qui tam actions; and (4) actions against the institution by accreditors.. (d) Enhanced civil penalties Section 487(c)(3)(B) of the Higher Education Act (20 U.S.C. 1094(c)(3)(B)) is amended— (1) in clause (i)— (A) by inserting or its third-party servicer after eligible institution; and (B) by striking $25,000 for each violation or misrepresentation and inserting $100,000 for each violation or misrepresentation, or— (I) in the case of an institution, 1.0 percent of the amount of funds the institution received through this title in the most recent award year prior to the determination for each such violation; and (II) in the case of a third-party servicer that contracts with such institution, the amount of the contract with the institution.; (2) by redesignating clause (ii) as clause (iii); (3) by inserting after clause (i) the following: (ii) The Secretary may consider each time a substantial misrepresentation is viewed or experienced, including static or standing misrepresentations, as a separate violation or misrepresentation.; and (4) by adding at the end the following: (iv) For the purpose of determining the amount of civil penalties under this subsection, any violation by a particular institution will accrue against all institutions or affiliates with common ownership..