Program participation agreements

In order to be an eligible institution for the purposes of any program authorized under this subchapter, an institution must be an institution of higher education or an eligible institution (as that term is defined for the purpose of that program) and shall, except with respect to a program under subpart 4 of part A, enter into a program participation agreement with the Secretary. The agreement shall condition the initial and continuing eligibility of an institution to participate in a program upon compliance with the following requirements: The institution will establish and maintain such administrative and fiscal procedures and records as may be necessary to ensure proper and efficient administration of funds received from the Secretary or from students under this subchapter, together with assurances that the institution will provide, upon request and in a timely fashion, information relating to the administrative capability and financial responsibility of the institution to— The institution certifies that— The institution will not knowingly contract with or employ any individual, agency, or organization that has been, or whose officers or employees have been— In the case of an institution that participates in a loan program under this subchapter, the institution will— develop a code of conduct with respect to such loans with which the institution’s officers, employees, and agents shall comply, that— The institution certifies that the institution— Notwithstanding any other provisions of this subchapter, the Secretary shall prescribe such regulations as may be necessary to provide for— an emergency action against an institution, under which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to the institution (by registered mail, return receipt requested), withhold funds from the institution or its students and withdraw the institution’s authority to obligate funds under any program under this subchapter, if the Secretary— an emergency action against a third party servicer that has contracted with an institution to administer any aspect of the institution’s student assistance program under this subchapter, under which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to such individual or organization (by registered mail, return receipt requested), withhold funds from the individual or organization and withdraw the individual or organization’s authority to act on behalf of an institution under any program under this subchapter, if the Secretary— Upon determination, after reasonable notice and opportunity for a hearing, that an eligible institution— In making calculations under subsection (a)(24), a proprietary institution of higher education shall— consider as revenue only those funds generated by the institution from— activities conducted by the institution that are necessary for the education and training of the institution’s students, if such activities are— funds paid by a student, or on behalf of a student by a party other than the institution, for an education or training program that is not eligible for funds under this subchapter, if the program— presume that any Federal education assistance funds that are disbursed or delivered to or on behalf of a student will be used to pay the student’s tuition, fees, or other institutional charges, regardless of whether the institution credits those funds to the student’s account or pays those funds directly to the student, except to the extent that the student’s tuition, fees, or other institutional charges are satisfied by— include institutional aid as revenue to the school only as follows: in the case of loans made by a proprietary institution of higher education on or after July 1, 2008 and prior to July 1, 2012, the net present value of such loans made by the institution during the applicable institutional fiscal year accounted for on an accrual basis and estimated in accordance with generally accepted accounting principles and related standards and guidance, if the loans— exclude from revenues— A proprietary institution of higher education that fails to meet a requirement of subsection (a)(24) for two consecutive institutional fiscal years shall be ineligible to participate in the programs authorized by this subchapter for a period of not less than two institutional fiscal years. To regain eligibility to participate in the programs authorized by this subchapter, a proprietary institution of higher education shall demonstrate compliance with all eligibility and certification requirements under section 1099c of this title for a minimum of two institutional fiscal years after the institutional fiscal year in which the institution became ineligible. In addition to such other means of enforcing the requirements of this subchapter as may be available to the Secretary, if a proprietary institution of higher education fails to meet a requirement of subsection (a)(24) for any institutional fiscal year, then the institution’s eligibility to participate in the programs authorized by this subchapter becomes provisional for the two institutional fiscal years after the institutional fiscal year in which the institution failed to meet the requirement of subsection (a)(24), except that such provisional eligibility shall terminate— The Secretary shall publicly disclose on the College Navigator website— Not later than July 1, 2009, and July 1 of each succeeding year, the Secretary shall submit to the authorizing committees a report that contains, for each proprietary institution of higher education that receives assistance under this subchapter, as provided in the audited financial statements submitted to the Secretary by each institution pursuant to the requirements of subsection (a)(24)— An institution of higher education’s code of conduct, as required under subsection (a)(25), shall include the following requirements: The institution shall not enter into any revenue-sharing arrangement with any lender. For purposes of this paragraph, the term “revenue-sharing arrangement” means an arrangement between an institution and a lender under which— No officer or employee of the institution who is employed in the financial aid office of the institution or who otherwise has responsibilities with respect to education loans, or agent who has responsibilities with respect to education loans, shall solicit or accept any gift from a lender, guarantor, or servicer of education loans. In this paragraph, the term “gift” means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having a monetary value of more than a de minimus amount. The term includes a gift of services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred. The term “gift” shall not include any of the following: Entrance and exit counseling services provided to borrowers to meet the institution’s responsibilities for entrance and exit counseling as required by subsections (b) and (l) of section 1092 of this title, as long as— For purposes of this paragraph, a gift to a family member of an officer or employee of an institution, to a family member of an agent, or to any other individual based on that individual’s relationship with the officer, employee, or agent, shall be considered a gift to the officer, employee, or agent if— An officer or employee who is employed in the financial aid office of the institution or who otherwise has responsibilities with respect to education loans, or an agent who has responsibilities with respect to education loans, shall not accept from any lender or affiliate of any lender any fee, payment, or other financial benefit (including the opportunity to purchase stock) as compensation for any type of consulting arrangement or other contract to provide services to a lender or on behalf of a lender relating to education loans. Nothing in this subsection shall be construed as prohibiting— The institution shall not— The institution shall not request or accept from any lender any offer of funds to be used for private education loans (as defined in section 1650 of title 15), including funds for an opportunity pool loan, to students in exchange for the institution providing concessions or promises regarding providing the lender with— In this paragraph, the term “opportunity pool loan” means a private education loan made by a lender to a student attending the institution or the family member of such a student that involves a payment, directly or indirectly, by such institution of points, premiums, additional interest, or financial support to such lender for the purpose of such lender extending credit to the student or the family. The institution shall not request or accept from any lender any assistance with call center staffing or financial aid office staffing. Nothing in paragraph (1) shall be construed to prohibit the institution from requesting or accepting assistance from a lender related to— Any employee who is employed in the financial aid office of the institution, or who otherwise has responsibilities with respect to education loans or other student financial aid of the institution, and who serves on an advisory board, commission, or group established by a lender, guarantor, or group of lenders or guarantors, shall be prohibited from receiving anything of value from the lender, guarantor, or group of lenders or guarantors, except that the employee may be reimbursed for reasonable expenses incurred in serving on such advisory board, commission, or group. In the event the Secretary initiates the limitation, suspension, or termination of the participation of an institution of higher education in any program under this subchapter under the authority of subsection (c)(1)(F) or initiates an emergency action under the authority of subsection (c)(1)(G) and its prescribed regulations, the Secretary shall require that institution to prepare a teach-out plan for submission to the institution’s accrediting agency or association in compliance with section 1099b(c)(3) of this title, the Secretary’s regulations on teach-out plans, and the standards of the institution’s accrediting agency or association. In this subsection, the term “teach-out plan” means a written plan that provides for the equitable treatment of students if an institution of higher education ceases to operate before all students have completed their program of study, and may include, if required by the institution’s accrediting agency or association, an agreement between institutions for such a teach-out plan. The Inspector General of the Department shall— In compiling, maintaining, and making available a preferred lender list as required under subsection (a)(27), the institution will— clearly and fully disclose on such preferred lender list— ensure, through the use of the list of lender affiliates provided by the Secretary under paragraph (2), that— the preferred lender list under this paragraph— prominently disclose the method and criteria used by the institution in selecting lenders with which to enter into preferred lender arrangements to ensure that such lenders are selected on the basis of the best interests of the borrowers, including— The Secretary shall maintain and regularly update a list of lender affiliates of all eligible lenders, and shall provide such list to institutions for use in carrying out paragraph (1)(B). An institution shall use the most recent list of lender affiliates provided by the Secretary under subparagraph (A) in carrying out paragraph (1)(B). For the purpose of this section: The term “agent” has the meaning given the term in section 1019 of this title. The term “affiliate” means a person that controls, is controlled by, or is under common control with another person. A person controls, is controlled by, or is under common control with another person if— The term “education loan” has the meaning given the term in section 1019 of this title. The term “eligible institution” means any such institution described in section 1002 of this title. The term “officer” has the meaning given the term in section 1019 of this title. The term “preferred lender arrangement” has the meaning given the term in section 1019 of this title. Nothing in the amendments made by the Higher Education Amendments of 1992 shall be construed to prohibit an institution from recording, at the cost of the institution, a hearing referred to in subsection (b)(2), subsection (c)(1)(D), or subparagraph (A) or (B)(i) of subsection (c)(2), of this section to create a record of the hearing, except the unavailability of a recording shall not serve to delay the completion of the proceeding. The Secretary shall allow the institution to use any reasonable means, including stenographers, of recording the hearing.