PROGRAM PARTICIPATION AGREEMENTS.

SEC. 490. PROGRAM PARTICIPATION AGREEMENTS. (a) In General.— Section 487(a) of the Act (20 U.S.C. 1094(a)) is amended— (1) in paragraph (3), by inserting before the period a comma and the following: “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— “(A) the Secretary; “(B) the appropriate State review entity designated under subpart 1 of part H; “(C) the appropriate guaranty agency; and “(D) the appropriate accrediting agency or association”; (2) in paragraph (8)— (A) by striking “at or before the time of application,” and inserting “at or before the time of application (A)”; and (B) by inserting before the period at the end the following: “, and (B) relevant State licensing requirements of the State in which such institution is located for any job for which the course of instruction is designed to prepare such prospective students”; and (3) by adding at the end the following new paragraphs: “(13) The institution will not deny any form of Federal financial aid to any student who meets the eligibility requirements of this title on the grounds that the student is participating in a program of study abroad approved for credit by the institution. “(14) (A) The institution, in order to participate as an eligible institution under part B, will develop a Default Management Plan for approval by the Secretary as part of its initial application for certification as an eligible institution and will implement such Plan for two years thereafter. “(B) Any institution of higher education which changes ownership and any eligible institution which changes its status as a parent or subordinate institution shall, in order to participate as an eligible institution under part B, develop a Default Management Plan for approval by the Secretary and implement such Plan for two years after its change of ownership or status. “(15) The institution acknowledges the authority of the Secretary, guaranty agencies, lenders, accrediting agencies, the Secretary of Veterans Affairs, and State review entities under subpart 1 of part H to share with each other any information pertaining to the institution’s eligibility to participate in programs under this title or any information on fraud and abuse. “(16) (A) The institution will not knowingly employ an individual in a capacity that involves the administration of programs under this title, or the receipt of program funds under this title, who has been convicted of, or has pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of funds under this title, or has been judicially determined to have committed fraud involving funds under this title or contract with an institution or third party servicer that has been terminated under section 432 involving the acquisition, use, or expenditure of funds under this title, or who has been judicially determined to have committed fraud involving funds under this title. 106 STAT. 626 “(B) The institution will not knowingly contract with or employ any individual, agency, or organization that has been, or whose officers or employees have been— “(i) convicted of, or pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of funds under this title; or “(ii) judicially determined to have committed fraud involving funds under this title. “(17) The institution will complete surveys conducted as a part of the Integrated Postsecondary Education Data System (IPEDS) or any other Federal postsecondary institution data collection effort, as designated by the Secretary, in a timely manner and to the satisfaction of the Secretary. “(18) (A) With respect to any institution that offers athletically related student aid, the institution will— “(i) cause an annual compilation, independently audited not less often than every 3 years, to be prepared within 6 months after the end of its fiscal year, of— “(I) the total revenues, and the revenues from football, men’s basketball, women’s basketball, all other men’s sports combined, and all other women’s sports combined, derived by the institution from its intercollegiate athletics activities; “(II) the total expenses, and the expenses attributable to football, men’s basketball, women’s basketball, all other men’s sports combined and all other women’s sports combined, made by the institution for its intercollegiate athletics activities; and “(III) the total revenues and operating expenses of the institution; and “(ii) make the reports on such compilations and, where allowable by State law, the audits, available for inspection by the Secretary and the public. “(B) For the purpose of subparagraph (A)— “(i) revenues from intercollegiate athletics activities allocable to a sport shall include without limitation gate receipts, broadcast revenues, appearance guarantees and options, concessions and advertising, but revenues such as student activities fees or alumni contributions not so allocable shall be included in the calculation of total revenues only; and “(ii) expenses for intercollegiate athletics activities allocable to a sport shall include without limitation grants-in-aid, salaries, travel, equipment, and supplies, but expenses such as general and administrative overhead not so allocable shall be included in the calculation of total expenses only. “(19) The institution will not impose any penalty, including the assessment of late fees, the denial of access to classes, libraries, or other institutional facilities, or the requirement that the student borrow additional funds, on any student because of the student’s inability to meet his or her financial obligations to the institution as a result of the delayed disbursement of the proceeds of a loan made under this title due to compliance with the provisions of this title, or delays attributable to the institution. 106 STAT. 627 “(20) The institution will not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance, except that this paragraph shall not apply to the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance. “(21) The institution will meet the requirements established by the Secretary, State postsecondary review entities, and accrediting agencies pursuant to part H of this title. “(22) The institution will comply with the refund policy established pursuant to section 484B.”. (b) Hearings.— Section 487 of the Act is amended— (1) in subsection (b)(2), by striking out “on the record”; and (2) in subsection (c)— (A) in the matter preceding subparagraph (A) of paragraph (1), by striking “is authorized to” and inserting “shall”; (B) in paragraph (1)(D), by striking out “on the record,” and inserting in lieu thereof a comma; (C) in paragraph (1)(F), by striking out “on the record”; and (D) in paragraph (2)— (i) in subparagraph (A), by striking out “on the record,” and inserting in lieu thereof a comma; and (ii) in subparagraph (B)(i), by striking out “on the record,” and inserting in lieu thereof a comma. (c) Audits; Availability of Audit Information.— Section 487(c)(l)(A)(i) of the Act is amended— (1) by striking “a financial and compliance audit of an eligible institution,” and inserting “a financial audit of an eligible institution with regard to the financial condition of the institution in its entirety, and a compliance audit of such institution”; (2) by striking “at least once every 2 years” and inserting “on at least an annual basis”; and (3) by inserting “and shall be available to cognizant guaranty agencies, eligible lenders, State agencies, and the State review entities referred to in subpart 1 of part H” after “submitted to the Secretary”. (d) Information.— Section 487(c) of the Act is amended— (1) in paragraph (1)(B), by inserting “, including any matter the Secretary deems necessary to the sound administration of the financial aid programs, such as the pertinent actions of any owner, shareholder, or person exercising control over an eligible institution” before the semicolon at the end thereof; (2) m paragraph (1), by redesignating subparagraphs (C) through (G) as subparagraphs (E) through (I), respectively; (3) by inserting after subparagraph (B) of such paragraph the following new subparagraphs: “(C) (i) except as provided in clause (ii), a compliance audit of a third party servicer (other than with respect to the servicer’s functions as a lender if such functions are otherwise audited under this part and such audits meet the requirements of this clause), with regard to any contract with an eligible institution, guaranty agency, or lender for administering or servicing any aspect of the student assistance programs under 106 STAT. 628this title, at least once every year and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary; or “(ii) with regard to a third party servicer that is audited under chapter 75 of title 31, United States Code, such audit shall be deemed to satisfy the requirements of clause (i) for the period covered by such audit; “(D) (i) a compliance audit of a secondary market with regard to its transactions involving, and its servicing and collection of, loans made under this title, at least once a year and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary; or (ii) with regard to a secondary market that is audited under chapter 75 of title 31, United States Code, such audit shall be deemed to satisfy the requirements of clause (i) for the period covered by the audit;”; (4) in subparagraph (H) (as redesignated) of such paragraph, by striking out “an individual or an organization” and inserting in lieu thereof “a third party servicer”; (5) in subparagraph (I) (as redesignated) of such paragraph, by striking out “an individual or an organization” and inserting in lieu thereof “a third party servicer”; (6) in paragraph (3), by inserting “, after consultation with each State review entity designated under subpart 1 of part H,” after “shall publish”; (7) by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively; (8) by inserting immediately after paragraph (1) the following new paragraph: “(2) If an individual who, or entity that, exercises substantial control, as determined by the Secretary in accordance with the definition of substantial control in subpart 3 of part H, over one or more institutions participating in any program under this title, or, for purposes of paragraphs (1) (H) and (I), over one or more organizations that contract with an institution to administer any aspect of the institution’s student assistance program under this title, is determined to have committed one or more violations of the requirements of any program under this title, or has been suspended or debarred in accordance with the regulations of the Secretary, the Secretary may use such determination, suspension, or debarment as the basis for imposing an emergency action on, or limiting, suspending, or terminating, in a single proceeding, the participation of any or all institutions under the substantial control of that individual or entity.”; and (9) by adding at the end the following new paragraphs: “(5) The Secretary shall make readily available to appropriate guaranty agencies, eligible lenders, State review entities designated under subpart 1 of part H, and accrediting agencies or associations 106 STAT. 629the results of the audits of eligible institutions conducted pursuant to paragraph (1)(A). “(6) The Secretary is authorized to provide any information collected as a result of audits conducted under this section, together with audit information collected by guaranty agencies, to any Federal or State agency having responsibilities with respect to student financial assistance, including those referred to in subsection (a)(15) of this section”. “(7) Effective with respect to any audit conducted under this subsection after December 31, 1988, if, in the course of conducting any such audit, the personnel of the Department of Education discover, or are informed of, grants or other assistance provided by an institution in accordance with this title for which the institution has not received funds appropriated under this title (in the amount necessary to provide such assistance), including funds for which reimbursement was not requested prior to such discovery or information, such institution shall be permitted to offset that amount against any sums determined to be owed by the institution pursuant to such audit, or to receive reimbursement for that amount (if the institution does not owe any such sums).”. (e) Construction.— Section 487 of the Act, as amended by subsection (a), is further amended by adding at the end the following: “(e) Construction.— 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.”. (f) Conforming Amendments.— Section 487 of the Act is amended— (1) by striking “subpart 3” in subsection (a) and inserting “subpart 4”; (2) by striking “provided for in section 483(e)” in subsection (a)(2); and (3) by striking “435(a)” in subsection (d) and inserting “481”.