Bill · H.R. 713· House(119-HR-713)
Preventing Financial Exploitation in Higher Education Act
- Introduced
- 1/23/2025
- Last activity
- 1/23/2025 — Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Sponsored by
- Beth Van Duyne
- Cosponsors
- None
- Introduced
- In Committee
What this bill would do
This bill, titled the "Preventing Financial Exploitation in Higher Education Act," aims to impose financial penalties on certain large higher education institutions. It targets "covered institutions" that possess an endowment fund valued at $2,500,000,000 or more. These institutions would face penalties based on their student cohort default, delinquency, and underpayment rates. The bill also includes a provision to increase the tax on net investment income for certain large educational institutions that increase their tuition. The penalties follow a phase-in schedule starting in fiscal year 2025.
Yes· 3 of 4
Does this raise the taxes companies pay?+7
The bill increases the tax on net investment income from 1.4 percent to 25 percent for certain large educational institutions that increase tuition.
Would students be better off under this?+4
The bill holds institutions financially accountable for high rates of student loan default, delinquency, and underpayment.
Does this make college cost less?+3
The bill imposes financial penalties and higher taxes on large institutions to potentially disincentivize tuition increases and hold them accountable for student loan defaults.
The opposite
Would high-income households be better off under this?-2
The bill targets large institutions with significant endowments, which may impact those who contribute heavily to such institutions.
Who it would affect, and how
Potential Positive Impacts for People
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Institutional Accountability: The bill requires covered institutions of higher education to pay penalties to the Secretary based on their cohort default, delinquency, and underpayment rates (Section 2, subsection a). This creates a system where institutions are held financially responsible for high rates of student loan issues.
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Penalty Structure for Default, Delinquency, and Underpayment: The bill establishes specific percentages for penalties that scale over several fiscal years, such as a 30 percent penalty for a 11 percent or more cohort default rate in fiscal year 2025 (Section 2, subsection b).
Potential Negative Impacts for People
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Impact on Borrowers: The payment of a penalty by a covered institution has no effect on the rights or obligations of a borrower of a loan included in the calculation of the institution's rates (Section 2, subsection c).
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Increased Tax on Large Institutions: For "disqualified large applicable educational institutions," the tax on net investment income may increase from 1.4 percent to 25 percent if the institution's average tuition exceeds the inflation-adjusted base amount (Section 4, subsection a and subsection 2).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Economy And Finance
- Increases Corporate Taxes+7
- Demographic And Interest Groups
- Good For Students+4Good For Low Income Households+2Good For High Income Households-2
- Education And Technology
- Improves College Affordability+3
- 1/23/2025
- Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Introduced in House