Protecting Students from Worthless Degrees Act

in a recognized occupation''. (2) Proprietary institution of higher education.--Section 102(b)(1)(A)(i) of the Higher Education Act of 1965 (20 U.S.C. 1002(b)(1)(A)(i)) is amended by inserting ``that meets the standards for debt-to-earnings in section 498C'' after ``gainful employment in a recognized occupation''. (3) Postsecondary vocational institution.--Section 102(c)(1)(A) of the Higher Education Act of 1965 (20 U.S.C. 1002(c)(1)(A)) is amended by inserting ``that meets the standards for debt-to-earnings in section 498C'' after ``gainful employment in a recognized occupation''. (4) Eligible program.--Section 481(b)(1)(A)(i) of the Higher Education Act of 1965 (20 U.S.C. 1088(b)(1)(A)(i)) is amended by inserting ``and meets the standards for debt-to- earnings in section 498C'' after ``gainful employment in a recognized profession''. (b) Debt-to-Earnings.--Subpart 3 of part H of title IV of the Higher Education Act of 1965 (20 U.S.C. 1099c et seq.) is amended by adding at the end the following: ``SEC. 498C. DEBT-TO-EARNINGS. ``(a) Definitions.--In this section: ``(1) Annual debt-to-earnings rate.--The term `annual debt- to-earnings rate' means, for a cohort period and eligible program, the rate that is calculated for the cohort period for students, as defined by the Secretary, who completed the eligible program during such cohort period by dividing the annual loan payment for such cohort period, as calculated by the Secretary, by the median annual earnings for such cohort period. ``(2) Annual loan payment.--The term `annual loan payment' means, for a cohort period and eligible program, the annual loan payment for the cohort of students who completed the eligible program during the cohort period, calculated by the Secretary by using-- ``(A) the median loan debt of the cohort; ``(B) an amortization period of-- ``(i) 10 years, in the case of an eligible program that leads to an undergraduate certificate or diploma, a postbaccalaureate certificate, an associate degree, or a graduate certificate; ``(ii) 15 years, in the case of an eligible program that leads to a baccalaureate degree or a master's degree; or ``(iii) 20 years, in the case of an eligible program not described in clause (i) or (ii); and ``(C) an annual interest rate that is-- ``(i) in the case of an eligible program that is an undergraduate certificate or diploma program, postbaccalaureate certificate program, or associate degree program, the average of the annual statutory interest rates on Federal Direct Unsubsidized Loans applicable to undergraduate students for the three consecutive award years ending in the final year of the cohort period; ``(ii) in the case of an eligible program that is a graduate certificate program or a master's degree program, the average of the annual statutory interest rates on Federal Direct Unsubsidized Loans applicable to graduate students that were in effect during the three consecutive award years ending in the final year of the cohort period; ``(iii) in the case of an eligible program that is a bachelor's degree program, the average of the annual statutory interest rates on Federal Direct Unsubsidized Loans applicable to undergraduate students for the six consecutive award years ending in the final year of the cohort period; and ``(iv) in the case of an eligible program that is a doctoral program or a first professional degree program, the average of the annual statutory interest rates on Federal Direct Unsubsidized Loan applicable to graduate students for the six consecutive award years ending in the final year of the cohort period. ``(3) Cohort period.--The term `cohort period' means-- ``(A) a period of 2 award years, with respect to an eligible program for which the number of students who completed the eligible program in the 2-year period is 30 or more; and ``(B) a period of 4 award years, with respect to an eligible program not described in subparagraph (A). ``(4) Discretionary debt-to-earnings rate.--The term `discretionary debt-to-earnings rate' means the rate that is calculated for a cohort period and eligible program by calculating the quotient of-- ``(A) the annual loan payment for such cohort period; divided by ``(B) the discretionary earnings for such cohort period. ``(5) Discretionary earnings.--The term `discretionary earnings' means the difference between-- ``(A) the median annual earnings for a cohort period; and ``(B) the amount that is 150 percent of the poverty level for an individual, as determined by the Secretary of Health and Human Services for the most recent calendar year for which median annual earnings data has been obtained. ``(6) Median annual earnings.--The term `median annual earnings' means, for a cohort period and an eligible program, the midpoint of the annual earnings of students who completed the program-- ``(A) for a 2-year cohort period-- ``(i) in the fourth and fifth award years prior to the year for which the most recent data are available from the Federal agency with earnings data, except as provided in clause (ii); and ``(ii) in the seventh and eighth award years prior to the year for which the most recent data are available from such Federal agency, for qualifying graduate programs; and ``(B) for a 4-year cohort period-- ``(i) in the fourth, fifth, sixth, and seventh award years prior to the year for which the most recent data are available from the Federal agency with earnings data, except as provided in clause (ii); and ``(ii) in the seventh, eighth, ninth, and tenth award years prior to the year for which the most recent data are available from such Federal agency, for qualifying graduate programs. ``(7) Median loan debt.--The term `median loan debt' means, for a cohort period and an eligible program, the amount obtained by-- ``(A) calculating the loan debt, including private education loans (as defined in section 140(a) of the Truth in Lending Act (15 U.S.C. 1650(a))) for each student who completed the eligible program during such cohort period, based on the lesser of-- ``(i) the loan debt incurred by each student; or ``(ii) the total amount for tuition and fees and books, equipment, and supplies for each student, less the amount of institutional grant or scholarship funds provided to that student; ``(B) removing, if applicable, the number of largest loan debts equivalent to the number of students for whom the Federal agency with earnings data reports it is unable to match to earnings data; and ``(C) calculating the median of the remaining loan debts of the cohort of students. ``(8) Qualifying graduate program.-- ``(A) In general.--The term `qualifying graduate program' means an eligible program-- ``(i) for which the Secretary has identified outlier earnings growth; and ``(ii) whose students must complete required postgraduation training programs of not less than 3 years to obtain licensure in one of the following fields: ``(I) Medicine. ``(II) Osteopathy. ``(III) Dentistry. ``(IV) Clinical psychology. ``(V) Marriage and family counseling. ``(VI) Clinical social work. ``(VII) Clinical counseling. ``(B) Outlier earnings growth.--For purposes of subparagraph (A)(i), the Secretary may identify an eligible program as having outlier earnings growth if there is a growth in the median earnings for students who have completed the program that is reflected by a percent change in the median earnings of such students between the median earnings of such students measured 4 years after completion of the program and the median earnings of such students measured 10 years after completion of the program, that is more than 2 standard deviations above the average earnings growth for other programs with the same credential level, measured 4 years after completion and 10 years after completion. ``(b) Standards.-- ``(1) In general.--An eligible program does not meet the standards for debt-to-earnings if, for 2 of any 3 consecutive award years, the applicable cohort of students fails the debt- to-earnings rates, as described in paragraph (2). ``(2) Failing.--A cohort of students who completed an eligible program during the cohort period ending on the last day of an award year fails the debt-to-earnings rates for the award year if the cohort has-- ``(A) a discretionary debt-to-earnings rate for such cohort period equal to or greater than 20 percent; and ``(B) an annual debt-to-earnings rate for such cohort period equal to or greater than 8 percent. ``(c) Process.-- ``(1) Data match.--In order to ensure compliance with paragraph (2), the Commissioner of the Internal Revenue Service, the Commissioner of the Social Security Administration, and the head of any other Federal agency that administers the database of individual-level earnings data shall, in coordination with the Secretary, timely ensure secure, annual data matches of earnings data with Department of Education data to produce the median annual earnings of each eligible program. ``(2) Requirements of the secretary.--The Secretary shall-- ``(A) on an annual calendar year basis-- ``(i) for each eligible program-- ``(I) calculate for each award year the discretionary debt-to-earnings rate and the annual debt-to-earnings rate for the program; and ``(II) publish the discretionary debt-to-earnings rate and the annual debt-to-earnings rate for the eligible program for each award year on a website established and maintained by the Secretary; ``(ii) for each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation or a graduate or professional degree program offered by an institution of higher education described in section 101(a), issue a notice of determination not later than 45 days after completing the data match described in paragraph (1), informing the institution that provides the program-- ``(I) of the final discretionary debt-to-earnings rate and the annual debt-to-earnings rate for the program, which may not be appealed by the institution unless the institution believes that the Secretary erred in the calculation of any such measure; ``(II) of the final determination regarding whether the program meets the standards for debt-to-earnings, as described in subsection (b); ``(III) whether the program does not meet the standards for debt-to- earnings as described in subsection (b)(1) or could not meet such standards in the next year if it fails the debt- to-earnings rates, as described in subsection (b)(2), in such next year; and ``(IV) whether the institution is required to provide warnings to enrolled students and prospective students of the program's failure, or risk of failure, to meet the standards, as determined under subclause (III); and ``(iii) for each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to- earnings as described in subsection (b)(1), enforce the consequences under subsection (d); and ``(B) develop processes to verify, on an annual calendar year basis-- ``(i) that each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation, or a graduate or professional degree program offered by an institution of higher education described in section 101(a), provides the warning described in subparagraph (A)(ii)(IV), if applicable; and ``(ii) that each eligible program that is a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to- earnings as described in subsection (b)(1) does not receive funds as described in subsection (d). ``(d) Consequences of Not Meeting Standards.-- ``(1) No disbursement of funds for enrollment in ineligible programs.--An institution may not disburse program funds under this title to students enrolled in a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to- earnings as described in this section. ``(2) Time period to reestablish eligibility.--An institution may not seek to reestablish the eligibility of a program of training to prepare students for gainful employment in a recognized occupation that does not meet the standards for debt-to-earnings as described in this section, or establish the eligibility of a program of training to prepare students for gainful employment in a recognized occupation that is substantially similar to the program that did not meet such standards, until the date that is 3 years after the date of the notice of determination issued under subsection (c)(2)(A)(ii) that the program of training to prepare students for gainful employment in a recognized occupation does not meet the standards. ``(e) Equal Treatment of All Programs and Professions.--In carrying out this section, the Secretary shall apply the requirements equally to all categories of programs and professions and shall not differentiate, delay implementation, or adjust any deadline, with respect to tipped professions or any other category of professions or programs unless explicitly authorized under this section. ``(f) Regulations.--The Secretary shall issue regulations to carry out this section not later than 1 year after the date of enactment of the Protecting Students from Worthless Degrees Act, except that such regulations shall not be subject to the requirements of sections 482 and 492.''. (c) Program Participation Requirements.--Section 487 of the Higher Education Act of 1965 (20 U.S.C. 1094) is amended-- (1) in subsection (a), by adding at the end the following: ``(30) The institution will-- ``(A) provide to the Secretary not later than the first December 31 following the date of enactment of the Protecting Students from Worthless Degrees Act (or, for any institution that does not have an active program participation agreement as of such date, the first December 31 after the institution enters into the agreement), in accordance with procedures established by the Secretary, a certification signed by the most senior executive officer of the institution that the institution and each of the eligible gainful employment programs included on the eligibility and certification approval report of the institution under subpart 3 of part H meet the requirements of subsection (i); ``(B) include with its certification an explanation of how each eligible gainful employment program is not substantially similar to any ineligible or discontinued program described in subsection (i)(2)(D); and ``(C) update the certification within 10 days if there are any changes in the approvals for an eligible gainful employment program, or other changes for an eligible gainful employment program that make the existing certification no longer accurate.''; (2) by redesignating subsections (i) and (j) as subsections (j) and (k), respectively; and (3) by inserting after subsection (h) the following: ``(i) Certification Requirements for Gainful Employment Programs.-- ``(1) Definition of gainful employment program.--In this subsection, the term `gainful employment program' means a program of training that-- ``(A) in order to qualify for assistance under this title, is required under subsection (b)(1)(A)(i) or (c)(1)(A) of section 102, or section 101(b)(1), to satisfy gainful employment requirements, including debt-to-earnings; and ``(B) is offered by an institution eligible to receive assistance under this title. ``(2) In general.--Each eligible gainful employment program included on the eligibility and certification approval report of an institution of higher education shall comply with each of the following: ``(A) The gainful employment program is approved by a recognized accrediting agency or is otherwise included in the institution's accreditation by its recognized accrediting agency, or, if the institution is a public postsecondary vocational institution, the program is approved by a recognized State agency for the approval of public postsecondary vocational education in lieu of accreditation. ``(B) The gainful employment program is programmatically accredited, if such accreditation is required by-- ``(i) a Federal governmental entity; ``(ii) a governmental entity in the State in which the institution is located; or ``(iii) a governmental entity in a State in which the institution is not physically located, if the institution-- ``(I) offers postsecondary education through distance education or correspondence courses to students located in that State; or ``(II) is otherwise subject to that State's jurisdiction, as determined by that State. ``(C) The gainful employment program satisfies the applicable educational prerequisites for professional licensure or certification requirements in the State in which the institution is located or a State described in subparagraph (B)(iii), so that a student who completes the program and seeks employment in any such State qualifies to take any licensure or certification examination that is needed for the student to practice or find employment in an occupation that the program prepares students to enter. ``(D) The gainful employment program is not substantially similar to a program offered by the institution that, in any of the 3 years prior to the date of the eligibility and certification approval report-- ``(i) failed the standards for debt-to- earnings in section 498C, the low earnings outcome measure described in section 454(c)(2), or any subsequent outcome measure that the Secretary determines serves the best interests of students and taxpayers; and ``(ii)(I) became ineligible for funding; or ``(II) was voluntarily discontinued by the institution. ``(3) Requirements ensuring student awareness.--Before an institution offering a gainful employment program enrolls any student who intends to reside, practice, or seek employment in a State for which the program does not satisfy the applicable educational prerequisites for professional licensure or certification requirements needed for that occupation in that State, the institution shall notify the student that the gainful employment program does not satisfy the prerequisites. ``(4) Requirements regarding reestablishment of eligibility.--The institution shall not seek to reestablish the eligibility of a gainful employment program that is ineligible for funding under this subsection or subsection (a)(30) until not less than 3 years following the date specified in the notice of determination informing the institution of the program's ineligibility.''. (d) Application of Earnings Outcomes Requirements to Undergraduate Certificate or Diploma Programs.--Section 454 of the Higher Education Act of 1965 (20 U.S.C. 1087d) is amended-- (1) in subsection (c)(2), by inserting ``undergraduate certificate or diploma,'' after ``if the program awards an''; (2) in subsection (c)(3)(A)(iii)(I), by inserting ``, or undergraduate certificate or diploma,'' after ``in the case of a determination made for an educational program that awards a baccalaureate or lesser degree''; and (3) in subsection (c)(3)(B)(i), by inserting ``, or undergraduate certificate or diploma,'' after ``with respect to an educational program that awards a baccalaureate or lesser degree''. (e) Applying Earning Outcomes Requirements Equally to All Professions, Including Tipped Professions.-- (1) In general.--Section 454(c) of the Higher Education Act of 1965 (20 U.S.C. 1087d(c)) is amended by adding at the end the following: ``(8) Equal treatment of all programs and professions.--In carrying out this subsection, the Secretary shall apply the requirements equally to all categories of programs and professions and shall not differentiate, delay implementation, or adjust any deadline, with respect to tipped professions or any other category of professions or programs unless explicitly authorized in this subsection.''. (2) No regulations allowing delay for tipped professions.-- (A) In general.--Paragraph (3) of section 668.402(c) of title 34, Code of Federal Regulations, as amended by the final rule submitted by the Department of Education relating to ``Accountability in Higher Education and Access Through Demand-Driven Workforce Pell: Student Tuition and Transparency System (STATS) and Earnings Accountability'' (91 Fed. Reg. 40136 (July 1, 2026)), shall have no force or effect. (B) Effective date.--Subparagraph (A) shall take effect on July 1, 2027. SEC. 5. STATE AUTHORIZATION REQUIREMENTS FOR DISTANCE EDUCATION PROGRAMS. Section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001) is amended-- (1) in subsection (a)(2), by inserting ``, in accordance with subsection (d)'' before the semicolon; and (2) by adding at the end the following: ``(d) State Authorization.-- ``(1) In general.--An institution that offers postsecondary education through distance education or correspondence courses shall meet the requirements of subsection (a)(2) by being legally authorized within each State in which the institution's enrolled students are located, subject to paragraph (2). ``(2) State authorization reciprocity agreements.--An institution described in paragraph (1) that is located in a State that participates in a State authorization reciprocity agreement with another State and that is covered by such State authorization reciprocity agreement, is considered to meet State requirements for the institution to be legally offering postsecondary distance education or correspondence courses in the other State-- ``(A) subject to any additional requirements of that State; and ``(B) if the institution documents, in the manner required by the Secretary, that each State in which the institution's enrolled students are located has a State process-- ``(i) to review and take appropriate action on complaints from any of such enrolled students concerning the institution, including enforcing applicable State law; and ``(ii) to make the complaints public. ``(3) State authorization reciprocity agreement defined.-- In this subsection, the term `State authorization reciprocity agreement' means an agreement between 2 or more States that-- ``(A) authorizes an institution located and legally authorized in a State covered by the agreement to provide postsecondary education through distance education or correspondence courses to students located in other States covered by the agreement; and ``(B) does not prohibit any State in the agreement from enforcing the State's own statutes and regulations, regardless as to whether such statutes and regulations are general and apply to all educational institutions or specifically directed at a subset of educational institutions.''. <all>