HR-2271-119
Referred to the House Committee on Education and Workforce.
Sponsored by Burgess Owens (R-UT)
What it does
The bill would amend the Higher Education Act to let colleges seek a pretransaction review of a planned change in ownership. It would require the Education Department to decide materially complete applications within 90 days, with good-cause extensions capped at one month at a time and 12 months total, and an application not decided in time without a good-cause extension would be deemed approved. It would charge fees of 0.15 percent of an institution's federal student aid revenue (0.30 percent for for-profit-to-nonprofit conversions), capped at $120,000 per application, and the Department could spend them without further appropriation. Converting schools would face fair-market-value and self-dealing tests, a 5-year monitoring period with an annual fee capped at $60,000 (waivable if no ongoing financial tie to former owners), and limits on advertising nonprofit status until all approvals are in hand. Applications submitted on or after January 1, 2026 would be covered, and other limits apply.
Who benefits
Colleges and buyers in mergers and acquisitions, who would gain a firm 90-day decision clock, automatic approval if the Department misses it, and a published list of required documents. For-profit schools seeking nonprofit status would gain a defined path with a fair-market-value safe harbor. Students and taxpayers may benefit from added monitoring of conversions and from fee funding replacing general taxpayer funds for these reviews. The Education Department and IRS would gain fee revenue for review and monitoring staff.
Who is hurt
Institutions filing applications would pay new fees (up to $120,000 per application) and converting schools would pay annual monitoring fees (up to $60,000) for at least 5 years. For-profit owners selling to nonprofit buyers would face fair-market-value and independent-committee requirements that could limit favorable deals. The Education Department could face pressure to finish reviews quickly, raising the risk of rushed decisions or automatic approvals of flawed deals. Schools could not market themselves as nonprofit until several agencies approve. Taxpayers and students could bear costs if deemed approvals let weak buyers through.
Supporters argue
Supporters argue that the Department's reviews have taken up to 5 years, in part because few staff are assigned, and that a 90-day clock funded by user fees would make deals predictable without burdening general taxpayers. They contend that fair-market-value tests, disinterested-committee approval, a 5-year monitoring period, and IRS funding would better guard against improper private benefit in conversions, and the bill's findings state that GAO has identified gaps in current monitoring.
Opponents argue
Opponents argue that a hard 90-day clock with automatic approval could push an understaffed agency to approve complex transactions without full scrutiny, putting federal student aid dollars and students at risk. They contend that letting an agency spend fees without annual appropriations weakens congressional oversight, and that fees tied to aid revenue and capped amounts may not match review costs. The bill's findings state that the Department should review thoroughly, yet the deadline mechanism could work against that goal.
Constitutional context
Congress's authority rests on the Spending Clause (Art. I, §8, cl. 1) conditioning participation in federal student aid programs, as in South Dakota v. Dole (1987), and on the Appropriations Clause (Art. I, §9, cl. 7), since fees would be spendable by agencies without further appropriation. Deemed-approval and fee provisions raise no clear constitutional conflict.
Checks and balances
The bill shifts some control from the executive branch's Education Department to Congress by setting binding deadlines and deemed approval, while giving the Department fee spending authority outside annual appropriations; checks include annual reports to Congress, a GAO review, and a bar on spending fees if reports are late.
Historical precedent
Congress has authorized agency user fees that fund reviews with deadlines before, such as the Prescription Drug User Fee Act of 1992 for FDA drug reviews.