Colleges changing control would pay fees and face review deadlines

The Education Department would approve or deny complete applications within 90 days unless the Secretary grants an extension for good cause. The deadline would cover applications for ownership changes that change control, conversions to public or nonprofit status, and advance reviews. Complete applications would count as approved without a decision or justified extension. Extensions would require written reasons and could last up to one month each, totaling no more than 12 months. Approval of an advance application submitted at least 90 days before the deal would assure later approval if the college followed applicable rules and the deal's terms stayed materially the same. The rules would apply to applications submitted on or after January 1, 2026.

Colleges would pay application fees to fund federal reviews. Fees would cover ownership changes that change control and for-profit colleges seeking public or nonprofit status, including advance reviews. Fees would equal 0.15% of the college's federal student aid revenue for the latest fiscal year with available data, or 0.30% for conversions. Paying for an advance review would avoid another application fee for the same deal. The fee rules would apply to applications submitted on or after January 1, 2026.

Buyers could meet the nonprofit definition by satisfying pricing and conflict-of-interest tests. These rules would cover for-profit colleges seeking public or nonprofit status. Under this route, buyers would pay no more than fair market value—the going price—for assets and service or lease contracts. When people hold substantial ownership or control on both sides, this route would require directors without a stake in the deal to approve it and major related agreements. Advertising the college as public or nonprofit would require final Education Department and state approvals, accreditor approval, and IRS tax-exempt approval for nonprofit status. The rules would apply to applications submitted on or after January 1, 2026.

Converted colleges would face monitoring and annual fees unless they received a waiver. This covers colleges approved for conversion. Education Department monitoring would cover only compliance with the nonprofit definition and the bill's buyer requirements. Annual fees would equal 0.15% of federal student aid revenue for the latest fiscal year with available data. Officials could extend monitoring beyond five years by providing written reasons. The department would grant a requested yearly waiver of monitoring and fees when no ongoing contractual or financial ties to former owners remained. For applications submitted on or after January 1, 2026, monitoring would begin the day after conversion approval.