New Bill Speeds Up College Mergers, Adds Fees and Scrutiny for For-Profit Conversions

This proposed legislation, the "Change of Ownership and Conversion Improvement Act," overhauls how the government reviews colleges and universities when they change hands, aiming to speed things up while adding guardrails, particularly when for-profit schools become non-profits. Starting January 1, 2026, schools undergoing ownership changes or seeking pre-approval will face new administrative fees based on their federal student aid revenue – 0.15% for standard changes and 0.30% for conversions to non-profit status, capped at $120,000. The core idea is to use these fees to fund quicker, more thorough reviews by the Department of Education (DOE) and, in conversion cases, the IRS.

Faster Lane, Toll Required

Think of it like an express lane for college mergers, but with a toll. The bill mandates the DOE decide on complete applications within 90 days. If they don't, the application is automatically approved unless the DOE justifies an extension (which has limits). This addresses current complaints about slow processing times holding up potentially beneficial deals. Institutions can even get a "pre-transaction review" to check compliance before a deal closes. The catch? Those new fees (Sec. 3). While capped, they represent a new cost for institutions, potentially impacting smaller schools more. The bill bets these fees will pay for the staff needed to hit that 90-day target, but the pressure to approve quickly could raise questions about whether reviews will be as deep, especially since the standard for delaying a decision – "good cause" – isn't explicitly defined.

Spotlight on School Conversions

The bill puts for-profit colleges converting to non-profit status under a microscope, reflecting concerns about deals where former owners might still improperly benefit. These conversions face a higher fee (0.30% of Title IV revenue, up to $120k), with half earmarked for the IRS to vet the non-profit setup (Sec. 3). The rules get stricter: assets must be sold at fair market value, deals need approval from directors without conflicts of interest, and schools can't market themselves as non-profits until everyone (DOE, accreditor, state, IRS) signs off. Post-conversion, these schools face a 5-year monitoring period with another annual fee (0.15% of Title IV funds, capped at $60k, half to IRS), though they can request a waiver if ties to former owners are completely cut. This is designed to ensure a clean break and protect taxpayer dollars flowing through student aid.

Keeping Tabs: Transparency and Reporting

To make sure this new process works as intended, the bill adds transparency measures. The DOE must publicly explain its approval or denial reasoning in the Federal Register (Sec. 3). It also has to report annually to Congress on how quickly it's processing applications, why any delays happened, and suggest improvements. If the DOE misses its reporting deadline, it temporarily loses access to the fee revenue – a measure seemingly designed to keep the agency accountable. Furthermore, the Government Accountability Office (GAO) is tasked with reviewing the whole system within five years to see if these changes actually improved the process and monitoring (Sec. 4). It’s an attempt to balance speed with accountability, ensuring the new fees lead to better oversight, not just faster rubber-stamping.