This bill establishes stricter financial accountability, enhances student protections against deceptive practices, and increases transparency across federal student aid programs to safeguard educational and career outcomes.
Richard Durbin
Senator
IL
The **Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025** significantly increases accountability for higher education institutions by establishing stricter financial performance metrics, strengthening student protections against deceptive practices, and mandating greater transparency in spending and outcomes. The bill aims to empower students by simplifying loan forgiveness, banning coercive practices like forced arbitration, and ensuring they can access their transcripts regardless of outstanding debt. Furthermore, it overhauls federal oversight by creating a dedicated enforcement unit and requiring better coordination among agencies to monitor institutional integrity and contractor performance. Ultimately, this legislation seeks to protect students and taxpayers by cutting off federal aid to underperforming programs and increasing penalties for institutional misconduct.
New Bill Ties College Aid to Grad Earnings: Programs Must Hit 30% Instruction Spending Floor
The PROTECT Students Act of 2025 is a massive overhaul of federal student aid rules, designed to put the brakes on schools that leave students with huge debt and zero job prospects. At its core, the bill says: If your program doesn’t translate into better earnings than a high school diploma, and it saddles students with too much debt, it loses access to federal funding—period. It also mandates that, starting in 2026, colleges must spend at least 30 percent of their tuition and fee revenue directly on instruction, not marketing or executive pay.
The New Bottom Line: Show Me the Money
Section 101 introduces a brutal new reality for schools: the Gainful Employment standard. To keep receiving federal student aid funds (Title IV), programs must now pass two tests based on actual student outcomes. First, the debt-to-earnings test: graduates’ average annual loan payments cannot exceed 8 percent of their total annual earnings or 20 percent of their discretionary earnings. Second, the Earnings Premium test: graduates must earn more than the typical working adult in their state who only has a high school diploma. If a program fails these metrics in two out of three years, the school can’t enroll new students in that program using federal aid funds. This isn't just about theory; the Department of Education will use IRS and Social Security data to track actual earnings, making the consequences very real for schools that overcharge for low-value degrees.
Transcript Hostages, Forced Arbitration, and Student Lawsuits
For anyone who has ever been stuck paying a fee just to get their own transcripts, Section 104 is a game-changer. It flat-out bans colleges from withholding official transcripts because a student owes them money. Furthermore, if you’re a student, the school can no longer force you into private, secret arbitration to settle a dispute. The bill eliminates forced arbitration clauses in enrollment contracts and grants students a “private right of action.” This means if a school lies to you about job prospects, costs, or anything else, you can sue them directly in court. If you win, the court can award you up to triple the damages if the school was found to have acted recklessly.
When Schools Close, Loans Disappear
Section 103 tackles the nightmare scenario of a school suddenly shutting down. Currently, students often have to jump through hoops to get their loans discharged. This bill creates automatic closed school discharge one year after the school closes for eligible students who didn’t finish their program. You won't have to fill out an application or sign anything; the debt will be wiped out automatically. This provision is a huge relief for students who have been left holding the bag after a school collapses.
Where the Tuition Money Must Go
If you ever wondered why your tuition seems to fund more glossy brochures than actual classroom resources, Section 203 provides an answer. It mandates that, starting in 2026, colleges must spend a minimum of 30 percent of their tuition and fee revenue on instruction. After a few years, the Secretary of Education will establish a new, higher combined minimum percentage for instruction and student services. Critically, money spent on marketing, recruitment, advertising, executive pay, or lobbying cannot be counted toward this instruction floor. This aims to shift institutional priorities back toward education and away from aggressive sales tactics.
The New Federal Watchdogs
To enforce all these rules, the bill creates a powerful new Enforcement Unit within the Office of Federal Student Aid (FSA) (Section 301). This unit will be staffed with experts, conduct “secret shopping” at schools, and have the power to issue subpoenas for documents and testimony. Fines for violations are dramatically increased from $25,000 to $100,000 per violation. Furthermore, Section 204 tightens the screws on hiring: schools cannot knowingly hire owners or executives from other institutions that have a history of fraud or failing to repay government debt. Essentially, the government is creating a dedicated, highly funded police force to patrol the student aid landscape, signaling a clear end to the era of lax oversight.