Change of Ownership and Conversion Improvement Act
Change of Ownership and Conversion Improvement Act
Plain Language Summary
# Summary of HR 2271: Change of Ownership and Conversion Improvement Act **What It Does:** This bill would streamline the process for colleges and universities to change ownership or for for-profit colleges to convert to nonprofit status. It creates a new "pretransaction review" system that allows institutions to get approval from the Department of Education before finalizing ownership changes, and establishes specific timelines for the government to approve or reject these applications. The bill also requires institutions to pay administrative fees to cover the cost of these reviews. **Who It Affects:** This legislation primarily impacts for-profit colleges and universities considering conversion to nonprofit status, as well as any higher education institutions undergoing ownership changes. The Department of Education and Internal Revenue Service would also be affected, as they would handle the new application reviews and fee processing.
Students and faculty at affected institutions could potentially see changes based on their school's new ownership structure. **Key Provisions:** Institutions seeking approval must pay an administrative fee to the Department of Education. For for-profit colleges converting to nonprofit status, half of that fee goes to the IRS to verify tax-exempt status and compliance. The bill sets deadlines for government approval decisions and includes new reporting requirements. **Current Status:** HR 2271 is currently in committee and has not yet been voted on by the full House of Representatives.
CRS Official Summary
Change of Ownership and Conversion Improvement ActThis bill revises the application and review process for institutions of higher education (IHEs) to change ownership or for a proprietary (i.e., for-profit) IHE to convert to public or other nonprofit status.Specifically, the bill (1) establishes a pretransaction review application, and (2) requires an IHE to pay an administrative fee to the Department of Education (ED) for change in ownership or conversion transactions or pretransaction reviews. In the case of a for-profit IHE seeking conversion or a pretransaction review for conversion, ED must remit 50% of the administrative fee to the Internal Revenue Service (IRS) to determine whether the IHE is exempt from tax and is otherwise in compliance with the applicable requirements of the Internal Revenue Code of 1986 (IRC).The bill establishes time frames for ED to approve or deny applications. The bill also includes various reporting requirements.An IHE that has been approved for conversion by ED must be subject to a five-year monitoring period and must also pay an annual fee for this monitoring. ED must remit 50% of the annual fee to the IRS for monitoring the IHE's compliance with the IRC.The Government Accountability Office must report on the implementation of this bill's provisions.
Latest Action
Referred to the House Committee on Education and Workforce.