H.R. 10562 — Students Not Profits Act of 2026

This section revises the definition of an institution of higher education under the Higher Education Act of 1965. It expands eligibility to public nonprofit postsecondary vocational institutions and certain foreign institutions for Direct Loans. It caps enrollment at 50 percent distance education (except public or nonprofit career and technical institutions), 25 percent incarcerated students, and 50 percent students without a secondary diploma. It bars eligibility for institutions that have filed for bankruptcy, whose executives have been convicted of Title IV fraud or related crimes, or that have engaged in predatory recruitment or consumer-protection violations. It requires the Secretary to certify compliance and ties continued eligibility to Title IV standards.

This section repeals requirements that applied specifically to proprietary institutions in program participation agreements for federal student aid programs under the Higher Education Act. It eliminates paragraph (24) of subsection (a) and subsection (d), along with related cross-references in the remaining provisions.

This section prohibits institutions of higher education from making payments to unaffiliated persons or entities for services that include recruitment when the payment amount is based on tuition generated by those services.

This section requires the Secretary of Education to mandate that one or more individuals exercising substantial control over an institution of higher education assume personal liability for financial losses to the Federal Government, student assistance recipients, and other participants from loan discharges under section 437(c) due to institutional closure or successful borrower defense claims under section 455(h).

This section updates cross-references throughout the Higher Education Act of 1965 from section 102 to section 101, removes redundant phrases defining institutions of higher education by reference to section 102, and revises internal citations to subsections of section 487 to reflect prior redesignations. It also eliminates specified paragraphs in sections 133 and 487 and adjusts related numbering.

This section establishes a process for the Secretary of Education to approve conversions of institutions of higher education to nonprofit status. It requires applications demonstrating nonprofit status under section 501(c)(3), fair-value acquisition of assets from prior owners, no substantial economic benefits to governing board members or related parties, and no significant direction from for-profit entities, with a conclusive presumption of such direction if entity personnel hold institutional authority. Converted institutions remain subject to proprietary institution rules for 5 years. It bars marketing as nonprofit until the Secretary, accreditor, state, and IRS grant final approvals; requires Federal Register publication of applications and determinations; directs the Secretary to establish a monitoring office within the Department within 1 year of enactment; and requires governance reviews for institutions with indicators of private inurement.