Students Not Profits Act of 2026

The bill would make for-profit institutions ineligible for federal student aid and revise the Higher Education Act’s definitions and references to proprietary institutions.

A school seeking to convert to nonprofit status would have to show, among other things, that it paid no more than fair value for assets or services from former owners and that outside entities do not control its core functions. The application and the Secretary’s decision would be published for public review, and converted schools would remain subject to rules for proprietary institutions for at least 5 years.

To qualify as an institution of higher education, a school would generally have to limit enrollment in distance education courses to 50 percent of its students, incarcerated students to 25 percent, and students without a high school diploma or equivalent to 50 percent. Exceptions to the distance-learning limit apply to certain public or nonprofit technical and career and technical education schools.

The Secretary would have to require one or more people with substantial control over an institution to assume personal liability for certain financial losses to the federal government, student aid recipients, and other program participants. This applies to losses tied to loan discharges after a school closes or successful borrower-defense claims involving the school.

The ban on certain incentive payments would also cover payments to unaffiliated people or entities that provide recruitment services when the payment is based on tuition those services generate for a school.