Preventing Financial Exploitation in Higher Education Act

This bill creates financial penalties for colleges and universities with endowments of $2.5 billion or more based on how their students handle federal student loans. These schools would have to pay penalties to the Department of Education if too many of their current and former students default on loans, are behind on payments, or owe more than they originally borrowed despite making regular payments. For example, if 11% or more of a school's borrowers default on their loans in fiscal year 2025, the school must pay a penalty equal to 30% of all outstanding loan balances. The bill also increases taxes on these wealthy schools' investment income if they raise tuition beyond certain inflation-adjusted amounts.

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