§ 3696. Prohibition on certain advertising, sales, and enrollment practices

Footnotes

1. 1 So in original. Probably should be “for”.
2. 2 So in original. Probably should be “Benefits’ ”.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1974

   Vietnam Era Veterans’ Readjustment Assistance Act of 1974

   Pub. L. 93–508 title II § 212(a) · 88 Stat. 1578

   Enacted · 38 U.S.C. § 3696

   Added Pub. L. 93–508, title II, § 212(a), Dec. 3, 1974, 88 Stat. 1585, § 1796

   Source evidence

   Code source credit
   Added Pub. L. 93–508, title II, § 212(a), Dec. 3, 1974, 88 Stat. 1585, § 1796

   Enacted provision · exact public law section
   (a) Chapter 36 of title 38, United States Code, is amended by inserting at the end thereof the, following new section: 38 USC 1796. “§ 1796. Limitation on certain advertising, sales, and enrollment practices “(a) The Administrator shall not approve the enrollment of an eligible veteran or eligible person in any course offered by an institution which utilizes advertising, sales, or enrollment practices of any type which are erroneous, deceptive, or misleading either by actual statement, omission, or intimation. “(b) The Administrator shall, pursuant to section 1794 of this title, enter into an agreement with the Federal Trade Commission to utilize, where appropriate, its services and facilities, consistent with its available resources, in carrying out investigations and making his determinations under subsection (a) of this section. Such agreement shall provide that cases arising under subsection (a) of this section or any similar matters with respect to any of the requirements of this chapter or chapters 34 and 35 of this title shall be referred to the Federal Trade Commission which in its discretion will conduct an investigation and make preliminary findings. The findings and results of any such investigations shall be referred to the Administrator who shall take appropriate action in such cases within ninety days after such referral. “(c) Not later than sixty days after the end of each fiscal year, the Administrator shall report to Congress on the nature and disposition of all cases arising under this section.”.

2. 1976

   Veterans’ Education and Employment Assistance Act of 1976

   Pub. L. 94–502 § 512 · 90 Stat. 2383

   1. Added · 38 U.S.C. § 3696(b)

      Pub. L. 94–502, § 512, added subsec. (b)

   2. Redesignated · 38 U.S.C. § 3696(b)

      Pub. L. 94–502, § 512, redesignated former subsec. (b) as (c)

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 94–502, § 512, added subsec. (b) and redesignated former subsec. (b) as (c).

   Enacted provision · exact public law section
   Sec. 512. Section 1796 of title 38, United States Code, is amended— (1) by redesignating subsections (b) and (c) as (c) and (d), respectively; and (2) by inserting after subsection (a) a new subsection (b) as follows: “(b) To ensure compliance with this section, any institution offering courses approved for the enrollment of eligible persons or veterans shall maintain a complete record of all advertising, sales, or enrollment materials (and copies thereof) utilized by or on behalf of the institution during the preceding 12-month period. Such record shall be available for inspection by the State approving agency or the Administrator. Such materials shall include but are not limited to any direct mail pieces, brochures, printed literature used by sales persons, films, video tapes, and audio tapes disseminated through broadcast media, material disseminated through print media, tear sheets, leaflets, handbills, fliers, and any sales or recruitment manuals used to instruct sales personnel, agents, or representatives of such institution.”.

3. 1976

   Veterans’ Education and Employment Assistance Act of 1976

   Pub. L. 94–502 title V · 90 Stat. 2383

   1. Redesignated · 38 U.S.C. § 3696(c)

      Pub. L. 94–502, §§ 512(1), 513(a)(22), redesignated former subsec. (b) as (c)

   2. Redesignated · 38 U.S.C. § 3696(c)

      Pub. L. 94–502, §§ 512(1), 513(a)(22), substituted “making the Administrator’s determinations” for “making his determinations”. Former subsec. (c) redesignated (d)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 94–502, §§ 512(1), 513(a)(22), redesignated former subsec. (b) as (c) and substituted “making the Administrator’s determinations” for “making his determinations”. Former subsec. (c) redesignated (d).

   Enacted provision · exact public law
   TITLE V— CHAPTER 36 EDUCATION LOAN AND PROGRAM ADMINISTRATION AMENDMENTS Sec. 501. Chapter 36 of title 38, United States Code, is amended— (1) by striking out in section 1786(a) (2) “$270” and inserting in lieu thereof “$292”; and (2) by amending the table contained in paragraph (1) of section 1787(b) to read as follows: “Column I Column II Column III Column IV Column V Periods of training No dependents One dependent Two dependents More than two dependents         The amount in column IV, plus the following for each dependent in excess of two: First 6 months $212 $238 $260 $11 Second 6 months 159 185 207  11 Third 6 months 106 132 154  11 Fourth and any succeeding 6-month periods  53  79 101  11”.           Sec. 502. (a) Section 1798 of title 38, United States Code, is amended— (1) by striking out in subsection (b)(3) “$270” and “$600” and inserting in lieu thereof “$292” and “$1,500”, respectively; and (2) by amending clause (3) of subsection (d) to read as follows: (3) shall provide that the loan shall bear interest, on the unpaid balance of the loan, at a rate prescribed by the Administrator, at the time the loan is contracted for which rate shall be comparable to the rate of interest charged students at such time on loans insured by the Commissioner of Education, Department of Health, Education, and Welfare, under part B of title IV of the Higher Education Act of 1965, but in no event shall the rate 20 USC 1071. so prescribed by the Administrator exceed the rate charged students on such insured loans, and shall provide that no interest shall accrue prior to the beginning date of repayment; and”. (b) The amendments made by subsection (a) shall be effective with 38 USC 1798 note. respect to loans made under section 1798 of title 38, United States Code, on and after October 1, 1976. Sec 503. Section 1774 of title 38, United States Code, is amended— (1) by adding at the end of subsection (a) thereof the following new sentence: “The Administrator may also reimburse such agencies for work performed by their subcontractors where such work has a direct relationship to the requirements of chapter 32, 34, 35, or 36 of this title, and has had the prior approval of the Ante, p. 2393. 38 USC 1651, 1700, 1770. Administrator.”; and (2) by amending subsection (b) to read as follows: “(b) The allowance for administrative expenses incurred pursuant to subsection (a) of this section shall be paid in accordance with the following formula: “Total salary cost reimbursable under this section Allowable for administrative expense $5,000 or less $600. Over $5,000 but not exceeding $10,000 $1,080. Over $10,000 but not exceeding $35,000 $1,080 for the first $10,000 plus $1,000 for each additional $5,000 or fraction thereof. Over $35,000 but not exceeding $40,000 $6,535. Over $40,000 but not exceeding $75,000 $6,535 for the first $40,000 plus $865 for each additional $5,000 or fraction thereof. Over $75,000 but not exceeding $80,000 $12,960. Over $80,000 $12,960 for the first $40,000 plus $755 for each additional $5,000 or fraction thereof. Sec. 504. Section 1775 of title 38, United States Code, is amended— (1) by striking out the period at the end of subsection (a) and inserting in lieu thereof “which must be certified as true and correct in content and policy by an authorized representative of the school. The catalog or bulletin must specifically state its progress requirements for graduation and must include as a minimum the information required by sections 1776(b) (6) and (7) of this title.”; and , (2) by inserting before the period in the first sentence of subsection (b) the following: “and must include as a minimum (except for attendance) the requirements set forth in section 1776(c) (7) of this title”. Sec. 505. Section 1780(a) of title 38, United States Code, is amended— (1) by striking out at the end of clause (1) “or”; (2) by striking out the period at the end of clause (2) and inserting in lieu thereof a semicolon; and (3) by inserting immediately after clause (2) the following new clauses: (3) to any eligible veteran or person for auditing a course; (4) to any eligible veteran or person for a course for which the grade assigned is not used in computing the requirements for graduation including a course from which the student withdraws unless the Administrator finds there are mitigating circumstances; or (5) to any eligible veteran or person for pursuit of a program of education exclusively by correspondence as authorized under section 1786 of this title or for the pursuit of a correspondence portion of a combination correspondence-residence course leading to a vocational objective where the normal period of time required to complete such correspondence course or portion is less the 6 months. A certification as to the normal period of time required to complete the course must be made to the Administrator by the educational institution.”. Sec. 506. The last sentence of section 1780(a) of title 38, United States Code, is amended to read as follows: “Notwithstanding the foregoing, the Administrator may, subject to such regulations as the Administrator shall prescribe, continue to pay allowances to eligible veterans and eligible persons enrolled in courses set forth in clause (1) or (2) of this subsection— (A) during periods when the schools are temporarily closed under an established policy based upon an Executive order of the President or due to an emergency situation, and such periods shall not be counted as absences for the purposes of clause (2); “(B) during periods between consecutive school terms where such veterans or persons transfer from one approved educational institution to another approved educational institution for the purpose of enrolling in and pursuing a similar course at the second institution if the period between such consecutive terms does not exceed 30 days, but such periods shall be counted as absences for the purposes of clause (2); or (C) during periods between a semester, term, or quarter where the educational institution certifies the enrollment of the eligible veteran or eligible person on an individual semester, term, or quarter basis if the interval between such periods does not exceed 1 full calendar month, but such periods shall be counted as absences for the purposes of clause (2).”. Sec. 507. Section 1784(a) of title 38, United States Code, is amended by adding at the end thereof the following: “The date of interruption or termination will be the last date of pursuit or, in the case of correspondence training, the last date a lesson was serviced by the school.”. Sec. 508. Section 1784(b) of title 38, United States Code, is amended by striking out “$3” and “$4” and inserting in lieu thereof “$5” and “$6” respectively. Sec. 509. (a) Section 1788(a) of title 38, United States Code, is amended— (1) by striking out the semicolon at the, end of clause 1 and inserting in lieu thereof a comma and the following: “but if such course is approved pursuant to section 1775 of this title, then 27 38 USC 1775. hours per week of attendance, with no more than 2½ hours of rest period per week allowed and excluding supervised study, shall be considered full time;”; and (2) by striking out the semicolon at the end of clause 2 and inserting in lieu thereof a comma and the following: “but if such course is approved pursuant to section 1775 of this title, then 22 hours per week net of instruction (excluding supervised study), which may include customary intervals not to exceed ten minutes between hours of instruction, shall be considered full time;” (b) Section 1789 of title 38, United States Code, is amended— (1) by striking out “or” at the end of clause (4) in subsection (2) by striking out the period at the end of clause (5) in subsection (b) and inserting in lieu thereof “; or”; (3) by adding at the end of subsection (b) a new clause (6) to read as follows: “(6) any course offered by an educational institution under a contract with the Department of Defense that (A) is given on, or immediately adjacent to, a military base; (B) is available only to active duty military personnel and/or their dependents and (C) has been approved by the State approving agency of the State in which the base is located.”; and (4) by adding at the end thereof a new subsection (e) as follows: “(c) Notwithstanding the provisions of subsection (b) (1), (2), (3), or (4) of this section, the provisions of subsection (a) shall apply to any course offered by a branch or extension of— (1) a public or other tax-supported institution where the branch or extension is located outside of the area of the taxing jurisdiction providing support to such institution; or (2) a proprietary profit or proprietary nonprofit educational institution where the branch or extension is located beyond the normal commuting distance of such institution.”. Sec. 510. Section 1790(c) of title 38, United States Code, is amended to read as follows: “(c) Notwithstanding any other provision of law, the records and accounts of educational institutions pertaining to eligible veterans or eligible persons who received educational assistance under this chapter or chapter 31. 32, 34, or 35 of this title, as well as the records of other 38 USC 1501. Ante, p. 2393. 38 USC 1651, 1700. students which the Administrator determines necessary to ascertain institutional compliance with the requirements of such chapters, shall be available for examination by duly authorized representatives of the Government.”. Sec. 511. Subchapter II of chapter 36, United States Code, is amended— (1) by striking out section 1793 and inserting in lieu thereof the following: “§ 1793. Compliance surveys “The Administrator shall conduct an annual compliance survey of each institution offering one or more courses approved for the enrollment of eligible veterans or persons where at least 300 veterans or persons are enrolled under provisions of this title or where the course does not lead to a standard college degree. Such compliance survey shall assure that the institution and approved courses are in compliance with all applicable provisions of chapters 31, 34, 35, and 36 of this title. The Administrator shall assign at least one education compliance specialist to work on compliance surveys in any year for each 40 compliance surveys required to be made under this section.”; and (2) by striking out in the table of sections at the beginning of chapter 36 of such title “1703. Institutions listed by Attorney General.” and inserting in lieu thereof “1793. Compliance surveys.”. Sec. 512. Section 1796 of title 38, United States Code, is amended— (1) by redesignating subsections (b) and (c) as (c) and (d), respectively; and (2) by inserting after subsection (a) a new subsection (b) as follows: “(b) To ensure compliance with this section, any institution offering courses approved for the enrollment of eligible persons or veterans shall maintain a complete record of all advertising, sales, or enrollment materials (and copies thereof) utilized by or on behalf of the institution during the preceding 12-month period. Such record shall be available for inspection by the State approving agency or the Administrator. Such materials shall include but are not limited to any direct mail pieces, brochures, printed literature used by sales persons, films, video tapes, and audio tapes disseminated through broadcast media, material disseminated through print media, tear sheets, leaflets, handbills, fliers, and any sales or recruitment manuals used to instruct sales personnel, agents, or representatives of such institution.”. Sec. 513. (a) Chapter 36 of title 38, United States Code, is amended— (1) by striking out in section 1771(a) “his” and inserting in lieu thereof “such”; (2) by striking out in section 1775(a) “he” and inserting in lieu thereof “the Commissioner”; (3) by striking out in subsections (b) and (c) of section 1777 “he”, “Kim”, “his” each time they appear and inserting in lieu thereof “the veteran or person”, “the veteran or person”, and “such veteran’s or person’s”, respectively; (4) by striking out in section 1779(b) “his” and inserting in lieu thereof “the Administrator’s”; (5) by striking out in subsections (a) and (b) of section 1780 “his”, “wife or widow”, and “wife’s or widow’s” each time they appear and inserting in lieu thereof “such veteran’s or person’s”, “spouse or surviving spouse”, and “spouse’s or surviving spouse’s”, respectively; (6) by striking out in subsections (c) and (d) of section 1780 “his” and “he” each time they appear and inserting in lieu thereof “such veteran’s or person’s” and “the veteran or person”, respectively; (7) by inserting “may” immediately before “need” in section 1780(d)(1); (8) by inserting immediately after the fourth sentence in section 1780(d) (2) the following new sentence: “An advance pay-ment may not be made under this subsection to any veteran or person unless the veteran or person requests such payment and the Administrator finds that the educational institution at which such veteran or person is accepted or enrolled has agreed to, and can satisfactorily, carry out the provisions of paragraphs 5(B) and (C) and (6) of this subsection.” (9) by striking out section 1780(e) and the heading thereto ; 38 USC 1780. (10) by redesignating subsections (f), (g), and (h) of section 1780 as subsections (e), (f), and (g), respectively, and by adding at the end of such subsection (g) (as so redesignated) the following : “Subject to such reports and proof as the Administrator may require to show an eligible veteran’s or eligible person’s enrollment in and satisfactory pursuit of such person’s program, the Administrator is authorized to withhold the final payment of benefits to such person until the required proof is received and the amount of the final payment is appropriately adjusted.”; (11) by striking out in section 1780(f) “him” and inserting in lieu thereof “such veteran or person”; (12) by striking out in section 1780(h) “he” the first time it appears and inserting in lieu thereof “the Administrator” and by striking out “he” the second time it appears and inserting in lieu thereof “the veteran or person” ; (13) by striking out in section 1781 “him” and inserting in lieu 38 USC 1781. thereof “such person”; (14) by striking out in section 1783(a) “his” and inserting in 38 USC 1783. lieu thereof “such officer’s or employee’s”; (15) by striking out in section 1783(b) “he” the first time it appears and inserting in lieu thereof “such person” and by striking out “he” the second time it appears and inserting in lieu thereof “the Administrator”; (16) by striking out in section 1783(d) “he” and inserting in lieu thereof “the Administrator”: (17) by striking out in subsections (a) and (b) of section 1784 38 USC 1784. “him” and inserting in lieu thereof “the Administrator”; (18) by striking put in subsections (a), (b), and (c) of section 1786 “wife and widow” and “his” each time they appear and inserting in lieu thereof “spouse or surviving spouse” and “such veteran’s or spouse’s”, respectively ; (19) by striking out in subsections (a), (b),and (d) of section 1790 “he” each time it appears and inserting in lieu thereof “the Administrator”; (20) by striking out in subsections (a), (b). and (c) of section 1791 “his” and “he” each time they appear and inserting in lieu thereof “the veteran’s or person’s” and “the Administrator”, respectively; (21) by striking out in section 1794 “his” and inserting in lieu 38 USC 1794. thereof “the Administrator’s”; (22) by striking out in section 1796(c) (as redesignated by 38 USC 1796. section 513(1) of this Act) “his” and inserting in lieu thereof “the Administrator’s”; (23) by striking out in section 1798(b) (1) “he” and inserting 38 USC 1798. in lieu thereof “the veteran or person” and by striking out in section 1798(e)(1) “he” and inserting in lieu thereof “the Administrator” ; and (24) by striking out in section 1799(d) “his” and inserting in lieu thereof “the Administrator’s”. (b) The amendments made by paragraphs (7), (8), (9), and (10) of subsection (a) shall take effect June 1, 1977, and shall apply with respect to educational assistance allowances and subsistence allowances paid under title 38, United States Code, for months after May 1977.

4. 1976

   Veterans’ Education and Employment Assistance Act of 1976

   Pub. L. 94–502 § 512(1) · 90 Stat. 2383

   Redesignated · 38 U.S.C. § 3696(d)

   Pub. L. 94–502, § 512(1), redesignated former subsec. (c) as (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 94–502, § 512(1), redesignated former subsec. (c) as (d).

   Enacted provision · exact public law section
   (1) by redesignating subsections (b) and (c) as (c) and (d), respectively; and

5. 1984

   Veterans’ Benefits Improvement Act of 1984

   Pub. L. 98–543 title IV § 401 · 98 Stat. 2735

   Struck · 38 U.S.C. § 3696(d)

   Pub. L. 98–543 struck out subsec. (d) which provided that not later than 60 days after the end of each fiscal year the Administrator would be required to report to Congress regarding the disposition of cases under this section

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 98–543 struck out subsec. (d) which provided that not later than 60 days after the end of each fiscal year the Administrator would be required to report to Congress regarding the disposition of cases under this section.

   Enacted provision · exact public law section
   Sec 401. repeal of annual reporting requirement Section 1796 is amended by striking out subsection (d). 38 USC 1796.

6. 1989

   Veterans Education and Employment Amendments of 1989

   Pub. L. 101–237 title IV § 423(b)(1)(A) · 103 Stat. 2062

   1. Substituted · 38 U.S.C. § 3696

      Pub. L. 101–237 substituted “Secretary” for “Administrator” in subsec. (c)

   2. Substituted · 38 U.S.C. § 3696

      Pub. L. 101–237 substituted “Secretary’s” for “Administrator’s” in subsec. (c)

   Source evidence

   Code amendment note
   Pub. L. 101–237 substituted “Secretary” for “Administrator” wherever appearing and “Secretary’s” for “Administrator’s” in subsec. (c).

   Enacted provision · exact public law section
   (A) by striking out “Administrator” each place it appears (other than in section 1652(b)) and inserting in lieu thereof “Secretary”; and

7. 1991

   Pub. L. 102–83 § 5(a) · 105 Stat. 378

   Changed · 38 U.S.C. § 3696

   Pub. L. 102–83, § 5(a), renumbered section 1796 of this title as this section

   Source evidence

   Code amendment note
   Pub. L. 102–83, § 5(a), renumbered section 1796 of this title as this section.

   Enacted provision · exact public law section
   (a) Redesignation of Sections to Conform to Chapter Numbers.— Each section contained in any of chapters 11 through 23 is redesignated by replacing the first digit of the section number with the number of the chapter containing that section. Each section contained in any of chapters 24 through 42 is redesignated so that the first two digits of the section number of that section are the same as the chapter number of the chapter containing that section.

8. 1991

   Pub. L. 102–83 § 5(c)(1) · 105 Stat. 378

   Substituted · 38 U.S.C. § 3696(c)

   Pub. L. 102–83, § 5(c)(1), substituted “3694” for “1794”

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 102–83, § 5(c)(1), substituted “3694” for “1794”.

   Enacted provision · exact public law section
   (1) Each provision of title 38, United States Code, that contains a reference to a section redesignated by subsection (a) is amended so that the reference refers to the section as redesignated.

9. 2013

   Pub. L. 112–249 § 2 · 126 Stat. 2398

   Added · 38 U.S.C. § 3696(d)

   Pub. L. 112–249 added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 112–249 added subsec. (d).

   Enacted provision · exact public law section
   SEC. 2. PROHIBITION ON CERTAIN USES OF INDUCEMENTS BY EDUCATIONAL INSTITUTIONS.   Section 3696 of title 38, United States Code, is amended by adding at the end the following new subsection: “(d) (1) The Secretary shall not approve under this chapter any course offered by an educational institution if the educational institution provides any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance. “(2) To the degree practicable, the Secretary shall carry out paragraph (1) in a manner that is consistent with the Secretary of Education’s enforcement of section 487(a)(20) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)(20)).” .

10. 2021

    Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020

    Pub. L. 116–315 title I § 1020(a)(1) · 134 Stat. 4932

    Amended · 38 U.S.C. § 3696

    Pub. L. 116–315 amended section generally. Prior to amendment, section related to limitation on certain advertising, sales, and enrollment practices

    Source evidence

    Code amendment note
    Pub. L. 116–315 amended section generally. Prior to amendment, section related to limitation on certain advertising, sales, and enrollment practices.

    Enacted provision · exact public law section
    (1) In general.— Section 3696 of title 38, United States Code, is amended to read as follows: “§ 3696. Prohibition on certain advertising, sales, and enrollment practices “(a) Prohibition on Engaging in Substantial Misrepresentation.— An educational institution with a course or program of education approved under this chapter, and an entity that owns such an educational institution, shall not engage in substantial misrepresentation described in subsection (b). “(b) Substantial Misrepresentation Described.— (1) Substantial misrepresentation described in this paragraph is substantial misrepresentation by an educational institution, a representative of the institution, or any person with whom the institution has an agreement to provide educational programs, marketing, advertising, recruiting or admissions services, concerning any of the following: “(A) The nature of the educational program of the institution, including misrepresentation regarding— “(i) the particular type, specific source, or nature and extent, of the accreditation of the institution or a course of education at the institution; “(ii) whether a student may transfer course credits to another institution; “(iii) conditions under which the institution will accept transfer credits earned at another institution; “(iv) whether successful completion of a course of instruction qualifies a student— “(I) for acceptance to a labor union or similar organization; or “(II) to receive, to apply to take, or to take an examination required to receive a local, State, or Federal license, or a nongovernmental certification required as a precondition for employment, or to perform certain functions in the States in which the educational program is offered, or to meet additional conditions that the institution knows or reasonably should know are generally needed to secure employment in a recognized occupation for which the program is represented to prepare students; “(v) the requirements for successfully completing the course of study or program and the circumstances that would constitute grounds for terminating the student’s enrollment; “(vi) whether the courses of education at the institution are recommended or have been the subject of unsolicited testimonials or endorsements by— “(I) vocational counselors, high schools, colleges, educational organizations, employment agencies, members of a particular industry, students, former students, or others; or “(II) officials of a local or State government or the Federal Government; “(vii) the size, location, facilities, or equipment of the institution; “(viii) the availability, frequency, and appropriateness of the courses of education and programs to the employment objectives that the institution states the courses and programs are designed to meet; “(ix) the nature, age, and availability of the training devices or equipment of the institution and the appropriateness to the employment objectives that the institution states the courses and programs are designed to meet; “(x) the number, availability, and qualifications, including the training and experience, of the faculty and other personnel of the institution; “(xi) the availability of part-time employment or other forms of financial assistance; “(xii) the nature and availability of any tutorial or specialized instruction, guidance and counseling, or other supplementary assistance the institution will provide students before, during, or after the completion of a course of education; “(xiii) the nature or extent of any prerequisites established for enrollment in any course of education; “(xiv) the subject matter, content of the course of education, or any other fact related to the degree, diploma, certificate of completion, or any similar document that the student is to be, or is, awarded upon completion of the course of education; and “(xv) whether the degree that the institution will confer upon completion of the course of education has been authorized by the appropriate State educational agency, including with respect to cases where the institution fails to disclose facts regarding the lack of such authorization in any advertising or promotional materials that reference such degree. “(B) The financial charges of the institution, including misrepresentation regarding— “(i) offers of scholarships to pay all or part of a course charge; “(ii) whether a particular charge is the customary charge at the institution for a course; “(iii) the cost of the program and the refund policy of the institution if the student does not complete the program; “(iv) the availability or nature of any financial assistance offered to students, including a student’s responsibility to repay any loans, regardless of whether the student is successful in completing the program and obtaining employment; and “(v) the student’s right to reject any particular type of financial aid or other assistance, or whether the student must apply for a particular type of financial aid, such as financing offered by the institution. “(C) The employability of the graduates of the institution, including misrepresentation regarding— “(i) the relationship of the institution with any organization, employment agency, or other agency providing authorized training leading directly to employment; “(ii) the plans of the institution to maintain a placement service for graduates or otherwise assist graduates to obtain employment; “(iii) the knowledge of the institution about the current or likely future conditions, compensation, or employment opportunities in the industry or occupation for which the students are being prepared; “(iv) job market statistics maintained by the Federal Government in relation to the potential placement of the graduates of the institution; and “(v) other requirements that are generally needed to be employed in the fields for which the training is provided, such as requirements related to commercial driving licenses or permits to carry firearms, and failing to disclose factors that would prevent an applicant from qualifying for such requirements, such as prior criminal records or preexisting medical conditions. “(2) In this subsection: “(A) The term ‘misleading statement’ includes any communication, action, omission, or intimation made in writing, visually, orally, or through other means, that has the likelihood or tendency to mislead the intended recipient of the communication under the circumstances in which the communication is made. Such term includes the use of student endorsements or testimonials for an educational institution that a student gives to the institution either under duress or because the institution required the student to make such an endorsement or testimonial to participate in a program of education. “(B) The term ‘misrepresentation’ means any false, erroneous, or misleading statement, action, omission, or intimation made directly or indirectly to a student, a prospective student, the public, an accrediting agency, a State agency, or to the Secretary by an eligible institution, one of its representatives, or any person with whom the institution has an agreement to provide educational programs, marketing, advertising, recruiting or admissions services. “(C) The term ‘substantial misrepresentation’ means misrepresentation in which the person to whom it was made could reasonably be expected to rely, or has reasonably relied, to that person’s detriment. “(c) Limitation on Certain Commissions, Bonuses, and Other Incentive Payments.— An educational institution with a course or program of education approved under this chapter, and an entity that owns such an educational institution, shall not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance. “(d) Requirement to Maintain Records.— (1) To ensure compliance with this section, any educational institution offering courses approved for the enrollment of eligible persons or veterans shall maintain a complete record of all advertising, sales, or enrollment materials (and copies thereof) utilized by or on behalf of the institution during the preceding two-year period. Such record shall be available for inspection by the State approving agency or the Secretary. “(2) Such materials shall include but are not limited to any direct mail pieces, brochures, printed literature used by sales persons, films, video tapes, and audio tapes disseminated through broadcast media, material disseminated through print, digital, or electronic media, tear sheets, leaflets, handbills, fliers, and any sales or recruitment manuals used to instruct sales personnel, agents, or representatives of such institution. “(e) Agreement With Federal Trade Commission.— (1) The Secretary shall, pursuant to section 3694 of this title, enter into an agreement with the Federal Trade Commission to utilize, where appropriate, its services and facilities, consistent with its available resources, in carrying out investigations and making the Under Secretary of Benefit’s preliminary findings under subsection (g)(1). “(2) Such agreement shall provide that cases arising under subsection (a) of this section or any similar matters with respect to any of the requirements of this chapter or chapters 34 and 35 of this title may be referred to the Federal Trade Commission which in its discretion will conduct an investigation and make preliminary findings. “(3) The findings and results of any investigation under paragraph (2) shall be referred to the Under Secretary for Benefits, who shall take appropriate action under subsection (g) in such cases not later than 60 days after the date of such referral. “(f) Final Judgments From Other Federal Agencies.— Whenever the Deadlines. Secretary becomes aware of a final judgment by a Federal agency against an educational institution or owner of an educational institution pertaining to substantial misrepresentation described in subsection (b) or of other credible evidence relating to a violation of subsection (a), the Secretary, in partnership with the applicable State approving agency, shall— “(1) within 30 days, alert the educational institution or owner that it is at risk of losing approval under this chapter of its courses or programs of education; “(2) provide the educational institution or owner 60 days to provide any information it wishes to the Secretary; “(3) require the educational institution or owner to submit to the Secretary a report prepared by an approved third-party auditor of the advertising and enrollment practices of the educational institution or owner; and “(4) refer the matter to the Under Secretary of Benefits, who may thereafter make a preliminary finding under subsection (g). “(g) Preliminary Findings, Final Determinations, and Processes.— (1) The Under Secretary for Benefits shall make preliminary findings and final determinations on violations of subsections (a), (c), and (d). “(2) (A) The Under Secretary shall establish a process for making preliminary findings and final determinations under paragraph (1). “(B) The process established under subparagraph (A) shall— “(i) clearly define what triggers an oversight visit by the Under Secretary for purposes of enforcing subsections (a), (c), and (d); “(ii) set forth factors an educational institution, or the owner of the educational institution, must meet in order to retain approval status under this section, including with respect to the factors set forth under subsection (h)(2); “(iii) include a process for the provision of notice to an educational institution, or the owner of the educational institution, that the Under Secretary has made a preliminary finding under paragraph (1) that the education institution or owner has violated subsection (a), (c), or (d), which the Under Secretary shall provide to the educational institution or owner within such period after making the preliminary finding as the Under Secretary shall establish for purposes of this clause, except that, in every case, such period shall end before the date on which the Under Secretary makes a final determination under such paragraph; and “(iv) include— “(I) a process for receipt of findings from a third-party pertinent to this section; and “(II) a process for an educational institution or an owner to provide such information as the educational institution or owner determines appropriate to the Secretary, including information about corrective actions the educational institution or owner may have taken in response to preliminary findings under paragraph (1). “(C) The process established under subparagraph (A) shall not prohibit a State approving agency from— “(i) independently investigating a potential violation of subsection (a), (c), or (d); or “(ii) taking action if the State approving agency finds a violation of subsection (a), (c), or (d). “(3) Upon a preliminary finding under this subsection of a violation of subsection (a), (c), or (d) by an educational institution, or the owner of an educational institution, the Under Secretary shall require the educational institution or owner to submit to the Under Secretary a report prepared by an approved third-party auditor of the advertising and enrollment practices of the educational institution or owner. “(4) (A) Before making a final determination under this subsection regarding a violation of subsection (a), (c), or (d) by an educational institution or owner of an educational institution, the Under Secretary shall— “(i) review the practices of the educational institution or owner that pertain to activities and practices covered by subsections (a), (c), and (d); “(ii) consider the results of a risk-based survey conducted by a State approving agency, if available; and “(iii) review— “(I) the findings and information received pursuant to the processes established under paragraph (2)(B)(iii); “(II) in a case in which a report was submitted under subsection (f)(3), such report; “(III) the report submitted under paragraph (3)(B) of this subsection; “(IV) any findings and results submitted under subsection (e)(3); “(V) the marketing and outreach material of the educational institution and the contractors of the educational institution. “(B) The Under Secretary may not make a final determination under this subsection solely based on preliminary findings. “(5) The Under Secretary may not delegate authority to make a final determination under this subsection, including to any employee of the Department or to the Federal Trade Commission. “(h) Enforcement.— (1) (A) Upon a final determination by the Under Secretary for Benefits under subsection (g) that an educational institution or the owner of an educational institution violated subsection (a), (c), or (d), the Under Secretary shall, but subject to subparagraphs (B), (C), and (D) of this paragraph, take one of the following actions independent of any actions taken under section 3690 of this title: “(i) Publish a caution flag on the GI Bill Comparison Tool, or successor tool, about that educational institution and alert its currently enrolled eligible veterans and eligible persons. “(ii) Suspend the approval of the courses and programs of education offered by the educational institution by disapproving new enrollments of eligible veterans and eligible persons in each course or program of education offered by that educational institution. “(iii) Revoke the approval of the courses and programs of education offered by the educational institution by disapproving all enrollments of eligible veterans and eligible persons in each course or program of education offered by that educational institution. “(B) In deciding upon a course of action under subparagraph (A), for the first violation of this section, the Secretary shall consider the factors set forth in paragraph (2). “(C) Subject to subsection (i), any repeat violation and final finding within five years of the first violation of this section shall result in— “(i) a suspension of approval of new enrollments as described in subparagraph (A)(ii) of this paragraph until reinstatement under subsection (j); or “(ii) a revocation of approval under this chapter as described in subparagraph (A)(iii) of this paragraph until reinstatement under subsection (j). “(D) Subject to subsection (i), any third violation within three years of the second violation of this section shall result in revocation of approval under this chapter as described in subparagraph (A)(iii) of this paragraph until reinstatement under subsection (j). “(E) Any action taken under subparagraph (A) of this paragraph regarding a violation of subsection (a), (c), or (d) by an educational institution or the owner of an educational institution shall be taken on or before the date that is 180 days after the date on which the Under Secretary provided notice to the educational institution or owner regarding the violation in accordance with the process established under subsection (g)(2)(B)(iii). “(2) The factors set forth in this paragraph are the following: “(A) That the Secretary’s action brings sufficient deterrence for future fraud against students and the programs of education carried out under this title. Fraud against veterans must be met with a repercussion strong enough to send a deterrent message to this and other educational institutions and owners. “(B) That the educational institution has secured an approved third-party auditor to verify the educational institution’s, or owner’s, advertising and enrollment practices for at least three years going forward. “(C) That the educational institution or owner has repudiated the deceptive practices and has communicated to all employees that deceptive practices will not be tolerated, and has instituted strong governance procedures to prevent recurrence. “(D) That the educational institution has taken steps to remove any pressure on its enrollment recruiters, including by removing enrollment quotas and incentives for enrollment. “(E) That the State approving agency or the Secretary acting in the role of the State approving agency, has completed a risk-based survey and determined the educational institution is worthy of serving eligible veterans and eligible persons. “(3) Enforcement action under this section shall not preclude enforcement action under section 3690 of this title. “(4) No action may be carried out under this subsection with respect to a final determination by the Under Secretary under subsection (g) while such final determination is pending review under subsection (i). “(i) Appeals.— (1) The Secretary shall establish a process by which an educational institution or the owner of an educational institution that is the subject of more than one final determination by the Under Secretary under subsection (g)(1) that the educational institution or owner violated subsection (a), may request a review of the most recent final determination. “(2) (A) The Secretary shall— “(i) review each final determination for which a review is requested under paragraph (1); and “(ii) pursuant to such review, issue a final decision sustaining, modifying, or overturning the final determination. “(B) The Secretary may not delegate any decision under subparagraph (A). “(C) (i) Review under subparagraph (A)(i) of this paragraph shall be the exclusive avenue for review of a final determination under subsection (g)(1). “(ii) A decision issued pursuant to a review under subparagraph (A)(i) may not be appealed to the Secretary for review under section 7104(a) of this title. “(3) (A) Not later than 30 days after the date on which the Secretary issues a final decision under paragraph (2)(A)(ii), the Secretary shall submit to Congress a report on such final decision. “(B) A report submitted under subparagraph (A) shall include the following: “(i) An outline of the decisionmaking process of the Secretary that led to the final decision described in subparagraph (A). “(ii) Any relevant material used to make the final decision under paragraph (2)(A)(ii), including risk-based surveys and documentation from the educational institution or the owners of the educational institution. “(iii) Materials that were submitted to the Secretary after the date of the final determination under subsection (g) that was the subject of the final decision under paragraph (2)(A)(ii) of this subsection and before the date on which the Secretary issued such final decision. “(j) Reinstatement of Approval.— (1) If an educational institution or the owner of an educational institution has had the approval of the courses or programs of education of the educational institution suspended as described in clause (ii) of subsection (h)(1)(A) or revoked as described in clause (iii) of such subsection for a violation of subsection (a), (c), or (d) pursuant to subparagraph (C) or (D) of subsection (h)(1), the educational institution or owner may submit to the applicable State approving agency or the Secretary when acting as a State approving agency an application for reinstatement of approval under this subsection. “(2) Approval under this chapter may not be reinstated under this subsection until— “(A) the educational institution or owner submits to the applicable State approving agency or the Secretary when acting as a State approving agency an application for reinstatement of approval under paragraph (1); “(B) the date that is 540 days after the date of the most recent suspension or revocation described in paragraph (1) of the educational institution or owner; “(C) the educational institution submits a report by an approved third-party auditor on the advertising and enrollment practices of the educational institution, including those of its third-party contractors; “(D) procedures are in place to prevent any future violation of subsection (a), (c), or (d); “(E) that the educational institution has met all factors set forth in subsection (h)(2); and “(F) the Secretary agrees to such reinstatement. “(k) Rule of Construction Regarding State Approving Agencies and Risk-based Surveys.— Nothing in this section shall be construed to prohibit a State approving agency from conducting any risk-based survey the State approving agency considers appropriate at any educational institution that it considers appropriate for oversight purposes. “(l) Definitions.— In this section: “(1) The term ‘approved third-party auditor’ means an independent third-party auditor that is approved by the Secretary for purposes of third-party audits under this section. “(2) The term ‘risk-based survey’ means the risk-based survey developed under section 3673A of this title.” .

    Effective date note
    Amendment by Pub. L. 116–315 effective on Aug. 1, 2021, see section 1020(c) of Pub. L. 116–315, set out as a note under section 3676 of this title.

11. 2021

    Training in High-demand Roles to Improve Veteran Employment Act

    Pub. L. 117–16 § 7(a)(5) · 135 Stat. 280

    Substituted · 38 U.S.C. § 3696(g)(4)(A)(iii)(III)

    Pub. L. 117–16 substituted “paragraph (3)” for “paragraph (3)(B) of this subsection”

    Source evidence

    Code amendment note
    Subsec. (g)(4)(A)(iii)(III). Pub. L. 117–16 substituted “paragraph (3)” for “paragraph (3)(B) of this subsection”.

    Enacted provision · exact public law section
    (5) Section 3696(g)(4)(A)(iii)(III), as amended by section 1020 of such Act, 38 USC 3696. is amended by striking “paragraph (3)(B) of this subsection” and inserting “paragraph (3)”.

12. 2021

    Responsible Education Mitigating Options and Technical Extensions Act

    Pub. L. 117–76 § 3(b)(3) · 135 Stat. 1517

    1. Amended · 38 U.S.C. § 3696(c)

       Pub. L. 117–76 designated existing provisions as par. (1)

    2. Inserted · 38 U.S.C. § 3696(c)

       Pub. L. 117–76 inserted “, except for the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance” after “assistance”

    3. Added · 38 U.S.C. § 3696(c)

       Pub. L. 117–76 added par. (2)

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 117–76 designated existing provisions as par. (1), inserted “, except for the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance” after “assistance”, and added par. (2).

    Enacted provision · exact public law section
    (3) Conforming amendments.— Subsection (c) of section 3696 of such title is amended— (A) by inserting “(1)” before “An educational”; (B) by inserting “, except for the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance” after “assistance”; and (C) by adding at the end the following new paragraph: “(2) In determining whether a violation of paragraph (1) has occurred, the Under Secretary for Benefits shall construe the requirements of this paragraph in accordance with the regulations and guidance prescribed by the Secretary of Education under section 487(a)(20) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)(20)).” .

15 of 17 references resolved to an enrolled provision · 2 partial