The "Preventing Risky Operations from Threatening the Education and Career Trajectories of Students Act of 2025," or the PROTECT Students Act of 2025, seeks to significantly enhance accountability across higher education institutions and their contractors. It introduces comprehensive reforms focused on protecting students and taxpayers from predatory practices, ensuring institutional integrity, and improving federal oversight. This legislation strengthens student protections, increases transparency, and bolsters enforcement mechanisms within the Department of Education.

The bill establishes rigorous gainful employment and financial value transparency standards, requiring programs to meet specific debt-to-earnings and earnings premium thresholds or face ineligibility for federal funds. It expands borrower defense to repayment by defining clear criteria for discharge, including substantial misrepresentation, contractual failures, or aggressive recruitment tactics, and allows for group discharges. Furthermore, the legislation broadens eligibility for closed school discharges, making it easier for students affected by institutional closures to receive loan relief, often without requiring an application.

To safeguard students' legal rights, the bill prohibits institutions from enforcing arbitration agreements or other limitations on a student's ability to pursue claims in court, and it creates a private right of action for students against institutions for violations like substantial misrepresentation. It also bans the practice of transcript withholding due to unpaid balances. Additionally, the Act revokes specific guidance that previously allowed exceptions to the prohibition on incentive compensation for recruiters, requiring institutions to attest to and annually verify their compliance with this ban.

The legislation mandates greater integrity from institutions and their contractors, expanding federal oversight of third-party servicers and directing the Secretary to establish a single definition for job placement rates. A significant provision requires institutions to spend a minimum percentage of their net tuition and fee revenue on instruction and student services, starting at 30% and evolving to a combined threshold. To prevent repeat offenders, the bill prohibits institutions from employing individuals or contracting with entities with a history of fraud or significant federal fund losses.

A new Enforcement Unit is established within the Office of Federal Student Aid, tasked with investigating misconduct, enforcing compliance, and conducting "secret shopping" at institutions, supported by expanded subpoena power. The bill also significantly increases civil penalties for violations, allowing for fines up to $100,000 per violation or 1.0% of Title IV funds, with penalties accruing across commonly owned affiliates. The Secretary's authority to recoup funds from institutions responsible for student loan discharges or other misconduct is clarified and strengthened.

To improve interagency collaboration, a For-Profit Education Oversight Coordination Committee is created, bringing together various federal agencies to enhance oversight and protect students. The Secretary is also directed to establish a centralized complaint tracking system for student financial aid and institutional practices, ensuring timely responses and public transparency. The Act reforms eligibility and certification procedures, requiring institutions to demonstrate full compliance with all Title IV requirements and applying the False Claims Act to institutions making misrepresentations.

State oversight is strengthened by requiring institutions offering distance education to comply with state requirements, and accrediting agencies are mandated to assess and monitor risk to students more effectively. Finally, the bill significantly enhances transparency by requiring institutions to provide warnings for failing gainful employment programs and to disclose detailed information on instructional spending, third-party servicer activities, and online program outcomes. The Department of Education must publicly disclose extensive data, including borrower defense claims, 90/10 rule compliance, institutional financial standing, and all accrediting agency reports.