Change of Ownership and Conversion Improvement Act
HB2271, titled the Change of Ownership and Conversion Improvement Act, would amend the Higher Education Act of 1965 to overhaul how the U.S. Department of Education reviews changes in control for colleges and universities. The bill creates a formal pretransaction review process for institutions planning mergers, acquisitions, sales, or conversions, and requires the Department to provide a full review of materially complete applications. If an institution submits a complete pretransaction application at least 90 days before the transaction and receives approval, the later change-of-ownership application would also be approved so long as the transaction does not materially change.
The bill also adds specific rules for proprietary institutions converting to public or nonprofit status. It defines conversion transactions, requires proof that assets and contracts are purchased at fair market value, and adds safeguards against self-dealing when insiders are on both sides of the deal. Institutions seeking conversion would face a five-year post-conversion monitoring period, during which the Department may require reports or audits to ensure compliance with nonprofit requirements and tax rules. The bill further restricts institutions from marketing themselves as public or nonprofit until they receive approvals from the Department, accreditor, state, and, where applicable, the IRS.
The bill would amend section 498(i) of the Higher Education Act of 1965 and apply to change-of-control or conversion applications submitted on or after January 1, 2026. It would impose new administrative fees on institutions seeking ownership changes, with higher fees for proprietary-to-nonprofit conversions, and would dedicate portions of those fees to the Department of Education and the Internal Revenue Service for review and monitoring. It also sets deadlines for agency action, creates deemed approval if the Department misses the deadline without good cause, requires Federal Register publication of application standards and decisions, and directs GAO to report on implementation after five years. The practical effect would be to speed up and standardize federal review while shifting some review costs from taxpayers to institutions undergoing transactions.
The bill’s findings and structure reflect a generally supportive view of mergers, acquisitions, and nonprofit conversions in higher education, emphasizing innovation, competition, and faster processing. The bill also signals concern that current federal review processes are too slow and under-resourced, and it seeks to address that by funding additional staff through user fees. Because no committee transcript or vote record was provided, there is no recorded floor or committee sentiment beyond the bill text itself. On its face, the measure appears designed to appeal to institutions seeking faster approvals while also reassuring regulators and taxpayers that oversight will be more robust.
The main points of contention are likely to be the new fees, the automatic-approval mechanism, and the expanded federal oversight of conversions. Institutions may object to the cost of the administrative and monitoring fees, especially the higher fee for proprietary conversions and the annual monitoring charge. Regulators or watchdogs may be concerned that deemed approval after 90 days could weaken scrutiny if the Department is unable to complete a thorough review in time. Another likely issue is the bill’s anti-self-dealing and fair-market-value requirements for conversions, which could draw scrutiny from for-profit education operators and transaction participants, while consumer advocates and tax authorities may support those safeguards.