1. Short title This Act may be cited as the Pay for Student Success Act . 2. Authorization of pay-for-success projects Part B of title VII of the Higher Education Act of 1965 ( 20 U.S.C. 1138 et seq.) is amended— (1) by redesignating section 745 as section 746; and (2) by inserting after section 744 the following: 745. Pay-for-success projects (a) Definitions In this section: (1) Pay-for-success project The term pay-for-success project refers to a performance-based contract under this section in which— (A) the eligible entity pursues innovative strategies for improving outcomes and conducts a rigorous evaluation of the results to determine effectiveness; (B) the Secretary and the eligible entity agree to target outcomes; (C) the Federal Government imposes minimal administrative requirements on the eligible entity to allow for maximum flexibility to improve efficiency and effectiveness; and (D) the eligible entry may receive additional funding under this section if the eligible entity achieves successful outcomes as demonstrated through a rigorous independent evaluation approved by the Director of the Institute of Education Sciences. (2) Eligible entity The term eligible entity means— (A) an institution of higher education; (B) a nonprofit organization; (C) a consortium composed of an institution of higher education and a nonprofit organization; or (D) an entity described in subparagraph (A), (B), or (C) in partnership with— (i) a local educational agency; (ii) a business; (iii) a State educational agency; or (iv) a State department of higher education. (b) Pay-for-Success projects authorized From the amounts appropriated under section 746, the Secretary shall enter into contracts with eligible entities for pay-for-success projects that develop, implement, evaluate, and promote innovative strategies for increasing the postsecondary education retention and completion rates of— (1) students who receive Federal Pell Grants