[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4370 Introduced in House (IH)]






108th CONGRESS
  2d Session
                                H. R. 4370

To ensure that the Direct Loan Program is a competitive alternative to 
  the Federal Family Education Loan Program for schools and students.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 17, 2004

Mr. Petri (for himself and Mr. George Miller of California) introduced 
 the following bill; which was referred to the Committee on Education 
                           and the Workforce

_______________________________________________________________________

                                 A BILL


 
To ensure that the Direct Loan Program is a competitive alternative to 
  the Federal Family Education Loan Program for schools and students.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Direct Loan Reward Act of 2004''.

SEC. 2. DIRECT LOAN REWARD PROGRAM.

    Part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1087a et seq.) is amended by adding at the end the following:

``SEC. 460A. DIRECT LOAN REWARD PROGRAM.

    ``(a) Program Authorized.--The Secretary shall carry out a Direct 
Loan Reward Program to encourage institutions of higher education to 
participate in the student loan program under this part.
    ``(b) Program Requirements.--In carrying out the Direct Loan Reward 
Program, the Secretary shall--
            ``(1) provide to each institution of higher education 
        participating in the student loan program under this part a 
        financial reward payment, in an amount determined in accordance 
        with subsection (c), to encourage the institution to provide 
        student loans under this part;
            ``(2) require each institution of higher education 
        receiving a payment under this section to provide student loans 
        under this part for a period of 5 years from the date the 
        payment is made;
            ``(3) require that funds paid to institutions of higher 
        education under this section be used to award students a 
        supplement to such students' Pell Grants under subpart 1 of 
        part A; and
            ``(4) for a period of 2 years beginning on the date of 
        enactment of this section, encourage all institutions of higher 
        education to participate in the Direct Loan Reward Program.
    ``(c) Amount.--The amount of a financial reward payment under this 
section shall be an amount equal to 50 percent of the savings to the 
Federal Government generated by the institution's participation in the 
student loan program under this part instead of the institution's 
participation in the student loan program under part B.
    ``(d) Trigger to Ensure Cost Neutrality.--
            ``(1) Limit to ensure cost neutrality.--Notwithstanding 
        subsection (c), the Secretary shall not distribute financial 
        reward payments under the Direct Loan Reward Program that, in 
        the aggregate, exceed the Federal savings resulting from 
        implementation of the Direct Loan Reward Program.
            ``(2) Federal savings.--In calculating Federal savings, as 
        used in paragraph (1), the Secretary shall determine any 
        Federal savings on loans made to students at institutions of 
        higher education that participate in the Direct Loan Reward 
        Program and that, on the date of enactment of the Direct Loan 
        Reward Program, participated in the student loan program under 
        part B, resulting from the difference of--
                    ``(A) the Federal cost of loan volume made under 
                this part; and
                    ``(B) the Federal cost of an equivalent type and 
                amount of loan volume made, insured, or guaranteed 
                under part B.
            ``(3) Distribution rules.--If the Federal savings 
        determined under paragraph (2) is not sufficient to distribute 
        full financial reward payments under the Direct Loan Reward 
        Program, the Secretary shall--
                    ``(A) first make financial reward payments to those 
                institutions of higher education that participated in 
                the student loan program under part B on the date of 
                enactment of the Direct Loan Reward Program; and
                    ``(B) with any remaining Federal savings after 
                making payments under subparagraph (A), make financial 
                reward payments to the institutions of higher education 
                not described in subparagraph (A) on a pro-rata basis.
            ``(4) Distribution to students.--Any institution of higher 
        education that receives a financial reward payment under this 
        section shall distribute such payment among the students of 
        such institution who are Pell Grant recipients by awarding each 
        such student an equal supplemental grant. Such supplemental 
        grant shall be known as a `Pell Reward'.
            ``(5) Carry over.--Any institution of higher education that 
        receives a reduced financial reward payment under paragraph 
        (3)(B), shall remain eligible for the unpaid portion of such 
        institution's financial reward payment, as well as any 
        additional financial reward payments for which the institution 
        is otherwise eligible, in subsequent fiscal years.''.
                                 <all>