[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 151 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 151

 To ensure that all college students and their families have the tools 
    and resources to adequately save for, finance, and repay their 
             postsecondary and post-baccalaureate expenses.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 4, 2005

 Mr. Menendez introduced the following bill; which was referred to the 
   Committee on Education and the Workforce, and in addition to the 
Committee on Ways and Means, for a period to be subsequently determined 
 by the Speaker, in each case for consideration of such provisions as 
        fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To ensure that all college students and their families have the tools 
    and resources to adequately save for, finance, and repay their 
             postsecondary and post-baccalaureate expenses.

    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 ``Higher Education Affordability 
Resource Act''.

SEC. 2. HOPE SCHOLARSHIP CREDIT EXPANDED TO COVER EXPENSES FOR OTHER 
              EDUCATIONAL EXPENSES.

    (a) In General.--Sections 25A and 6050S of the Internal Revenue 
Code of 1986 are each amended by striking ``qualified tuition and 
related expenses'' each place it appears and inserting ``qualified 
higher education expenses''.
    (b) Qualified Higher Education Expenses.--Section 25A(f)(1) of such 
Code is amended to read as follows:
            ``(1) Qualified higher education expenses.--The term 
        `qualified higher education expenses' means the qualified 
        higher education expenses (as defined by section 529(e)(3) 
        without regard to subparagraph (B) thereof) required for the 
        enrollment or attendance of--
                    ``(A) the taxpayer,
                    ``(B) the taxpayer's spouse, or
                    ``(C) any dependent of the taxpayer with respect to 
                whom the taxpayer is allowed a deduction under section 
                151,
        at an eligible educational institution for courses of 
        instruction of such individual at such institution.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to expenses paid after December 31, 2005 (in taxable years ending 
after such date), for education furnished in academic periods beginning 
after such date.

SEC. 3. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

    Section 428K (20 U.S.C. 1078-11) is amended to read as follows:

``SEC. 428K. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

    ``(a) Purposes.--The purposes of this section are--
            ``(1) to reduce the burden of student debt, particularly 
        for Americans who dedicate their careers to meeting certain 
        urgent national needs; and
            ``(2) to attract more excellent individuals into important 
        public service careers.
    ``(b) Loan Forgiveness.--
            ``(1) In general.--The Secretary shall assume the 
        obligation to repay, pursuant to subsection (c), a loan made 
        under section 428 or 428H, a Federal Direct Stafford Loan or 
        Federal Direct Unsubsidized Stafford Loan, a Federal Direct 
        Consolidation Loan, or a Federal Perkins Loan for any new 
        borrower after the date of enactment of the Higher Education 
        Amendments of 1998, who--
                    ``(A) is employed full time in a qualified public 
                service position described in paragraph (2); and
                    ``(B) is not in default on a loan for which the 
                borrower seeks forgiveness.
            ``(2) Qualified public service positions.--For purposes of 
        this section, an individual shall be treated as employed in a 
        qualified public service position if the individual is any of 
        the following:
                    ``(A) Highly qualified teachers in low-income 
                communities and of mathematics, science, and bilingual 
                and special education.--An individual who--
                            ``(i) is highly qualified as such term is 
                        defined in section 9101 of the Elementary and 
                        Secondary Education Act of 1965; and
                            ``(ii)(I) has obtained employment as a 
                        teacher for service in a public or nonprofit 
                        private elementary or secondary school which is 
                        in the school district of a local educational 
                        agency which is eligible in such year for 
                        assistance pursuant to title I of the 
                        Elementary and Secondary Education Act of 1965, 
                        and which for the purpose of this paragraph and 
                        for that year has been determined by the 
                        Secretary (pursuant to regulations and after 
                        consultation with the State educational agency 
                        of the State in which the school is located) to 
                        be a school in which the enrollment of children 
                        counted under section 1113(a)(5) of the 
                        Elementary and Secondary Education Act of 1965 
                        exceeds 40 percent of the total enrollment of 
                        that school; or
                            ``(II) has obtained employment as a full-
                        time teacher of mathematics, science, or 
                        bilingual or special education.
                    ``(B) Nurses in low income communities.--An 
                individual who has obtained employment --
                            ``(i)(I) in a clinical setting; or
                            ``(II) as a member of the nursing faculty 
                        at an accredited school of nursing (as those 
                        terms are defined in section 801 of the Public 
                        Health Service Act (42 U.S.C. 296)); and
                            ``(ii) serves a low-income or needy 
                        community.
                    ``(C) Child welfare workers.--An individual who--
                            ``(i) has completed a degree in social work 
                        or related field with a focus on serving 
                        children and families (as determined in 
                        accordance with regulations prescribed by the 
                        Secretary); and
                            ``(ii) has obtained employment in public or 
                        private child welfare services.
                    ``(D) First responders in low-income communities.--
                An individual who, as determined by the Secretary of 
                Education by regulation--
                            ``(i) has obtained employment as a 
                        firefighter, police officer, or emergency 
                        medical technician; and
                            ``(ii) serves a low-income community.
    ``(c) Loan Repayment.--
            ``(1) In general.--The Secretary shall assume the 
        obligation to repay--
                    ``(A) after each of the first or second years of 
                service by an individual in a qualified public service 
                position, 15 percent of the total amount of principal 
                and interest of the loans described in subsection 
                (b)(1) to such individual that are outstanding 
                immediately preceding such first year of such service;
                    ``(B) after each of the third or fourth years of 
                such service, 20 percent of such total amount; and
                    ``(C) after the fifth year of such service, 30 
                percent of such total amount.
            ``(2) Treatment of consolidation loans.--A loan amount for 
        a loan made under section 428C or for a Federal Direct 
        Consolidation Loan may be a qualified loan amount for the 
        purposes of this subsection only to the extent that such loan 
        amount was used to repay a loan described in subsection (b)(1) 
        for a borrower who meets the requirements of subsection (b), as 
        determined in accordance with regulations prescribed by the 
        Secretary.
            ``(3) Construction.--Nothing in this section shall be 
        construed to authorize the refunding of any repayment of a loan 
        made under section 428 or 428H, a Federal Direct Stafford Loan 
        or Federal Direct Unsubsidized Stafford Loan, a Federal Direct 
        Loan, or a Federal Perkins Loan.
            ``(4) Interest.--If a portion of a loan is repaid by the 
        Secretary under this section for any year, the proportionate 
        amount of interest on such loan that accrues for such year 
        shall be repaid by the Secretary.
            ``(5) Ineligibility of national service award recipients.--
        No student borrower may, for the same service, receive a 
        benefit under both this section and subtitle D of title I of 
        the National and Community Service Act of 1990 (42 U.S.C. 12601 
        et seq.).
            ``(6) Ineligibility for double benefits.--No borrower may 
        receive a reduction of loan obligations under both this section 
        and section 428J or 460.
            ``(7) Continued eligibility of teachers.--Any teacher who 
        performs service in a school that--
                    ``(A) meets the requirements of subsection 
                (b)(2)(A)(ii)(I) in any year during such service; and
                    ``(B) in a subsequent year fails to meet the 
                requirements of such subsection,
        may continue to teach in such school and shall be eligible for 
        loan forgiveness pursuant to subsection (b).
    ``(d) Repayment to Eligible Lenders and Holders.--The Secretary 
shall pay to each eligible lender or holder for each fiscal year an 
amount equal to the aggregate amount of the lender's or holder's loans 
that are subject to repayment pursuant to this section for such year.
    ``(e) Application for Repayment.--
            ``(1) In general.--Each eligible individual desiring loan 
        repayment under this section shall submit a complete and 
        accurate application to the Secretary at such time, in such 
        manner, and containing such information as the Secretary may 
        require.
            ``(2) Conditions.--An eligible individual may apply for 
        loan repayment under this section after completing each of the 
        consecutive years of qualifying service described in subsection 
        (c)(1). The borrower may elect to receive forbearance while 
        engaged in qualifying service described in subsection (c)(1) 
        unless the borrower is in deferment while so engaged.
    ``(f) Regulations.--The Secretary is authorized to prescribe such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(g) Definitions.--In this section:
            ``(1) Child welfare services.--The term `child welfare 
        services' has the meaning given the term in section 425 of the 
        Social Security Act.
            ``(2) Degree.--The term `degree' means an associate's or 
        bachelor's degree awarded by an institution of higher 
        education.
            ``(3) Eligible nurse.--The term `eligible nurse' means a 
        nurse who meets all of the following:
                    ``(A) The nurse graduated from--
                            ``(i) an accredited school of nursing (as 
                        those terms are defined in section 801 of the 
                        Public Health Service Act (42 U.S.C. 296));
                            ``(ii) a nursing center; or
                            ``(iii) an academic health center that 
                        provides nurse training.
                    ``(B) The nurse holds a valid and unrestricted 
                license to practice nursing in the State in which the 
                nurse practices in a clinical setting.
                    ``(C) The nurse holds 1 or more of the following:
                            ``(i) A graduate degree in nursing, or an 
                        equivalent degree.
                            ``(ii) A nursing degree from a collegiate 
                        school of nursing (as defined in section 801 of 
                        the Public Health Service Act (42 U.S.C. 296)).
                            ``(iii) A nursing degree from an associate 
                        degree school of nursing (as defined in section 
                        801 of the Public Health Service Act (42 U.S.C. 
                        296)).
                            ``(iv) A nursing degree from a diploma 
                        school of nursing (as defined in section 801 of 
                        the Public Health Service Act (42 U.S.C. 296)).
            ``(4) Low-income community.--In this subsection, the term 
        `low-income community' means a community in which 70 percent of 
        households earn less than 85 percent of the State median 
        household income.
            ``(5) Year.--The term `year', where applied to service as a 
        teacher (or service as a member of an accredited school of 
        nursing (as those terms are defined in section 801 of the 
        Public Health Service Act (42 U.S.C. 296))), means an academic 
        year as defined by the Secretary.''.

SEC. 4. YEAR-ROUND PELL GRANTS.

    Section 401(b)(6) (20 U.S.C. 1070a(b)(6)) is amended by striking 
``may allow, on a case-by-case basis,'' and inserting ``shall allow''.

SEC. 5. TREATMENT OF PREPAYMENT AND SAVINGS PLANS UNDER STUDENT 
              FINANCIAL AID NEEDS ANALYSIS.

    (a) Definition of Assets.--Subsection (f) of section 480 of the 
Higher Education Act of 1965 (20 U.S.C. 1087vv(j)) is amended--
            (1) in paragraph (1), by inserting ``qualified education 
        benefit (except as provided in paragraph (3)),'' after ``tax 
        shelters,''; and
            (2) by adding at the end the following new paragraphs:
    ``(3) A qualified education benefit shall not be considered an 
asset of the student under section 475 of this part.
    ``(4) For purposes of this subsection, the term `qualified 
education benefit' means--
            ``(A) a program which is described in clause (i) of section 
        529(b)(1)(A) of the Internal Revenue Code of 1986 and which 
        meets the requirements of section 529(b)(1)(B) of such Code;
            ``(B) a State tuition program described in clause (ii) of 
        section 529(b)(1)(A) of the Internal Revenue Code of 1986 which 
        meets the requirements of section 529(b)(1)(B) of such Code; 
        and
            ``(C) a Coverdell education savings account (as defined in 
        section 530(b)(1) of the Internal Revenue Code of 1986).''.
    (b) Definition of Other Financial Assistance.--Subsection (j) of 
section 480 of the Higher Education Act of 1965 (20 U.S.C. 1087vv(j)) 
is amended--
            (1) by striking ``; Tuition Prepayment Plans'' in the 
        heading of such subsection;
            (2) by striking ``(1) For purposes'' and inserting ``For 
        purposes''; and
            (3) by striking paragraph (2).
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to determinations of need under part F of title IV 
of the Higher Education Act of 1965 for academic years beginning on or 
after July 1, 2005.

SEC. 6. SPECIAL TRANSITION ASSISTANCE PLANS FOR BORROWERS.

    (a) Plans Authorized.--Section 428(b)(9) (20 U.S.C. 1078(b)(9)) is 
amended by adding at the end the following new subparagraph:
                    ``(C) Special transition assistance plans.--In 
                addition to the plans required by subparagraph (A), the 
                lender shall provide a borrower who has not yet 
                completed 12 months in the repayment period with the 
                option to repay a loan made under this section in 
                accordance with a special transition assistance plan. 
                The interest rate on a loan for which the borrower 
                elected a special transition assistance plan shall be 
                determined in accordance with section 427A(k) or 
                427A(l), as applicable. If a borrower participates in a 
                special transition assistance plan for 24 or more 
                months, and then repays the outstanding balance of the 
                loan more than 24 months prior to the last scheduled 
                payment on the loan, the borrower shall repay the 
                Secretary the amount of interest that accrued on the 
                loan during the 24 months beginning on the effective 
                date of the plan.''.
    (b) Interest Rates.--
            (1) Pre-2006 loans.--Section 427A(k) (20 U.S.C. 1077a(k)) 
        is amended--
                    (A) by redesignating paragraph (6) as paragraph 
                (7); and
                    (B) by inserting after paragraph (5) the following 
                new paragraph:
            ``(6) Special transition assistance plans interest rates.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                with respect to any loan for which the borrower elected 
                a special transition assistance plan as provided in 
                section 428(b)(9)(C)--
                            ``(i) for 24 months beginning on the 
                        effective date of the plan the applicable rate 
                        of interest shall be 3.4 percent; and
                            ``(ii) for the last 24 months of the 
                        scheduled repayment period the applicable rate 
                        of interest shall be computed for each calendar 
                        quarter beginning January 1, April 1, July 1, 
                        and October 1 of each year--
                                    ``(I) by determining the average of 
                                the bond equivalent rates of the quotes 
                                of the 3-month commercial paper 
                                (financial) rates in effect for each of 
                                the days in such quarter as reported by 
                                the Federal Reserve in Publication H-15 
                                (or its successor) for such 3-month 
                                period;
                                    ``(II) by subtracting the 
                                applicable interest rates on such loans 
                                from such average bond equivalent rate;
                                    ``(III) by adding 2.34 percent to 
                                the resultant percent; and by dividing 
                                the resultant percent by 4.
                    ``(B) Exception.--The interest rate on a loan for 
                which the borrower elected a special transition 
                assistance plan for the period beginning the first day 
                of the last 24 months of the scheduled repayment period 
                until the beginning of the first calendar quarter 
                thereafter will be computed using the average of the 
                bond equivalent rates of the quotes of the 3-month 
                commercial paper (financial) rates in effect for the 
                quarter ending the previous March 31, June 30, 
                September 30, or December 31.''.
            (2) Post-2006 loans.--Section 427A(l) (20 U.S.C. 1077a(l)) 
        is amended by adding at the end the following new paragraph:
            ``(4) Special transition assistance plans interest rates.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                with respect to any loan for which the borrower elected 
                a special transition assistance plan as provided in 
                section 428(b)(9)(C)--
                            ``(i) for 24 months beginning on the 
                        effective date of the plan the applicable rate 
                        of interest shall be 3.4 percent; and
                            ``(ii) for the last 24 months of the 
                        scheduled repayment period the applicable rate 
                        of interest shall be computed for each calendar 
                        quarter beginning January 1, April 1, July 1, 
                        and October 1 of each year--
                                    ``(I) by determining the average of 
                                the bond equivalent rates of the quotes 
                                of the 3-month commercial paper 
                                (financial) rates in effect for each of 
                                the days in such quarter as reported by 
                                the Federal Reserve in Publication H-15 
                                (or its successor) for such 3-month 
                                period;
                                    ``(II) by subtracting the 
                                applicable interest rates on such loans 
                                from such average bond equivalent rate;
                                    ``(III) by adding 2.34 percent to 
                                the resultant percent; and by dividing 
                                the resultant percent by 4.
                    ``(B) Exception.--The interest rate on a loan for 
                which the borrower elected a special transition 
                assistance plan for the period beginning the first day 
                of the last 24 months of the scheduled repayment period 
                until the beginning of the first calendar quarter 
                thereafter will be computed using the average of the 
                bond equivalent rates of the quotes of the 3-month 
                commercial paper (financial) rates in effect for the 
                quarter ending the previous March 31, June 30, 
                September 30, or December 31.''.
    (c) Additional Conforming Amendments.--
            (1) Section 427(a)(2)(H) (20 U.S.C. 1077(a)(2)(H)) is 
        amended by inserting after ``regulations of the Secretary'' the 
        following: ``or in accordance with a special transition 
        assistance plan as provided in section 428(b)(9)(C)''.
            (2) Section 428(b)(1)(E)(i) (20 U.S.C. 1078(b)(1)(E)(i)) is 
        amended by inserting after ``regulations of the Secretary'' the 
        following: ``or in accordance with a special transition 
        assistance plan as provided in section 428(b)(9)(C)''.
            (3) Section 428(b)(1)(L)(i) (20 U.S.C. 1078(b)(1)(L)(i)) is 
        amended by inserting before ``, be less than $600'' the 
        following: ``or the borrower is in the first 24 months after 
        the borrower elected a special transition assistance plan as 
        provided in section 428(b)(9)(C)''.
            (4) Section 428C(a)(4)(A) (20 U.S.C. 1078-3(a)(4)(A)) is 
        amended by inserting before the semicolon the following: `` 
        except a loan for which the borrower elected a special 
        transition assistance plan as provided in section 
        428(b)(9)(C)''.
            (5) Section 428J(e)(1) (20 U.S.C. 1078-10(e)(1)) is amended 
        by adding at the end the following new sentence: ``A loan for 
        which the borrower elected a special transition assistance plan 
        as provided in section 428(b)(9)(C) is not eligible for 
        repayment under this section.''.

SEC. 7. SUPPORT FOR ACADEMIC CREDIT TRANSFERS.

    Subpart 2 of part A of title IV of the Higher Education Act of 1965 
is amended--
            (1) by redesignating section 407E as section 406E; and
            (2) by inserting after chapter 3 (20 U.S.C. 1070a-31 et 
        seq.) the following new chapter:

           ``CHAPTER 4--SUPPORT FOR ACADEMIC CREDIT TRANSFERS

``SEC. 407A. PURPOSE.

    ``It is the purpose of this chapter to enhance opportunities of 
students to transfer between institutions in order to complete 
bachelor's degrees by supporting the development and implementation of 
articulation and guaranteed transfer agreements.

``SEC. 407B. ACTIVITIES.

    ``(a) Grants Authorized.--From the amounts appropriated under 
section 407C, the Secretary shall award grants to a partnership that 
includes two or more institutions of higher education, at least one of 
which offers a baccalaureate or postbaccalaureate degree.
    ``(b) Use of Funds.--Grants awarded under this part shall be used 
for--
            ``(1) the development of policies to promote the transfer 
        of academic credits between institutions and expanding 
        articulation and guaranteed transfer agreements;
            ``(2) support services to students participating in the 
        program, such as tutoring, mentoring, and academic and personal 
        counseling, as well as any service that facilitates the 
        transition of students between the partner institutions;
            ``(3) academic program enhancements at the community or 
        technical college that result in increasing the quality of the 
        program offered and the number of student participants in the 
        dual degree program offered in conjunction with a baccalaureate 
        degree granting institution; and
            ``(4) programs to identify barriers that inhibit student 
        transfers.
    ``(c) Applications.--Any partnership that desires to obtain a grant 
under this section shall submit to the Secretary an application at such 
time, in such manner, and containing such information or assurances as 
the Secretary may require.
    ``(d) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out this section.

``SEC. 407C. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated $70,000,000 to carry out 
this chapter for fiscal year 2004 and such sums as may be necessary for 
each of the 3 succeeding fiscal years.''.

SEC. 8. FINANCIAL AID ADMINISTRATOR DISCRETION.

    Section 479A(a) (20 U.S.C. 1087tt(a)) is amended--
            (1) by inserting ``as described in paragraph (1)'' after 
        ``on the basis of adequate documentation''; and
            (2) by inserting ``on a case-by-case basis to'' after ``on 
        a case-by-case basis to the cost of attendance or''.

SEC. 9. PREVENTION OF EXCESSIVE DEBT.

    Section 479A(c) (20 U.S.C. 1087tt(c)) is amended--
            (1) by inserting ``or on a program, class-year, or 
        institution-wide basis'' after ``On a case-by-case basis''; and
            (2) by adding at the end the following new sentences: ``An 
        institution may not refuse to certify, or reduce the amount 
        certified for, a loan under part B in order to require the 
        student to borrow a loan under part D if the student has 
        remaining loan eligibility under part B. An institution that 
        refuses or reduces a certification under this subsection may 
        subsequently certify or increase the amount certified, subject 
        to the remaining loan eligibility of the student borrower.''.
                                 <all>