II 109th CONGRESS 2d Session S. 2573 IN THE SENATE OF THE UNITED STATES April 6, 2006 Mr. Durbin introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To amend the Higher Education Act of 1965 to provide interest rate reductions, to authorize and appropriate amounts for the Federal Pell Grant program, to allow for in-school consolidation, to provide the administrative account for the Federal Direct Loan Program as a mandatory program, to strike the single holder rule, and for other purposes.

1.

Short title

This Act may be cited as the Reverse the Raid on Student Aid Act of 2006.

2.

Interest rate reductions

(a)

FFEL Interest Rates

Section 427A(l) (20 U.S.C. 1077a(l)) is amended— (1)in paragraph (1)— (A)by striking 6.8 percent and inserting 3.4 percent; and (B)by inserting before the period at the end the following: , except that for any loan made pursuant to section 428H for which the first disbursement is made on or after July 1, 2006, the applicable rate of interest shall be 6.8 percent on the unpaid principal balance of the loan; and (2)in paragraph (2), by striking 8.5 percent and inserting 4.25 percent. (b)

Direct Loans

Section 455(b)(7) (20 U.S.C. 1087e(b)(7)) is amended— (1)in subparagraph (A)— (A)by striking and Federal Direct Unsubsidized Stafford Loans; (B)by striking 6.8 percent and inserting 3.4 percent; and (C)by inserting before the period at the end the following: , and for any Federal Direct Unsubsidized Stafford Loan made for which the first disbursement is made on or after July 1, 2006, the applicable rate of interest shall be 6.8 percent on the unpaid principal balance of the loan; and (2)in subparagraph (B), by striking 7.9 percent and inserting 4.25 percent.

3.

Federal Pell Grant awards

Section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) is amended— (1)in subsection (b)— (A)in paragraph (2)(A), by striking clauses (i) through (v) and inserting the following: (i)$4,500 for academic year 2007–2008; (ii)$4,800 for academic year 2008–2009; (iii)$5,200 for academic year 2009–2010; (iv)$5,600 for academic year 2010–2011; and (v)$6,000 for academic year 2011–2012, ; (B)in paragraph (3)(A), by striking an appropriation Act and inserting this section; and (C)in paragraph (7), by striking the appropriate Appropriation Act for this subpart and inserting this section; (2)by striking subsection (g); (3)by redesignating subsections (h), (i), and (j), as subsections (g), (h), and (i), respectively; and (4)by adding at the end the following: (j)

Authorization and appropriation of funds

There are authorized to be appropriated, and there are appropriated, to carry out this section— (1)for academic year 2007–2008, such sums as may be necessary to award each student eligible for a Federal Pell Grant for such academic year not more than $4,500; (2)for academic year 2008–2009, such sums as may be necessary to award each student eligible for a Federal Pell Grant for such academic year not more than $4,800; (3)for academic year 2009–2010, such sums as may be necessary to award each student eligible for a Federal Pell Grant for such academic year not more than $5,200; (4)for academic year 2010–2011, such sums as may be necessary to award each student eligible for a Federal Pell Grant for such academic year not more than $5,600; (5)for academic year 2011–2012, such sums as may be necessary to award each student eligible for a Federal Pell Grant for such academic year not more than $6,000; and (6)for each subsequent academic year, such sums as may be necessary to award each student eligible for a Federal Pell Grant for such subsequent academic year not more than the amount that is equal to the maximum award amount for the previous academic year increased by a percentage equal to the estimated percentage increase in the Consumer Price Index (as determined by the Secretary) between such previous academic year and such subsequent academic year. .

4.

In-school consolidation

Section 428(b)(7)(A) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(7)(A)) is amended by striking shall begin and all that follows through the period and inserting shall begin—(i)the day after 6 months after the date the student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); or (ii)on an earlier date if the borrower requests and is granted a repayment schedule that provides for repayment to commence at an earlier date. .

5.

Administrative account for direct loan program

Section 458 of the Higher Education Act of 1965 (20 U.S.C. 1087h) is amended to read as follows:

458.

Funds for administrative expenses

(a)

Administrative expenses

(1)

In general

Each fiscal year there shall be available to the Secretary, from funds not otherwise appropriated, funds to be obligated for— (A)administrative costs under this part and part B, including the costs of the direct student loan programs under this part; and (B)account maintenance fees payable to guaranty agencies under part B and calculated in accordance with subsection (b), not to exceed (from such funds not otherwise appropriated) $904,000,000 in fiscal year 2007, $943,000,000 in fiscal year 2008, $983,000,000 in fiscal year 2009, $1,023,000,000 in fiscal year 2010, $1,064,000,000 in fiscal year 2011, and $1,106,000,000 in fiscal year 2012.(2)

Account maintenance fees

Account maintenance fees under paragraph (1)(B) shall be paid quarterly and deposited in the Agency Operating Fund established under section 422B. (3)

Carryover

The Secretary may carry over funds made available under this section to a subsequent fiscal year. (b)

Calculation basis

Account maintenance fees payable to guaranty agencies under subsection (a)(1)(B) shall not exceed the basis of 0.10 percent of the original principal amount of outstanding loans on which insurance was issued under part B. (c)

Budget justification

No funds may be expended under this section unless the Secretary includes in the Department of Education's annual budget justification to Congress a detailed description of the specific activities for which the funds made available by this section have been used in the prior and current years (if applicable), the activities and costs planned for the budget year, and the projection of activities and costs for each remaining year for which administrative expenses under this section are made available.

.

6.

Single holder rule

Subparagraph (A) of section 428C(b)(1) of the Higher Education Act of 1965 (20 U.S.C. 1078–3(b)(1)) is amended by striking and (i) and all that follows through so selected for consolidation).