1.
This Act may be cited as the
Student Aid Reward Act of
2005
.
2.
Student aid reward program
Part G of title IV of the
Higher Education Act of 1965 (20
U.S.C. 1088 et seq.) is amended by inserting after section 489 the
following:
489A.
Student aid reward program
(a)
The Secretary shall carry
out a Student Aid Reward Program to encourage institutions of higher education
to participate in the student loan program under this title that is most
cost-effective for taxpayers.
(b)
In carrying out the Student
Aid Reward Program, the Secretary shall—
(1)
provide to each institution
of higher education participating in the student loan program under this title
that is most cost-effective for taxpayers, a Student Aid Reward Payment, in an
amount determined in accordance with
subsection (c), to encourage the
institution to participate in that student loan program;
(2)
require each institution of
higher education receiving a payment under this section to provide student
loans under such student loan program for a period of 5 years after the date
the first payment is made under this section;
(3)
where appropriate, require
that funds paid to institutions of higher education under this section be used
to award students a supplement to such students’ Federal Pell Grants under
subpart 1 of part A;
(4)
permit such funds to also
be used to award need-based grants to lower- and middle-income graduate
students; and
(5)
encourage all institutions
of higher education to participate in the Student Aid Reward Program under this
section.
(c)
The amount of a Student Aid
Reward Payment under this section shall be not less than 50 percent of the
savings to the Federal Government generated by the institution of higher
education’s participation in the student loan program under this title that is
most cost-effective for taxpayers instead of the institution’s participation in
the student loan program that is not most cost-effective for taxpayers.
(d)
Trigger to ensure cost neutrality
(1)
Limit to ensure cost neutrality
Notwithstanding
subsection (c), the Secretary shall not
distribute Student Aid Reward Payments under the Student Aid Reward Program
that, in the aggregate, exceed the Federal savings resulting from the
implementation of the Student Aid Reward Program.
(2)
In calculating Federal
savings, as used in
paragraph (1), the Secretary shall
determine Federal savings on loans made to students at institutions of higher
education that participate in the student loan program under this title that is
most cost-effective for taxpayers and that, on the date of enactment of the
Student Aid Reward Act of 2005, participated in the student loan program that
is not most cost-effective for taxpayers, resulting from the difference
of—
(A)
the Federal cost of loan
volume made under the student loan program under this title that is most
cost-effective for taxpayers; and
(B)
the Federal cost of an
equivalent type and amount of loan volume made, insured, or guaranteed under
the student loan program under this title that is not most cost-effective for
taxpayers.
(3)
If the Federal savings
determined under
paragraph (2) is not sufficient to
distribute full Student Aid Reward Payments under the Student Aid Reward
Program, the Secretary shall—
(A)
first make Student Aid
Reward Payments to those institutions of higher education that participated in
the student loan program under this title that is not most cost-effective for
taxpayers on the date of enactment of the Student Aid Reward Act of 2005;
and
(B)
with any remaining Federal
savings after making Student Aid Reward Payments under
subparagraph (A), make Student Aid
Reward Payments to the institutions of higher education eligible for a Student
Aid Reward Payment and not described in
subparagraph (A) on a pro-rata
basis.
(4)
Any institution of higher
education that receives a Student Aid Reward Payment under this section—
(A)
shall distribute, where
appropriate, part or all of such payment among the students of such institution
who are Federal Pell Grant recipients by awarding such students a supplemental
grant; and
(B)
may distribute part of such
payment as a supplemental grant to graduate students in financial need.
(5)
Estimates, adjustments, and carry over
(A)
Estimates and adjustments
The Secretary shall make
Student Aid Reward Payments to institutions of higher education on the basis of
estimates, using the best data available at the beginning of an academic or
fiscal year. If the Secretary determines thereafter that loan program costs for
that academic or fiscal year were different than such estimate, the Secretary
shall adjust by reducing or increasing subsequent Student Aid Reward Payments
rewards paid to such institutions of higher education to reflect such
difference.
(B)
Any institution of higher
education that receives a reduced Student Aid 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 academic or fiscal years.
(e)
In this section:
(1)
Student loan program under this title that is most
cost-effective for taxpayers
The term student
loan program under this title that is most cost-effective for taxpayers
means the loan program under part B or D of this title that has the lowest
overall cost to the Federal Government (including administrative costs) for the
loans authorized by such parts.
(2)
Student loan program under this title that is not most
cost-effective for taxpayers
The term student
loan program under this title that is not most cost-effective for
taxpayers
means the loan program under part B or D of this title that
does not have the lowest overall cost to the Federal Government (including
administrative costs) for the loans authorized by such parts.
.