[Congressional Record Volume 149, Number 153 (Tuesday, October 28, 2003)]
[Senate]
[Pages S13383-S13407]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KENNEDY (for himself, Mr. Dodd, Mr. Bingaman, Mrs. Murray, 
        Mr. Reed, and Mrs. Clinton):
  S. 1793. A bill to provide for college quality, affordability, and 
diversity, and for other purposes; to the Committee on Health, 
Education, Labor, and Pensions.
  Mr. KENNEDY. Mr. President, it should be our common purpose to 
guarantee the promise of a good education to all from birth through 
college. The strength, security, and future of our Nation lie in the 
education and character of our people.
  In recent years, on a bipartisan basis, we have been working to 
improve pre-school, elementary, and secondary education. We should move 
forward in the same bipartisan way on higher education.
  Last year, on a bipartisan basis, we passed the No Child Left Behind 
Act to raise standards for students in elementary and secondary schools 
to hold schools and states accountable for results. These worthwhile 
school reforms deserve to be well-funded, so that all public school 
students will have a fair chance to succeed.
  Last year, Senator Gregg and I also introduced a bipartisan bill to 
improve the quality of early childhood education in the states, and 
help ensure that young children begin school ready to learn.
  This year, in the Education Committee, again on a bipartisan basis, 
we have worked to strengthen the Individuals with Disabilities 
Education Act (IDEA) and ensure that special needs children receive a 
quality education. I hope we can pass that legislation soon, to assure 
that the federal government meets its full obligation to children with 
disabilities.
  The next great challenge we should confront on a bipartisan basis is 
to ensure that every student with the talent, desire, and drive to go 
to college is able to afford to go to college. Education is the golden 
door of opportunity, but for too long, the door of higher education has 
been closed to many students, because of their inability to pay. 
Surely, we have reached a stage in America where we can say it and mean 
it--cost will never be a barrier to a college education.
  Just as Social Security is a promise of retirement security to senior 
citizens, just as Medicare is a promise of health security to senior 
citizens, so we should make ``Education Security'' a promise to every 
young American. If you work hard, if you finish high school, if you are 
admitted to a college, we should guarantee that you can afford the cost 
of the four years it takes to earn a degree.
  As we move forward on the reauthorization of the Higher Education 
Act, let us come together again on a bipartisan basis to make college 
affordable to all qualified students. No students should have to 
mortgage their future to obtain a college degree.
  At other times in our nation's history, we have acted boldly to 
extend college opportunity. In 1862, a year after the Civil War began, 
President Abraham Lincoln signed into law the Morrill Land Grant 
Colleges Act which set aside at least 90,000 acres in each Union 
State--30,000 acres for each of the state seats in Congress. The Act 
was named for Congressman Justin Morrill from Vermont, and the funds 
from sales of the land were to be used for public colleges and 
universities in the fields of engineering, agriculture, and military 
science. In the following years, over 70 colleges were established, and 
in 1890, the Morrill Act was extended to Southern and Western States. 
Today, over 3.5 million students are educated in public colleges and 
universities first created under the Morrill Act.
  The next great benchmark in higher education came in 1944 when 
President Franklin Roosevelt signed the GI Bill to help the vast number 
of veterans who would be returning to civilization when World War II 
ended. The nation embraced the transforming principles that became a 
cornerstone of our democracy, that the benefits of college education 
should be available to all in our society, not just the elite, the 
wealthy or the white. In less than a decade, 8 million veterans 
benefitted from the GI Bill, and the immense success of that bill is in 
no small measure the reason why the World War II generation is now 
called the Greatest Generation.
  In the half century since the GI Bill was enacted, we have made 
ongoing efforts to make college a reality for as many young men and 
women as possible. In 1972, we created what we now know as Pell Grants 
to make college affordable for low and middle income families. Since 
then, over 79 million students have attended college with the 
assistance of a Pell Grant, which are named for our distinguished 
colleague Claiborne Pell, who served as Chairman of the Senate 
Committee.
  In 1993, we created the Direct Loans to make inexpensive student 
loans available to college students. In the same year, we created 
AmeriCorps to encourage young people to serve their communities and 
pursue their education.
  Now, in this new century, in this new century, it is essential for 
Congress to take new steps to make the dream of a college education a 
reality for all.
  Men and women with a college degree now earn 75 percent more than 
those without it--a million dollars more in earnings over their 
lifetime. Those who use computers on the job earn 43 percent more than 
those who do not. Jobs requiring at least some post-secondary education 
are estimated to account for over 40 percent of total employment growth 
over the next decade.
  The need for a college education is greater that ever, but so is 
cost, and the soaring cost today is often pressing college education 
out of reach for qualified students. Last year, tuition and fees at 
four-year public colleges rose an average of 14 percent, and the year 
before, 10 percent. For families in the lowest quartile of income 
average public university costs now consume over 62 percent of their 
income--compared to 42 percent in the early 1970's.
  It is shameful that federal aid has not kept pace with rising 
tuition. Twenty years ago, a Pell Grant covered over 80 percent of 
four-year college costs. Today, it covers less than 40 percent. Twenty 
years ago, the typical package of student financial aid had 60 percent 
in grants and 40 percent in loans. Today, the ratio is reduced the 
typical package now has 40 percent in grants and 60 percent loans--and 
the grant-loan imbalance is getting worse.
  Each year, over a half a million high school graduates who are 
qualified for college do not go to college full-time, because they 
cannot pay the bill. The average low-income, college student has an 
average of $3,800 a year in college costs not covered by grants, loans, 
work, or family savings.
  Students who begin college have trouble staying in college and 
graduating from college. Only 48 percent of students from upper-income 
families graduate from college by age 24, and that figure is seven 
times the graduation rate of students from low-income families. Only 7 
percent--7 percent--of low-income students graduate from college by age 
24. Students from minority backgrounds and those who would be the first 
in their family to achieve a four-year college degree are 33 percent 
more likely to drop out of college.
  Only forty percent of all whites in ages of 18 to 24 attend college. 
Only 30 percent of African-American and only 16 percent of all Latinos 
are enrolled in college. Four in ten Latino college students drop out 
within three years of their enrollment.
  We cannot allow these unacceptable percentages to continue. We must 
do more to help students attend and finish college, and do more to help 
colleges train more teachers and better teachers for our public schools 
so that more young men and women will be able to go to college and earn 
their degree, and fulfill their role in the nation's future.
  It is a privilege today to join our Democratic colleagues on the 
Education Committee, in introducing the College Quality, Affordability, 
and Diversity Improvement Act of 2003 to improve college opportunity 
for qualified students. We know that too many families and students 
across the country are struggling to afford the cost of college and we 
should do all we can to

[[Page S13384]]

help them. The bill will improve access to college in six key ways. It 
helps students pay for college by providing more financial aid. It 
slows the excessive increases in college tuition. It makes the 
repayment of students loan less costly. It encourages and rewards 
students working their way through school. It help minority and low-
income students go to college and finish college. It improves the 
recruitment and training of public school teachers who will prepare the 
next generation of college students.
  In compliance with the Congressional Budget Act of 1974, the cost of 
our bill is offset by eliminating windfall profits to banks that 
participate in the student loan program.
  Fulfilling a pledge of ``Education Security'' requires renewed 
resolve by everyone--students, families, colleges, states, and the 
federal government. Students should work to save money for college. 
Families should pay what they can afford. Colleges should commit to 
reducing increases in tuition. States should continue as much support 
as they can for students. Federal support should fill the gap that 
remains.

  Under our bill, $1,500 more in student aid will be available to hard-
pressed, middle-class families and $3,800 to lower income families.
  We increase the maximum Pell grant by nearly $500, from $4,050 to 
$4,500, in order to keep pace with rising costs of tuition in public 
colleges; 4.8 million lower income and working class students will get 
larger Pell grants and 200,000 middle-class students will get Pell 
grants for the first time.
  The Act makes $3,000 in HOPE tax credit aid available to low-income 
families who currently do not receive this aid, in part because the tax 
credit is not refundable, and doubles the $1,500 HOPE scholarship tax 
credit that middle-class families currently receive. Over 4 million 
Pell grant students in families with a median income of $15,200 a year 
will receive the HOPE tax credit for the first time. For 3.2 million 
middle-income families, their tax credit will double in size.
  The bill increases campus-based financial aid programs such as 
College Work-Study and the Supplemental Education Opportunity Grants, 
which means $200 more in aid to needy students on average.
  The bill eliminates $100 in annual student taxes (also called 
``origination fees'') on federal need-based loans. Over 5 million 
students will no longer have to pay these up-front fees for the 
privilege of borrowing tens of thousands of dollars.
  For needy families struggling to send their children to college, 
these changes will provide $3,800 in additional college aid each year--
$500 in increased Pell aid, $3,000 in HOPE tax benefits, $200 more in 
campus-based aid, and $100 in waivers of student loan fees.
  The rising cost of college is an increasingly serious problem for the 
nation. Students need more financial aid each year. Families need 
protection from tuition increases that year after year are in the 
hundreds, or even thousands of dollars. We have ignored the tuition 
increase problem in higher education for too long.
  In fact, few students actually pay ``sticker price'' tuition at 
private colleges, since many get a discount. At private universities, 8 
out of every 10 students receives a discount from the published tuition 
cost, and those discounts average 40 percent of the sticker price.
  The sticker price of college tuition is rising for many reasons. 
Public colleges are dependent on state funding that has been declining 
with the struggling national economy. As states cut back their support 
for higher education, tuition rises. Colleges can reduce some costs in 
order to limit tuition increases, and we can help them do so.
  Tuition is rising in general because colleges believe that in the 
constant competition for students and faculty, it is necessary for each 
college to have the best facilities and programs. In effect, and 
because of this, a ``higher education arms race,'' colleges are 
constantly striving to be ahead of the competition.
  This bill rejects the price controls on college tuition that some 
have suggested. Instead, it creates incentives for colleges to reduce 
costs. It reduces regulatory costs for colleges and supports voluntary 
limits on cost growth. It requires states to do their part in 
supporting higher education. It ensures that families obtain better 
information about the true cost of college. And importantly, it rejects 
the idea of withholding federal student aid for students who attend 
colleges with excessive tuition costs, because doing so would hurt the 
neediest students.
  Our bill supports the creation of college consortiums that will 
jointly buy in bulk and share the costs of health care, libraries, 
faculties, and other needs, so that they achieve economies of scale. It 
reduces regulatory burdens on colleges. When we lower the operating 
costs of colleges, we make it easier for them to restrain tuition 
increases.
  The bill requires the Secretary of Education to convene a ``higher 
education arms control'' summit. Groups of competing colleges will be 
convened by the Secretary to negotiate limits on future growth in 
tuition. The Secretary will be given the authority to waive anti-trust 
protections, when the waiver is needed to achieve reduced tuition 
growth.
  States and colleges must do their part to make college affordable. 
The bill insists that states must not treat college students like piggy 
banks to balance state budgets. The bill offers a new partnership to 
States, under which additional federal resources will be available to 
states that invest in higher education. States that dramatically cut 
higher education will be limited to current levels of aid.

  Finally, our bill requires schools to publish their true tuition: the 
extent and average amount of discounts offered to students. Families 
should know how much school really will cost and how possible it is to 
bargain for the best deal.
  No matter what we do on grants and college costs, loans will continue 
to be a large part of college aid, but that debt should not be 
excessive. Today, the average debt on student loans is $17,000, but it 
can exceed $100,000 for graduate students and professional students. 
This bill makes it easier to repay student loan debt or work it off. It 
creates a new refinancing option for borrowers now saddled with 
consolidated loans at high interest rates. It saves taxpayers money by 
rewarding student and school participation in the Direct Loan program.
  The Act converts the current tax deduction for interest tax on 
student loans into a tax credit. This bipartisan proposal of Senator 
Snowe and Senator Schumer will provide low-income graduates with up to 
$1,500 in reimbursement for interest in student loans.
  To encourage public service, the Act forgives the debt on Direct 
Loans for remaining after ten years for students in certain public 
sector jobs. Currently, student loan debt is often so large that it 
prevents students from accepting public interest jobs and forces them 
to look for higher paying jobs in the private sector. The bill rewards 
those who choose lower paying public interest jobs in sectors where the 
need is great, such as public safety, law enforcement, teaching, and 
public interest legal services.
  In addition, the Act enables all college graduates to refinance their 
student loans, just as their families would refinance a home mortgage. 
Under current law, graduates who make payments on multiple variable 
interest rate student loans can consolidate their loans today into a 
single fixed rate loan at the relatively low interest rate of 3.42 
percent. But over 5 million borrowers consolidated their student loans 
years ago at higher interest rates. The bill enables them to refinance 
that consolidated loan at today's prevailing interest rate.
  The availability of new Refinanced Direct Loans will dramatically 
reduce student loan repayment for millions of college graduates. A 
middle-class borrower, for example, with $60,000 in student loan debt 
at 7 percent interest will save $1,200 a year, or more than $10,000 
over the life of the loan, if they refinance under this proposal.
  Further, the bill rewards schools and students that save taxpayers 
money by participating in the federal Direct Loan program. For every 
dollar borrowed through the Direct Loan program instead of the 
traditional private FFEL program, taxpayers save approximately fourteen 
cents. Our bill offers schools that participate in the Direct Loan 
program a percentage of the federal savings earmarked for student

[[Page S13385]]

aid. Taxpayers will save money and students will receive more financial 
aid, as a result of this ``Direct Loan Reward Program.'' It's a win-win 
proposal.
  In light of the growing need today, current law imposes too heavy a 
penalty on students who work their way through college. Their financial 
aid is reduced by 50 cents for every after-tax dollar they earn.
  This bill exempts from penalty the first $9,000 earned by traditional 
college students and the first $18,000 earned by adults attending 
college. Those students who work to support their college education 
deserve this additional assistance.
  This bill includes a series of proposals to enable larger numbers of 
minority first-generation college students to go to college and 
graduate from college. Our national commitment to diversity in college 
education has been re-affirmed earlier this year by the Supreme Court. 
A major part of that commitment is preparing all young persons to 
approach the doors of higher education, making sure the gates are fully 
and fairly open to them, helping students to pay the costs, and 
enabling them to stay in college and graduate from college.
  The Act increases funding for the successful TRIO and GEAR UP 
programs that provide information and counseling about college 
preparation, financial aid, and admissions.
  It increases the access of low-income students to college preparation 
and tutoring programs for the Scholastic Achievement Test and American 
College Test that have been proven to be effective.
  In addition, it assists students in making well-informed decisions on 
college applications and enrollments, encourages colleges to act on 
their own to modify policies that make it more difficult for already 
disadvantaged students to apply or enroll.
  The Act supports partnerships between community colleges and four-
year colleges, and it encourages them to provide targeted assistance in 
the form of tutoring, financial aid, child care, counseling, mentoring, 
and innovative course schedules, all with the goal of improving the 
admission, retention and graduation rates of low-income students, and 
non-traditional students.
  Increased funding will be available for Hispanic-Serving Institutions 
and Historically Black Colleges and Universities. These colleges are 
the source of an extraordinary proportion of minority graduates from 
college and they deserve greater support.
  The federal government must do its part in strengthening further 
diversity in higher education and colleges and individual students must 
do their part as well. Diversity is our nation's strength, and all of 
us have an obligation to support it.
  The Act includes a series of initiatives to help recruit and retain 
high-quality teachers for the nation's public schools. A fundamental 
aspect of preparing students for college means making sure they have a 
good teacher in every classroom.
  The shortage of such teachers is increasingly severe. America will 
need more than 2 million new teachers in the next decade. Today, 
approximately one in every three teachers leaves teaching within the 
first three years, and almost half leave within the first five years. 
The No Child Left Behind Act has set a goal of a highly-qualified 
teacher in every classroom by 2006. Clearly, it is time for the nation 
to make teacher training a priority.
  The Higher Education Act Amendments of 1998 included a new title II 
program to respond to the teacher shortage. The Act scales up the 
current title II ``pilot program'' and strengthens and expands it, so 
that every State will receive funds every year, in order to assure that 
as many children as possible are taught by highly qualified teachers.
  The Act authorizes additional for State Grants and Partnership 
Grants, with the goal of establishing formula grants for every State. 
We need to train teachers more effectively, attract more men and women 
to the field of teaching, and encourage them to continue in the field. 
These grants will improve preparation, recruitment, and retention of 
teachers, and help States and schools put a highly qualified teacher in 
every classroom.
  By increasing the accountability of teacher preparation programs, the 
Act strengthens teacher preparation courses, so that teachers will have 
the skills and support they need to succeed in the classroom. The bill 
creates a new national database to provide accurate information on the 
quality of these preparation programs.
  In addition, the Act establishes innovative programs to attract and 
retain teachers. A mentoring program will help train new teachers and 
provide professional assistance from more experienced teachers. A new 
home-ownership program will provide teachers in high-need districts 
with funds to afford the purchase of a home. A separate initiative will 
develop links between community colleges and four-year colleges in 
teacher preparation programs, and help train teacher aides in high-need 
communities to become teachers.
  The Act also helps attract teachers to high-need areas in high-demand 
subjects, by increasing the amount of student loan forgiveness from 
$5,000 to $15,000, for teachers who teach math, science, special 
education, bilingual education, or early education in these areas.
  Good teachers in our schools are essential for preparing students to 
enter college. We must do all we can to support them and give them the 
training necessary to enable all students to achieve.
  In total dollars, the size of this legislation is approximately $15 
billion a year. For a sense of context, I would note that we have just 
approved an $87 billion package for Iraq, have a $786 billion annual 
discretionary budget, and a $2.3 trillion annual mandatory and 
discretionary budget. This legislation is comparatively small.
  There are three types of cost included. First, there are the tax 
provisions that total approximately $9.2 billion a year--the same size 
as the President's tax breaks on dividend and capital gain income. We 
should replace those dividend and capital gains cuts for the very 
wealthy instead with the education tax benefits included in this 
legislation for families trying to pay for college.

  Second, there are about $1.3 billion in annual changes to the student 
loan program for which this legislation fully pays. The bill eliminates 
windfall profits to lenders in the loan program in order to pay fully 
for the elimination student loan origination fees and to enable 
borrowers out of school to refinance their consolidated loans.
  In particular, this bill closes a loophole in the student loan 
program whereby taxpayers subsidize a small minority of lenders to the 
tune of over $400 million a year in order to assure them a 9.5 percent 
rate of return. 9.5 percent is too much in today's interest rate 
environment. All lenders should receive the same guaranteed market rate 
of return for participating in the student loan program and no more.
  Finally, the legislation includes approximately $4.5 billion in 
annual increases in discretionary education spending. That amount 
equals one half of one percent of the discretionary budget and is the 
same amount that education funding increased last year. It is a modest 
proposal, frankly.
  In the past, higher education policy helped the poor and the middle 
class together. In recent years, though, we have developed separate 
approaches for these two groups--grants for the poor, and tax benefits 
for the middle class. The median family income of recipients of Pell 
grants is $15,000 a year. The HOPE Scholarship tax credit is available 
only to families with more than $40,000 in income.
  Because of the high cost of higher education for everyone, and 
because each student's own interest in a college education is also in 
our common interest, this bill will help both hard-pressed low-income 
and hard-pressed middle income families to send their children to 
college and prepare them for the future.
  Our bill has the support of a variety of national groups: the United 
States Students' Association, the United States Public Interest 
Research Group, the Direct Loan Coalition, the National Council for 
Community and Education Partnerships, the Council for Opportunity in 
Education, the College Migrant Association, the National Association of 
Secondary School Principals, the American Federation of Teachers, the 
National Education Association, and Kaplan, Inc.

[[Page S13386]]

  Quality, affordability, and diversity--these are the focus of this 
act because these are the three great challenges we face today in 
higher education policy and each closely related to the others. 
Together, we can meet these new challenges in this new century and make 
the promise of Education Security a reality not just a reality for some 
of our citizens but a reality for all of our citizens.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1793

       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 ``College Quality, 
     Affordability, and Diversity Improvement Act of 2003''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
Sec. 3. Findings.

                   TITLE I--ACCESS TO COLLEGE FOR ALL

Sec. 101. Pell Grants.
Sec. 102. Expansion of Hope scholarships.
Sec. 103. Elimination of origination fees and adjustment of fees and 
              terms.
Sec. 104. Direct Loan Reward Program.
Sec. 105. Costs of higher education.
Sec. 106. Credit for interest on higher education loans.
Sec. 107. Refinancing authority for Federal Direct Consolidation Loan.
Sec. 108. Loans funded through tax-exempt securities.
Sec. 109. Windfall profit offset.
Sec. 110. Support for working students.
Sec. 111. Student eligibility.
Sec. 112. Authorization of appropriations levels for campus-based aid.
Sec. 113. Special programs for students whose families are engaged in 
              migrant and seasonal farmwork.
Sec. 114. Loan forgiveness and cancellation for certain teachers.
Sec. 115. Revision of tax table.
Sec. 116. Income contingent repayment for public sector employees.

                 TITLE II--TEACHER QUALITY ENHANCEMENT

Sec. 201. Amendment to title II.

      TITLE III--DIVERSITY, RETENTION, AND ENRICHED ACADEMICS FOR 
                         MATRICULATING STUDENTS

Sec. 301. Test preparation for low-income students.
Sec. 302. Admissions and retention.
Sec. 303. Federal Trio program.
Sec. 304. Gear Up.
Sec. 305. Leveraging educational assistance partnership program.

        TITLE IV--OPPORTUNITIES AT HISPANIC-SERVING INSTITUTIONS

Sec. 401. Postbaccalaureate opportunities for Hispanic Americans.
Sec. 402. Definitions.
Sec. 403. Authorized activities.
Sec. 404. Elimination of wait-out period.
Sec. 405. Application priority.

         TITLE V--HISTORICALLY BLACK COLLEGES AND UNIVERSITIES

Sec. 501. Professional or graduate institutions.
Sec. 502. Graduate and professional degree development program.
Sec. 503. Authorization of appropriations.
Sec. 504. Patsy T. Mink fellowship program.

   TITLE VI--RECRUITMENT OF TEACHERS TO TEACH AT TRIBAL COLLEGES OR 
                              UNIVERSITIES

Sec. 601. Loan repayment or cancellation for individuals who teach in 
              Tribal Colleges or Universities.
Sec. 602. Amounts forgiven not treated as gross income.

     SEC. 3. FINDINGS.

       Congress finds the following:
       (1) A college education is more important than ever, and 
     the Federal Government should do more to make it affordable 
     and accessible to all qualified students because--
       (A) recent shifts in the economy have increased the demand 
     for college-educated workers and increased the wage gap 
     between college-educated workers and those without a degree 
     (workers with a Bachelor's degree earn 75 percent more than 
     workers with just a high school diploma); and
       (B) jobs requiring some postsecondary education are 
     expected to account for about 42 percent of total job growth 
     from 2000 through 2010.
       (2) Increased access to college, reformed admissions 
     systems, and better retention of students are needed 
     because--
       (A) 65 percent of high-income students are on a college-
     preparatory track, whereas only 28 percent of low-income 
     students are on a college-preparatory track;
       (B) 7 times as many students from high-income families (48 
     percent) graduate from college by age 24 as students from 
     low-income families (7 percent);
       (C) 80 percent of 4-year institutions of higher education 
     use the SAT in the admissions process;
       (D) commercial SAT coaching classes, such as those run by 
     Kaplan, Inc. and Princeton Review, have demonstrated 
     effectiveness in raising a student's SAT score by 100 points 
     or more, which can significantly improve a student's chance 
     of getting into an elite college;
       (E) SAT coaching programs range from $700 to $3,000 per 
     course and the costs are prohibitive for low-income students;
       (F) those students who receive SAT coaching tend to be 
     disproportionally middle or upper class;
       (G) 34 percent of students who receive SAT coaching are 
     from families whose combined annual income is between $40,000 
     and $80,000, and 43 percent are from families whose combined 
     annual income is more than $80,000;
       (H) applying to college early decision provides an 
     advantage to an applicant equal to an additional 100 points 
     on the SAT;
       (I) low-income students are less able to apply to colleges 
     early decision because such students need to compare the 
     financial aid packages at different colleges;
       (J) 40 percent of all Whites age 18 through 24 are enrolled 
     in institutions of higher education, whereas only 30 percent 
     of all African-Americans and only 16 percent of all Hispanics 
     are enrolled in institutions of higher education;
       (K) nearly 4 out of every 10 Hispanics enrolled full time 
     in 4-year colleges drop out within 3 years of their initial 
     enrollment, African-Americans are half as likely as White 
     students to complete a Bachelor's degree in 4 years, and low-
     income students are half as likely as upper-income students 
     to complete a Bachelor's degree in 4 years;
       (L) in 1990, 1 in 4 Americans was a member of a minority 
     group, and in 2001, 1 in 3 Americans was a member of a 
     minority group;
       (M) low-income, college-qualified high school graduates 
     have an annual ``unmet need'' of $3,800 in college expenses, 
     expenses not covered by grants, loans, work, or family 
     savings;
       (N) 46 percent of all students who work in addition to 
     being full-time students report 25 hours or more a week of 
     employment; and
       (O) 50 percent of those employed more than 25 hours a week 
     report that working hurts their grades and retention in 
     college, and students who work more than 35 hours a week are 
     considerably less likely to complete a year of college than 
     those who work less than 15 hours a week.
       (3) Federal student aid is too focused on loans instead of 
     grant aid because--
       (A) although approximately $55,000,000,000 is made 
     available annually in direct and indirect Federal aid to 
     postsecondary education students and their families, in 2002, 
     60 percent of such Federal student aid was in the form of 
     loans while only 40 percent was in the form of grants, a 
     reversal of the distribution 20 years ago;
       (B) the purchasing power of the Pell Grant has declined 
     since Pell Grants cover only 40 percent of average fixed 
     costs at 4-year public colleges, about half of what they 
     covered 25 years ago;
       (C) 15 years ago Pell Grants covered 98 percent of average 
     tuition at 4-year public colleges, whereas today Pell Grants 
     only cover 64 percent on average;
       (D) the Federal Government saves money under the Direct 
     Loan program and makes a profit of 3.5 cents on every dollar 
     lent under the Direct Lending program, while it loses 10.37 
     cents on every dollar lent under the Federal Family Education 
     Loan Program; and
       (E) average student indebtedness is $17,000, and reaches 
     over $120,000 for professional school graduates.
       (4) The Federal Government should do more to help States, 
     local educational agencies, and schools ensure a qualified 
     teacher in every classroom because under the No Child Left 
     Behind Act of 2001, States are required to ensure that all 
     teachers teaching in core academic subjects within the State 
     are ``highly qualified'' not later than the end of the 2005-
     2006 school year. States need to do much more to meet the 
     challenges in the new Federal law. In the 1999-2000 school 
     year, 29 percent of elementary school students, 59 percent of 
     middle school students, and 29 percent of high school 
     students were taught by teachers without both a major and 
     certification in the subject in which they taught.
       (5) There is a severe shortage of qualified teachers, 
     especially in high-need fields and low-income areas because--
       (A) approximately a third of America's teachers leave 
     teaching sometime during their first 3 years of teaching and 
     almost half leave during the first 5 years;
       (B) overall turnover rate for teachers in high-poverty 
     areas is almost a third higher than it is for teachers in all 
     schools;
       (C) underqualified teachers are more often found in high-
     poverty schools; and
       (D) in low-poverty secondary schools, approximately \1/3\ 
     of students are taught by a teacher who lacks either a 
     college degree in the subject area in which the teacher 
     teaches or certification in such subject area, while in high-
     poverty secondary schools, approximately \1/2\ of students 
     are taught by such a teacher.
       (6) Teacher shortages are more severe in some fields than 
     in others:
       (A) Employment opportunities in teaching special education 
     are expected to grow 21 to 35 percent through 2010, an 
     increase of over 150,000 positions.
       (B) The most recent data from a 1994 General Accounting 
     Office report estimates a

[[Page S13387]]

     shortage of 100,000 to 200,000 bilingual teachers, even as 
     the limited English proficient student population continues 
     to grow.
       (C) It is estimated that of the 2,000,000 teachers needed 
     over the next 10 years, almost 200,000 will be secondary 
     school mathematics and science teachers.

                   TITLE I--ACCESS TO COLLEGE FOR ALL

     SEC. 101. PELL GRANTS.

       (a) Appropriation of Funds for Pell Grants.--There are 
     authorized to be appropriated and there are appropriated, out 
     of any money in the Treasury not otherwise appropriated for 
     the fiscal year ending September 30, 2004, for carrying out 
     subpart 1 of part A of title IV of the Higher Education Act 
     of 1965, $14,515,000,000.
       (b) Authorization Amount and Maximum Pell Grant.--Section 
     401(b) of the Higher Education Act of 1965 (20 U.S.C. 
     1070a(b)) is amended--
       (1) in paragraph (3)--
       (A) in subparagraph (A), by striking ``appropriation Act'' 
     and inserting ``appropriation Act or subparagraph (C)''; and
       (B) by adding at the end the following:
       ``(C) The maximum Pell Grant for which a student shall be 
     eligible during award year 2004-2005 shall be $4,500.''; and
       (2) in paragraph (2)(A), by striking clauses (i) through 
     (v) and inserting the following:
       ``(i) $7,600 for academic year 2005-2006;
       ``(ii) $8,600 for academic year 2006-2007;
       ``(iii) $9,600 for academic year 2007-2008;
       ``(iv) $10,600 for academic year 2008-2009; and
       ``(v) $11,600 for academic year 2009-2010,''.

     SEC. 102. EXPANSION OF HOPE SCHOLARSHIPS.

       (a) Expansion of Hope Scholarship Credit.--
       (1) Double maximum credit to $3,000.--Subsection (b) of 
     section 25A of the Internal Revenue Code of 1986 (relating to 
     Hope and Lifetime Learning credits) is amended by striking 
     ``2'' in paragraph (4) and inserting ``3''.
       (2) Credit available for 4 years.--Subsection (b) of 
     section 25A of such Code is amended by striking ``2'' each 
     place it appears in paragraphs (2)(A), (2)(C), and (4) and 
     inserting ``4''.
       (3) Refundable credit.--
       (A) In general.--Section 25A of such Code is hereby moved 
     to subpart C of part IV of subchapter A of chapter 1 of such 
     Code (relating to refundable credits) and inserted after 
     section 35.
       (B) Technical amendments.--
       (i) Section 36 of such Code is redesignated as section 37.
       (ii) Section 25A of such Code (as moved by subsection (a)) 
     is redesignated as section 36.
       (iii) Paragraph (1) of section 36(a) of such Code (as 
     redesignated by paragraph (2)) is amended by striking ``this 
     chapter'' and inserting ``this subtitle''.
       (iv) Subparagraph (B) of section 72(t)(7) of such Code is 
     amended by striking ``section 25A(g)(2)'' and inserting 
     ``section 36(g)(2)''.
       (v) Subparagraph (A) of section 135(d)(2) of such Code is 
     amended by striking ``section 25A'' and inserting ``section 
     36''.
       (vi) Section 221(d) of such Code is amended--

       (I) by striking ``section 25A(g)(2)'' in paragraph (2)(B) 
     and inserting ``section 36(g)(2)'',
       (II) by striking ``section 25A(f)(2)'' in paragraph (2)(B) 
     and inserting ``section 36(f)(2)'', and
       (III) by striking ``section 25A(b)(3)'' in paragraph (3) 
     and inserting ``section 36(b)(3)''.

       (vii) Section 222 of such Code is amended--

       (I) by striking ``section 25A'' in subparagraph (A) of 
     subsection (c)(2) and inserting ``section 36'',
       (II) by striking ``section 25A(f)'' in subsection (d)(1) 
     and inserting ``section 36(f)'', and
       (III) by striking ``section 25A(g)(2)'' in subsection 
     (d)(1) and inserting ``section 36(g)(2)''.

       (viii) Section 529 of such Code is amended--

       (I) by striking ``section 25A(g)(2)'' in subclause (I) of 
     subsection (c)(3)(B)(v) and inserting ``section 36(g)(2)'',
       (II) by striking ``section 25A'' in subclause (II) of 
     subsection (c)(3)(B)(v) and inserting ``section 36'', and
       (III) by striking ``section 25A(b)(3)'' in clause (i) of 
     subsection (e)(3)(B) and inserting ``section 36(b)(3)''.

       (ix) Section 530 of such Code is amended--

       (I) by striking ``section 25A(g)(2)'' in subclause (I) of 
     subsection (d)(2)(C)(i) and inserting ``section 36(g)(2)'',
       (II) by striking ``section 25A'' in subclause (II) of 
     subsection (d)(2)(C)(i) and inserting ``section 36'', and
       (III) by striking ``section 25A(g)(2)'' in clause (iii) of 
     subsection (d)(4)(B) and inserting ``section 36(g)(2)''.

       (x) Subsection (e) of section 6050S of such Code is amended 
     by striking ``section 25A'' and inserting ``section 36''.
       (xi) Subparagraph (J) of section 6213(g)(2) of such Code is 
     amended by striking ``section 25A(g)(1)'' and inserting 
     ``section 36(g)(1)''.
       (xii) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``or 
     from section 36 of such Code''.
       (xiii) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking the item relating to section 36 
     and inserting the following:

``Sec. 36. Hope and Lifetime Learning credits.
``Sec. 37. Overpayments of tax.''.
       (xiv) The table of sections for subpart A of such part IV 
     is amended by striking the item relating to section 25A.
       (4) Credit allowed for cost of attendance.--
       (A) In general.--
       (i) Subsection (b) of section 36 of such Code, as moved and 
     redesignated by paragraph (3), is amended by striking 
     ``qualified tuition and related expenses'' each place it 
     occurs and inserting ``cost of attendance''.
       (ii) Subsection (f) of such section 36 is amended by adding 
     at the end the following new paragraph:
       ``(3) No pell reduction.--The term `cost of attendance' has 
     the meaning given such term in section 472 of the Higher 
     Education Act of 1965, except that the term shall not include 
     any costs described in paragraph (4) or (5) of such 
     section.''.
       (B) Conforming amendments.--
       (i) Subsection (b)(1)(B) of such section 36 is amended by 
     striking ``such expenses'' and inserting ``such cost''.
       (ii) Subsections (e) and (g) of such section 36 are amended 
     by inserting ``the cost of attendance or'' before 
     ``qualified'' each place it appears.
       (5) Expansion of limitation.--
       (A) In general.--Subsection (d) of section 36 of such Code, 
     as moved and redesignated by paragraph (3), is amended--
       (i) in paragraph (1), by striking the period and inserting 
     ``in the case of the Lifetime Learning Credit and paragraph 
     (3) in the case of the Hope Scholarship Credit.'',
       (ii) in paragraph (2), by inserting ``for the lifetime 
     learning credit'' in the heading after ``reduction'', and
       (iii) by redesignating paragraph (3) as paragraph (4) and 
     by adding after paragraph (2) the following new paragraph:
       ``(3) Amount of reduction for hope scholarship credit.--The 
     amount determined under this paragraph is the amount which 
     bears the same ratio to the amount which would be so taken 
     into account as--
       ``(A) the excess of--
       ``(i) the taxpayer's modified adjusted gross income for 
     such taxable year, over
       ``(ii) the sum of--

       ``(I) the amount of any education assistance received by 
     the student that is not subject to tax under this chapter, 
     and
       ``(II) $40,000 ($80,000 in the case of a joint return), 
     bears to

       ``(B) $10,000 ($20,000 in the case of a joint return).''.
       (B) Conforming amendments.--Subsection (h) of such section 
     36 is amended--
       (i) in paragraph (2), by inserting ``for the lifetime 
     learning credit'' in the heading after ``limits'', and
       (ii) by inserting at the end the following new paragraph:
       ``(3) Income limits for hope scholarship credit.--
       ``(A) In general.--In the case of a taxable year beginning 
     after 2003, the $40,000 and $80,000 amounts in subsection 
     (d)(3) shall each be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2002' 
     for `calendar year 1992' in subparagraph (B) thereof.
       ``(B) Rounding.--If any amount as adjusted under 
     subparagraph (A) is not a multiple of $1,000, such amount 
     shall be rounded to the next lowest multiple of $1,000.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 103. ELIMINATION OF ORIGINATION FEES AND ADJUSTMENT OF 
                   FEES AND TERMS.

       (a) Direct Loans.--Section 455(c) of the Higher Education 
     Act of 1965 (20 U.S.C. 1087e(c)) is amended to read as 
     follows:
       ``(c) Loan Fee.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     Secretary shall charge the borrower of a loan made under this 
     part an origination fee of 4.0 percent of the principal 
     amount of the loan.
       ``(2) Exception for subsidized loans.--The Secretary may 
     not charge the borrower of a loan made under this part an 
     origination fee if the borrower receives an interest subsidy 
     for such loan.''.
       (b) FFEL Program.--Section 438(c) of the Higher Education 
     Act of 1965 (20 U.S.C. 1087-1(c)) is amended by adding at the 
     end the following:
       ``(9) Termination of origination fees for subsidized 
     loans.--Notwithstanding any other provision of this 
     subsection, with respect to any loan made, insured, or 
     guaranteed under this part on or after the first July 1 after 
     the date of enactment of this paragraph for which a borrower 
     receives an interest subsidy under section 428(a)--
       ``(A) no eligible lender may collect directly or indirectly 
     from the borrower any origination fee with respect to such 
     loan, or any other fee relating to the origination of a loan 
     however described; and
       ``(B) the Secretary shall not collect any origination fee 
     from the lender under this subsection.''.
       (c) Adjustment of Fees and Loans for Direct Loans.--Section 
     455 of the Higher Education Act of 1965 (20 U.S.C. 1087e) is 
     amended by adding at the end the following:
       ``(m) Adjustment of Fees and Loans.--Notwithstanding any 
     other provision of law, the Secretary shall adjust the fees 
     and terms for Federal Direct Unsubsidized Stafford Loans to 
     be equal to the fees and terms for loans made to borrowers 
     under section 428H.''.

[[Page S13388]]

     SEC. 104. 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) Short Title.--This section may be cited as the 
     `Direct Loan Reward Act'.
       ``(b) 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.
       ``(c) 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 (d), 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 
     Federal Supplemental Educational Opportunity Grants in 
     accordance with subpart 3 of part A, except that an 
     institution of higher education shall not be required to 
     provide any matching funds with respect to such awards; 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.
       ``(d) Amount.--The amount of a financial reward payment 
     under this section shall be--
       ``(1) in the case of the first year of an institution of 
     higher education's participation in the Direct Loan Reward 
     Program, 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; and
       ``(2) in the case of the second through fifth years of an 
     institution of higher education's participation in the Direct 
     Loan Reward Program, an amount equal to 10 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.--
       ``(e) Trigger To Ensure Cost Neutrality.--
       ``(1) Limit to ensure cost neutrality.--Notwithstanding 
     subsection (d), 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) 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.''.

     SEC. 105. COSTS OF HIGHER EDUCATION.

       (a) Supporting Reduced Tuition Increases.--Part C of title 
     I of the Higher Education Act of 1965 (20 U.S.C. 1015 et 
     seq.) is amended by adding at the end the following:

     ``SEC. 132. ECONOMIES OF SCALE.

       ``(a) Authorization.--
       ``(1) In general.--The Secretary is authorized to award 
     grants, on a competitive basis, to university consortia to 
     enable such consortia to engage in endeavors to reduce 
     college costs.
       ``(2) University consortium.--In this section, the term 
     `university consortium' means a consortium of not less than 5 
     two- or four-year degree granting institutions of higher 
     education that receive assistance under title IV.
       ``(3) Duration.--Grants awarded under this section shall be 
     for a period of not more than 4 years.
       ``(b) Application.--
       ``(1) In general.--A university consortium that desires a 
     grant under this section shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary determines appropriate.
       ``(2) Content.--An application submitted under paragraph 
     (1) shall include--
       ``(A) a list of the institutions of higher education that 
     are partners in the university consortium;
       ``(B) a letter of intent to participate in the university 
     consortium from each partner institution of higher education;
       ``(C) a general description of the nature of the programs, 
     activities, or other cost-cutting measures to be carried out 
     by the university consortium with funds received under this 
     section, and the cost of such programs, activities, or other 
     cost-cutting measures;
       ``(D) a description of how such activities are expected to 
     result in cost savings for all partner institutions of higher 
     education;
       ``(E) an estimation of how much money will be saved through 
     such activities;
       ``(F) an assurance that when the university consortium 
     efforts begin to post savings for the partner institutions of 
     higher education, not less than 50 percent of the savings 
     will be passed to students by cutting or maintaining student 
     tuition rates or increasing student aid;
       ``(G) an assurance that each partner institution of higher 
     education will not raise tuition more than twice the 
     inflation change tracked pursuant to section 131(c)(4) from 
     academic year to subsequent academic year during the life of 
     the grant;
       ``(H) a general timeline of how the university consortium 
     will carry out planned activities and when savings are 
     expected to be posted; and
       ``(I) a statement as to how the university consortium plans 
     to provide matching funds required under this section.
       ``(3) Peer review panel.--
       ``(A) In general.--The Secretary shall submit to a peer 
     review panel each application submitted under paragraph (1).
       ``(B) Composition.--The peer review panel shall consist of 
     representatives from--
       ``(i) higher education, including professors;
       ``(ii) the Department; and
       ``(iii) the business community.
       ``(C) Approval or disapproval.--With respect to each 
     application, the peer review panel shall recommend whether 
     each applicant should be awarded a grant under this section.
       ``(c) Awarding of Grants.--
       ``(1) Geographic distribution.--In awarding grants under 
     this section, the Secretary shall take into consideration 
     providing an equitable geographic distribution of the grants 
     throughout the United States.
       ``(2) Maximum award.--A grant award under this section 
     shall be not more than $200,000. Not more than $75,000 may be 
     awarded in the first year of the grant award and remaining 
     funds shall be evenly divided over the remaining 3 years.
       ``(d) Activities.--
       ``(1) Cost-cutting activities.--A university consortium 
     awarded a grant under this section shall use the grant funds 
     to cut partner institution of higher education costs by 
     carrying out 1 or more of the following activities:
       ``(A) Cooperative purchasing of health care and other 
     employee benefit plans.
       ``(B) Cooperative purchasing of technology infrastructure.
       ``(C) Joint degree programs.
       ``(D) Expansion of joint distance education programs across 
     institutions of higher education.
       ``(E) Shared library acquisitions.
       ``(F) Development and implementation of a credit transfer 
     system among partner institutions of higher education.
       ``(G) Development and implementation of cooperative billing 
     structures.
       ``(H) Development and implementation of joint professional 
     development for faculty and staff.
       ``(I) Joint legal counsel.
       ``(J) Other activities that have the effect of cutting 
     partner institution of higher education costs.
       ``(2) Further activities.--A university consortium may 
     carry out activities not listed in paragraph (1) in addition 
     to carrying out 1 or more activities listed in paragraph (1).
       ``(3) Cost savings to students.--Each partner institution 
     of higher education of a university consortium awarded a 
     grant under this section shall--
       ``(A) not raise tuition more than twice the rate of 
     inflation from academic year to subsequent academic year 
     during the life of the grant; and
       ``(B) pass on to the students at such institution not less 
     than 50 percent of the savings from the grant by cutting or 
     maintaining student tuition rates or increasing student aid.
       ``(e) Matching Funds.--
       ``(1) In general.--Each university consortium awarded a 
     grant under this section shall provide matching funds from 
     non-Federal sources to carry out activities under this 
     section in an amount equal to--
       ``(A) 40 percent of the grant award in the first year;
       ``(B) 50 percent of the grant award in the second year;
       ``(C) 65 percent of the grant award in each of the third 
     and fourth years; and
       ``(D) 80 percent of the grant award in the fifth year.

[[Page S13389]]

       ``(2) In-kind contributions.--Not more than 50 percent of 
     the matching funds required under paragraph (1) may be 
     provided in the form of in-kind contributions.
       ``(f) One-Time Award.--A university consortium may receive 
     a grant under this section only one time.
       ``(g) Supplement, Not Supplant.--Funds made available under 
     this section shall be used to supplement, not supplant, other 
     funds available for institutional or campus-based student 
     aid.
       ``(h) Reporting.--
       ``(1) Annual report.--
       ``(A) In general.--Each university consortium awarded a 
     grant under this section shall submit an annual report to the 
     Secretary on progress toward meeting the purposes of this 
     section.
       ``(B) Consequences of not making substantial progress.--If 
     the Secretary, after consultation with the peer review panel 
     described in subsection (b)(3), determines that the 
     university consortium is not making substantial progress in 
     meeting the purposes and goals of this section, as 
     appropriate, by the end of the second year of the grant, the 
     grant shall not be continued for the third and fourth year of 
     the grant.
       ``(2) Report by the secretary.--The Secretary shall--
       ``(A) conduct an analysis on the overall effectiveness of 
     university consortia in cutting college costs and passing 
     savings on to students; and
       ``(B) make the analysis under subparagraph (A) available to 
     Congress and the public biannually.
       ``(i) National Activities.--The Secretary may reserve not 
     more than 5 percent of the funds appropriated for this 
     section for any fiscal year for--
       ``(1) peer review of applications;
       ``(2) conducting the analysis required under subsection 
     (h)(3); and
       ``(3) technical assistance.
       ``(j) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section 
     $5,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.''.
       (b) College Cost Summit.--Part C of title I of the Higher 
     Education Act of 1965 (20 U.S.C. 1015 et seq.), as amended by 
     subsection (a), is further amended by adding at the end the 
     following:

     ``SEC. 133. COLLEGE COST SUMMIT.

       ``(a) In General.--The Secretary shall convene a college 
     cost summit with representatives of competing peer 
     institutions of higher education for the purpose of 
     negotiating voluntarily agreed upon limits on future college 
     tuition and fee increases.
       ``(b) Secretarial Approval.--No agreement reached pursuant 
     to subsection (a) shall take effect absent approval by the 
     Secretary.
       ``(c) Antitrust Exemption.--
       ``(1) Definitions.--In this subsection:
       ``(A) Antitrust laws.--The term `antitrust laws' has the 
     meaning given such term in subsection (a) of the first 
     section of the Clayton Act (15 U.S.C. 12(a)), except that 
     such term includes section 5 of the Federal Trade Commission 
     Act (15 U.S.C. 45) to the extent such section 5 applies to 
     unfair methods of competition.
       ``(B) Institution of higher education.--The term 
     `institution of higher education'--
       ``(i) means an institution of higher education as defined 
     in section 101; and
       ``(ii) includes any individual acting on behalf of such an 
     institution.
       ``(2) Exemption.--The antitrust laws shall not apply to any 
     joint discussion, consideration, review, action, or agreement 
     by or among institutions of higher education or their 
     representatives pursuant to this section and for the purpose 
     of, and limited to, negotiating voluntarily agreed upon 
     limits on future college tuition and fee increases, approved 
     by the Secretary.''.
       (c) Maintenance of Effort.--Part A of title IV of the 
     Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) is 
     amended by adding at the end the following:

                   ``Subpart 9--Maintenance of Effort

     ``SEC. 420K. MAINTENANCE OF EFFORT.

       ``(a) In General.--A public institution of higher education 
     is eligible to receive the full amount of assistance under 
     this title for any fiscal year only if the Secretary 
     determines that the State in which the public institution of 
     higher education is located maintains not less than 90 
     percent of its support for higher education from the 
     preceding fiscal year, as demonstrated by the State aggregate 
     expenditures with respect to the provision of higher 
     education.
       ``(b) Waiver.--The Secretary may waive the requirements of 
     this section if the Secretary determines that a waiver would 
     be equitable due to--
       ``(1) exceptional or uncontrollable circumstances, such as 
     a natural disaster; or
       ``(2) a precipitous, unpredicted, and unprecedented decline 
     in State budget authority.
       ``(c) Consequences of Failure To Maintain Effort.--
     Notwithstanding any other provision of this Act, the 
     Secretary shall adjust the level of assistance available to 
     institutions described in subsection (a) by restoring the 
     Pell Grant maximum under this part and student loan fees 
     under parts B and D to their levels on June 30, 2004.''.
       (d) Truth-in-Tuition.--Part A of title IV of the Higher 
     Education Act of 1965 (20 U.S.C. 1070 et seq.), as amended by 
     subsection (c), is further amended by adding at the end the 
     following:

                     ``Subpart 10--Truth-in-Tuition

     ``SEC. 420L. DISCLOSURE IN APPLICATION.

       ``An institution of higher education that receives Federal 
     funds and is eligible for assistance under this title shall 
     include in materials accompanying an application for 
     admission to the institution up to date annual trend 
     information regarding the extent and average amount of such 
     institution's tuition and fee discounts.''.
       (e) College Consumer Price Information.--Section 131(c)(4) 
     of the Higher Education Act of 1965 (20 U.S.C. 1015(c)(4)) is 
     amended to read as follows:
       ``(4) Higher Education Market Basket.--
       ``(A) In general.--The Bureau of Labor Statistics, in 
     consultation with the Commissioner for Education Statistics, 
     shall develop a higher education cost index that tracks 
     inflation changes in the necessary costs associated with 
     higher education.
       ``(B) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this paragraph 
     $7,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.''.

     SEC. 106. CREDIT FOR INTEREST ON HIGHER EDUCATION LOANS.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 25B the following new section:

     ``SEC. 25C. INTEREST ON HIGHER EDUCATION LOANS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     this chapter for the taxable year an amount equal to the 
     interest paid by the taxpayer during the taxable year on any 
     qualified education loan.
       ``(b) Maximum Credit.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     credit allowed by subsection (a) for the taxable year shall 
     not exceed $1,500.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--If the modified adjusted gross income of 
     the taxpayer for the taxable year exceeds $50,000 ($100,000 
     in the case of a joint return), the amount which would (but 
     for this paragraph) be allowable as a credit under this 
     section shall be reduced (but not below zero) by the amount 
     which bears the same ratio to the amount which would be so 
     allowable as such excess bears to $10,000 ($20,000 in the 
     case of a joint return).
       ``(B) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income determined 
     without regard to sections 911, 931, and 933.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 2004, the $50,000 and $100,000 amounts 
     referred to in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `2003' for `1992'.
       ``(D) Rounding.--If any amount as adjusted under 
     subparagraph (C) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Dependents Not Eligible for Credit.--No credit shall 
     be allowed by this section to an individual for the taxable 
     year if a deduction under section 151 with respect to such 
     individual is allowed to another taxpayer for the taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(d) Limit on Period Credit Allowed.--A credit shall be 
     allowed under this section only with respect to interest paid 
     on any qualified education loan during the first 60 months 
     (whether or not consecutive) in which interest payments are 
     required. For purposes of this paragraph, any loan and all 
     refinancings of such loan shall be treated as 1 loan.
       ``(e) Definitions.--For purposes of this section:
       ``(1) Qualified education loan.--The term `qualified 
     education loan' has the meaning given such term by section 
     221(d)(1).
       ``(2) Dependent.--The term `dependent' has the meaning 
     given such term by section 152.
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--No credit shall be allowed 
     under this section for any amount taken into account for any 
     deduction under any other provision of this chapter.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.''.
       (b) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     the item relating to section 25B the following new item:

``Sec. 25C. Interest on higher education loans.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any qualified education loan (as defined in 
     section 25C(e)(1) of the Internal Revenue Code of 1986, as 
     added by this section) incurred on, before, or after the date 
     of enactment of this

[[Page S13390]]

     Act, but only with respect to any loan interest payment due 
     after December 31, 2002.

     SEC. 107. REFINANCING AUTHORITY FOR FEDERAL DIRECT 
                   CONSOLIDATION LOAN.

       Section 455(g) of the Higher Education Act of 1965 (20 
     U.S.C. 1087e(g)) is amended--
       (1) by striking ``A borrower'' and inserting the following:
       ``(1) In general.--A borrower''; and
       (2) by adding at the end the following:
       ``(2) Refinancing authority.--
       ``(A) In general.--Notwithstanding any other provision of 
     this part, a borrower may refinance a Federal Direct 
     Consolidation Loan at the prevailing fixed rate as determined 
     by the Secretary, if the interest rate on such borrower's 
     Federal Direct Consolidation Loan is not less than the sum of 
     3.3 percent and the average of the bond equivalent rates of 
     the 91-day Treasury bills auctioned for the previous calendar 
     quarter.
       ``(B) One-time only.--A borrower may refinance under 
     subparagraph (A) only once.''.

     SEC. 108. LOANS FUNDED THROUGH TAX-EXEMPT SECURITIES.

       (a) Repeal.--Subparagraph (B) of section 438(b)(2) of the 
     Higher Education Act of 1965 (20 U.S.C. 1087-1(b)(2)) is 
     repealed.
       (b) Loans Funded Through Tax-Exempt Securities.--Section 
     438(b)(2) of the Higher Education Act of 1965 is amended 
     further by inserting after subparagraph (A) the following:
       ``(B) Notwithstanding any other provision of law, the 
     quarterly rate of the special allowance for the holders of 
     loans financed directly, indirectly, or derivatively with 
     funds obtained by the holders from the issuance of 
     obligations, the income from which is excluded from gross 
     income under the Internal Revenue Code of 1986, regardless of 
     the date of the issuance of the obligations, shall be the 
     quarterly rate of the special allowance established under 
     subparagraph (A), (E), (F), (G), or (H), as the case may 
     be.''.

     SEC. 109. WINDFALL PROFIT OFFSET.

       Section 438 of the Higher Education Act of 1965 (20 U.S.C. 
     1087-1) is amended by adding at the end the following:
       ``(g) Windfall Profit Offset.--
       ``(1) In general.--Except as provided in paragraph (2), at 
     the end of every fiscal quarter for which an eligible lender 
     does not receive a special allowance payment under this 
     section, the eligible lender shall pay to the Secretary of 
     the Treasury for deposit into the Treasury as miscellaneous 
     receipts a windfall profit offset payment for the fiscal 
     quarter equal to the amount by which--
       ``(A) the aggregate amount of all payments of interest 
     received by the eligible lender from borrowers on all loans 
     made, insured, or guaranteed under this part during the 
     fiscal quarter; exceeds
       ``(B) interest guaranteed the lender under this section for 
     the fiscal quarter, irrespective of the amount received under 
     subparagraph (A).
       ``(2) Exception.--An eligible lender shall not be subject 
     to the requirement of paragraph (1) if the eligible lender is 
     an organization described in section 501(c)(3) of the 
     Internal Revenue Code of 1986 and a nonprofit entity as 
     defined by applicable State law, and meets the following 
     requirements:
       ``(A) The eligible lender does not confer a salary or 
     benefits to any employee of the lender in an amount that is 
     in excess of the salary and benefits provided to the 
     Secretary by the Department.
       ``(B) The eligible lender does not maintain an ongoing 
     relationship whereby it passes on revenue directly or 
     indirectly through lease, securitization, resale, or any 
     other financial instrument to a for-profit entity or to 
     shareholders.
       ``(C) The eligible lender does not offer benefits to a 
     borrower in a manner directly or indirectly predicated on 
     such borrower's participation in a program under this part, 
     part D, or with any particular lender.
       ``(D) The eligible lender certifies that it uses the 
     windfall profit amount described in paragraph (1) to carry 
     out the purposes of this Act through activities such as the 
     following:
       ``(i) Conferring grants, scholarships, or loans.
       ``(ii) Financing work-study student employment.
       ``(iii) Carrying out activities authorized under chapters 1 
     and 2 of subpart 2 of part A.
       ``(E) The eligible lender is subject to public oversight 
     through either a State charter, or not less than 50 percent 
     of the lender's board of directors consists of State 
     appointed representatives.
       ``(F) The eligible lender does not engage in the marketing 
     of the relative value of programs under this part as compared 
     to programs under part D, nor does the lender engage in the 
     marketing of loans or programs offered by for-profit lenders. 
     This subparagraph shall not be construed to prohibit the 
     eligible lender from conferring basic information on lenders 
     under this part and the related benefits offered by such 
     lenders.''.

     SEC. 110. SUPPORT FOR WORKING STUDENTS.

       (a) Dependent Students.--Section 475(g)(2) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087oo(g)(2)) is amended by 
     striking subparagraph (D) and inserting the following:
       ``(D) $9,000;''.
       (b) Independent Students Without Dependents Other Than a 
     Spouse.--Section 476(b)(1)(A) of the Higher Education Act of 
     1965 (20 U.S.C. 1087pp(b)(1)(A)) is amended by striking 
     clause (iv) and inserting the following:
       ``(iv) $13,000;''.
       (c) Independent Students With Dependents Other Than a 
     Spouse.--Section 477(b) of the Higher Education Act of 1965 
     (20 U.S.C. 1087qq(b)) is amended--
       (1) in paragraph (1)--
       (A) by striking subparagraph (D) and inserting the 
     following:
       ``(D) $18,000;''; and
       (B) in subparagraph (E), by striking ``paragraph (5)'' and 
     inserting ``paragraph (4)'';
       (2) by striking paragraph (4); and
       (3) by redesignating paragraph (5) as paragraph (4).
       (d) Conforming Amendments.--Section 478 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087rr) is amended--
       (1) by striking subsection (b) and inserting the following:
       ``(b) Income Protection Allowance.--For each academic year 
     after academic year 1993-1994, the Secretary shall publish in 
     the Federal Register a revised table of income protection 
     allowances for the purpose of section 475(c)(4). Such revised 
     table shall be developed by increasing each of the dollar 
     amounts contained in the table in such section by a 
     percentage equal to the estimated percentage increase in the 
     Consumer Price Index (as determined by the Secretary) between 
     December 1992 and the December next preceding the beginning 
     of such academic year, and rounding the result to the nearest 
     $10.''; and
       (2) in subsection (h)--
       (A) in the first sentence, by striking ``477(b)(5)'' and 
     inserting ``477(b)(4)''; and
       (B) in the second sentence--
       (i) by striking ``477(b)(5)(A)'' and inserting 
     ``477(b)(4)(A)''; and
       (ii) by striking ``477(b)(5)(B)'' and inserting 
     ``477(b)(4)(B)''.

     SEC. 111. STUDENT ELIGIBILITY.

       Section 484 of the Higher Education Act of 1965 (20 U.S.C. 
     1091) is amended by striking subsection (r).

     SEC. 112. AUTHORIZATION OF APPROPRIATIONS LEVELS FOR CAMPUS-
                   BASED AID.

       (a) Federal Supplemental Educational Opportunity Grants.--
     Section 413A(b)(1) of the Higher Education Act of 1965 (20 
     U.S.C. 1070b(b)(1)) is amended by striking ``$675,000,000 for 
     fiscal year 1999 and such sums as may be necessary for the 4 
     succeeding fiscal years'' and inserting ``$1,000,000,000 for 
     fiscal year 2004 and such sums as may be necessary for each 
     of the 5 succeeding fiscal years''.
       (b) Federal Work-Study Programs.--Section 441(b) of the 
     Higher Education Act of 1965 (42 U.S.C. 2751(b)) is amended 
     by striking ``$1,000,000,000 for fiscal year 1999 and such 
     sums as may be necessary for each of the 4 succeeding fiscal 
     years'' and inserting ``$1,500,000,000 for fiscal year 2004 
     and such sums as may be necessary for each of the 5 
     succeeding fiscal years''.
       (c) Federal Perkins Loans.--Section 461(b)(1) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087aa(b)(1)) is amended by 
     striking ``$250,000,000 for fiscal year 1999 and such sums as 
     may be necessary for each of the 4 succeeding fiscal years'' 
     and inserting ``$300,000,000 for fiscal year 2004 and such 
     sums as may be necessary for each of the 5 succeeding fiscal 
     years''.

     SEC. 113. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE 
                   ENGAGED IN MIGRANT AND SEASONAL FARMWORK.

       Section 418A of the Higher Education Act of 1965 (20 U.S.C. 
     1070d-2) is amended--
       (1) in subsection (f)--
       (A) in paragraph (1), by striking ``$150,000'' and 
     inserting ``$225,000''; and
       (B) in paragraph (2), by striking ``$150,000'' and 
     inserting ``$225,000''; and
       (2) in subsection (h)--
       (A) in paragraph (1)--
       (i) by striking ``$15,000,000'' and inserting 
     ``$40,000,000'';
       (ii) by striking ``1999'' and inserting ``2004''; and
       (iii) by striking ``4'' and inserting ``5''; and
       (B) in paragraph (2)--
       (i) by striking ``$5,000,000'' and inserting 
     ``$30,000,000'';
       (ii) by striking ``1999'' and inserting ``2004''; and
       (iii) by striking ``4'' and inserting ``5''.

     SEC. 114. LOAN FORGIVENESS AND CANCELLATION FOR CERTAIN 
                   TEACHERS.

       (a) FFEL Loans.--Section 428J of the Higher Education Act 
     of 1965 (20 U.S.C. 1078-10) is amended--
       (1) in subsection (c), by adding at the end the following:
       ``(3) Additional amounts for highly qualified teachers in 
     mathematics, science, special education, or bilingual 
     education.--Notwithstanding the amount specified in paragraph 
     (1) and the requirements of subsection (b)(1), the Secretary 
     shall repay not more than $15,000 in the aggregate of the 
     loan obligation on a loan made under section 428 or 428H that 
     is outstanding after the completion of the fifth complete 
     school year of teaching described in subparagraphs (A) and 
     (B) in the case of a teacher--
       ``(A) who has been employed as a full-time teacher for 5 
     consecutive complete school years in a school that qualifies 
     under section 465(a)(2)(A) for loan cancellation for Perkins 
     loan recipients who teach in such schools, except that the 
     enrollment of children counted under section 1124(c) of the 
     Elementary and Secondary Education Act of 1965 exceeds 40 
     percent of the total enrollment of such school;

[[Page S13391]]

       ``(B) whose qualifying employment is teaching mathematics, 
     science, special education, or bilingual education; and
       ``(C) who is highly qualified (as defined in section 9101 
     of the Elementary and Secondary Education Act of 1965).''; 
     and
       (2) by adding at the end the following:
       ``(i) Early Education Teachers.--
       ``(1) Authorization.--The Secretary shall carry out a 
     program, through the holder of the loan, of assuming the 
     obligation to repay a qualified loan amount for a loan made 
     under section 428 or 428H, in accordance with paragraph (2), 
     for any new borrower on or after October 1, 1998, who--
       ``(A) has been employed as a full-time teacher for 5 
     consecutive complete school years in a Head Start or Early 
     Head Start program under the Head Start Act (42 U.S.C. 9831 
     et seq.), or in another comparable prekindergarten program 
     that serves children not less than 60 percent of whom are 
     eligible to participate in a Head Start or Early Head Start 
     program; and
       ``(B) is not in default on a loan for which the borrower 
     seeks forgiveness.
       ``(2) Qualified loan amount.--
       ``(A) In general.--The Secretary shall repay not more than 
     $15,000 in the aggregate of the loan obligation on a loan 
     made under section 428 or 428H that is outstanding after the 
     completion of the fifth complete school year of teaching 
     described in paragraph (1)(A).
       ``(B) Treatment of consolidation loans.--A loan amount for 
     a loan made under section 428C may be a qualified loan amount 
     for the purposes of this paragraph only to the extent that 
     such loan amount was used to repay a Federal Direct Stafford 
     Loan, a Federal Direct Unsubsidized Stafford Loan, or a loan 
     made under section 428 or 428H for a borrower who meets the 
     requirements of paragraph (1), as determined in accordance 
     with regulations prescribed by the Secretary.''.
       (b) Direct Loans.--Section 460 of the Higher Education Act 
     of 1965 (20 U.S.C. 1087j) is amended--
       (1) in subsection (c), by adding at the end the following:
       ``(3) Additional amounts for highly qualified teachers in 
     mathematics, science, special education, or bilingual 
     education.--Notwithstanding the amount specified in paragraph 
     (1) and the requirements of subsection (b)(1)(A), the 
     Secretary shall cancel not more than $15,000 in the aggregate 
     of the loan obligation on a Federal Direct Stafford Loan or a 
     Federal Direct Unsubsidized Stafford Loan that is outstanding 
     after the completion of the fifth complete school year of 
     teaching described in subparagraphs (A) and (B) in the case 
     of a teacher--
       ``(A) who has been employed as a full-time teacher for 5 
     consecutive complete school years in a school that qualifies 
     under section 465(a)(2)(A) for loan cancellation for Perkins 
     loan recipients who teach in such schools, except that the 
     enrollment of children counted under section 1124(c) of the 
     Elementary and Secondary Education Act of 1965 exceeds 40 
     percent of the total enrollment of such school;
       ``(B) whose qualifying employment is teaching mathematics, 
     science, special education, or bilingual education; and
       ``(C) who is highly qualified (as defined in section 9101 
     of the Elementary and Secondary Education Act of 1965).''; 
     and
       (2) by adding at the end the following:
       ``(i) Early Education Teachers.--
       ``(1) Authorization.--The Secretary shall carry out a 
     program of canceling the obligation to repay a qualified loan 
     amount in accordance with paragraph (2) for Federal Direct 
     Stafford Loans and Federal Direct Unsubsidized Stafford Loans 
     made under this part for any new borrower on or after October 
     1, 1998, who--
       ``(A) has been employed as a full-time teacher for 5 
     consecutive complete school years in a Head Start or Early 
     Head Start program under the Head Start Act (42 U.S.C. 9831 
     et seq.), or in another comparable prekindergarten program 
     that serves children not less than 60 percent of whom are 
     eligible to participate in a Head Start or Early Head Start 
     program; and
       ``(B) is not in default on a loan for which the borrower 
     seeks cancellation.
       ``(2) Qualified loan amount.--
       ``(A) In general.--The Secretary shall cancel not more than 
     $15,000 in the aggregate of the loan obligation on a Federal 
     Direct Stafford Loan or a Federal Direct Unsubsidized 
     Stafford Loan that is outstanding after the completion of the 
     fifth complete school year of teaching described in paragraph 
     (1)(A).
       ``(B) Treatment of consolidation loans.--A loan amount for 
     a Federal Direct Consolidation Loan may be a qualified loan 
     amount for the purposes of this paragraph only to the extent 
     that such loan amount was used to repay a Federal Direct 
     Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, 
     or a loan made under section 428 or 428H for a borrower who 
     meets the requirements of paragraph (1), as determined in 
     accordance with regulations prescribed by the Secretary.''.

     SEC. 115. REVISION OF TAX TABLE.

       Section 478(g) of the Higher Education Act of 1965 (20 
     U.S.C. 1087rr(g)) is amended by adding at the end the 
     following: ``The Secretary shall develop such revised table 
     only after consultation with appropriate committees of 
     Congress.''.

     SEC. 116. INCOME CONTINGENT REPAYMENT FOR PUBLIC SECTOR 
                   EMPLOYEES.

       Section 455(e) of the Higher Education Act of 1965 (20 
     U.S.C. 1087e(e)) is amended by adding at the end the 
     following:
       ``(7) Repayment plan for public sector employees.--
       ``(A) In general.--The Secretary shall forgive the balance 
     due on any loan made under this part for a borrower--
       ``(i) who has made 120 payments on such loan pursuant to 
     income contingent repayment; and
       ``(ii) who is employed, and was employed for the 10-year 
     period in which the borrower made the 120 payments described 
     in clause (i), in a public sector job.
       ``(B) Public sector job.--In this paragraph, the term 
     `public sector job' means a full-time job in emergency 
     management, government, public safety, law enforcement, 
     public health, education (including early childhood 
     education), or public interest legal services (including 
     prosecution or public defense).
       ``(8) Return to standard repayment.--A borrower who is 
     repaying a loan made under this part pursuant to income 
     contingent repayment may choose, at any time, to terminate 
     repayment pursuant to income contingent repayment and repay 
     such loan under the standard repayment plan.''.

                 TITLE II--TEACHER QUALITY ENHANCEMENT

     SEC. 201. AMENDMENT TO TITLE II.

       Title II of the Higher Education Act of 1965 (20 U.S.C. 
     1021 et seq.) is amended to read as follows:

                ``TITLE II--TEACHER QUALITY ENHANCEMENT

      ``PART A--TEACHER QUALITY ENHANCEMENT GRANTS FOR STATES AND 
                              PARTNERSHIPS

     ``SEC. 201. PURPOSES; DEFINITIONS.

       ``(a) Purposes.--The purposes of this part are to--
       ``(1) improve student achievement;
       ``(2) increase the size and scope of programs funded under 
     this part to meet the goal of having 100 percent of teachers 
     as highly qualified teachers;
       ``(3) retain and recruit highly qualified individuals into 
     the teaching force through incentives;
       ``(4) hold institutions of higher education accountable for 
     preparing teachers, through coursework in pedagogy, with 
     effective methods of teaching as a means of better preparing 
     teachers for the modern day classroom;
       ``(5) improve the quality of the current and future 
     teaching force by improving the preparation of prospective 
     teachers and enhancing professional development activities;
       ``(6) hold institutions of higher education accountable for 
     preparing teachers who have the necessary teaching skills and 
     are highly competent in the academic content areas in which 
     the teachers plan to teach, such as mathematics, science, 
     English, reading or language arts, foreign languages, 
     history, economics, art, civics, Government, and geography, 
     including training in the effective uses of technology in the 
     classroom;
       ``(7) recruit highly qualified individuals, including 
     individuals from other occupations, into the teaching force, 
     especially in subject areas of high need (including bilingual 
     education, special education, mathematics, science, and early 
     childhood education), geographic areas of high need, and in 
     geographic areas with teacher vacancy or retention problems; 
     and
       ``(8) encourage learning partnerships between students and 
     parents that lead to improving student academic achievement 
     and school performance.
       ``(b) Definitions.--In this part:
       ``(1) Arts and sciences.--The term `arts and sciences' 
     means--
       ``(A) when referring to an organizational unit of an 
     institution of higher education, any academic unit that 
     offers 1 or more academic majors in disciplines or content 
     areas corresponding to the academic subject matter areas in 
     which teachers provide instruction; and
       ``(B) when referring to a specific academic subject matter 
     area, the disciplines or content areas in which academic 
     majors are offered by the arts and science organizational 
     unit.
       ``(2) High need local educational agency.--The term `high 
     need local educational agency' means a local educational 
     agency in which--
       ``(A)(i) 30 percent of the students served by the agency 
     are from families with incomes below the poverty line; or
       ``(ii) there are more than 20,000 students served by the 
     agency from families with incomes below the poverty line; and
       ``(B)(i) there is a high percentage of teachers who are not 
     highly qualified; or
       ``(ii) there is a high teacher turnover rate.
       ``(3) High need school.--The term `high need school' means 
     an elementary school or secondary school--
       ``(A) in which there is a high concentration of students 
     from families with incomes below the poverty line; or
       ``(B) that is identified as in need of school improvement 
     or corrective action pursuant to section 1116 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6316).
       ``(4) Highly qualified.--The term `highly qualified' has 
     the meaning given the term in section 9101 of the Elementary 
     and Secondary Education Act of 1965.
       ``(5) Mentoring.--The term `mentoring' has the meaning 
     given the term in section 9101 of the Elementary and 
     Secondary Education Act of 1965.

[[Page S13392]]

       ``(6) Parent.--The term `parent' has the meaning given the 
     term in section 9101 of the Elementary and Secondary 
     Education Act of 1965.
       ``(7) Parental involvement.--The term `parental 
     involvement' has the meaning given the term in section 9101 
     of the Elementary and Secondary Education Act of 1965.
       ``(8) Poverty line.--The term `poverty line' means the 
     poverty line (as defined by the Office of Management and 
     Budget, and revised annually in accordance with section 
     673(2) of the Community Services Block Grant Act (42 U.S.C. 
     9902(2))) applicable to a family of the size involved.
       ``(9) Professional development.--The term `professional 
     development' has the meaning given the term in section 9101 
     of the Elementary and Secondary Education Act of 1965.
       ``(10) Teaching skills.--The term `teaching skills' means 
     skills--
       ``(A) grounded in the disciplines of teaching and learning 
     that teachers use to create effective instruction in subject 
     matter content and that lead to student achievement and the 
     ability to apply knowledge; and
       ``(B) that require an understanding of the learning process 
     itself, including an understanding of--
       ``(i) the use of strategies specific to the subject matter;
       ``(ii) the application of on-going assessment of student 
     learning;
       ``(iii) individual differences in ability and instructional 
     needs; and
       ``(iv) effective classroom management.

     ``SEC. 202. PROGRAM AUTHORITY.

       ``(a) Competitive Grant Program.--If the amount 
     appropriated to carry out this part for a fiscal year is less 
     than $270,000,000, then the Secretary shall use--
       ``(1) 25 percent of such funds to carry out the competitive 
     State grant program under section 203; and
       ``(2) 75 percent of such funds to carry out the competitive 
     partnership grant program under section 204.
       ``(b) Formula Grant Program.--
       ``(1) In general.--
       ``(A) Authorization of grants.--If the amount appropriated 
     to carry out this part for a fiscal year is equal to or 
     exceeds $270,000,000, then the Secretary shall use such funds 
     to award a grant to each State from allotments under 
     subparagraph (B).
       ``(B) Allotments.--The Secretary shall make an allotment to 
     each State in an amount that bears the same relation to the 
     funds as the amount the State received under part A of title 
     I of the Elementary and Secondary Education Act of 1965 for 
     the preceding fiscal year bears to the amount received by all 
     States under such part for the preceding fiscal year.
       ``(2) State use of funds.--A State that receives an 
     allotment under paragraph (1) shall expend--
       ``(A) 25 percent of such funds to carry out State level 
     activities under subsections (d) and (e) of section 203; and
       ``(B) 75 percent of such funds to carry out the competitive 
     partnership grant program under section 204.

     ``SEC. 203. STATE GRANTS.

       ``(a) In General.--From amounts made available under 
     section 210 for a fiscal year, the Secretary is authorized to 
     award grants under this section, on a competitive basis, to 
     eligible States to enable the eligible States to carry out 
     the activities described in subsections (d) and (e).
       ``(b) Eligible State.--
       ``(1) Definition.--In this part, the term `eligible State' 
     means a State educational agency.
       ``(2) Consultation.--The State educational agency shall 
     consult with the Governor, State board of education, or State 
     agency for higher education, as appropriate, with respect to 
     the activities assisted under this section.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed to negate or supersede the legal authority under 
     State law of any State agency, State entity, or State public 
     official over programs that are under the jurisdiction of the 
     agency, entity, or official.
       ``(c) Application.--To be eligible to receive a grant under 
     this section, an eligible State shall, at the time of the 
     initial grant application, submit an application to the 
     Secretary that--
       ``(1) meets the requirement of this section;
       ``(2) includes a description of how the eligible State 
     intends to use funds provided under this section; and
       ``(3) contains such other information and assurances as the 
     Secretary may require.
       ``(d) Required Uses of Funds.--A State that receives a 
     grant under this section shall use the grant funds to carry 
     out the following activities:
       ``(1) Rigorous teacher certification or licensure 
     programs.--Ensuring that the State's teacher certification or 
     licensure program is rigorous and has high standards.
       ``(2) Teacher recruitment.--
       ``(A) In general.--Awarding scholarships to help students 
     pay the costs of tuition, room, board, and other expenses of 
     completing a teacher preparation program.
       ``(B) Support services.--Providing support services, if 
     needed, to enable scholarship recipients to complete 
     postsecondary education programs.
       ``(C) Assistance to become highly qualified teachers.--
     Providing teachers who are not highly qualified with the 
     opportunity to take coursework or credentialing courses in 
     order to become highly qualified teachers.
       ``(D) Followup services.--Providing followup services to 
     former scholarship recipients during the recipients first 3 
     years of teaching.
       ``(E) Service requirement.--The Secretary shall establish 
     such requirements as the Secretary finds necessary to ensure 
     that recipients of scholarships under this paragraph who 
     complete teacher education programs subsequently teach in a 
     high need local educational agency, for a period of time 
     equivalent to the period for which the recipients receive 
     scholarship assistance, or repay the amount of the 
     scholarship. The Secretary shall use any such repayments to 
     carry out additional activities under this section.
       ``(e) Allowable Uses of Funds.--A State that receives a 
     grant under this section may use such funds to carry out any 
     of the following activities:
       ``(1) Reforms.--Implementing reforms that hold institutions 
     of higher education with teacher preparation programs 
     accountable for preparing teachers who are highly competent 
     in the academic content areas in which the teachers plan to 
     teach, and possess strong teaching skills, which may include 
     the use of rigorous subject matter competency tests and the 
     requirement that a teacher have an academic major in the 
     subject area, or related discipline, in which the teacher 
     plans to teach, and instruction for such teachers on how to 
     involve parents in their children's education.
       ``(2) Certification or licensure requirements.--Reforming 
     teacher certification or licensure requirements to ensure 
     that teachers have the necessary teaching skills and academic 
     content knowledge in the subject areas in which teachers are 
     assigned to teach. States are encouraged to use funds to 
     develop or enhance existing licensure and certification 
     requirements for subject areas of high need (including 
     bilingual education, special education, mathematics, science, 
     and early childhood education), including development of a 
     State test.
       ``(3) Alternative routes to certification for teaching.--
     Providing prospective teachers with alternative routes to 
     traditional preparation for teaching through programs at 
     colleges of arts and sciences or at nonprofit educational 
     organizations that have a proven record of effectiveness and 
     include instruction in teaching skills. Strengthening or 
     developing alternative routes to State certification of 
     teachers programs that includes, at a minimum--
       ``(A) a selective means for admitting individuals into such 
     programs that includes passage of State teacher exams in 
     appropriate subject areas;
       ``(B) pedagogical course work, including formal instruction 
     that addresses the theories and practices of teaching and 
     monitoring student performance; and
       ``(C) support services, including mentoring for the 
     individuals participating in the alternative State 
     certification of teachers programs that focuses on--
       ``(i) helping the individuals develop effective teaching 
     skills and strategies;
       ``(ii) professional development; and
       ``(iii) the disciplines of teaching and learning to ensure 
     that prospective teachers have an understanding of research-
     based learning practices and possess skills related to the 
     learning process.
       ``(4) Teacher support.--Carrying out programs that include 
     support during the initial teaching experience.
       ``(5) Recruiting and hiring teachers.--
       ``(A) Effective mechanisms.--Developing and implementing 
     effective mechanisms to ensure that local educational 
     agencies and schools are able to effectively recruit highly 
     qualified teachers.
       ``(B) Programs.--Establishing programs that--
       ``(i) train and hire regular, special education, and 
     bilingual education teachers (which may include hiring 
     special education teachers to team-teach in classrooms that 
     contain both children with disabilities and nondisabled 
     children);
       ``(ii) train and hire highly qualified teachers of special 
     needs children and limited English proficient students, as 
     well as teaching specialists in core academic subjects who 
     will provide individualized instruction to students;
       ``(iii) recruit qualified professionals from other fields, 
     including highly qualified paraprofessionals (as defined in 
     section 2102 of the Elementary and Secondary Education Act of 
     1965), and provide such professionals with alternative routes 
     to teacher certification, including developing and 
     implementing hiring policies that ensure comprehensive 
     recruitment efforts as a way to expand the applicant pool, 
     such as through identifying teachers certified through 
     alternative routes, and using a system of intensive screening 
     designed to hire the most qualified applicants; and
       ``(iv) provide increased opportunities for minorities, 
     individuals with disabilities, and other individuals 
     underrepresented in the teaching profession.
       ``(C) Reduction in class size.--Recruiting and hiring 
     highly qualified teachers to reduce class size, particularly 
     in the early grades.
       ``(6) Social promotion.--Development and implementation of 
     efforts to address the problem of social promotion and to 
     prepare teachers to effectively address the issues raised by 
     ending the practice of social promotion.
       ``(7) Special certification for prospective ap teachers.--
     Developing and implementing teacher preparation programs that

[[Page S13393]]

     provide special certification in advanced placement (AP)-
     level or international baccalaureate (IB)-level content and 
     pedagogy, including undergraduate specializations in in-depth 
     study of subject-specific content and practical pedagogical 
     experience through student teaching, and master degree level 
     programs that lead to a master's degree in AP-level or IB-
     level content.
       ``(8) Financial incentives.--Providing financial incentives 
     for teachers to teach in high need schools in which there 
     exists a shortage of highly qualified teachers.

     ``SEC. 204. PARTNERSHIP GRANTS.

       ``(a) Grants.--The Secretary or State, as appropriate, 
     shall use funds made available under section 202 to award 
     grants under this section, on a competitive basis, to 
     eligible partnerships to enable the eligible partnerships to 
     carry out the activities described in subsections (d) and 
     (e).
       ``(b) Definitions.--
       ``(1) Eligible partnerships.--In this part, the term 
     `eligible partnerships' means an entity that--
       ``(A) shall include--
       ``(i) a partner institution;
       ``(ii) a school of arts and sciences; and
       ``(iii) a high need local educational agency; and
       ``(B) may include a Governor, State educational agency, the 
     State board of education, the State agency for higher 
     education, an institution of higher education not described 
     in subparagraph (A), a community college, a public charter 
     school, a public or private elementary school or secondary 
     school, a public or private nonprofit educational 
     organization, a business, a teacher organization, or a 
     prekindergarten program.
       ``(2) Partner institution.--In this section, the term 
     `partner institution' means a private independent or State-
     supported public institution of higher education, the teacher 
     training program of which demonstrates that--
       ``(A) graduates from the teacher training program exhibit 
     strong performance on State-determined qualifying assessments 
     for new teachers through--
       ``(i) demonstrating that 80 percent or more of the 
     graduates of the program who intend to enter the field of 
     teaching have passed all of the applicable State 
     qualification assessments for new teachers, which shall 
     include an assessment of each prospective teacher's subject 
     matter knowledge in the content area or areas in which the 
     teacher intends to teach; or
       ``(ii) being ranked among the highest-performing teacher 
     preparation programs in the State as determined by the 
     State--

       ``(I) using criteria consistent with the requirements for 
     the State report card under section 207(b); and
       ``(II) using the State report card on teacher preparation 
     required under section 207(b), after the first publication of 
     such report card and for every year thereafter; or

       ``(B) the teacher training program requires all the 
     students of the program to participate in intensive clinical 
     experience, to meet high academic standards, and--
       ``(i) in the case of secondary school candidates, to 
     successfully complete an academic major in the subject area 
     in which the candidate intends to teach or to demonstrate 
     competence through a high level of performance in relevant 
     content areas; and
       ``(ii) in the case of elementary school candidates, to 
     successfully complete an academic major in the arts and 
     sciences or to demonstrate competence through a high level of 
     performance in core academic subject areas.
       ``(c) Application.--Each eligible partnership desiring a 
     grant under this section shall submit an application to the 
     Secretary or State, as appropriate, at such time, in such 
     manner, and accompanied by such information as the Secretary 
     or State, as appropriate, may require. Each such application 
     shall--
       ``(1) contain a needs assessment of all the partners with 
     respect to teaching and learning and a description of how the 
     partnership will coordinate with other teacher training or 
     professional development programs, and how the activities of 
     the partnership will be consistent with State, local, and 
     other education reform activities that promote student 
     achievement and parent involvement;
       ``(2) contain a resource assessment that describes the 
     resources available to the partnership, the intended use of 
     the grant funds, including a description of how the grant 
     funds will be fairly distributed in accordance with 
     subsection (f), and the commitment of the resources of the 
     partnership to the activities assisted under this part, 
     including financial support, faculty participation, time 
     commitments, and continuation of the activities when the 
     grant ends; and
       ``(3) contain a description of--
       ``(A) how the partnership will meet the purposes of this 
     part;
       ``(B) how the partnership will carry out the activities 
     required under subsection (d) and any permissible activities 
     under subsection (e); and
       ``(C) the partnership's evaluation plan pursuant to section 
     206(b).
       ``(d) Required Uses of Funds.--An eligible partnership that 
     receives a grant under this section shall use the grant funds 
     to carry out the following activities:
       ``(1) Reforms.--Implementing reforms within teacher 
     preparation programs to hold the programs accountable for 
     preparing teachers who are highly competent in the academic 
     content areas in which the teachers plan to teach, and for 
     promoting strong teaching skills, including working with a 
     school of arts and sciences and integrating reliable 
     research-based teaching methods into the curriculum, which 
     curriculum shall include programs designed to successfully 
     integrate technology into teaching and learning.
       ``(2) Clinical experience and interaction.--Providing 
     sustained and high-quality preservice clinical experience 
     including the mentoring of prospective teachers by veteran 
     teachers, and substantially increasing interaction between 
     faculty at institutions of higher education and new and 
     experienced teachers, principals, and other administrators at 
     elementary schools or secondary schools, and providing 
     support, including preparation time, for such interaction.
       ``(3) Professional development.--Creating opportunities for 
     enhanced and ongoing professional development that improves 
     the academic content knowledge of teachers in the subject 
     areas in which the teachers are certified to teach or in 
     which the teachers are working toward certification to teach, 
     and that promotes strong teaching skills.
       ``(4) Ensuring adequate preparation to meet high 
     standards.--Developing and implementing accountability 
     measures for preservice--
       ``(A) training in reading;
       ``(B) training in addressing the needs of children with 
     disabilities and limited English proficient individuals;
       ``(C) training in data analysis and how to use student 
     achievement data to improve instruction; and
       ``(D) optional training in teaching advanced placement or 
     international baccalaureate courses.
       ``(5) Teacher preparation and parental involvement.--
     Preparing teachers with the knowledge and skills to enable 
     such teachers to--
       ``(A) provide instruction to diverse student populations, 
     including individuals with disabilities and limited English 
     proficient individuals; and
       ``(B) work with and involve parents in their children's 
     education and in the teacher preparation program reform 
     process.
       ``(6) Teacher preparation enhancement internship.--
     Developing a 1-year paid internship program for students who 
     have completed a 4-year teacher education program to enable 
     such students to develop the skills and experience necessary 
     for success in teaching, including providing intensive 
     clinical training and combining in-service instruction in 
     teacher methods and assessments with classroom observations, 
     experiences, and practices. Such interns would have a reduced 
     teaching load and a mentor for assistance in the classroom.
       ``(e) Allowable Uses of Funds.--An eligible partnership 
     that receives a grant under this section may use such funds 
     to carry out any of the following activities:
       ``(1) Dissemination and coordination.--Broadly 
     disseminating information on effective practices used by the 
     partnership, and coordinating with the activities of the 
     Governor, State board of education, State higher education 
     agency, and State educational agency, as appropriate.
       ``(2) Managerial and leadership skills.--Developing and 
     implementing proven mechanisms to provide principals and 
     superintendents with effective managerial and leadership 
     skills that result in increased student achievement.
       ``(3) Scholarships.--
       ``(A) In general.--Awarding scholarships to help students 
     pay the costs of tuition, room, board, and other expenses of 
     completing a teacher preparation program.
       ``(B) Support services.--Providing support services, if 
     needed, to enable scholarship recipients to complete 
     postsecondary education programs.
       ``(C) Assistance to become highly qualified teachers.--
     Providing teachers who are not highly qualified with the 
     opportunity to take coursework or credentialing courses in 
     order to become highly qualified teachers.
       ``(D) Followup services.--Providing followup services to 
     former scholarship recipients during the recipients' first 3 
     years of teaching.
       ``(E) Service requirement.--The Secretary or State, as 
     appropriate, shall establish such requirements as the 
     Secretary or State, as appropriate, finds necessary to ensure 
     that recipients of scholarships under this paragraph who 
     complete teacher education programs subsequently teach in a 
     high need local educational agency, for a period of time 
     equivalent to the period for which the recipients receive 
     scholarship assistance, or repay the amount of the 
     scholarship. The Secretary or State, as appropriate, shall 
     use any such repayments to carry out additional activities 
     under this section.
       ``(4) Financial incentives.--Providing financial incentives 
     for teachers to teach in high need schools in which there 
     exists a shortage of highly qualified teachers.
       ``(5) Recruiting and hiring teachers.--
       ``(A) In general.--Establishing programs that--
       ``(i) train and hire regular and special education teachers 
     (which may include hiring special education teachers to team-
     teach in classrooms that contain both children with 
     disabilities and nondisabled children);
       ``(ii) train and hire highly qualified teachers of special 
     needs children, as well as

[[Page S13394]]

     teaching specialists in core academic subjects who will 
     provide increased individualized instruction to students;
       ``(iii) recruit qualified professionals from other fields, 
     including highly qualified paraprofessionals (as defined in 
     section 2102 of the Elementary and Secondary Education Act of 
     1965), and provide such professionals with alternative routes 
     to teacher certification, including developing and 
     implementing hiring policies that ensure comprehensive 
     recruitment efforts as a way to expand the applicant pool, 
     such as through identifying teachers certified through 
     alternative routes, and using a system of intensive screening 
     designed to hire the most qualified applicants; and
       ``(iv) provide increased opportunities for minorities, 
     individuals with disabilities, and other individuals 
     underrepresented in the teaching profession.
       ``(B) Reduction in class size.--Recruiting and hiring 
     highly qualified teachers to reduce class size, particularly 
     in the early grades.
       ``(6) Faculty opportunity programs.--Awarding competitive 
     grants to institutions of higher education to enable such 
     institutions to fill education faculty vacancies in special 
     education, early childhood education, and bilingual 
     education, to create new faculty positions that are targeted 
     toward training highly qualified special education, early 
     childhood education, and bilingual education teachers, and to 
     develop doctoral programs in special education, early 
     childhood education, and bilingual education that will 
     produce new faculty at institutions of higher education in 
     such subject areas. Funds from such grants may be used to 
     develop and carry out recruitment strategies, subsidize 
     moving expenses, provide bonuses, provide fully subsidized 
     salaries for not more than 2 years per new faculty member, 
     and provide partially subsidized salaries for not more than 
     an additional 3 years per new faculty member. If an 
     institution of higher education receives a grant under this 
     paragraph and uses the grant funds to provide faculty 
     salaries, such institution shall continue to fully fund such 
     faculty positions for not less than 5 years after the end of 
     Federal funding under the grant.
       ``(f ) Special Rule.--No individual member of an eligible 
     partnership shall retain more than 50 percent of the funds 
     made available to the partnership under this section.
       ``(g) Construction.--Nothing in this section shall be 
     construed to prohibit an eligible partnership from using 
     grant funds to coordinate with the activities of more than 1 
     Governor, State board of education, State educational agency, 
     local educational agency, or State agency for higher 
     education.

     ``SEC. 205. ADMINISTRATIVE PROVISIONS.

       ``(a) Duration; Increased Accountability; Payments.--
       ``(1) Duration.--
       ``(A) Eligible states and eligible applicants.--Grants 
     awarded to eligible States and eligible applicants under this 
     part shall be awarded for a period not to exceed 3 years.
       ``(B) Eligible partnerships.--Grants awarded to eligible 
     partnerships under this part shall be awarded for a period of 
     5 years.
       ``(2) Increased accountability.--An eligible State, 
     eligible applicant, or eligible partnership that receives 
     more than 1 grant under this part has an increased 
     accountability to disseminate information gained from such 
     grants to States and local educational agencies.
       ``(3) Payments.--The Secretary shall make annual payments 
     of grant funds awarded under this part.
       ``(b) Peer Review.--
       ``(1) Panel.--The Secretary shall provide the applications 
     submitted under this part to a peer review panel for 
     evaluation. With respect to each application, the peer review 
     panel shall initially recommend the application for funding 
     or for disapproval.
       ``(2) Priority.--In recommending applications to the 
     Secretary for funding under this part, the panel shall--
       ``(A) with respect to grants under section 203, give 
     priority to eligible States serving States that--
       ``(i) have initiatives to reform State teacher 
     certification requirements that are designed to ensure that 
     current and future teachers possess the necessary teaching 
     skills and academic content knowledge in the subject areas in 
     which the teachers are certified or licensed to teach;
       ``(ii) include innovative reforms to hold institutions of 
     higher education with teacher preparation programs 
     accountable for preparing teachers who are highly competent 
     in the academic content area in which the teachers plan to 
     teach and have strong teaching skills; or
       ``(iii) involve the development of innovative efforts aimed 
     at reducing the shortage of highly qualified teachers in high 
     poverty urban and rural areas, and in subject areas of high 
     need (including bilingual education, special education, 
     mathematics, science, early childhood education, and 
     vocational education); and
       ``(B) with respect to grants under section 204--
       ``(i) give priority to applications from eligible 
     partnerships that involve businesses; and
       ``(ii) take into consideration--

       ``(I) providing an equitable geographic distribution of the 
     grants throughout the United States; and
       ``(II) the potential of the proposed activities for 
     creating improvement and positive change.

       ``(3) Secretarial selection.--The Secretary shall 
     determine, based on the peer review process, which 
     application shall receive funding and the amounts of the 
     grants. In determining grant amounts, the Secretary shall 
     take into account the total amount of funds available for all 
     grants under this part and the types of activities proposed 
     to be carried out.
       ``(c) Matching Requirements.--
       ``(1) State grants.--Each eligible State receiving a grant 
     under section 203 shall provide, from non-Federal sources, an 
     amount equal to 50 percent of the amount of the grant (in 
     cash or in kind) to carry out the activities supported by the 
     grant.
       ``(2) Partnership grants.--Each eligible partnership 
     receiving a grant under section 204 shall provide, from non-
     Federal sources (in cash or in kind), an amount equal to 25 
     percent of the grant for the first year of the grant, 35 
     percent of the grant for the second year of the grant, and 50 
     percent of the grant for each succeeding year of the grant.
       ``(d) Limitation on Administrative Expenses.--An eligible 
     State or eligible partnership that receives a grant under 
     this part may not use more than 2 percent of the grant funds 
     for purposes of administering the grant.

     ``SEC. 206. ACCOUNTABILITY AND EVALUATION.

       ``(a) State Grant Accountability Report.--An eligible State 
     that receives a grant under section 203 shall submit an 
     annual accountability report to the Secretary. Such report 
     shall include a description of the degree to which the 
     eligible State, in using funds provided under such section, 
     has made substantial progress in meeting the following goals:
       ``(1) Student achievement.--Increasing student achievement 
     for all students as defined by the eligible State.
       ``(2) Raising standards.--Raising the State academic 
     standards required to enter the teaching profession, 
     including, where appropriate, through the use of incentives 
     to incorporate the requirement of an academic major in the 
     subject, or related discipline, in which the teacher plans to 
     teach.
       ``(3) Initial certification or licensure.--Increasing 
     success in the pass rate for initial State teacher 
     certification or licensure, and increasing the numbers of 
     highly qualified individuals being certified or licensed as 
     teachers, including through alternative routes.
       ``(4) Highly Qualified Teachers.--Ensuring that all 
     teachers teaching in core academic subjects within the State 
     are highly qualified not later than the end of the 2005-2006 
     school year pursuant to section 1119(a)(2) of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6319(a)(2)).
       ``(5) Decreasing teacher shortages.--Decreasing shortages 
     of qualified teachers in poor urban and rural areas.
       ``(6) Increasing opportunities for professional 
     development.--Increasing opportunities for enhanced and 
     ongoing professional development that improves the academic 
     content knowledge of teachers in the subject areas in which 
     the teachers are certified or licensed to teach or in which 
     the teachers are working toward certification or licensure to 
     teach, and that promotes strong teaching skills.
       ``(7) Technology integration.--Increasing the number of 
     teachers prepared to integrate technology in the classroom.
       ``(b) Eligible Partnership Evaluation.--Each eligible 
     partnership receiving a grant under section 204 shall 
     establish and include in the application submitted under 
     section 204(c), an evaluation plan that includes strong 
     performance objectives. The plan shall include objectives and 
     measures for--
       ``(1) increased student achievement for all students as 
     measured by the partnership;
       ``(2) increased teacher retention in the first 3 years of a 
     teacher's career;
       ``(3) increased success in the pass rate for initial State 
     certification or licensure of teachers;
       ``(4) increased percentage of secondary school classes in 
     core academic subject areas taught by highly qualified 
     teachers;
       ``(5) increasing the number of teachers trained in 
     technology; and
       ``(6) increasing the number of teachers prepared to work 
     effectively with parents.
       ``(c) Revocation of Grant.--
       ``(1) Report.--Each eligible State or eligible partnership 
     receiving a grant under this part shall report annually on 
     the progress of the eligible State or eligible partnership 
     toward meeting the purposes of this part and the goals, 
     objectives, and measures described in subsections (a) and 
     (b).
       ``(2) Revocation.--
       ``(A) Eligible states and eligible applicants.--If the 
     Secretary determines that an eligible State or eligible 
     applicant is not making substantial progress in meeting the 
     purposes, goals, objectives, and measures, as appropriate, by 
     the end of the second year of a grant under this part, then 
     the grant payment shall not be made for the third year of the 
     grant.
       ``(B) Eligible partnerships.--If the Secretary determines 
     that an eligible partnership is not making substantial 
     progress in meeting the purposes, goals, objectives, and 
     measures, as appropriate, by the end of the third year of a 
     grant under this part, then the grant payments shall not be 
     made for any succeeding year of the grant.
       ``(d) Evaluation and Dissemination.--The Secretary shall 
     evaluate the activities funded under this part and report the 
     Secretary's

[[Page S13395]]

     findings regarding the activities to the Committee on Health, 
     Education, Labor, and Pensions of the Senate and the 
     Committee on Education and the Workforce of the House of 
     Representatives. The Secretary shall broadly disseminate 
     successful practices developed by eligible States and 
     eligible partnerships under this part, and shall broadly 
     disseminate information regarding such practices that were 
     found to be ineffective.

     ``SEC. 207. ACCOUNTABILITY FOR PROGRAMS THAT PREPARE 
                   TEACHERS.

       ``(a) Development of Definitions and Reporting Methods; 
     High-Quality Teacher Preparation Program.--
       ``(1) In general.--Within 9 months of the date of enactment 
     of the Higher Education Amendments of 1998, the Commissioner 
     of the National Center for Education Statistics, in 
     consultation with States and institutions of higher 
     education, shall develop key definitions for terms, and 
     uniform reporting methods (including the key definitions for 
     the consistent reporting of pass rates and program 
     completers), related to the performance of elementary school 
     and secondary school teacher preparation programs.
       ``(2) High-quality teacher preparation program.--Each 
     applicant for a grant under this part shall provide 
     assurances in such applicant's application that the applicant 
     will meet the following criteria:
       ``(A) Provide each teacher with each of the following 
     skills and supports:
       ``(i) A deep knowledge of the subjects such teacher 
     teaches.
       ``(ii) A firm understanding of how students learn.
       ``(iii) Teaching skills necessary to help all students 
     achieve high standards, including children with disabilities 
     and limited English proficient students.
       ``(iv) How to create a positive learning environment.
       ``(v) The ability to integrate challenging State academic 
     content standards and challenging student academic 
     achievement standards, and accountability into classroom 
     teaching.
       ``(vi) The ability to use a variety of assessment 
     strategies to diagnose and respond to individual learning 
     needs.
       ``(vii) The ability to integrate modern technology into 
     curricula to support student learning.
       ``(viii) Classroom management skills.
       ``(ix) Opportunities to collaborate with the teacher's 
     colleagues, with parents, community members, and other 
     educators.
       ``(x) The ability to work in partnership with parents and 
     involve parents in their children's education.
       ``(xi) How to reflect on practices in order to improve 
     teaching and student learning.
       ``(B) Ensure that each preservice teacher has the necessary 
     skills to succeed in the classroom, including providing--
       ``(i) some training in reading, addressing the needs of 
     children with disabilities and limited English proficient 
     students, data analysis, and how to use student achievement 
     data to improve instruction; and
       ``(ii) optional training in teaching advanced placement 
     courses.
       ``(b) State Report Card on the Quality of Teacher 
     Preparation.--Each State that receives funds under this Act 
     shall provide to the Secretary, within 2 years of the date of 
     enactment of the Higher Education Amendments of 1998, and 
     annually thereafter, in a uniform and comprehensible manner 
     that conforms with the definitions and methods established in 
     subsection (a), a State report card on the quality of teacher 
     preparation in the State, which shall include at least the 
     following:
       ``(1) A description of the teacher certification and 
     licensure assessments, and any other certification and 
     licensure requirements, used by the State.
       ``(2) The standards and criteria that prospective teachers 
     must meet in order to attain initial teacher certification or 
     licensure and to be certified or licensed to teach particular 
     subjects or in particular grades within the State.
       ``(3) A description of the extent to which the assessments 
     and requirements described in paragraph (1) are aligned with 
     the State's standards and assessments for students.
       ``(4) The percentage of teaching candidates who passed each 
     of the assessments used by the State for teacher 
     certification and licensure, and the passing score on each 
     assessment that determines whether a candidate has passed 
     that assessment.
       ``(5) The percentage of teaching candidates who passed each 
     of the assessments used by the State for teacher 
     certification and licensure, disaggregated and ranked, by the 
     teacher preparation program in that State from which the 
     teacher candidate received the candidate's most recent 
     degree, which shall be made available widely and publicly.
       ``(6) Information on the extent to which teachers in the 
     State are given waivers of State certification or licensure 
     requirements, including the proportion of such teachers 
     distributed across high- and low-poverty school districts and 
     across subject areas.
       ``(7) A description of each State's alternative routes to 
     teacher certification, if any, and the percentage of teachers 
     certified through alternative certification routes who pass 
     State teacher certification or licensure assessments.
       ``(8) For each State, a description of proposed criteria 
     for assessing the performance of teacher preparation programs 
     within institutions of higher education in the State, 
     including indicators of teacher candidate knowledge and 
     skills.
       ``(9) Information on the extent to which teachers or 
     prospective teachers in each State are required to take 
     examinations or other assessments of their subject matter 
     knowledge in the area or areas in which the teachers provide 
     instruction, the standards established for passing any such 
     assessments, and the extent to which teachers or prospective 
     teachers are required to receive a passing score on such 
     assessments in order to teach in specific subject areas or 
     grade levels.
       ``(c) Initial Report.--
       ``(1) In general.--Each State that receives funds under 
     this Act, not later than 6 months after the date of enactment 
     of the College Quality, Affordability, and Diversity 
     Improvement Act of 2003 and in a uniform and comprehensible 
     manner, shall submit to the Secretary the information 
     described in paragraphs (1), (5), and (6) of subsection (b). 
     Such information shall be compiled by the Secretary and 
     submitted to the Committee on Health, Education, Labor, and 
     Pensions of the Senate and the Committee on Education and the 
     Workforce of the House of Representatives not later than 9 
     months after the date of enactment of the College Quality, 
     Affordability, and Diversity Improvement Act of 2003.
       ``(2) Construction.--Nothing in this subsection shall be 
     construed to require a State to gather information that is 
     not in the possession of the State or the teacher preparation 
     programs in the State, or readily available to the State or 
     teacher preparation programs.
       ``(d) Report of the Secretary on the Quality of Teacher 
     Preparation.--
       ``(1) Report card.--The Secretary shall provide to 
     Congress, and publish and make widely available, a report 
     card on teacher qualifications and preparation in the United 
     States, including all the information reported in paragraphs 
     (1) through (9) of subsection (b). Such report shall identify 
     States for which eligible States and eligible partnerships 
     received a grant under this part. Such report shall be so 
     provided, published and made available not later than 2 years 
     6 months after the date of enactment of the Higher Education 
     Amendments of 1998 and annually thereafter.
       ``(2) Report to congress.--The Secretary shall report to 
     Congress--
       ``(A) a comparison of States' efforts to improve teaching 
     quality; and
       ``(B) regarding the national mean and median scores on any 
     standardized test that is used in more than 1 State for 
     teacher certification or licensure.
       ``(3) Special rule.--In the case of teacher preparation 
     programs with fewer than 10 graduates taking any single 
     initial teacher certification or licensure assessment during 
     an academic year, the Secretary shall collect and publish 
     information with respect to an average pass rate on State 
     certification or licensure assessments taken over a 3-year 
     period.
       ``(4) Database.--The Secretary shall collect data and 
     develop a national and public database that provides reports 
     on States' passage rates on certification and licensure 
     assessments, the placement rates for teacher preparation 
     programs, the percentage of full-time faculty in institutions 
     of higher education in each State who teach classes offered 
     by a school of education, the tracking of graduates 3 years 
     after graduating from a teacher preparation program, and 
     other relevant information, as appropriate.
       ``(e) Coordination.--The Secretary, to the extent 
     practicable, shall coordinate the information collected and 
     published under this part among States for individuals who 
     took State teacher certification or licensure assessments in 
     a State other than the State in which the individual received 
     the individual's most recent degree.
       ``(f ) Institutional Report Cards on the Quality of Teacher 
     Preparation.--
       ``(1) Report card.--Each institution of higher education 
     that conducts a teacher preparation program that enrolls 
     students receiving Federal assistance under this Act, not 
     later than 18 months after the date of enactment of the 
     Higher Education Amendments of 1998 and annually thereafter, 
     shall report to the State and the general public, in a 
     uniform and comprehensible manner that conforms with the 
     definitions and methods established under subsection (a), the 
     following information:
       ``(A) Pass rate.--(i) For the most recent year for which 
     the information is available, the pass rate of the 
     institution's graduates on the teacher certification or 
     licensure assessments of the State in which the institution 
     is located, but only for those students who took those 
     assessments within 3 years of completing the program.
       ``(ii) A comparison of the program's pass rate with the 
     average pass rate for programs in the State.
       ``(iii) In the case of teacher preparation programs with 
     fewer than 10 graduates taking any single initial teacher 
     certification or licensure assessment during an academic 
     year, the institution shall collect and publish information 
     with respect to an average pass rate on State certification 
     or licensure assessments taken over a 3-year period.
       ``(B) Program information.--The number of students in the 
     program, the average number of hours of supervised practice 
     teaching required for those in the program, and the faculty-
     student ratio in supervised practice teaching.

[[Page S13396]]

       ``(C) Statement.--In States that approve or accredit 
     teacher education programs, a statement of whether the 
     institution's program is so approved or accredited.
       ``(D) Designation as low-performing.--Whether the program 
     has been designated as low-performing by the State under 
     section 208(a).
       ``(E) Percentage of faculty in school of education.--The 
     percentage of full-time faculty at the institution of higher 
     education who teach classes offered by the school of 
     education.
       ``(2) Requirement.--The information described in paragraph 
     (1) shall be reported through publications such as school 
     catalogs and promotional materials sent to potential 
     applicants, secondary school guidance counselors, and 
     prospective employers of the institution's program graduates.
       ``(3) Fines.--In addition to the actions authorized in 
     section 487(c), the Secretary may impose a fine not to exceed 
     $25,000 on an institution of higher education for failure to 
     provide the information described in this subsection in a 
     timely or accurate manner.
       ``(g) National Academy of Sciences Core Curriculum Study.--
       ``(1) In general.--The Secretary shall enter into a 
     contract with the National Academy of Sciences to conduct a 
     2-year study to develop a suggested core curriculum in 
     pedagogy for schools of education for such schools' teacher 
     education program that assists those within the education 
     profession and prospective teachers to understand what 
     prospective teachers need to know to become effective 
     teachers.
       ``(2) Domains of foundational and pedagogical knowledge.--
     The study under paragraph (1) shall include each of the 
     following domains of foundational and pedagogical knowledge:
       ``(A) Learning, which would include building on existing 
     knowledge and experience shaped by social and cultural 
     context in the community and in the classroom.
       ``(B) Human development, which would include how children 
     and adolescents think and behave, taking in account different 
     ages, contexts, and learning styles.
       ``(C) Assessment, which would include the introduction of 
     standards-based reform.
       ``(D) Teaching strategies, which would include providing 
     all teachers with the tools needed to be successful in the 
     classroom, especially with students who have specific 
     learning disabilities or needs such as language acquisition.
       ``(E) Reading instruction, which would include taking in 
     account different ages, contexts, and learning styles.
       ``(3) Best research; suggested training.--The suggested 
     core curriculum developed under paragraph (1) shall reflect 
     the best research into how students learn and on the content-
     specific methods shown to be effective with students, 
     including examining how children learn. The suggested core 
     curriculum shall include suggested training in working with 
     diverse populations, assessments in the classroom, and 
     classroom management.
       ``(4) Collaboration.--
       ``(A) In general.--In conducting the study under paragraph 
     (1), the National Academy of Sciences shall collaborate with 
     interested parties in developing the suggested core 
     curriculum.
       ``(B) Interested parties.--In this paragraph, the term 
     `interested parties' means--
       ``(i) college presidents;
       ``(ii) deans of teacher education programs;
       ``(iii) teacher preparation faculty;
       ``(iv) chief State school officers;
       ``(v) school superintendents;
       ``(vi) teacher organizations;
       ``(vii) outstanding teachers; and
       ``(viii) teacher preparation accrediting organizations.

     ``SEC. 208. STATE FUNCTIONS.

       ``(a) State Assessment.--In order to receive funds under 
     this Act, a State, not later than 2 years after the date of 
     enactment of the Higher Education Amendments of 1998, shall 
     have in place a procedure to identify, and assist, through 
     the provision of technical assistance, low-performing 
     programs of teacher preparation within institutions of higher 
     education. Such State shall provide the Secretary an annual 
     list of such low-performing institutions that includes an 
     identification of those institutions at risk of being placed 
     on such list. Such levels of performance shall be determined 
     solely by the State and may include criteria based upon 
     information collected pursuant to this part. Such assessment 
     shall be described in the report under section 207(b).
       ``(b) Termination of Eligibility.--Any institution of 
     higher education that offers a program of teacher preparation 
     in which the State has withdrawn the State's approval or 
     terminated the State's financial support due to the low 
     performance of the institution's teacher preparation program 
     based upon the State assessment described in subsection (a)--
       ``(1) shall be ineligible for any funding for professional 
     development activities awarded by the Department of 
     Education;
       ``(2) shall not be permitted to accept or enroll any 
     student that receives aid under title IV of this Act in the 
     institution's teacher preparation program; and
       ``(3) shall provide transitional support, including 
     remedial services if necessary, for students enrolled at the 
     institution at the time of termination of financial support 
     or withdrawal of approval.
       ``(c) Negotiated Rulemaking.--If the Secretary develops any 
     regulations implementing subsection (b)(2), the Secretary 
     shall submit such proposed regulations to a negotiated 
     rulemaking process, which shall include representatives of 
     States, institutions of higher education, and educational and 
     student organizations.

     ``SEC. 209. GENERAL PROVISIONS.

       ``(a) Methods.--In complying with sections 207 and 208, the 
     Secretary shall ensure that States and institutions of higher 
     education use fair and equitable methods in reporting and 
     that the reporting methods protect the privacy of 
     individuals.
       ``(b) Special Rule.--For each State in which there are no 
     State certification or licensure assessments, or for States 
     that do not set minimum performance levels on those 
     assessments--
       ``(1) the Secretary shall, to the extent practicable, 
     collect data comparable to the data required under this part 
     from States, local educational agencies, institutions of 
     higher education, or other entities that administer such 
     assessments to teachers or prospective teachers; and
       ``(2) notwithstanding any other provision of this part, the 
     Secretary shall use such data to carry out the requirements 
     of this part related to assessments or pass rates.
       ``(c) Limitations.--
       ``(1) Federal control prohibited.--Nothing in this part 
     shall be construed to permit, allow, encourage, or authorize 
     any Federal control over any aspect of any private, 
     religious, or home school, whether or not a home school is 
     treated as a private school or home school under State law. 
     This section shall not be construed to prohibit private, 
     religious, or home schools from participation in programs or 
     services under this part.
       ``(2) No change in state control encouraged or required.--
     Nothing in this part shall be construed to encourage or 
     require any change in a State's treatment of any private, 
     religious, or home school, whether or not a home school is 
     treated as a private school or home school under State law.
       ``(3) National system of teacher certification 
     prohibited.--Nothing in this part shall be construed to 
     permit, allow, encourage, or authorize the Secretary to 
     establish or support any national system of teacher 
     certification.

     ``SEC. 210. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     part $300,000,000 for fiscal year 2004 and such sums as may 
     be necessary for each of the 5 succeeding fiscal years.

  ``PART B--INNOVATIVE STRATEGIES TO RECRUIT, TRAIN, AND RETAIN HIGH 
                    QUALITY TEACHERS AND PRINCIPALS

     ``SEC. 215. INCENTIVES TO RECRUIT AND RETAIN HIGH QUALITY 
                   TEACHERS AND ADMINISTRATORS.

       ``(a) Mentoring Program.--
       ``(1) Authorization.--
       ``(A) In general.--The Secretary shall award grants, on a 
     competitive basis, to eligible partnerships to enable the 
     eligible partnerships to develop mentoring programs that help 
     train and retain new teachers and provide professional routes 
     for experienced teachers.
       ``(B) Priority.--In awarding grants under this subsection, 
     the Secretary shall give priority to eligible partnerships 
     that consist of a high need local educational agency with--
       ``(i) high rates of teacher turnover; and
       ``(ii) shortages of teachers in subject areas of high need 
     (including bilingual education, special education, 
     mathematics, science, vocational education, and early 
     childhood education) and teachers in rural areas.
       ``(2) Eligible partnership.--In this subsection, the term 
     `eligible partnership' means a partnership among an 
     institution of higher education, a high need local 
     educational agency, and a nonprofit entity (including teacher 
     organizations) that has an established record of providing 
     effective teacher training.
       ``(3) Application.--An eligible partnership that desires a 
     grant under this subsection shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       ``(4) Use of funds.--
       ``(A) Mandatory uses.--An eligible partnership that 
     receives a grant under this subsection shall develop a 
     mentoring program that is not less than 1 year in duration 
     and does each of the following:
       ``(i) Provides--

       ``(I) training for experienced teachers to become mentors;
       ``(II) training from trained mentors to teach teachers in 
     schools served by high need local educational agencies;
       ``(III) stipends to mentors; and
       ``(IV) release time or a reduced class load for mentors and 
     the teachers being mentored, or both.

       ``(ii) Outlines specific criteria for who can serve as 
     mentors, coaches, and team leaders.
       ``(iii) Requires mentors to--

       ``(I) be fully licensed;
       ``(II) be permanent (nonprobationary) classroom teachers;
       ``(III) have completed not less than 3 years of teaching;
       ``(IV) demonstrate mastery of pedagogy and the subject 
     matter such mentor teaches;
       ``(V) have superior teaching and interpersonal skills;
       ``(VI) have the ability to integrate challenging State 
     academic content standards and challenging student academic 
     achievement standards and accountability into classroom 
     teaching;

[[Page S13397]]

       ``(VII) use a variety of assessment strategies to respond 
     to individual learning needs; and
       ``(VIII) reflect on their teaching practices in order to 
     improve teaching and student learning.

       ``(iv) Endeavors to match mentors and the teachers being 
     mentored by geographic proximity or by the same grade level 
     and subject matter area of teaching, or both.
       ``(v) Ensures that teachers who have been mentored will 
     work in schools served by high need local educational 
     agencies for a specified period of time.
       ``(vi) Provides a plan to evaluate the mentoring program.
       ``(B) Permissible uses.--An eligible partnership that 
     receives a grant under this subsection may use the grant 
     funds to provide academic credit toward an advanced degree 
     for mentors and the teachers being mentored.
       ``(5) Duration of grants.--Grants awarded under this 
     subsection shall be for 3 years in duration.
       ``(6) Evaluation.--
       ``(A) In general.--Not later than the last day of the grant 
     award, an eligible partnership that receives a grant under 
     this subsection shall submit an accountability report to the 
     Secretary.
       ``(B) Content.--The accountability report under 
     subparagraph (A) shall include, at a minimum--
       ``(i) teacher retention rates for teachers participating in 
     the mentoring program as compared with teachers in the high 
     need local educational agency not participating in the 
     mentoring program;
       ``(ii) results of evaluations on mentor and teachers being 
     mentored satisfaction with the mentoring program; and
       ``(iii) results of the plan developed by the eligible 
     partnership to evaluate the mentoring program.
       ``(7) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection 
     $50,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.
       ``(b) Housing Incentives Program.--
       ``(1) Grant program authorized.--The Secretary shall award 
     grants, on a competitive basis, to eligible partnerships to 
     enable the eligible partnerships to develop a housing 
     incentive program that assists teachers who teach in schools 
     served by high need local educational agencies to afford 
     housing.
       ``(2) Eligible partnership.--In this subsection:
       ``(A) In general.--The term `eligible partnership' means a 
     partnership between--
       ``(i)(I) a high need local educational agency; or
       ``(II) a State educational agency; and
       ``(ii) an institution of higher education.
       ``(B) Other entities.--The term `eligible partnership' may 
     include other public entities or private entities.
       ``(3) Application.--An eligible partnership that desires a 
     grant under this subsection shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       ``(4) Use of funds.--An eligible partnership that receives 
     a grant under this subsection shall use the grant funds to 
     develop a housing incentive program that--
       ``(A) provides financial incentives to teachers who teach 
     in schools served by high need local educational agencies by 
     providing for such teachers funds for--
       ``(i) a downpayment on a home;
       ``(ii) closing costs associated with purchasing a home; or
       ``(iii) moving expenses; or
       ``(B) develops a partnership with a lender to create a home 
     loan program for teachers who teach in schools served by high 
     need local educational agencies that provides home loans to 
     such teachers that--
       ``(i) are insured by the eligible partnership; or
       ``(ii) require minimal or no downpayment.
       ``(5) Service requirement.--A teacher that receives 
     assistance under this subsection shall--
       ``(A) teach in a school served by a high need local 
     educational agency for not less than 5 subsequent school 
     years; or
       ``(B) repay the amount of assistance.
       ``(6) Evaluation.--
       ``(A) In general.--An eligible partnership that receives a 
     grant under this subsection shall develop an evaluation of 
     the partnership's housing incentive program that includes, at 
     a minimum--
       ``(i) how many teachers received assistance under the 
     program and retention rates in schools served by high need 
     local educational agencies for such teachers;
       ``(ii) whether the program helped improve teacher 
     shortages;
       ``(iii) a description of the specific inactive model that 
     was used to develop the housing incentive program;
       ``(iv) if applicable, how partnerships with lenders worked; 
     and
       ``(v) successful practices.
       ``(B) Submission of evaluation.--Not later than the last 
     day of the grant award, the eligible partnership shall submit 
     to the Secretary the evaluation developed under subparagraph 
     (A).
       ``(7) Tax exemption.--The amount of any financial 
     assistance received by a teacher under a housing incentive 
     program developed pursuant to this subsection shall not be 
     considered income for purposes of the Internal Revenue Code 
     of 1986.
       ``(8) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection 
     $50,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.
       ``(c) Community College as a Partner.--
       ``(1) Grant program authorized.--The Secretary shall award 
     grants, on a competitive basis, to eligible partnerships to 
     enable the eligible partnerships to strengthen teacher 
     preparation programs.
       ``(2) Eligible partnership.--In this subsection, the term 
     `eligible partnership' means a partnership between--
       ``(A) a community college; and
       ``(B) a 4-year institution of higher education that has a 
     teacher preparation program.
       ``(3) Application.--An eligible partnership that desires a 
     grant under this subsection shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       ``(4) Use of funds.--
       ``(A) Mandatory uses.--An eligible partnership that 
     receives a grant under this subsection shall do both of the 
     following:
       ``(i) Community college activities.--The community college 
     of the eligible partnership shall develop and strengthen the 
     core curriculum centered on a liberal arts education at such 
     college that adequately prepares students to enter the 
     teacher preparation program at the 4-year institution of 
     higher education of the eligible partnership.
       ``(ii) 4-year institution of higher education activities.--

       ``(I) In general.--The 4-year institution of higher 
     education of the eligible partnership shall provide intensive 
     support services for students that enter the teacher 
     preparation program from the community college of the 
     eligible partnership.
       ``(II) Support services.--The support services shall be 
     offered prior to and during such student's tenure at the 4-
     year institution of higher education and shall include 
     mentoring, and academic and career support.
       ``(III) Point person.--The 4-year institution of higher 
     education shall provide a point person within the teacher 
     preparation program whose sole job is to provide support 
     services to the students described in subclause (I).

       ``(B) Permissive uses.--An eligible partnership that 
     receives a grant under this subsection may use the grant 
     funds to provide compensation to staff in the teacher 
     preparation programs at the community college and 4-year 
     institution of higher education.
       ``(5) Duration of grants.--Grants awarded under this 
     subsection shall be for 5 years in duration.
       ``(6) Evaluation.--
       ``(A) In general.--An eligible partnership that receives a 
     grant under this subsection shall develop an evaluation of 
     the partnerships's activities under this subsection that--
       ``(i) includes the number of student teachers served and 
     the retention rate in the 4-year institution of higher 
     education of such student teachers;
       ``(ii) addresses the qualification of such student teachers 
     when graduating from the 4-year institution of higher 
     education, including whether such student teachers found 
     teaching positions and whether they passed State 
     certification examinations; and
       ``(iii) includes successful practices.
       ``(B) Submission of evaluation.--Not later than the last 
     day of the grant award, the eligible partnership shall submit 
     to the Secretary the evaluation developed under subparagraph 
     (A).
       ``(7) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection 
     $25,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.
       ``(d) Paraprofessionals to Teachers.--
       ``(1) Grant program authorized.--The Secretary shall award 
     grants, on a competitive basis, to eligible partnerships to 
     enable the eligible partnerships to develop a 
     Paraprofessionals to Teachers Program (in this subsection 
     referred to as the `Program') to assist paraprofessionals 
     employed by high need local educational agencies to become 
     teachers.
       ``(2) Eligible partnership.--In this subsection, the term 
     `eligible partnership' means a partnership among an 
     institution of higher education, a high need local 
     educational agency, and other entities that may include 
     businesses, community colleges, and teacher organizations.
       ``(3) Application.--An eligible partnership that desires a 
     grant under this subsection shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       ``(4) Use of funds.--
       ``(A) In general.--An eligible partnership that receives a 
     grant under this subsection shall develop a Program to assist 
     paraprofessionals employed by the high need local educational 
     agency of the eligible partnership to become teachers by--
       ``(i) developing a teacher preparation program at the 
     institution of higher education of the eligible partnership 
     for paraprofessionals that allows for part-time study and 
     flexible student teaching and coursework schedules;
       ``(ii) ensuring that paraprofessionals enrolled in the 
     teacher preparation program under clause (i) retain such 
     paraprofessionals' benefit packages with the high need

[[Page S13398]]

     local educational agency while enrolled in the teacher 
     preparation program;
       ``(iii) providing support services for such 
     paraprofessionals that include tutoring to meet teacher 
     preparation program requirements, child care, career 
     counseling, and financial aid guidance; and
       ``(iv) providing mentoring for such paraprofessionals 
     during their first 3 years of teaching.
       ``(B) Permissible use of funds.--An eligible partnership 
     that receives a grant under this subsection may use the grant 
     funds for--
       ``(i) tuition expenses of paraprofessionals in the teacher 
     preparation program;
       ``(ii) child care expenses of paraprofessionals;
       ``(iii) release time for paraprofessionals;
       ``(iv) compensation for mentors;
       ``(v) support services for paraprofessionals;
       ``(vi) salaries of staff at the institution of higher 
     education and the high need local educational agency of the 
     eligible partnership; and
       ``(vii) stipends for paraprofessionals.
       ``(5) Activities of the high need local educational 
     agency.--The high need local educational agency of the 
     eligible partnership shall--
       ``(A) make efforts to recruit paraprofessionals employed by 
     such agency to participate in the Program;
       ``(B) arrange for administrative leave for 
     paraprofessionals employed by such agency who participate in 
     the Program; and
       ``(C) guarantee a provisional teaching position to 
     paraprofessionals employed by such agency who participate in 
     the Program upon completion of the Program.
       ``(6) Duration of grants.--Grants awarded under this 
     subsection shall be for 3 years in duration.
       ``(7) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection 
     $50,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.
       ``(e) School Leadership Development Program for Principals, 
     Assistant Principals, and Superintendents.--
       ``(1) Grant program authorized.--The Secretary shall award 
     grants, on a competitive basis, to eligible partnerships to 
     enable the eligible partnerships to provide practical 
     training to principals, assistant principals, and school 
     superintendents that focuses on developing and enhancing the 
     skills necessary to serve as instructional leaders of schools 
     and school systems.
       ``(2) Eligible partnership.--In this subsection, the term 
     `eligible partnership'--
       ``(A) means a partnership between--
       ``(i) an institution of higher education; and
       ``(ii) 1 or more high need local educational agencies; and
       ``(B) may include a school principal professional 
     organization.
       ``(3) Application.--An eligible partnership that desires a 
     grant under this subsection shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       ``(4) Use of funds.--
       ``(A) In general.--An eligible partnership that receives a 
     grant under this subsection shall establish a certificate 
     program for principals, assistant principals, and school 
     superintendents that is developed by education experts and 
     practitioners and that provides training in--
       ``(i) diagnostic leadership skills assessment;
       ``(ii) the development of knowledge and skills that 
     contribute to the effective practice of instructional 
     leadership behaviors;
       ``(iii) research methodology for educational leaders that 
     includes understanding of systematic and empirical research 
     methods, application of rigorous data analyses, collections 
     of reliable and valid data, knowledge of appropriate research 
     designs, and the importance of peer review and other external 
     scrutiny, and its application to the practice of school 
     leadership; and
       ``(iv) the development of knowledge and skills to develop 
     and align curriculum, assessments, and instruction with 
     standards, legislation, and regulations.
       ``(B) Permissible use of funds.--An eligible partnership 
     that receives a grant under this subsection may use the grant 
     funds--
       ``(i) to provide training in developing and enhancing the 
     skills necessary to effectively run schools for individuals 
     who are about to become principals, assistant principals, or 
     school superintendents;
       ``(ii) for a pre-induction year internship or 
     apprenticeship with a successful practitioner to help train 
     individuals who are about to become principals, assistant 
     principals, or school superintendents, and, during an 
     induction year, to support and develop the capacity of new 
     principals, assistant principals, and school superintendents 
     as instructional leaders; and
       ``(iii) to provide mentoring and peer coaching services for 
     principals, assistant principals, and school superintendents 
     to enable exemplary principals, assistant principals, and 
     school superintendents to serve as mentors and role models.
       ``(5) Technology.--In carrying out activities under this 
     subsection, an eligible partnership shall use, to the extent 
     practicable, technology as an outreach mechanism to expand 
     opportunities for professional development and ongoing 
     support services for principals, assistant principals, and 
     school superintendents.
       ``(6) Report.--An eligible partnership that receives a 
     grant under this subsection shall submit to the Secretary an 
     evaluation detailing the use of grant funds under this 
     subsection and the progress in meeting the goals of the 
     eligible partnership.
       ``(7) Duration of grants.--Grants awarded under this 
     subsection shall be for 3 years in duration.
       ``(8) Authorization of appropriations.--There are 
     authorized to be appropriated to carry out this subsection 
     $25,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.

       ``PART C--PREPARING TOMORROW'S TEACHERS TO USE TECHNOLOGY

     ``SEC. 221. PURPOSE AND PROGRAM AUTHORITY.

       ``(a) Purpose.--It is the purpose of this part to assist 
     consortia of public and private entities--
       ``(1) to carry out programs that prepare prospective 
     teachers to use advanced technology to prepare all students 
     to meet challenging State and local academic content and 
     student academic achievement standards; and
       ``(2) to improve the ability of institutions of higher 
     education to carry out such programs.
       ``(b) Program Authority.--
       ``(1) In general.--The Secretary is authorized to award 
     grants to eligible applicants, or enter into contracts or 
     cooperative agreements with eligible applicants, on a 
     competitive basis in order to pay for the Federal share of 
     the cost of projects to develop or redesign teacher 
     preparation programs to enable prospective teachers to use 
     advanced technology effectively in their classrooms.
       ``(2) Period of awards.--The Secretary may award grants, or 
     enter into contracts or cooperative agreements, under this 
     part for periods that are not more than 5 years in duration.

     ``SEC. 222. ELIGIBILITY.

       ``(a) Eligible Applicants.--In order to receive a grant or 
     enter into a contract or cooperative agreement under this 
     part, an applicant shall be a consortium that includes the 
     following:
       ``(1) At least one institution of higher education that 
     awards baccalaureate degrees and prepares teachers for their 
     initial entry into teaching.
       ``(2) At least one State educational agency or local 
     educational agency.
       ``(3) One or more of the following entities:
       ``(A) An institution of higher education (other than the 
     institution described in paragraph (1)).
       ``(B) A school or department of education at an institution 
     of higher education.
       ``(C) A school or college of arts and sciences (as defined 
     in section 201(b)) at an institution of higher education.
       ``(D) A professional association, foundation, museum, 
     library, for-profit business, public or private nonprofit 
     organization, community-based organization, or other entity, 
     with the capacity to contribute to the technology-related 
     reform of teacher preparation programs.
       ``(b) Application Requirements.--In order to receive a 
     grant or enter into a contract or cooperative agreement under 
     this part, an eligible applicant shall submit an application 
     to the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require. Such 
     application shall include the following:
       ``(1) A description of the proposed project, including how 
     the project would--
       ``(A) ensure that individuals participating in the project 
     would be prepared to use advanced technology to prepare all 
     students, including groups of students who are 
     underrepresented in technology-related fields and groups of 
     students who are economically disadvantaged, to meet 
     challenging State and local academic content and student 
     academic achievement standards; and
       ``(B) improve the ability of at least one participating 
     institution of higher education described in section 
     222(a)(1) to ensure such preparation.
       ``(2) A demonstration of--
       ``(A) the commitment, including the financial commitment, 
     of each of the members of the consortium for the proposed 
     project; and
       ``(B) the active support of the leadership of each 
     organization that is a member of the consortium for the 
     proposed project.
       ``(3) A description of how each member of the consortium 
     will participate in project activities.
       ``(4) A description of how the proposed project will be 
     continued after Federal funds are no longer awarded under 
     this part for the project.
       ``(5) A plan for the evaluation of the project, which shall 
     include benchmarks to monitor progress toward specific 
     project objectives.
       ``(c) Matching Requirements.--
       ``(1) In general.--The Federal share of the cost of any 
     project funded under this part shall not exceed 50 percent. 
     Except as provided in paragraph (2), the non-Federal share of 
     the cost of such project may be provided in cash or in kind, 
     fairly evaluated, including services.
       ``(2) Acquisition of equipment.--Not more than 10 percent 
     of the funds awarded for a project under this part may be 
     used to acquire equipment, networking capabilities, or 
     infrastructure, and the non-Federal share of the cost of any 
     such acquisition shall be provided in cash.

     ``SEC. 223. USE OF FUNDS.

       ``(a) Required Uses.--A consortium that receives a grant or 
     enters into a contract or

[[Page S13399]]

     cooperative agreement under this part shall use funds made 
     available under this part for--
       ``(1) a project creating one or more programs that prepare 
     prospective teachers to use advanced technology to prepare 
     all students, including groups of students who are 
     underrepresented in technology-related fields and groups of 
     students who are economically disadvantaged, to meet 
     challenging State and local academic content and student 
     academic achievement standards; and
       ``(2) evaluating the effectiveness of the project.
       ``(b) Permissible Uses.--The consortium may use funds made 
     available under this part for a project, described in the 
     application submitted by the consortium under this part, that 
     carries out the purpose of this part, such as the following:
       ``(1) Developing and implementing high-quality teacher 
     preparation programs that enable educators--
       ``(A) to learn the full range of resources that can be 
     accessed through the use of technology;
       ``(B) to integrate a variety of technologies into curricula 
     and instruction in order to expand students' knowledge;
       ``(C) to evaluate educational technologies and their 
     potential for use in instruction;
       ``(D) to help students develop their technical skills; and
       ``(E) to use technology to collect, manage, and analyze 
     data to improve teaching and decisionmaking.
       ``(2) Developing alternative teacher development paths that 
     provide elementary schools and secondary schools with well-
     prepared, technology-proficient educators.
       ``(3) Developing achievement-based standards and 
     assessments aligned with the standards to measure the 
     capacity of prospective teachers to use technology 
     effectively in their classrooms.
       ``(4) Providing technical assistance to entities carrying 
     out other teacher preparation programs.
       ``(5) Developing and disseminating resources and 
     information in order to assist institutions of higher 
     education to prepare teachers to use technology effectively 
     in their classrooms.
       ``(6) Subject to section 222(c)(2), acquiring technology 
     equipment, networking capabilities, infrastructure, software, 
     and digital curricula to carry out the project.

     ``SEC. 224. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     part--
       ``(1) $150,000,000 for fiscal year 2004; and
       ``(2) such sums as may be necessary for each of the 5 
     succeeding fiscal years.''.

      TITLE III--DIVERSITY, RETENTION, AND ENRICHED ACADEMICS FOR 
                         MATRICULATING STUDENTS

     SEC. 301. TEST PREPARATION FOR LOW-INCOME STUDENTS.

       Title I of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 6301 et seq.) is amended by adding at the end 
     the following:

           ``PART J--TEST PREPARATION FOR LOW-INCOME STUDENTS

     ``SEC. 1910. DEFINITIONS.

       ``In this part:
       ``(1) Eligible entity.--The term `eligible entity' means a 
     public, private, or nonprofit entity (including a secondary 
     school or a local educational agency) that--
       ``(A) offers a program to prepare students for college 
     admissions tests; and
       ``(B) has a verified track record of not less than 3 years 
     of increasing the average college admissions test score of 
     students who participate in such program.
       ``(2) Eligible local educational agency.--The term 
     `eligible local educational agency' means a local educational 
     agency for which the number of children determined under 
     section 1124(c) for that local educational agency constitute 
     more than--
       ``(A) the percentage described in section 1125(c)(2)(B)(v) 
     of the agency's total population aged 5 to 17; or
       ``(B) the number described in section 1125(c)(2)(C)(v) of 
     the agency's total population aged 5 to 17.
       ``(3) Eligible secondary school.--The term `eligible 
     secondary school'--
       ``(A) means a secondary school that receives Federal 
     assistance under part A and is served by an eligible local 
     educational agency; and
       ``(B) includes a secondary school that does not receive 
     Federal assistance under part A for a fiscal year if such 
     secondary school is served by an eligible local educational 
     agency that serves secondary schools, none of which received 
     Federal assistance under part A for such fiscal year.

     ``SEC. 1911. ESTABLISHMENT.

       ``From amounts appropriated under section 1917 for a fiscal 
     year, the Secretary shall award grants, on a competitive 
     basis, to eligible local educational agencies to enable such 
     agencies to fund college admissions test preparation programs 
     for juniors and seniors at eligible secondary schools served 
     by such agencies.

     ``SEC. 1912. APPLICATION.

       ``An eligible local educational agency that desires a grant 
     under this part shall submit an application to the Secretary 
     at such time, in such manner, and containing such information 
     as the Secretary may require.

     ``SEC. 1913. DURATION.

       ``Grants awarded under this subpart shall be for a period 
     of not less than 3 years.

     ``SEC. 1914. USE OF FUNDS.

       ``(a) In General.--An eligible local educational agency 
     that receives a grant under this part shall use the grant 
     funds to provide, through an eligible entity, a college 
     admissions test preparation program for juniors and seniors 
     at eligible secondary schools served by such agency that uses 
     methods that have proven effective in preparing students for 
     college admissions tests.
       ``(b) Methods.--
       ``(1) In general.--A college admissions test preparation 
     program funded under this part shall--
       ``(A) use methods that have proven effective in preparing 
     students for college admissions tests;
       ``(B) to the extent practicable, be administered through 
     instructor led, classroom-based courses; and
       ``(C) consist of a minimum of 25 hours of instructional 
     (nontesting) time.
       ``(2) Online courses.--
       ``(A) In general.--An eligible local educational agency may 
     enter into a contract with an eligible entity to provide a 
     college admissions test preparation program that will be 
     offered online if--
       ``(i) a classroom-based college admissions test preparation 
     program provided by an eligible entity is not available; and
       ``(ii) the eligible entity providing such online program 
     has a verified track record of not less than 3 years of 
     increasing the average college admissions test score of 
     students served through such online program.
       ``(B) Supervision; administration.--An online college 
     admissions test preparation program shall be supervised or 
     administered by a teacher, administrator, or coach who has 
     received appropriate professional development to support 
     student success in such online program.
       ``(c) Comparable Service.--An eligible entity that is not a 
     school or local educational agency and that receives a 
     contract under this section shall--
       ``(1) provide comparable services in programs offered under 
     this part as in programs such entity offers to such entity's 
     other customers; and
       ``(2) provide services in programs offered under this part 
     for not more than 75 percent of such entity's national 
     average rate per student for comparable programs.
       ``(d) Practice Examinations.--
       ``(1) Prior to preparation.--
       ``(A) In general.--Programs provided under this section 
     shall require each participating student to complete a 
     practice examination of the college admissions test the 
     student will be preparing for, prior to preparing such 
     student for such college admissions test.
       ``(B) Previously administered; same timeframe and 
     setting.--The practice examination described under 
     subparagraph (A) shall be--
       ``(i) an examination previously administered by the College 
     Board, ACT Inc., or other college admissions tests' 
     respective administrator; and
       ``(ii) administered in a timeframe and setting similar to 
     that of the examination when administered by the College 
     Board, ACT Inc., or other college admissions tests' 
     respective administrator.
       ``(2) After preparation.--
       ``(A) In general.--Programs provided under subsection (a) 
     shall require each participating student to complete a 
     practice examination of the college admissions test the 
     student prepared for at the completion of the program.
       ``(B) Previously administered; same timeframe and 
     setting.--The practice examination described under 
     subparagraph (A)--
       ``(i) shall be an examination previously administered by 
     the College Board, ACT Inc., or other college admissions 
     tests' respective administrator;
       ``(ii) shall not be the same practice examination given at 
     the start of the program, given at any time during the 
     program, or used as a study aid during the program; and
       ``(iii) shall be administered in a timeframe and setting 
     similar to that of the examination when administered by the 
     College Board, ACT Inc., or other college admissions tests' 
     respective administrator.
       ``(e) Supplemental Preparation and Guidance.--An eligible 
     entity that receives a contract under this section or an 
     eligible local educational agency that develops and 
     implements a school-based college admissions test preparation 
     program under this section shall--
       ``(1) provide supplemental preparation for those students 
     that need such supplemental preparation to prepare for 
     college admissions tests in the form of prepreparation review 
     of skills and knowledge, including in mathematics, grammar, 
     and vocabulary;
       ``(2) ensure that students participating in programs funded 
     under this part receive counseling on college admissions, 
     including information on selecting an institution of higher 
     education, the application process and related requirements, 
     the availability of supports and services to facilitate 
     transition to and success in postsecondary education, and the 
     availability of financial aid; and
       ``(3) offer not less than 1 seminar or class on the 
     counseling described under paragraph (2) that shall be held 
     during evening or weekend hours and parents shall be invited 
     to attend such seminar or class.
       ``(f) Local Educational Agency Separate Programs.--An 
     eligible local educational agency that enters into a contract 
     with an eligible entity pursuant to this section--

[[Page S13400]]

       ``(1) may conduct activities described under subsection (e) 
     separate from such contract; and
       ``(2) may not use more than 5 percent of the grant funds to 
     conduct activities described under subsection (e) separate 
     from such contract.

     ``SEC. 1915. REPORTING REQUIREMENT.

       ``(a) Local Educational Agency.--An eligible local 
     educational agency that develops and implements a school-
     based college admissions test preparation program under 
     section 1914(a)(1) shall submit to the Secretary a report 
     that includes--
       ``(1) the number of students who started the program, 
     disaggregated by race and gender where appropriate;
       ``(2) the number of students who completed the program, 
     disaggregated by race and gender where appropriate;
       ``(3) the number of students participating in the program 
     who subsequently take the officially administered college 
     admissions test for which such students were preparing, 
     disaggregated by race and gender where appropriate; and
       ``(4) average scores for participating students on the 
     preprogram test pursuant to section 1914(d)(1), and the end 
     of program test pursuant to section 1914(d)(2).
       ``(b) Eligible Entity.--An eligible entity that receives a 
     contract under section 1914 shall submit to the eligible 
     local educational agency that has contracted for such 
     eligible entity's services a report that includes the 
     information described in subsection (a) and any other 
     information the eligible local educational agency shall 
     reasonably require.
       ``(c) Failure To Submit Scores.--An eligible local 
     educational agency or eligible entity that fails to submit 
     the average scores for participating students on the 
     preprogram test pursuant to section 1914(d)(1), and the end 
     of program test pursuant to section 1914(d)(2) shall have 
     such agency or entity's grant terminated at the discretion of 
     the Secretary.

     ``SEC. 1916. SCORE IMPROVEMENT.

       ``(a) Report.--Not less than once every 3 years, the 
     Secretary shall review and report to Congress on all programs 
     funded under this part to ensure that such programs are 
     improving the scores of students participating in the 
     program.
       ``(b) Non-Eligibility.--Programs funded under this part 
     that are determined by the Secretary to have not 
     significantly improved the average score of participating 
     students shall no longer be eligible for grants under this 
     part.

     ``SEC. 1917. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     part $50,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.''.

     SEC. 302. ADMISSIONS AND RETENTION.

       (a) Prospective Student Information.--Part A of title IV of 
     the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), as 
     amended by section 105, is further amended by adding at the 
     end the following:

             ``Subpart 11--Prospective Student Information

     ``SEC. 420M. REPORTING.

       ``(a) In General.--An institution of higher education that 
     offers a baccalaureate degree and is eligible to receive 
     assistance under this part shall include in such 
     institution's application for assistance under this part the 
     following information:
       ``(1) The percentage of freshman students enrolled at the 
     institution in the previous academic year who were self-
     identified members of the following disaggregated categories:
       ``(A) Individual major racial and ethnic groups.
       ``(B) Male.
       ``(C) Female.
       ``(D) The relative of an alumnus, disaggregated by race and 
     eligibility for Federal Pell Grants.
       ``(E) Economically disadvantaged, as measured by 
     eligibility for Federal Pell Grants.
       ``(2) The percentage of freshman students enrolled at the 
     institution in the previous academic year who were admitted 
     to the institution through binding early decision, 
     disaggregated by race and eligibility for Federal Pell 
     Grants.
       ``(3) The percentage of freshman students enrolled at the 
     institution in the previous academic year who were admitted 
     to the institution through regular decision, disaggregated by 
     race and eligibility for Federal Pell Grants.
       ``(b) Disaggregation.--An institution of higher education 
     shall provide specific disaggregated subgroup information 
     under subsection (a) only if the number of students in such 
     subgroup is sufficient to yield statistically reliable 
     information and reporting would not reveal personally 
     identifiable information about an individual. If such number 
     is not sufficient, the institution of higher education shall 
     note that the institution enrolled too few of such students 
     to report with confidence.''.
       (b) Antitrust Exemption.--
       (1) Definitions.--In this subsection:
       (A) Antitrust laws.--The term ``antitrust laws'' has the 
     meaning given such term in subsection (a) of the first 
     section of the Clayton Act (15 U.S.C. 12(a)), except that 
     such term includes section 5 of the Federal Trade Commission 
     Act (15 U.S.C. 45) to the extent such section 5 applies to 
     unfair methods of competition.
       (B) Institution of higher education.--The term 
     ``institution of higher education''--
       (i) means an institution of higher education as defined in 
     section 101 of the Higher Education Act of 1965 (20 U.S.C. 
     1001); and
       (ii) includes any individual acting on behalf of such an 
     institution.
       (2) Exemption.--The antitrust laws shall not apply to any 
     joint discussion, consideration, review, action, or agreement 
     by or among institutions of higher education, or their 
     representatives, for the purpose of, and limited to, 
     developing and disseminating guidelines designed to end 
     binding early decision admissions policies.
       (c) Retention.--
       (1) Grant program.--Part A of title III of the Higher 
     Education Act of 1965 (20 U.S.C. 1057 et seq.) is amended by 
     adding at the end the following:

     ``SEC. 318. GRANT PROGRAM TO INCREASE STUDENT RETENTION AND 
                   PROMOTE ARTICULATION AGREEMENTS.

       ``(a) Authorization of Program.--The Secretary shall award 
     grants, on a competitive basis, to eligible institutions to 
     enable the institutions to--
       ``(1) focus on increasing traditional and nontraditional 
     student retention at such institutions; and
       ``(2) promote articulation agreements among different 
     institutions that will increase the likelihood of progression 
     of students at such institutions to baccalaureate degrees.
       ``(b) Definition of Eligible Institution.--In this section, 
     the term `eligible institution' means an institution of 
     higher education (as defined in section 101(a)) where not 
     less than 40 percent of such institution's student body 
     receives financial aid under subpart 1 of part A of title IV.
       ``(c) Application.--An eligible institution that desires a 
     grant under this section shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may require.
       ``(d) Mandatory Activities.--An eligible institution that 
     receives a grant under this section shall use the grant funds 
     to carry out each of the following:
       ``(1) Offering counseling services to help students cope 
     with the challenges they are facing and identify the services 
     that are available to help them persist in their education.
       ``(2) Making mentors available to all students that are at 
     risk for not completing a degree.
       ``(3) Providing detailed assistance to all students who 
     request help in understanding--
       ``(A) the options for financing their education, including 
     information on grants, loans, and loan repayment programs;
       ``(B) the process of applying for financial assistance;
       ``(C) the outcome of their financial assistance 
     application; and
       ``(D) any unanticipated problems related to financing their 
     education that arise.
       ``(4) Offering tutoring to all students who request 
     assistance with any course or subject.
       ``(5) Conducting outreach activities so that all students 
     know that these services are available and are aware of how 
     to access the services.
       ``(6) Making services listed in paragraphs (1) through (4) 
     available in students' native languages, if it is not 
     English, if the percentage of students needing translation 
     services in a specific language exceeds 5 percent.
       ``(e) Permissible Activities.--An eligible institution that 
     receives a grant under this section may use grant funds to 
     carry out any of the following activities:
       ``(1) Providing intensive remedial academic instruction.
       ``(2) Designing innovative course schedules to meet the 
     needs of working adults, such as classes that are 
     concentrated on weekends or over short periods of time.
       ``(3) Designing and implementing online courses or 
     components of courses to allow nontraditional students to 
     obtain an education when their family or professional 
     responsibilities, or both, make it difficult for them to 
     attend class on campus at prespecified, regular times.
       ``(4) Offering childcare during the hours when students 
     have class or are studying.
       ``(5) Providing transportation assistance to students that 
     helps such students manage their schedules.
       ``(6) Partnering with local businesses to create flexible 
     work-hour programs so that students can balance work and 
     school.
       ``(7) Offering time management seminars or personal coaches 
     to help students improve their time management skills.
       ``(8) Any other activities the Secretary believes will 
     promote retention of students attending eligible 
     institutions.
       ``(f) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $100,000,000 for 
     fiscal year 2004 and such sums as may be necessary for each 
     of the 5 succeeding fiscal years.''.
       (2) Institutional support services.--Part B of title I of 
     the Higher Education Act of 1965 (20 U.S.C. 1011 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 123. INSTITUTIONAL SUPPORT SERVICES TO INCREASE 
                   STUDENT RETENTION.

       ``(a) Determination of Rates.--
       ``(1) In general.--Beginning on the date that is 2 years 
     after the date of enactment of this section, and annually 
     thereafter, an institution of higher education shall 
     determine for the preceding academic year the rates of 
     baccalaureate degree completion not later

[[Page S13401]]

     than 6 years after enrollment for students enrolled at such 
     institution, disaggregated by race, gender, and eligibility 
     for Federal Pell Grants, if the institution of higher 
     education--
       ``(A) receives Federal funds;
       ``(B) is eligible for assistance under title IV;
       ``(C) is not eligible for assistance under section 318; and
       ``(D) awards a baccalaureate degree.
       ``(2) Disaggregation.--An institution of higher education 
     shall provide specific disaggregated subgroup information 
     under paragraph (1) only if the number of students in such 
     subgroup is sufficient to yield statistically reliable 
     information and reporting would not reveal personally 
     identifiable information about an individual. If such number 
     is not sufficient, the institution of higher education shall 
     note that the institution enrolled too few of such students 
     to report with confidence.
       ``(b) Support Services for At Risk Students.--
       ``(1) In general.--Beginning on the date that is 2 years 
     after the date of enactment of this section, and annually 
     thereafter, each institution of higher education that has a 
     disparity of 20 or more percentage points in the rates 
     determined under subsection (a) between any 2 or more 
     subgroups in all the disaggregated categories for an academic 
     year shall increase, from the level provided in such academic 
     year and in accordance with paragraph (2), support services 
     for the students in the subgroups in which the baccalaureate 
     degree completion rate is 20 or more percentage points below 
     the completion rate for the subgroup with the highest 
     completion rate.
       ``(2) Amount of increase and activities.--
       ``(A) Increase.--The amount of the increase required under 
     paragraph (1) for an academic year shall be equal to 5 
     percent of the amount of assistance received by the 
     institution of higher education under part C of title IV and 
     subpart 3 of part A of title IV for such academic year.
       ``(B) Activities.--
       ``(i) Mandatory activities.--The amount of the increase 
     required under paragraph (1) shall be used to carry out the 
     following activities:

       ``(I) Offering counseling services to help students cope 
     with the challenges they are facing and identify the services 
     that are available to help them persist in their education.
       ``(II) Making mentors available to all students that are at 
     risk for not completing a degree.
       ``(III) Providing detailed assistance to all students who 
     request help in understanding--

       ``(aa) the options for financing their education, including 
     information on grants, loans, and loan repayment programs;
       ``(bb) the process of applying for financial assistance;
       ``(cc) the outcome of their financial assistance 
     application; and
       ``(dd) any unanticipated problems related to financing 
     their education that arise.

       ``(IV) Offering tutoring to all students who request 
     assistance with any course or subject.
       ``(V) Conducting outreach activities so that all students 
     know that these services are available and are aware of how 
     to access the services.
       ``(VI) Making services listed in subclauses (I) through 
     (IV) available in students' native languages, if it is not 
     English, if the percentage of students needing translation 
     services in a specific language exceeds 5 percent.

       ``(ii) Permissible activities.--The amount of the increase 
     required under paragraph (1) may be used to carry out any of 
     the following activities:

       ``(I) Providing intensive remedial academic instruction.
       ``(II) Designing innovative course schedules to meet the 
     needs of working adults, such as classes that are 
     concentrated on weekends or over short periods of time.
       ``(III) Designing and implementing online courses or 
     components of courses to allow nontraditional students to 
     obtain an education when their family or professional 
     responsibilities, or both, make it difficult for them to 
     attend class on campus at prespecified, regular times.
       ``(IV) Offering childcare during the hours when students 
     have class or are studying.
       ``(V) Providing transportation assistance to students that 
     helps such students manage their schedules.
       ``(VI) Partnering with local businesses to create flexible 
     work-hour programs so that students can balance work and 
     school.
       ``(VII) Offering time management seminars or personal 
     coaches to help students improve their time management 
     skills.
       ``(VIII) Any other activities the Secretary believes will 
     promote retention of students attending eligible 
     institutions.''.

     SEC. 303. FEDERAL TRIO PROGRAM.

       Section 402A of the Higher Education Act of 1965 (20 U.S.C. 
     1070a-11) is amended--
       (1) in subsection (b)(3)--
       (A) in subparagraph (A), by striking ``$170,000'' and 
     inserting ``$190,000'';
       (B) in subparagraph (B), by striking ``$180,000'' and 
     inserting ``$200,000''; and
       (C) in subparagraph (C), by striking ``$190,000'' and 
     inserting ``$220,000''; and
       (2) in subsection (f), by striking the first sentence and 
     inserting the following: ``For the purpose of making grants 
     and contracts under this chapter, there are authorized to be 
     appropriated $1,250,000,000 for fiscal year 2004 and such 
     sums as may be necessary for each of the 5 succeeding fiscal 
     years''.

     SEC. 304. GEAR UP.

       (a) Early Intervention and College Awareness Program 
     Authorized.--Section 404A(b) of the Higher Education Act of 
     1965 (20 U.S.C. 1070a-21(b)) is amended--
       (1) in paragraph (1), by inserting ``6 year'' after ``shall 
     make''; and
       (2) by adding at the end the following:
       ``(3) Current grantees.--An eligible entity that has 
     received an award under this section, has performed 
     successfully, and still has need for an award may apply for 
     an additional award under this section.''.
       (b) Authorization of Appropriations.--Section 404H of the 
     Higher Education Act of 1965 (20 U.S.C. 1070a-28) is amended 
     by striking ``$200,000,000 for fiscal year 1999 and such sums 
     as may be necessary for each of the 4 succeeding fiscal 
     years'' and inserting ``$500,000,000 for fiscal year 2004 and 
     such sums as may be necessary for each of the 5 succeeding 
     fiscal years''.

     SEC. 305. LEVERAGING EDUCATIONAL ASSISTANCE PARTNERSHIP 
                   PROGRAM.

       (a) Authorization of Appropriations.--Section 415A(b) of 
     the Higher Education Act of 1965 (20 U.S.C. 1070c(b)) is 
     amended by striking paragraphs (1) and (2) and inserting the 
     following:
       ``(1) In general.--There are authorized to be appropriated 
     $200,000,000 for fiscal year 2004, and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.
       ``(2) Reservation.--For any fiscal year for which the 
     amount appropriated under paragraph (1)--
       ``(A) exceeds $30,000,000, the excess amount up to and 
     including $67,000,000 shall be available to carry out section 
     415E; and
       ``(B) exceeds $67,000,000, the excess amount shall be 
     available to carry out section 415F.''.
       (b) Increase in Maximum Student Grants.--Section 415C(b)(2) 
     of the Higher Education Act of 1965 (20 U.S.C. 1070c-2(b)(2)) 
     is amended by striking ``$5,000'' and inserting ``$12,500''.
       (c) Special Leveraging Educational Assistance Partnership 
     Program.--Section 415E(a) of the Higher Education Act of 1965 
     (20 U.S.C. 1070c-3a(a) is amended by striking ``section 
     415A(b)(2)'' and inserting ``section 415A(b)(2)(A)''.
       (d) Grants for Access and Persistence.--Subpart 4 of part A 
     of title IV of the Higher Education Act of 1965 (20 U.S.C. 
     1070c et seq.) is amended--
       (1) by redesignating section 415F as section 415G; and
       (2) by inserting after section 415E the following:

     ``SEC. 415F. GRANTS FOR ACCESS AND PERSISTENCE.

       ``(a) Authorization.--From amounts reserved under section 
     415A(b)(2)(B) for each fiscal year, the Secretary shall make 
     supplemental allotments among States in the same manner as 
     the Secretary makes allotments among States under section 
     415B to pay the Federal share of the cost of the authorized 
     activities under subsection (c).
       ``(b) Application.--
       ``(1) In general.--
       ``(A) Submission.--A State that desires to receive a 
     supplemental allotment under this section shall submit an 
     application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require.
       ``(B) Content.--An application submitted under subparagraph 
     (A) shall include both of the following:
       ``(i) A description of the State's plan for using the 
     supplemental allotment funds.
       ``(ii) Assurances that the State will provide matching 
     funds, from State, institutional, philanthropic, or private 
     funds, of not less than 33.33 percent of the cost of carrying 
     out the activities under subsection (c). The State shall 
     specify the methods by which matching funds will be paid and 
     include provisions designed to ensure that funds provided 
     under this section will be used to supplement, and not 
     supplant, non-Federal funds available for carrying out the 
     activities under subsection (c).
       ``(C) Approval.--The Secretary shall approve and fund 
     applications that meet the requirements of this section.
       ``(2) State agency.--The State agency that submits an 
     application for a State under section 415C(a) shall be the 
     same State agency that submits an application under paragraph 
     (1) for such State.
       ``(3) Partnership.--
       ``(A) Mandatory partners.--In applying for a supplemental 
     allotment under this section, the State agency shall apply 
     for a supplemental allotment in partnership with not less 
     than 1 public and 1 private degree granting institution of 
     higher education that are located in the State.
       ``(B) Permissive partners.--In addition to applying for a 
     supplemental allotment under this section in partnership with 
     degree granting institutions of higher education, a State 
     agency may also apply in partnership with philanthropic 
     organizations that are located in the State and private 
     corporations that do business in the State.
       ``(c) Authorized Activities.--
       ``(1) In general.--
       ``(A) Establishment of program.--Each State receiving a 
     supplemental allotment under this section shall use the funds 
     to establish a program to award access and persistence grants 
     to eligible low-income students in order to increase the 
     amount of financial assistance such students receive

[[Page S13402]]

     under this subpart for undergraduate education expenses.
       ``(B) Amount.--
       ``(i) Partnerships with less than a majority of 
     institutions in the state.--

       ``(I) In general.--In the case where a State receiving a 
     supplemental allotment under this section is in a partnership 
     described in subparagraph (A) or (B) of subsection (d)(2), 
     the amount of an access and persistence grant awarded by such 
     State shall be not less than the amount that is equal to the 
     average undergraduate tuition and mandatory fees at 4-year 
     public institutions of higher education in the State where 
     the student resides (less any other government sponsored 
     grant amount or scholarship amount, or both, received by the 
     student) and such amount shall be used toward the cost of 
     attendance at an institution of higher education, located in 
     the State, that is a partner in the program.
       ``(II) Cost of attendance.--A State that has a program, 
     apart from the program under this section, of providing 
     eligible low-income students with grants that are equal to 
     the average undergraduate tuition and mandatory fees at 4-
     year public institutions of higher education in the State, 
     may increase the amount of access and persistence grants 
     awarded by such State to an amount that is equal to the 
     average cost of attendance at 4-year public institutions of 
     higher education in the State.

       ``(ii) Partnership with a majority of institutions in the 
     state.--In the case where a State receiving a supplemental 
     allotment under this section is in a partnership described in 
     subsection (d)(2)(C), the amount of an access and persistence 
     grant awarded by such State shall be equal to the average 
     cost of attendance at 4-year public institutions of higher 
     education in the State where the student resides (less any 
     other government sponsored grant amount or scholarship 
     amount, or both, received by the student) and such amount 
     shall be used by the student to attend an institution of 
     higher education, located in the State, that is a partner in 
     the program.
       ``(2) Eligible low-income students.--
       ``(A) In general.--Each State receiving a supplemental 
     allotment under this section shall--
       ``(i) annually make a determination of which students in 
     grade 7 through grade 12 in the State are eligible to receive 
     an access and persistence grant if such students graduate 
     from secondary school and enroll at an institution of higher 
     education that is a partner in the program; and
       ``(ii) notify such students of their eligibility to receive 
     an access and persistence grant.
       ``(B) Priority.--In determining which students are eligible 
     to receive access and persistence grants, the State shall 
     give priority to students--
       ``(i) with an expected family contribution equal to zero 
     (as described in section 479(c));
       ``(ii) who are participating in, or have participated in, a 
     Federal, State, institutional, or community early 
     intervention program, as recognized by the State agency 
     administering the program; and
       ``(iii) who qualify for a free or reduced price lunch under 
     the Richard B. Russell National School Lunch Act (42 U.S.C. 
     1751 et seq.).
       ``(C) Content of notice.--The notification under 
     subparagraph (A)(ii) shall include--
       ``(i) information that a student's candidacy for an access 
     and persistence grant is enhanced through participation in an 
     early intervention program;
       ``(ii) information that the grant award shall be used 
     toward the cost of attendance at an institution of higher 
     education that is a partner in the program and therefore such 
     award is contingent upon the student's enrollment at such an 
     institution;
       ``(iii) an estimation of the amount of financial aid a 
     student awarded an access and persistence grant could expect 
     to receive, including an estimation of the amount of the 
     access and persistence grant and an estimation of the amount 
     of aid from the major Federal and State financial aid 
     programs; and
       ``(iv) instructions on how to apply for an access and 
     persistence grant.
       ``(3) Grant award.--If an eligible student, as determined 
     under paragraph (2), has been accepted to an institution of 
     higher education that is a partner in the program, the State 
     shall--
       ``(A) notify the student of the amount of the access and 
     persistence grant such student will receive if such student 
     enrolls at such institution; and
       ``(B) inform the student that the access and persistence 
     grant will be awarded and grant funds will be distributed 
     when such student enrolls at such institution.
       ``(4) Duration of award.--An eligible student that receives 
     an access and persistence grant under this section shall 
     receive such grant award for each year of such student's 
     undergraduate education.
       ``(d) Federal Share.--
       ``(1) In general.--The Federal share of the cost of the 
     authorized activities described in subsection (c) for any 
     fiscal year shall be not more than 66.66 percent.
       ``(2) Formula for federal share.--In awarding supplemental 
     allotments under this section, the Secretary shall provide a 
     match of the non-Federal funds provided by the State in 
     accordance with the following:
       ``(A) If a State applies for a supplemental allotment under 
     this section in partnership with only less than a majority of 
     the degree granting institutions of higher education located 
     in the State, then the Federal share shall be equal to 50 
     percent of the cost of carrying out the activities under 
     subsection (c).
       ``(B) If a State applies for a supplemental allotment under 
     this section in partnership with less than a majority of the 
     degree granting institutions of higher education located in 
     the State, philanthropic organizations located in the State, 
     and private corporations doing business in the State, then 
     the Federal share shall be equal to 57 percent of the cost of 
     carrying out the activities under subsection (c).
       ``(C) If a State applies for a supplemental allotment under 
     this section in partnership with a majority of the degree 
     granting institutions of higher education located in the 
     State, philanthropic organizations located in the State, and 
     private corporations doing business in the State, then the 
     Federal share shall be equal to 66.66 percent of the cost of 
     carrying out the activities under subsection (c).
       ``(e) Applicability Rule.--The provisions of this subpart 
     which are not inconsistent with this section shall apply to 
     the program authorized by this section.
       ``(f) Maintenance of Effort Requirement.--Each State 
     receiving a supplemental allotment under this section for a 
     fiscal year shall provide the Secretary an assurance that the 
     aggregate amount expended per student or the aggregate 
     expenditures by the State, from funds derived from non-
     Federal sources, for the authorized activities described in 
     subsection (c) for the preceding fiscal year were not less 
     than the amount expended per student or the aggregate 
     expenditure by the State for the activities for the second 
     preceding fiscal year.''.

        TITLE IV--OPPORTUNITIES AT HISPANIC-SERVING INSTITUTIONS

     SEC. 401. POSTBACCALAUREATE OPPORTUNITIES FOR HISPANIC 
                   AMERICANS.

       (a) Establishment of Program.--Title V of the Higher 
     Education Act of 1965 (20 U.S.C. 1101 et seq.) is amended--
       (1) by redesignating part B as part C;
       (2) by redesignating sections 511 through 518 as sections 
     521 through 528, respectively; and
       (3) by inserting after section 505 the following:

  ``PART B--PROMOTING POSTBACCA- LAUREATE OPPORTUNITIES FOR HISPANIC 
                               AMERICANS

     ``SEC. 511. FINDINGS AND PURPOSES.

       ``(a) Findings.--Congress finds the following:
       ``(1) According to the United States Census, by the year 
     2050, 1 in 4 Americans will be of Hispanic origin.
       ``(2) Despite the dramatic increase in the Hispanic 
     population in the United States, the National Center for 
     Education Statistics reported that in 1999, Hispanics 
     accounted for only 4 percent of the master's degrees, 3 
     percent of the doctor's degrees, and 5 percent of first-
     professional degrees awarded in the United States.
       ``(3) Although Hispanics constitute 10 percent of the 
     college enrollment in the United States, they comprise only 3 
     percent of instructional faculty in college and universities.
       ``(4) The future capacity for research and advanced study 
     in the United States will require increasing the number of 
     Hispanics pursuing postbaccalaureate studies.
       ``(5) Hispanic-serving institutions are leading the Nation 
     in increasing the number of Hispanics attaining graduate and 
     professional degrees.
       ``(6) Among Hispanics who received master's degrees in 
     1999-2000, 25 percent earned them at Hispanic-serving 
     institutions.
       ``(7) Between 1991 and 2000, the number of Hispanic 
     students earning master's degrees at Hispanic-serving 
     institutions grew 136 percent, the number receiving doctor's 
     degrees grew by 85 percent, and the number earning first-
     professional degrees grew by 47 percent.
       ``(8) It is in the National interest to expand the capacity 
     of Hispanic-serving institutions to offer graduate and 
     professional degree programs.
       ``(9) Research is a key element in graduate education and 
     undergraduate preparation, particularly in science and 
     technology, and Congress desires to strengthen the role of 
     research at Hispanic serving-institutions. University 
     research, whether performed directly or through a 
     university's nonprofit research institute or foundation, is 
     considered an integral part of the institution and mission of 
     the university.
       ``(b) Purposes.--The purposes of this part are--
       ``(1) to expand postbaccalaureate educational opportunities 
     for, and improve the academic attainment of, Hispanic 
     students; and
       ``(2) to expand and enhance the postbaccalaureate academic 
     offerings of high quality that are educating the majority of 
     Hispanic college students and helping large numbers of 
     Hispanic students and low-income individuals complete 
     postsecondary degrees.

     ``SEC. 512. PROGRAM AUTHORITY AND ELIGIBILITY.

       ``(a) Program Authorized.--Subject to the availability of 
     funds appropriated to carry out this part, the Secretary 
     shall award competitive grants to eligible institutions.
       ``(b) Eligibility.--For the purposes of this part, an 
     `eligible institution' means an institution of higher 
     education that--

[[Page S13403]]

       ``(1) is a Hispanic-serving institution (as defined under 
     section 502); and
       ``(2) offers a postbaccalaureate certificate or degree 
     granting program.

     ``SEC. 513. AUTHORIZED ACTIVITIES.

       ``Grants awarded under this part shall be used for 1 or 
     more of the following activities:
       ``(1) Purchase, rental, or lease of scientific or 
     laboratory equipment for educational purposes, including 
     instructional and research purposes.
       ``(2) Construction, maintenance, renovation, and 
     improvement in classroom, library, laboratory, and other 
     instructional facilities, including purchase or rental of 
     telecommunications technology equipment or services.
       ``(3) Purchase of library books, periodicals, technical and 
     other scientific journals, microfilm, microfiche, and other 
     educational materials, including telecommunications program 
     materials.
       ``(4) Support for needy postbaccalaureate students 
     including outreach, academic support services, mentoring, 
     scholarships, fellowships, and other financial assistance to 
     permit the enrollment of such students in postbaccalaureate 
     certificate and degree granting programs.
       ``(5) Support of faculty exchanges, faculty development, 
     faculty research, curriculum development, and academic 
     instruction.
       ``(6) Creating or improving facilities for Internet or 
     other distance learning academic instruction capabilities, 
     including purchase or rental of telecommunications technology 
     equipment or services.
       ``(7) Collaboration with other institutions of higher 
     education to expand postbaccalaureate certificate and degree 
     offerings.
       ``(8) Other activities proposed in the application 
     submitted pursuant to section 514 that--
       ``(A) contribute to carrying out the purposes of this part; 
     and
       ``(B) are approved by the Secretary as part of the review 
     and acceptance of such application.

     ``SEC. 514. APPLICATION AND DURATION.

       ``(a) Application.--Any eligible institution may apply for 
     a grant under this part by submitting an application to the 
     Secretary at such time and in such manner as determined by 
     the Secretary. Such application shall demonstrate how the 
     grant funds will be used to improve postbaccalaureate 
     education opportunities for Hispanic and low-income students 
     and will lead to such students' greater financial 
     independence.
       ``(b) Duration.--Grants under this part shall be awarded 
     for a period not to exceed 5 years.
       ``(c) Limitation.--The Secretary shall not award more than 
     1 grant under this part in any fiscal year to any Hispanic-
     serving institution.''.
       (b) Cooperative Arrangements.--Section 524 of the Higher 
     Education Act of 1965 (as redesignated by subsection (a)(2)) 
     is amended by inserting ``and section 513'' after ``section 
     503''.
       (c) Authorization of Appropriations.--Section 528(a) of the 
     Higher Education Act of 1965 (as redesignated by subsection 
     (a)(2)) is amended to read as follows:
       ``(a) Authorizations.--
       ``(1) Part a.--There are authorized to be appropriated to 
     carry out part A of this title $175,000,000 for fiscal year 
     2004 and such sums as may be necessary for each of the 5 
     succeeding fiscal years.
       ``(2) Part b.--There are authorized to be appropriated to 
     carry out part B of this title $125,000,000 for fiscal year 
     2004 and such sums as may be necessary for each of the 5 
     succeeding fiscal years.''.
       (d) Conforming Amendments.--Title V of the Higher Education 
     Act of 1965 (20 U.S.C. 1101 et seq.) is amended--
       (1) in section 502--
       (A) in subsection (a)(2)(A)(ii), by striking ``section 
     512(b)'' and inserting ``section 522(b)''; and
       (B) in subsection (b)(2), by striking ``section 512(a)'' 
     and inserting ``section 522(a)'';
       (2) in section 521(c)(6) (as redesignated by subsection 
     (a)(2)), by striking ``section 516'' and inserting ``section 
     526''; and
       (3) in section 526 (as redesignated by subsection (a)(2)), 
     by striking ``section 518'' and inserting ``section 528''.

     SEC. 402. DEFINITIONS.

       Section 502(a) of the Higher Education Act of 1965 (20 
     U.S.C. 1101a(a)) is amended--
       (1) in paragraph (5)--
       (A) in subparagraph (A), by inserting ``and'' after the 
     semicolon;
       (B) in subparagraph (B), by striking ``; and'' and 
     inserting a period; and
       (C) by striking subparagraph (C); and
       (2) by striking paragraph (7).

     SEC. 403. AUTHORIZED ACTIVITIES.

       Section 503(b)(7) of the Higher Education Act of 1965 (20 
     U.S.C. 1101b(b)(7)) is amended to read as follows:
       ``(7) Articulation agreements and student support programs 
     designed to facilitate the transfer from 2-year to 4-year 
     institutions.''.

     SEC. 404. ELIMINATION OF WAIT-OUT PERIOD.

       Section 504(a) of the Higher Education Act of 1965 (20 
     U.S.C. 1101c(a)) is amended to read as follows:
       ``(a) Award Period.--The Secretary may award a grant to a 
     Hispanic-serving institution under this title for 5 years.''.

     SEC. 405. APPLICATION PRIORITY.

       Section 521(d) of the Higher Education Act of 1965 (as 
     redesignated by section 401(a)(2)) is amended by striking 
     ``(from funds other than funds provided under this title)''.

         TITLE V--HISTORICALLY BLACK COLLEGES AND UNIVERSITIES

     SEC. 501. PROFESSIONAL OR GRADUATE INSTITUTIONS.

       Section 326 of the Higher Education Act of 1965 (20 U.S.C. 
     1063b) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by inserting ``business 
     administration, computer or information science, nursing and 
     allied health,'' after ``engineering,''; and
       (B) in paragraph (2), by striking ``$1,000,000'' both 
     places such term appears and inserting ``$1,500,000'';
       (2) in subsection (d)(2), by striking ``$1,000,000'' and 
     inserting ``$1,500,000'';
       (3) in subsection (e)--
       (A) in paragraph (1)--
       (i) in subparagraph (Q), by striking ``and'' after the 
     semicolon;
       (ii) in subparagraph (R), by striking the period at the end 
     and inserting a semicolon; and
       (iii) by adding at the end the following:
       ``(S) Alabama State University qualified graduate programs;
       ``(T) Albany State University qualified graduate programs;
       ``(U) Alcorn State University qualified graduate programs;
       ``(V) Bowie State University qualified graduate programs;
       ``(W) Coppin State University qualified graduate programs;
       ``(X) Delaware State University qualified graduate 
     programs;
       ``(Y) Feyetteville State University qualified graduate 
     programs;
       ``(Z) Fisk University qualified graduate programs;
       ``(AA) Grambling State University qualified graduate 
     programs;
       ``(BB) Kentucky State University qualified graduate 
     programs;
       ``(CC) Langston University qualified graduate programs;
       ``(DD) Lincoln University (MO) qualified graduate programs;
       ``(EE) Prairie View A&M University qualified graduate 
     programs;
       ``(FF) South Carolina State University qualified graduate 
     programs;
       ``(GG) Southern University & A&M College qualified graduate 
     programs;
       ``(HH) University of the District of Columbia qualified 
     graduate programs; and
       ``(II) Virginia State University qualified graduate 
     programs.''; and
       (B) in paragraph (2)--
       (i) in subparagraph (A), by inserting ``business 
     administration, computer or information science, nursing and 
     allied health,'' after ``physical or natural sciences,''; and
       (ii) in subparagraph (B), by striking ``not more than 10 
     percent'' and inserting ``not more than 30 percent'';
       (4) by striking subsection (f) and inserting the following:
       ``(f) Funding Rule.--Subject to subsection (g), of the 
     amount appropriated to carry out this section for any fiscal 
     year--
       ``(1) the first $26,600,000 (or any lesser amount 
     appropriated) shall be available only for the purposes of 
     making grants to institutions or programs described in 
     subparagraphs (A) through (P) of subsection (e)(1);
       ``(2) any amount in excess of $26,600,000, but not in 
     excess of $28,600,000, shall be available for the purpose of 
     making grants to institutions or programs described in 
     subparagraphs (Q) and (R) of subsection (e)(1);
       ``(3) any amount in excess of $28,600,000, but not in 
     excess of $45,600,000, shall be available for the purpose of 
     making grants to institutions or programs described in 
     subparagraphs (S) through (II) of subsection (e)(1);
       ``(4) any amount in excess of $45,600,000, but not in 
     excess of $63,100,000, shall be available for the purpose of 
     increasing the grant amounts to not more than $1,500,000 to 
     each institution or program described in subparagraphs (A) 
     through (II) of subsection (e)(1); and
       ``(5) any amount in excess of $63,100,000, shall be made 
     available to each of the institutions or programs identified 
     in subparagraphs (A) through (II) of subsection (e)(1) 
     pursuant to a formula developed by the Secretary that uses 
     the following elements:
       ``(A) The ability of the institution to match Federal funds 
     with non-Federal funds.
       ``(B) The number of students enrolled in the programs for 
     which the eligible institution received funding under this 
     section in the previous year.
       ``(C) The average cost of education per student, for all 
     full-time graduate or professional students (or the 
     equivalent) enrolled in the eligible professional or graduate 
     school, or for doctoral students enrolled in the qualified 
     graduate programs.
       ``(D) The number of students in the previous year who 
     received their first professional or doctoral degree from the 
     programs for which the eligible institution received funding 
     under this section in the previous year.
       ``(E) The contribution, on a percent basis, of the programs 
     for which the institution is eligible to receive funds under 
     this section to the total number of African-Americans 
     receiving graduate or professional degrees in the professions 
     or disciplines related to the programs for the previous 
     year.''; and
       (5) in subsection (g), by striking ``paragraphs (2) and (3) 
     of subsection (f)'' and inserting ``subsection (f)''.

[[Page S13404]]

     SEC. 502. GRADUATE AND PROFESSIONAL DEGREE DEVELOPMENT 
                   PROGRAM.

       Part B of title III of the Higher Education Act of 1965 (20 
     U.S.C. 1060 et seq.) is amended--
       (1) by redesignating section 327 as section 328; and
       (2) by inserting after section 326 the following:

     ``SEC. 327. GRADUATE AND PROFESSIONAL DEGREE DEVELOPMENT 
                   PROGRAM.

       ``(a) Grant Authority.--The Secretary is authorized to 
     award grants to eligible historically Black colleges and 
     universities to enable such colleges and universities to--
       ``(1) develop masters, doctoral, or professional degree 
     programs; and
       ``(2) provide assistance, through fellowship awards, to 
     graduate students at such colleges and universities.
       ``(b) Eligible Grant Recipient.--Eligibility to receive 
     grants under this section is limited to historically Black 
     colleges and universities that are making a substantial 
     contribution to the education of African-Americans.
       ``(c) Application.--An eligible historically Black college 
     or university that desires to receive a grant under this 
     section shall submit an application to the Secretary that--
       ``(1) demonstrates how the grant funds will be used to 
     improve--
       ``(A) graduate educational opportunities for African-
     American and low-income students; and
       ``(B) the financial independence of such students;
       ``(2) provides, in the case of applications for grants in 
     excess of $500,000, the assurances required by subsection (g) 
     and specifies the manner in which the college or university 
     is going to pay the non-Federal share of the cost of the 
     application; and
       ``(3) contains such information as the Secretary may 
     require.
       ``(d) Priority.--In awarding grants under this section, the 
     Secretary shall give priority consideration to those eligible 
     historically Black colleges and universities desiring to 
     support programs and graduate students in areas of national 
     need or academic disciplines in which African-Americans are 
     underrepresented.
       ``(e) Use of Funds.--An eligible historically Black college 
     or university that receives a grant under this section may 
     use the grant funds for--
       ``(1) purchase, rental, or lease of equipment for 
     educational purposes, including instructional and research 
     purposes;
       ``(2) construction, maintenance, renovation, and 
     improvement in classroom, library, laboratory, and other 
     instructional facilities, including purchase or rental of 
     telecommunications technology equipment or services;
       ``(3) purchase of library books, periodicals, journals, 
     microfilm, microfiche, and other educational materials, 
     including telecommunications program materials;
       ``(4) scholarships, fellowships, and other financial 
     assistance for needy graduate and professional students to 
     permit the enrollment of the students in and completion of 
     the graduate or professional degree; and
       ``(5) assistance in the establishment or maintenance of an 
     institutional endowment to facilitate financial independence 
     pursuant to section 331.
       ``(f) Duration.--Grants shall be made for a period not to 
     exceed 5 years.
       ``(g) Funding Rule.--No grant in excess of $500,000 may be 
     made under this section unless the college or university 
     provides assurances that 50 percent of the cost of the 
     purposes for which the grant is made will be paid from non-
     Federal sources, except that no college or university shall 
     be required to match any portion of the first $500,000 of the 
     college or university's award from the Secretary.
       ``(h) Two Grants per Institution.--The Secretary may award 
     not more than 2 grants or an aggregate amount of $1,000,000 
     under this section in any fiscal year to any institution of 
     higher education or university system.
       ``(i) Institutional Choice.--The president or chancellor of 
     the college or university may select the program for which to 
     seek funding.
       ``(j) Authorization of Appropriations.--There are 
     authorized to be appropriated to carry out this section 
     $30,000,000 for fiscal year 2004 and such sums as may be 
     necessary for each of the 5 succeeding fiscal years.''.

     SEC. 503. AUTHORIZATION OF APPROPRIATIONS.

       (a) Grants to Institutions.--Section 323(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1062(a)) is amended by 
     striking ``section 360(a)(2)'' and inserting ``section 
     399(a)(2)(C)''.
       (b) Authorization.--Section 399(a) of the Higher Education 
     Act of 1965 (20 U.S.C. 1068h(a)) is amended--
       (1) in paragraph (2)--
       (A) in subparagraph (A), by striking ``section 326'' and 
     inserting ``sections 323 and 326'';
       (B) in subparagraph (B), by striking ``$35,000,000 for 
     fiscal year 1999, and such sums as may be necessary for each 
     of the 4 succeeding fiscal years'' and inserting 
     ``$75,000,000 for fiscal year 2004, and such sums as may be 
     necessary for each of the 5 succeeding fiscal years''; and
       (C) by adding at the end the following:
       ``(C) There are authorized to be appropriated to carry out 
     section 323, $250,000,000 for fiscal year 2004, and such sums 
     as may be necessary for each of the 5 succeeding fiscal 
     years'';
       (2) in paragraph (3), by striking ``$10,000,000 for fiscal 
     year 1999, and such sums as may be necessary for each of the 
     4 succeeding fiscal years'' and inserting ``$25,000,000 for 
     fiscal year 2004, and such sums as may be necessary for each 
     of the 5 succeeding fiscal years''; and
       (3) in paragraph (5), by striking ``$10,000,000 for fiscal 
     year 1999, and such sums as may be necessary for each of the 
     4 succeeding fiscal years'' and inserting ``$20,000,000 for 
     fiscal year 2004, and such sums as may be necessary for each 
     of the 5 succeeding fiscal years''.

     SEC. 504. PATSY T. MINK FELLOWSHIP PROGRAM.

       Part A of title VII of the Higher Education Act of 1965 (20 
     U.S.C. 1134 et seq.) is amended--
       (1) by redesignating subpart 4 as subpart 5;
       (2) by redesignating section 731 as section 741;
       (3) in section 741 (as redesignated by paragraph (2))--
       (A) in subsection (a), by striking ``and 3'' and inserting 
     ``3, and 4'';
       (B) in subsection (b), by striking ``and 3'' and inserting 
     ``3, and 4''; and
       (C) in subsection (d), by striking ``or 3'' and inserting 
     ``3, or 4''; and
       (4) by inserting after subpart 3 the following:

             ``Subpart 4--Patsy T. Mink Fellowship Program

     ``SEC. 731. PURPOSE AND DESIGNATION.

       ``(a) Purpose.--It is the purpose of this subpart to 
     provide, through eligible institutions, a program of 
     fellowship awards to assist highly qualified minorities and 
     women to acquire the doctoral degree, or highest possible 
     degree available, in academic areas in which such individuals 
     are underrepresented for the purpose of enabling such 
     individuals to enter the higher education professoriate.
       ``(b) Designation.--Each recipient of a fellowship award 
     from an eligible institution receiving a grant under this 
     subpart shall be known as a `Patsy T. Mink Graduate Fellow'.

     ``SEC. 732. DEFINITION OF ELIGIBLE INSTITUTION.

       ``In this subpart, the term `eligible institution' means an 
     institution of higher education, or a consortium of such 
     institutions, that offers a program of postbaccalaureate 
     study leading to a graduate degree.

     ``SEC. 733. PROGRAM AUTHORIZED.

       ``(a) Grants by Secretary.--
       ``(1) In general.--The Secretary shall award grants to 
     eligible institutions to enable such institutions to make 
     fellowship awards to individuals in accordance with the 
     provisions of this subpart.
       ``(2) Priority consideration.--In awarding grants under 
     this subpart, the Secretary shall consider the eligible 
     institution's prior experience in producing doctoral degree, 
     or highest possible degree available, holders who are 
     minorities and women, and shall give priority consideration 
     in making grants under this subpart to those eligible 
     institutions with a demonstrated record of producing 
     minorities and women who have earned such degrees.
       ``(b) Applications.--
       ``(1) In general.--An eligible institution that desires a 
     grant under this subpart shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may require.
       ``(2) Applications made on behalf.--
       ``(A) In general.--The following entities may submit an 
     application on behalf of an eligible institution:
       ``(i) A graduate school or department of such institution.
       ``(ii) A graduate school or department of such institution 
     in collaboration with an undergraduate college or university 
     of such institution.
       ``(iii) An organizational unit within such institution that 
     offers a program of postbaccalaureate study leading to a 
     graduate degree, including an interdisciplinary or an 
     interdepartmental program.
       ``(iv) A nonprofit organization with a demonstrated record 
     of helping minorities and women earn postbaccalaureate 
     degrees.
       ``(B) Nonprofit organizations.--Nothing in this paragraph 
     shall be construed to permit the Secretary to award a grant 
     under this subpart to an entity other than an eligible 
     institution.
       ``(c) Selection of Applications.--In awarding grants under 
     subsection (a), the Secretary shall--
       ``(1) take into account the number and distribution of 
     minority and female faculty nationally, as well as the 
     current and projected need for highly trained individuals in 
     all areas of the higher education professoriate;
       ``(2) take into account the number and distribution of 
     minority and female faculty nationally, as well as the 
     present and projected need for highly trained individuals in 
     academic career fields in which minorities and women are 
     underrepresented in the higher education professoriate; and
       ``(3) consider the need to prepare a large number of 
     minorities and women generally in academic career fields of 
     high national priority, especially in areas in which such 
     individuals are traditionally underrepresented in college and 
     university faculties.
       ``(d) Distribution and Amounts of Grants.--
       ``(1) Equitable distribution.--In awarding grants under 
     subsection (a), the Secretary shall, to the maximum extent 
     feasible, ensure an equitable geographic distribution of 
     awards and an equitable distribution among

[[Page S13405]]

     public and independent eligible institutions that apply for 
     grants under this subpart and that demonstrate an ability to 
     achieve the purpose of this subpart.
       ``(2) Special rule.--To the maximum extent practicable, the 
     Secretary shall use not less than 50 percent of the amount 
     appropriated pursuant to section 736 to award grants to the 
     following eligible institutions:
       ``(A) Eligible institutions that are eligible for 
     assistance under title III or title V.
       ``(B) Eligible institutions that are eligible institutions, 
     as defined in section 312.
       ``(C) Eligible institutions that are Tribal Colleges or 
     Universities, as defined in section 316.
       ``(D) Eligible institutions that are Alaska Native-serving 
     institutions, as defined in section 317.
       ``(E) Eligible institutions that are Native-Hawaiian-
     serving institutions, as defined in section 317.
       ``(F) Eligible institutions that are part B institutions, 
     as defined in section 322.
       ``(G) Eligible institutions that are eligible institutions, 
     as defined in section 502.
       ``(H) Consortia of eligible institutions that are 
     nonminority-serving institutions and eligible institutions 
     that are minority-serving institutions.
       ``(3) Allocation.--In awarding grants under this subpart, 
     the Secretary shall allocate appropriate funds to those 
     eligible institutions whose applications indicate an ability 
     to significantly increase the numbers of minorities and women 
     entering the higher education professoriate and that commit 
     institutional resources to the attainment of the purpose of 
     this subpart. An eligible institution that receives a grant 
     under this subpart shall make not less than 15 fellowship 
     awards.
       ``(4) Reallotment.--If the Secretary determines that an 
     eligible institution awarded a grant under this subpart is 
     unable to use all of the grant funds awarded to the 
     institution, the Secretary shall reallot, on such date during 
     each fiscal year as the Secretary may fix, the funds that are 
     not usable to other eligible institutions that demonstrate 
     that such institutions can use any reallocated grant funds to 
     make fellowship awards to individuals under this subpart.
       ``(e) Institutional Allowance.--
       ``(1) In general.--
       ``(A) Number of allowances.--In awarding grants under this 
     subpart, the Secretary shall pay to each eligible institution 
     awarded a grant, for each individual awarded a fellowship by 
     such institution under this subpart, an institutional 
     allowance.
       ``(B) Amount.--Except as provided in paragraph (3), an 
     institutional allowance shall be in an amount equal to, for 
     academic year 2005-2006 and succeeding academic years, the 
     amount of institutional allowance made to an institution of 
     higher education under section 715.
       ``(2) Use of funds.--Institutional allowances may be 
     expended in the discretion of the eligible institution and 
     may be used to provide, except as prohibited under paragraph 
     (4), academic support and career transition services for 
     individuals awarded fellowships by such institution.
       ``(3) Reduction.--The institutional allowance paid under 
     paragraph (1) shall be reduced by the amount the institution 
     charges and collects from a fellowship recipient for tuition 
     and other expenses as part of the recipient's instructional 
     program.
       ``(4) Use for overhead prohibited.--Funds made available 
     pursuant to this subpart may not be used for general 
     operational overhead of the academic department or 
     institution receiving funds under this subpart.

     ``SEC. 734. FELLOWSHIP RECIPIENTS.

       ``(a) Authorization.--An eligible institution that receives 
     a grant under this subpart shall use the grant funds to make 
     fellowship awards to minorities and women who are enrolled at 
     such institution in a doctoral degree, or highest possible 
     degree available, program and--
       ``(1) intend to pursue a career in instruction at--
       ``(A) an institution of higher education (as defined in 
     section 101);
       ``(B) an institution of higher education (as defined in 
     section 102(a)(1));
       ``(C) an institution of higher education outside the United 
     States, as that term is described in section 102(a)(2); or
       ``(D) a proprietary institution of higher education (as 
     defined in section 102(b)); and
       ``(2) sign an agreement with the Secretary agreeing to, 
     within 5 years of receiving the doctoral degree, or highest 
     possible degree available, begin employment at an institution 
     described in paragraph (1) for 1 year for each year of 
     fellowship assistance received under this subpart.
       ``(b) Failure To Comply.--If an individual who receives a 
     fellowship award under this subpart fails to comply with the 
     agreement signed pursuant to subsection (a)(2), then the 
     Secretary shall do 1 or both of the following:
       ``(1) Require the individual to repay all or the applicable 
     portion of the total fellowship amount awarded to the 
     individual by converting the balance due to a loan at the 
     interest rate applicable to loans made under part B of title 
     IV.
       ``(2) Impose a fine or penalty in an amount to be 
     determined by the Secretary.
       ``(c) Waiver and Modification.--
       ``(1) Regulations.--The Secretary shall promulgate 
     regulations setting forth criteria to be considered in 
     granting a waiver for the service requirement under 
     subsection (a).
       ``(2) Content.--The criteria under paragraph (1) shall 
     include whether compliance with the service requirement by 
     the fellowship recipient would be--
       ``(A) inequitable and represent a substantial hardship; or
       ``(B) deemed impossible because the individual is 
     permanently and totally disabled at the time of the waiver 
     request.
       ``(d) Amount of Fellowship Awards.--Fellowship awards under 
     this subpart shall consist of a stipend in an amount equal to 
     the level of support provided to the National Science 
     Foundation graduate fellows, except that such stipend shall 
     be adjusted as necessary so as not to exceed the fellow's 
     tuition and fees or demonstrated need (as determined by the 
     institution of higher education where the graduate student is 
     enrolled), whichever is greater.
       ``(e) Academic Progress Required.--An individual shall not 
     be eligible to receive a fellowship award--
       ``(1) except during periods in which such student is 
     enrolled, such student is maintaining satisfactory academic 
     progress in, devoting essentially full time to, study or 
     research in the pursuit of the degree for which the 
     fellowship support was awarded; and
       ``(2) if the student is engaged in gainful employment other 
     than part-time employment involved in teaching, research, or 
     similar activity determined by the institution to be 
     consistent with and supportive of the student's progress 
     toward the appropriate degree.

     ``SEC. 735. RULE OF CONSTRUCTION.

       ``Nothing in this subpart shall be construed to require an 
     eligible institution that receives a grant under this subpart 
     to--
       ``(1) grant a preference or to differentially treat any 
     applicant for a faculty position as a result of the 
     institution's participation in the program under this 
     subpart; and
       ``(2) hire a Patsy T. Mink Fellow who completes this 
     program and seeks employment at such institution.

     ``SEC. 736. AUTHORIZATION OF APPROPRIATIONS.

       ``There is authorized to be appropriated to carry out this 
     subpart $25,000,000 for fiscal year 2004 and such sums as may 
     be necessary for each of the 5 succeeding fiscal years.''.

   TITLE VI--RECRUITMENT OF TEACHERS TO TEACH AT TRIBAL COLLEGES OR 
                              UNIVERSITIES

     SEC. 601. LOAN REPAYMENT OR CANCELLATION FOR INDIVIDUALS WHO 
                   TEACH IN TRIBAL COLLEGES OR UNIVERSITIES.

       (a) Short Title.--This title may be cited as the ``Tribal 
     Colleges and Universities Teacher Loan Forgiveness Act''.
       (b) Perkins Loans.--
       (1) Amendment.--Section 465(a) of the Higher Education Act 
     of 1965 (20 U.S.C. 1087ee(a)) is amended--
       (A) in paragraph (2)--
       (i) in subparagraph (H), by striking ``or'' after the 
     semicolon;
       (ii) in subparagraph (I), by striking the period and 
     inserting ``; or''; and
       (iii) by adding at the end the following:
       ``(J) as a full-time teacher at a Tribal College or 
     University as defined in section 316(b).''; and
       (B) in paragraph (3)(A)(i), by striking ``or (I)'' and 
     inserting ``(I), or (J)''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall be effective for service performed during academic year 
     1998-1999 and succeeding academic years, notwithstanding any 
     contrary provision of the promissory note under which a loan 
     under part E of title IV of the Higher Education Act of 1965 
     (20 U.S.C. 1087aa et seq.) was made.
       (c) FFEL and Direct Loans.--Part G of title IV of the 
     Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 493C. LOAN REPAYMENT OR CANCELLATION FOR INDIVIDUALS 
                   WHO TEACH IN TRIBAL COLLEGES OR UNIVERSITIES.

       ``(a) Program Authorized.--The Secretary shall carry out a 
     program, through the holder of a loan, of assuming or 
     canceling the obligation to repay a qualified loan amount, in 
     accordance with subsection (b), for any new borrower on or 
     after the date of enactment of this section, who--
       ``(1) has been employed as a full-time teacher at a Tribal 
     College or University as defined in section 316(b); and
       ``(2) is not in default on a loan for which the borrower 
     seeks repayment or cancellation.
       ``(b) Qualified Loan Amounts.--
       ``(1) Percentages.--Subject to paragraph (2), the Secretary 
     shall assume or cancel the obligation to repay under this 
     section--
       ``(A) 15 percent of the amount of all loans made, insured, 
     or guaranteed after the date of enactment of this section to 
     a student under part B or D, for the first or second year of 
     employment described in subsection (a)(1);
       ``(B) 20 percent of such total amount, for the third or 
     fourth year of such employment; and
       ``(C) 30 percent of such total amount, for the fifth year 
     of such employment.
       ``(2) Maximum.--The Secretary shall not repay or cancel 
     under this section more than $15,000 in the aggregate of 
     loans made, insured, or guaranteed under parts B and D for 
     any student.
       ``(3) Treatment of consolidation loans.--A loan amount for 
     a loan made under section 428C may be a qualified loan amount 
     for the purposes of this subsection only to the extent that 
     such loan amount was used to

[[Page S13406]]

     repay a loan made, insured, or guaranteed under part B or D 
     for a borrower who meets the requirements of subsection (a), 
     as determined in accordance with regulations prescribed by 
     the Secretary.
       ``(c) Regulations.--The Secretary is authorized to issue 
     such regulations as may be necessary to carry out the 
     provisions of this section.
       ``(d) Construction.--Nothing in this section shall be 
     construed to authorize any refunding of any repayment of a 
     loan.
       ``(e) Prevention of Double Benefits.--No 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. 12571 et seq.).
       ``(f) Definition.--For purposes of this section, the term 
     `year', when applied to employment as a teacher, means an 
     academic year as defined by the Secretary.''.

     SEC. 602. AMOUNTS FORGIVEN NOT TREATED AS GROSS INCOME.

       The amount of any loan that is assumed or canceled under an 
     amendment made by this title shall not, consistent with 
     section 108(f) of the Internal Revenue Code of 1986, be 
     treated as gross income for Federal income tax purposes.

  Mr. DODD. Mr. President, I rise today with Senators Kennedy, 
Bingaman, Reed, Clinton and Murray to introduce the Democratic proposal 
to reauthorize the Higher Education Act, the College Quality, 
Affordability and Diversity Improvement Act of 2003 (QUAD).
  The Higher Education Act authorizes the Federal Government's major 
activities as they relate to financial assistance for students 
attending colleges and universities. It provides aid to institutions of 
higher education, services to help students complete high school and 
enter and succeed in postsecondary education, and mechanisms to improve 
the training of teachers.
  According to a recent CRS report, tuition went up last year at four-
year public universities from 1.9 percent in New York to 23.8 percent 
in Massachusetts. In Connecticut, tuition went up 8.1 percent. 
According to the College Board, the average cost of attending a public 
four-year college including tuition, fees, room and board is over 
$9,000. For private four-year colleges, the average cost is over 
$24,000. Another study indicates that 29 percent of an average family's 
income goes toward public university tuition payments and 41 percent of 
an average family's income goes toward private university tuition. In 
comparison, the average family's mortgage payment represents 32 percent 
of the annual income.
  The simple fact is that many parents are deeply worried about how 
they are going to pay for their children's higher education. Constant 
hikes in tuition are not only a source of concern for parents, in some 
cases they are a source of panic. The legislation we are introducing 
today is an attempt to alleviate this worry and help working parents 
and working students afford the high cost of college. We do this in a 
number of ways.
  The QUAD Act will increase the amount of Pell grants available to 
working families. Two decades ago, Pell grants covered 84 percent of 
average costs at four-year universities; today they cover less than 30 
percent. This bill will reverse this downward trend by raising the 
maximum Pell Grant for students by $450, from $4,050 to $4,500.
  The bill works through the tax code and student loans to make sure 
students are getting the financial support that they need on the most 
favorable terms. We eliminate origination fees on subsidized student 
loans, double the size of the Hope Credit, and allow college graduates 
a chance to refinance their consolidated loans so that they can take 
advantage of today's historically low interest rates.
  QUAD works to level the playing field in admissions by requiring 
universities and colleges to be more up-front about their admissions 
policies and by creating a grant program so that low-income students 
and minority students have available to them college test preparation 
programs that on average increase a student's SAT score by 100 points.
  The bill creates two new retention programs to ensure that students 
that start college complete their degrees. Low-income students are half 
as likely as upper income students to complete a bachelor's degree in 
four years. African-American students are half as likely as white 
students to graduate, and four in ten Hispanics who enroll in four-year 
institutions drop out within three years.
  QUAD will improve opportunities for undergraduates and graduate 
students at Minority Serving Institutions by creating new grant 
programs, removing regulatory burdens and increasing the funding levels 
of current initiatives. The bill also helps colleges and school 
districts recruit and train more highly qualified teachers and provides 
better training for principals and superintendents.
  In addition to all of this, QUAD directly addresses the problem of 
rising college costs. This bill puts into place a requirement that 
states maintain their portion of higher education funding at 90 percent 
from fiscal year to fiscal year. If the Federal Government is going to 
make a commitment to providing more resources to higher education by 
increasing monies for student aid, it is only fair that we require 
states to maintain their current share of assistance. States should not 
be using our proposed increases in federal aid as an excuse to decrease 
their own spending levels. The states and the Federal Government should 
be working together on higher education, and not using one or the other 
as an excuse to reduce their share of the costs.
  This bill also creates incentives for colleges to cut costs. QUAD 
creates a demonstration program to provide seed money to colleges and 
universities that want to explore innovative ways to reduce costs and 
pass savings on to students. This can be accomplished across 
universities by pooling resources, making joint purchase of supplies or 
employee benefits, and creating joint degree programs.
  Recently, a 20-member consortium of Wisconsin universities spent 
$285,000 on staff and resources to find a way to purchase health care 
jointly. In the first year, they realized a savings of $3.8 million. 
That is a pretty impressive return on an investment of $285,000. 
Building on this type of initiative, our bill provides grants of 
$200,000 to consortia in other states around the country to incentivize 
these same kinds of cost-cutting measures, measures that have no effect 
on academic mission or quality of student life.
  In the end, it is essential in this reauthorization that we do 
everything we can to ensure that qualified students are not being 
locked out of college. The economic costs for families would be 
immense. A full-time worker with a bachelor's degree earns about 60 
percent more than a full-time worker with only a high school diploma. 
Over a lifetime, the gap in earnings exceeds $1 million.
  I hope our colleagues who are not cosponsoring this bill will give it 
serious consideration. By working together, I believe that the Senate 
as a body can act to ensure that every young person in our Nation has 
an opportunity to rise as high as their talents, dreams and 
determination will take them.
  Mr. BINGAMAN. Mr. President, I rise today in support of the College 
Quality, Affordability and Diversity Improvement Act of 2003, or QUAD, 
introduced by Senator Kennedy and cosponsored by Senators Dodd, Murray, 
Reed, Clinton, and myself.
  Since 1998, when Congress last reauthorized the Higher Education Act, 
enrollment in institutions of higher education has risen to an all-time 
high, growing by nearly one million students. Half of these new 
enrollments are minority students, nearly 200,000 of which are of 
Hispanic origin. Projections show that enrollment in higher education 
will only continue to grow in the coming years. The increased demand 
for a college degree is due much in part to the changing economy. Those 
with a bachelor's degree now make 75 percent more than those without, 
and jobs requiring some post-secondary education are expected to 
account for over 40 percent of total job growth this decade.
  While the demand for a college degree has increased, so too has the 
cost of college, and rather drastically. These increases severely limit 
access for many qualified students. For the 2002-2003 school year, 
four-year public universities reported an average tuition increase of 
over 14 percent. This comes on top of an almost ten percent increase in 
average tuition last year. Just three years ago the average increase 
was just four percent. For families in the lowest income quartile, 
average public university costs now consume 62 percent of their income. 
In the

[[Page S13407]]

early 1970's it was only 42 percent. What's more, the purchasing power 
of the Pell grant has declined. Today, Pell Grants cover only 40 
percent of average fixed costs at four-year public colleges. Twenty 
years ago, they covered 80 percent of costs.
  Every American should have the opportunity to realize his or her full 
potential, regardless of the depth of their pocketbook or the size of 
their parents' wallet. It is time for Congress to step up and meet the 
challenge: we must do more to help qualified students attend and finish 
college.
  Currently, 40 percent of all whites ages 18-24 are pursuing post-
secondary education, compared with only 30 percent of African-Americans 
and 16 percent of Hispanics of the same age. Those disadvantaged 
students who do start college often do not finish: low-income students 
are half as likely as upper income students to complete a bachelor's 
degree in four years; four in ten Hispanic students enrolled in four-
year institutions drop out within three years of initial enrollment.
  The College Quality, Affordability, and Diversity Improvement Act 
will help low-income and minority students get into college. QUAD 
increases funding to critical programs including GEAR Up, TRIO and 
LEAP. It improves access for low-income students through the creation 
of a new grant program for proven-effective test prep programs to 
provide free tutoring for college entrance exams to low-income 
students. It improves access and awareness for low-income students by 
creating a partnership among the federal government, the states, 
colleges, philanthropies, and corporations to provide low-income 
students with early information and an early assurance of financial 
access to college.

  But Mr. President, we cannot simply help a student get into and pay 
for college, we must help them stay in college and earn their degree. 
Of the 16 percent of 18-24 year old Hispanics enrolling in college, a 
mere 40 percent actually complete their degree. Similarly, only 38 
percent of African-American students that enroll in college complete 
their degree. QUAD will help low-income and minority students complete 
their education through the creation of two new retention programs. The 
first program provides grants to colleges and universities, which serve 
high-proportions of low-income students to implement innovative 
programs to provide students with the support they need to persist and 
graduate. The second program requires schools with large discrepancies 
in disaggregated graduation rates to increase their investment in 
support services to improve retention. QUAD also increases funding for 
minority serving institutions, and creates new grant programs to 
encourage minority students to pursue graduate education at minority 
serving institutions.
  Minorities make up an increasing proportion of the United States 
population, but they continue to severely lag behind white students in 
completing both undergraduate and particularly graduate degrees. 
Minority Serving Institutions are serving an increasing proportion of 
minorities, and can help decrease this disparity. Among Hispanics who 
received master's degrees in 1999-2000, 25 percent attained them at 
Hispanic Serving Institutions and in the past ten years, the number of 
Hispanic students receiving master's degrees at HSIs grew by 136 
percent, the number receiving doctoral degrees grew by 85 percent, and 
the number earning first time professional degrees grew by 47 percent.
  This past May, I proposed the Next Generation Hispanic-Serving 
Institutions Act, S. 1190. Under this act, the burdensome regulatory 
barriers for the 18 Hispanic Serving Institutions in New Mexico and 
more than 190 HSIs nationally would be removed and opportunities for 
students at HSIs would be greatly expanded. QUAD takes up this effort, 
increasing funding for current grants to HSIs and creating a new grant 
program for graduate programs at HSIs. The grant program would 
authorize a total of $300 million in fiscal year 2005 and such sums as 
may be necessary in future years. Grants under this program would help 
schools improve instructional facilities, purchase instruction and 
telecommunications materials, give support to needy post baccalaureate 
students, improve distance learning and other telecommunications 
capabilities, collaborate with other institutions of higher education 
to expand programs, and support faculty and curriculum development.
  QUAD will also help to attract and retain high quality teachers at 
tribal universities. This past February, Senator Daschle and I 
introduced legislation that would create a loan forgiveness program for 
individuals who choose to teach at tribal colleges and universities. 
QUAD includes this legislation, S. 378.
  Another component of QUAD that I am proud to have worked on is the 
teacher quality provisions of Title II. Since my involvement in the 
accountability sections of Title II during the last reauthorization of 
the Higher Education Act, we have worked to increase the bar for 
teacher quality. QUAD will greatly improve the training and recruitment 
of teachers by expanding and strengthening teacher-training programs to 
help teacher preparation institutions feed more qualified teachers into 
the classrooms. These improvements will help States and school 
districts meet the goal outlined in the No Child Left Behind Act of 
ensuring a highly qualified teacher in every classroom.
  QUAD will help colleges and school districts recruit and train more 
teachers with higher quality programs, and provide better training for 
in-service principals and superintendents. QUAD strengths provisions of 
HEA to focus on improving the quality of programs and services to 
teachers by ensuring that teacher preparation courses provide teachers 
with the specific skills and supports they need to succeed in the 
classroom, such as training necessary to help all students achieve high 
standards, including children with disabilities and limited English 
proficient students, and the integration of state standards and 
accountability in the classroom. QUAD supports innovation by 
establishing new financial incentive programs to professionalize the 
field of teaching, and attract and retain more individuals in the 
classroom. QUAD will also help to attract teachers to where they are 
needed most by increasing the amount of student loan forgiveness for 
teachers working in high-need, high-demand areas. And QUAD helps to 
better prepare teachers to use technology in the classroom by 
increasing funding for the Preparing Tomorrow's Teachers to Use 
Technology program.
  It is time for Congress to step up and meet the challenge: We must do 
more to help qualified students attend and finish college. I know that 
my colleagues will take this proposal under serious consideration and I 
look forward to working with them on the reauthorization of the Higher 
Education Act this coming year.

                          ____________________