[Congressional Record Volume 153, Number 131 (Thursday, September 6, 2007)]
[House]
[Pages H10168-H10181]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CONFERENCE REPORT ON H.R. 2669, COLLEGE COST REDUCTION AND ACCESS ACT

  Mr. GEORGE MILLER of California submitted the following conference 
report and statement on the bill (H.R. 2669) to provide for 
reconciliation pursuant to section 601 of the concurrent resolution on 
the budget for fiscal year 2008:

                  Conference Report (H. Rept. 110-317)

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment to the Senate to the bill (H.R. 
     2669), to provide for reconciliation pursuant to section 601 
     of the concurrent resolution on the budget for fiscal year 
     2008, having met, after full and free conference, have agreed 
     to recommend and do recommend to their respective Houses as 
     follows:
       That the House recede from its disagreement to the 
     amendment of the Senate and agree to the same with an 
     amendment as follows:
       In lieu of the matter proposed to be inserted by the Senate 
     amendment, insert the following:

     SECTION 1. SHORT TITLE; REFERENCES.

       (a) Short Title.--This Act may be cited as the ``College 
     Cost Reduction and Access Act''.
       (b) References.--Except as otherwise expressly provided, 
     whenever in this Act an amendment or repeal is expressed in 
     terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Higher Education Act of 
     1965 (20 U.S.C. 1001 et seq.).
       (c) Effective Date.--Except as otherwise expressly 
     provided, the amendments made by this Act shall be effective 
     on October 1, 2007.
  TITLE I--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER 
                               EDUCATION

     SEC. 101. TUITION SENSITIVITY.

       (a) Amendment.--Section 401(b) (20 U.S.C. 1070a(b)) is 
     amended--
       (1) by striking paragraph (3); and
       (2) by redesignating paragraphs (4) through (9) as 
     paragraphs (3) through (8), respectively.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall be effective with respect to determinations of Federal 
     Pell Grant amounts for award years beginning on or after July 
     1, 2007.
       (c) Authorization and Appropriation of Funds.--There is 
     authorized to be appropriated, and there is appropriated, out 
     of any money in the Treasury not otherwise appropriated, for 
     the Department of Education to carry out the amendment made 
     by subsection (a), $11,000,000 for fiscal year 2008.

     SEC. 102. MANDATORY PELL GRANT INCREASES.

       (a) Extension of Authority.--Section 401(a) (20 U.S.C. 
     1070a(a)) is amended by striking ``fiscal year 2004'' and 
     inserting ``fiscal year 2017''.
       (b) Funding for Increases.--Section 401(b) (20 U.S.C. 
     1070a(b)) is amended by adding at the end the following new 
     paragraph:
       ``(9) Additional funds.--
       ``(A) In general.--There are authorized to be appropriated, 
     and there are appropriated, to carry out subparagraph (B) of 
     this paragraph (in addition to any other amounts appropriated 
     to carry out this section and out of any money in the 
     Treasury not otherwise appropriated) the following amounts:
       ``(i) $2,030,000,000 for fiscal year 2008;
       ``(ii) $2,090,000,000 for fiscal year 2009;
       ``(iii) $3,030,000,000 for fiscal year 2010;
       ``(iv) $3,090,000,000 for fiscal year 2011;
       ``(v) $5,050,000,000 for fiscal year 2012;
       ``(vi) $105,000,000 for fiscal year 2013;
       ``(vii) $4,305,000,000 for fiscal year 2014;
       ``(viii) $4,400,000,000 for fiscal year 2015;
       ``(ix) $4,600,000,000 for fiscal year 2016; and
       ``(x) $4,900,000,000 for fiscal year 2017.
       ``(B) Increase in federal pell grants.--The amounts made 
     available pursuant to subparagraph (A) of this paragraph 
     shall be used to increase the amount of the maximum Federal 
     Pell Grant for which a student shall be eligible during an 
     award year, as specified in the last enacted appropriation 
     Act applicable to that award year, by--
       ``(i) $490 for each of the award years 2008-2009 and 2009-
     2010;
       ``(ii) $690 for each of the award years 2010-2011 and 2011-
     2012; and
       ``(iii) $1,090 for award year 2012-2013.
       ``(C) Eligibility.--The Secretary shall only award an 
     increased amount of a Federal Pell Grant under this section 
     for any award year pursuant to the provisions of this 
     paragraph to students who qualify for a Federal Pell Grant 
     award under the maximum grant award enacted in the annual 
     appropriation Act for such award year without regard to the 
     provisions of this paragraph.
       ``(D) Formula otherwise unaffected.--Except as provided in 
     subparagraphs (B) and (C), nothing in this paragraph shall be 
     construed to alter the requirements of this section, or 
     authorize the imposition of additional requirements, for the 
     determination and allocation of Federal Pell Grants under 
     this section.
       ``(E) Ratable increases and decreases.--The amounts 
     specified in subparagraph (B) shall be ratably increased or 
     decreased to the extent that funds available under 
     subparagraph (A) exceed or are less than (respectively) the 
     amount required to provide the amounts specified in 
     subparagraph (B).
       ``(F) Use of fiscal year funds for award years.--The 
     amounts made available by subparagraph (A) for any fiscal 
     year shall be available and remain available for use under 
     subparagraph (B) for the award year that begins in such 
     fiscal year.''.

     SEC. 103. UPWARD BOUND.

       Section 402C is further amended by adding at the end the 
     following new subsection:
       ``(f) Additional Funds.--
       ``(1) Authorization and appropriation.--There are 
     authorized to be appropriated, and there are appropriated to 
     the Secretary, from funds not otherwise appropriated, 
     $57,000,000 for each of the fiscal years 2008 through 2011 to 
     carry out paragraph (2), except that any amounts that remain 
     unexpended for such purpose for each of such fiscal years may 
     be available for technical assistance and administration 
     costs for the Upward Bound program. The authority to award 
     grants under this subsection shall expire at the end of 
     fiscal year 2011.
       ``(2) Use of funds.--The amounts made available by 
     paragraph (1) shall be available to provide assistance to all 
     Upward Bound projects that did not receive assistance in 
     fiscal year 2007 and that have a grant score above 70. Such 
     assistance shall be made available in the form of 4-year 
     grants.''.

     SEC. 104. TEACH GRANTS.

       Part A of title IV (20 U.S.C. 1070 et seq.) is amended by 
     adding at the end the following new subpart:

                       ``Subpart 9--TEACH Grants

     ``SEC. 420L. DEFINITIONS.

       ``For the purposes of this subpart:
       ``(1) Eligible institution.--The term `eligible 
     institution' means an institution of higher education, as 
     defined in section 102, that the Secretary determines--
       ``(A) provides high quality teacher preparation and 
     professional development services, including extensive 
     clinical experience as a part of pre-service preparation;
       ``(B) is financially sound;
       ``(C) provides pedagogical course work, or assistance in 
     the provision of such coursework, including the monitoring of 
     student performance, and formal instruction related to the 
     theory and practices of teaching; and
       ``(D) provides supervision and support services to 
     teachers, or assistance in the provision of such services, 
     including mentoring focused on developing effective teaching 
     skills and strategies.
       ``(2) Post-baccalaureate.--The term `post-baccalaureate' 
     means a program of instruction for individuals who have 
     completed a baccalaureate degree, that does not lead to a 
     graduate degree, and that consists of courses required by a 
     State in order for a teacher candidate to receive a 
     professional certification or licensing credential that is 
     required for employment as a teacher in an elementary school 
     or secondary school in that State, except that such term 
     shall not include any program of instruction offered by an 
     eligible institution that offers a baccalaureate degree in 
     education.
       ``(3) Teacher candidate.--The term `teacher candidate' 
     means a student or teacher described in subparagraph (A) or 
     (B) of section 420N(a)(2).

     ``SEC. 420M. PROGRAM ESTABLISHED.

       ``(a) Program Authority.--
       ``(1) Payments required.--The Secretary shall pay to each 
     eligible institution such sums as may be necessary to pay to 
     each teacher candidate who files an application and agreement 
     in accordance with section 420N, and who qualifies under 
     paragraph (2) of section 420N(a), a TEACH Grant in the amount 
     of $4,000 for each academic year during which that teacher 
     candidate is in attendance at the institution.
       ``(2) References.--Grants made under paragraph (1) shall be 
     known as `Teacher Education Assistance for College and Higher 
     Education Grants' or `TEACH Grants'.
       ``(b) Payment Methodology.--
       ``(1) Prepayment.--Not less than 85 percent of any funds 
     provided to an eligible institution under subsection (a) 
     shall be advanced to the eligible institution prior to the 
     start of each payment period and shall be based upon an 
     amount requested by the institution as needed to pay teacher 
     candidates until such time as the Secretary determines and 
     publishes in the Federal Register with an opportunity for 
     comment, an alternative payment system that provides payments 
     to institutions in an accurate and timely manner, except that 
     this sentence shall not be construed to limit the authority 
     of the Secretary to place an institution on a reimbursement 
     system of payment.
       ``(2) Direct payment.--Nothing in this section shall be 
     interpreted to prohibit the Secretary from paying directly to 
     teacher candidates, in advance of the beginning of the 
     academic term, an amount for which teacher candidates are 
     eligible, in cases where the eligible

[[Page H10169]]

     institution elects not to participate in the disbursement 
     system required by paragraph (1).
       ``(3) Distribution of grants to teacher candidates.--
     Payments under this subpart shall be made, in accordance with 
     regulations promulgated by the Secretary for such purpose, in 
     such manner as will best accomplish the purposes of this 
     subpart. Any disbursement allowed to be made by crediting the 
     teacher candidate's account shall be limited to tuition and 
     fees and, in the case of institutionally-owned housing, room 
     and board. The teacher candidate may elect to have the 
     institution provide other such goods and services by 
     crediting the teacher candidate's account.
       ``(c) Reductions in Amount.--
       ``(1) Part-time students.--In any case where a teacher 
     candidate attends an eligible institution on less than a 
     full-time basis (including a teacher candidate who attends an 
     eligible institution on less than a half-time basis) during 
     any academic year, the amount of a grant under this subpart 
     for which that teacher candidate is eligible shall be reduced 
     in proportion to the degree to which that teacher candidate 
     is not attending on a full-time basis, in accordance with a 
     schedule of reductions established by the Secretary for the 
     purposes of this subpart, computed in accordance with this 
     subpart. Such schedule of reductions shall be established by 
     regulation and published in the Federal Register in 
     accordance with section 482 of this Act.
       ``(2) No exceeding cost.--The amount of a grant awarded 
     under this subpart, in combination with Federal assistance 
     and other student assistance, shall not exceed the cost of 
     attendance (as defined in section 472) at the eligible 
     institution at which that teacher candidate is in attendance. 
     If, with respect to any teacher candidate for any academic 
     year, it is determined that the amount of a TEACH Grant 
     exceeds the cost of attendance for that year, the amount of 
     the TEACH Grant shall be reduced until such grant does not 
     exceed the cost of attendance at the eligible institution.
       ``(d) Period of Eligibility for Grants.--
       ``(1) Undergraduate and post-baccalaureate students.--The 
     period during which an undergraduate or post-baccalaureate 
     student may receive grants under this subpart shall be the 
     period required for the completion of the first undergraduate 
     baccalaureate or post-baccalaureate course of study being 
     pursued by the teacher candidate at the eligible institution 
     at which the teacher candidate is in attendance, except 
     that--
       ``(A) any period during which the teacher candidate is 
     enrolled in a noncredit or remedial course of study as 
     described in paragraph (3) shall not be counted for the 
     purpose of this paragraph; and
       ``(B) the total amount that a teacher candidate may receive 
     under this subpart for undergraduate or post-baccalaureate 
     study shall not exceed $16,000.
       ``(2) Graduate students.--The period during which a 
     graduate student may receive grants under this subpart shall 
     be the period required for the completion of a master's 
     degree course of study pursued by the teacher candidate at 
     the eligible institution at which the teacher candidate is in 
     attendance, except that the total amount that a teacher 
     candidate may receive under this subpart for graduate study 
     shall not exceed $8,000.
       ``(3) Remedial course; study abroad.--Nothing in this 
     section shall be construed to exclude from eligibility 
     courses of study which are noncredit or remedial in nature 
     (including courses in English language acquisition) which are 
     determined by the eligible institution to be necessary to 
     help the teacher candidate be prepared for the pursuit of a 
     first undergraduate baccalaureate or post-baccalaureate 
     degree or certificate or, in the case of courses in English 
     language instruction, to be necessary to enable the teacher 
     candidate to utilize already existing knowledge, training, or 
     skills. Nothing in this section shall be construed to exclude 
     from eligibility programs of study abroad that are approved 
     for credit by the home institution at which the teacher 
     candidate is enrolled.

     ``SEC. 420N. APPLICATIONS; ELIGIBILITY.

       ``(a) Applications; Demonstration of Eligibility.--
       ``(1) Filing required.--The Secretary shall periodically 
     set dates by which teacher candidates shall file applications 
     for grants under this subpart. Each teacher candidate 
     desiring a grant under this subpart for any year shall file 
     an application containing such information and assurances as 
     the Secretary may determine necessary to enable the Secretary 
     to carry out the functions and responsibilities of this 
     subpart.
       ``(2) Demonstration of teach grant eligibility.--Each 
     application submitted under paragraph (1) shall contain such 
     information as is necessary to demonstrate that--
       ``(A) if the applicant is an enrolled student--
       ``(i) the student is an eligible student for purposes of 
     section 484;
       ``(ii) the student--

       ``(I) has a grade point average that is determined, under 
     standards prescribed by the Secretary, to be comparable to a 
     3.25 average on a zero to 4.0 scale, except that, if the 
     student is in the first year of a program of undergraduate 
     education, such grade point average shall be determined on 
     the basis of the student's cumulative secondary school grade 
     point average; or
       ``(II) displayed high academic aptitude by receiving a 
     score above the 75th percentile on at least one of the 
     batteries in an undergraduate, post-baccalaureate, or 
     graduate school admissions test; and

       ``(iii) the student is completing coursework and other 
     requirements necessary to begin a career in teaching, or 
     plans to complete such coursework and requirements prior to 
     graduating; or
       ``(B) if the applicant is a current or prospective teacher 
     applying for a grant to obtain a graduate degree--
       ``(i) the applicant is a teacher or a retiree from another 
     occupation with expertise in a field in which there is a 
     shortage of teachers, such as mathematics, science, special 
     education, English language acquisition, or another high-need 
     subject; or
       ``(ii) the applicant is or was a teacher who is using high-
     quality alternative certification routes, such as Teach for 
     America, to get certified.
       ``(b) Agreements To Serve.--Each application under 
     subsection (a) shall contain or be accompanied by an 
     agreement by the applicant that--
       ``(1) the applicant will--
       ``(A) serve as a full-time teacher for a total of not less 
     than 4 academic years within 8 years after completing the 
     course of study for which the applicant received a TEACH 
     Grant under this subpart;
       ``(B) teach in a school described in section 465(a)(2)(A);
       ``(C) teach in any of the following fields:
       ``(i) mathematics;
       ``(ii) science;
       ``(iii) a foreign language;
       ``(iv) bilingual education;
       ``(v) special education;
       ``(vi) as a reading specialist; or
       ``(vii) another field documented as high-need by the 
     Federal Government, State government, or local educational 
     agency, and approved by the Secretary;
       ``(D) submit evidence of such employment in the form of a 
     certification by the chief administrative officer of the 
     school upon completion of each year of such service; and
       ``(E) comply with the requirements for being a highly 
     qualified teacher as defined in section 9101 of the 
     Elementary and Secondary Education Act of 1965; and
       ``(2) in the event that the applicant is determined to have 
     failed or refused to carry out such service obligation, the 
     sum of the amounts of any TEACH Grants received by such 
     applicant will be treated as a loan and collected from the 
     applicant in accordance with subsection (c) and the 
     regulations thereunder.
       ``(c) Repayment for Failure To Complete Service.--In the 
     event that any recipient of a grant under this subpart fails 
     or refuses to comply with the service obligation in the 
     agreement under subsection (b), the sum of the amounts of any 
     TEACH Grants received by such recipient shall, upon a 
     determination of such a failure or refusal in such service 
     obligation, be treated as a Federal Direct Unsubsidized 
     Stafford Loan under part D of title IV, and shall be subject 
     to repayment, together with interest thereon accruing from 
     the date of the grant award, in accordance with terms and 
     conditions specified by the Secretary in regulations under 
     this subpart.

     ``SEC. 420O. PROGRAM PERIOD AND FUNDING.

       ``Beginning on July 1, 2008, there shall be available to 
     the Secretary to carry out this subpart, from funds not 
     otherwise appropriated, such sums as may be necessary to 
     provide TEACH Grants in accordance with this subpart to each 
     eligible applicant.''.
         TITLE II--STUDENT LOAN BENEFITS, TERMS, AND CONDITIONS

     SEC. 201. INTEREST RATE REDUCTIONS.

       (a) FFEL Interest Rates.--
       (1) Section 427A(l) (20 U.S.C. 1077a(l)) is amended by 
     adding at the end the following new paragraph:
       ``(4) Reduced rates for undergraduate subsidized loans.--
     Notwithstanding subsection (h) and paragraph (1) of this 
     subsection, with respect to any loan to an undergraduate 
     student made, insured, or guaranteed under this part (other 
     than a loan made pursuant to section 428B, 428C, or 428H) for 
     which the first disbursement is made on or after July 1, 
     2006, and before July 1, 2012, the applicable rate of 
     interest shall be as follows:
       ``(A) For a loan for which the first disbursement is made 
     on or after July 1, 2006, and before July 1, 2008, 6.8 
     percent on the unpaid principal balance of the loan.
       ``(B) For a loan for which the first disbursement is made 
     on or after July 1, 2008, and before July 1, 2009, 6.0 
     percent on the unpaid principal balance of the loan.
       ``(C) For a loan for which the first disbursement is made 
     on or after July 1, 2009, and before July 1, 2010, 5.6 
     percent on the unpaid principal balance of the loan.
       ``(D) For a loan for which the first disbursement is made 
     on or after July 1, 2010, and before July 1, 2011, 4.5 
     percent on the unpaid principal balance of the loan.
       ``(E) For a loan for which the first disbursement is made 
     on or after July 1, 2011, and before July 1, 2012, 3.4 
     percent on the unpaid principal balance of the loan.''.
       (2) Special allowance cross reference.--Section 
     438(b)(2)(I)(ii)(II) (20 U.S.C. 1087-1(b)(2)(I)(ii)(II)) is 
     amended by striking ``section 427A(l)(1)'' and inserting 
     ``section 427A(l)(1) or (l)(4)''.
       (b) Direct Loan Interest Rates.--Section 455(b)(7) (20 
     U.S.C. 1087e(b)(7)) is amended by adding at the end the 
     following new subparagraph:
       ``(D) Reduced rates for undergraduate fdsl.--
     Notwithstanding the preceding paragraphs of this subsection 
     and subparagraph (A) of this paragraph, for Federal Direct 
     Stafford Loans made to undergraduate students for which the 
     first disbursement is made on or after July 1, 2006, and 
     before July 1, 2012, the applicable rate of interest shall be 
     as follows:
       ``(i) For a loan for which the first disbursement is made 
     on or after July 1, 2006, and before July 1, 2008, 6.8 
     percent on the unpaid principal balance of the loan.
       ``(ii) For a loan for which the first disbursement is made 
     on or after July 1, 2008, and before July 1, 2009, 6.0 
     percent on the unpaid principal balance of the loan.

[[Page H10170]]

       ``(iii) For a loan for which the first disbursement is made 
     on or after July 1, 2009, and before July 1, 2010, 5.6 
     percent on the unpaid principal balance of the loan.
       ``(iv) For a loan for which the first disbursement is made 
     on or after July 1, 2010, and before July 1, 2011, 4.5 
     percent on the unpaid principal balance of the loan.
       ``(v) For a loan for which the first disbursement is made 
     on or after July 1, 2011, and before July 1, 2012, 3.4 
     percent on the unpaid principal balance of the loan.''.

     SEC. 202. STUDENT LOAN DEFERMENT FOR CERTAIN MEMBERS OF THE 
                   ARMED FORCES.

       (a) Federal Family Education Loans.--Section 
     428(b)(1)(M)(iii) (20 U.S.C. 1078(b)(1)(M)(iii)) is amended--
       (1) in the matter preceding subclause (I), by striking 
     ``not in excess of 3 years'';
       (2) in subclause (II), by striking ``; or'' and inserting a 
     comma; and
       (3) by adding at the end the following:

     ``and for the 180-day period following the demobilization 
     date for the service described in subclause (I) or (II); 
     or''.
       (b) Direct Loans.--Section 455(f)(2)(C) (20 U.S.C. 
     1087e(f)(2)(C)) is amended--
       (1) in the matter preceding clause (i), by striking ``not 
     in excess of 3 years'';
       (2) in clause (ii), by striking ``; or'' and inserting a 
     comma; and
       (3) by adding at the end the following:
     ``and for the 180-day period following the demobilization 
     date for the service described in clause (i) or (ii); or''.
       (c) Perkins Loans.--Section 464(c)(2)(A)(iii) (20 U.S.C. 
     1087dd(c)(2)(A)(iii)) is amended--
       (1) in the matter preceding subclause (I), by striking 
     ``not in excess of 3 years'';
       (2) in subclause (II), by striking the semicolon and 
     inserting a comma; and
       (3) by adding at the end the following:
     ``and for the 180-day period following the demobilization 
     date for the service described in subclause (I) or (II);''.
       (d) Applicability.--Section 8007(f) of the Higher Education 
     Reconciliation Act of 2005 (20 U.S.C. 1078 note) is amended 
     by striking ``loans for which'' and all that follows through 
     the period at the end and inserting ``all loans under title 
     IV of the Higher Education Act of 1965.''.

     SEC. 203. INCOME-BASED REPAYMENT.

       (a) Amendment.--Part G of title IV (20 U.S.C. 1088 et seq.) 
     is amended by adding at the end the following:

     ``SEC. 493C. INCOME-BASED REPAYMENT.

       ``(a) Definitions.--In this section:
       ``(1) Excepted plus loan.--The term `excepted PLUS loan' 
     means a loan under section 428B, or a Federal Direct PLUS 
     Loan, that is made, insured, or guaranteed on behalf of a 
     dependent student.
       ``(2) Excepted consolidation loan.--The term `excepted 
     consolidation loan' means a consolidation loan under section 
     428C, or a Federal Direct Consolidation Loan, if the proceeds 
     of such loan were used to the discharge the liability on an 
     excepted PLUS loan.
       ``(3) Partial financial hardship.--The term `partial 
     financial hardship', when used with respect to a borrower, 
     means that for such borrower--
       ``(A) the annual amount due on the total amount of loans 
     made, insured, or guaranteed under part B or D (other than an 
     excepted PLUS loan or excepted consolidation loan) to a 
     borrower as calculated under the standard repayment plan 
     under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-
     year repayment period; exceeds
       ``(B) 15 percent of the result obtained by calculating, on 
     at least an annual basis, the amount by which--
       ``(i) the borrower's, and the borrower's spouse's (if 
     applicable), adjusted gross income; exceeds
       ``(ii) 150 percent of the poverty line applicable to the 
     borrower's family size as determined under section 673(2) of 
     the Community Services Block Grant Act (42 U.S.C. 9902(2)).
       ``(b) Income-Based Repayment Program Authorized.--
     Notwithstanding any other provision of this Act, the 
     Secretary shall carry out a program under which--
       ``(1) a borrower of any loan made, insured, or guaranteed 
     under part B or D (other than an excepted PLUS loan or 
     excepted consolidation loan) who has a partial financial 
     hardship (whether or not the borrower's loan has been 
     submitted to a guaranty agency for default aversion or is 
     already in default) may elect, during any period the borrower 
     has the partial financial hardship, to have the borrower's 
     aggregate monthly payment for all such loans not exceed the 
     result described in subsection (a)(3)(B) divided by 12;
       ``(2) the holder of such a loan shall apply the borrower's 
     monthly payment under this subsection first toward interest 
     due on the loan, next toward any fees due on the loan, and 
     then toward the principal of the loan;
       ``(3) any interest due and not paid under paragraph (2)--
       ``(A) shall, on subsidized loans, be paid by the Secretary 
     for a period of not more than 3 years after the date of the 
     borrower's election under paragraph (1), except that such 
     period shall not include any period during which the borrower 
     is in deferment due to an economic hardship described in 
     section 435(o); and
       ``(B) be capitalized--
       ``(i) in the case of a subsidized loan, subject to 
     subparagraph (A), at the time the borrower--

       ``(I) ends the election to make income-based repayment 
     under this subsection; or
       ``(II) begins making payments of not less than the amount 
     specified in paragraph (6)(A); or

       ``(ii) in the case of an unsubsidized loan, at the time the 
     borrower--

       ``(I) ends the election to make income-based repayment 
     under this subsection; or
       ``(II) begins making payments of not less than the amount 
     specified in paragraph (6)(A);

       ``(4) any principal due and not paid under paragraph (2) 
     shall be deferred;
       ``(5) the amount of time the borrower makes monthly 
     payments under paragraph (1) may exceed 10 years;
       ``(6) if the borrower no longer has a partial financial 
     hardship or no longer wishes to continue the election under 
     this subsection, then--
       ``(A) the maximum monthly payment required to be paid for 
     all loans made to the borrower under part B or D (other than 
     an excepted PLUS loan or excepted consolidation loan) shall 
     not exceed the monthly amount calculated under section 
     428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment 
     period, when the borrower first made the election described 
     in this subsection; and
       ``(B) the amount of time the borrower is permitted to repay 
     such loans may exceed 10 years;
       ``(7) the Secretary shall repay or cancel any outstanding 
     balance of principal and interest due on all loans made under 
     part B or D (other than a loan under section 428B or a 
     Federal Direct PLUS Loan) to a borrower who--
       ``(A) at any time, elected to participate in income-based 
     repayment under paragraph (1); and
       ``(B) for a period of time prescribed by the Secretary, not 
     to exceed 25 years, meets 1 or more of the following 
     requirements:
       ``(i) has made reduced monthly payments under paragraph (1) 
     or paragraph (6);
       ``(ii) has made monthly payments of not less than the 
     monthly amount calculated under section 428(b)(9)(A)(i) or 
     455(d)(1)(A), based on a 10-year repayment period, when the 
     borrower first made the election described in this 
     subsection;
       ``(iii) has made payments of not less than the payments 
     required under a standard repayment plan under section 
     428(b)(9)(A)(i) or 455(d)(1)(A) with a repayment period of 10 
     years;
       ``(iv) has made payments under an income-contingent 
     repayment plan under section 455(d)(1)(D);
       ``(v) has been in deferment due to an economic hardship 
     described in section 435(o);
       ``(8) a borrower who is repaying a loan made under part B 
     or D pursuant to income-based repayment may elect, at any 
     time, to terminate repayment pursuant to income-based 
     repayment and repay such loan under the standard repayment 
     plan; and
       ``(9) the special allowance payment to a lender calculated 
     under section 438(b)(2)(I), when calculated for a loan in 
     repayment under this section, shall be calculated on the 
     principal balance of the loan and on any accrued interest 
     unpaid by the borrower in accordance with this section.
       ``(c) Eligibility Determinations.--The Secretary shall 
     establish procedures for annually determining the borrower's 
     eligibility for income-based repayment, including 
     verification of a borrower's annual income and the annual 
     amount due on the total amount of loans made, insured, or 
     guaranteed under part B or D (other than an excepted PLUS 
     loan or excepted consolidation loan), and such other 
     procedures as are necessary to effectively implement income-
     based repayment under this section. The Secretary shall 
     consider, but is not limited to, the procedures established 
     in accordance with section 455(e)(1) or in connection with 
     income sensitive repayment schedules under section 
     428(b)(9)(A)(iii) or 428C(b)(1)(E).''.
       (b) Conforming Amendments.--
       (1) Section 428C (20 U.S.C. 1078-3) is amended--
       (A) in subsection (a)(3)(B)(i), by amending subclause (V) 
     to read as follows:

       ``(V) an individual may obtain a subsequent consolidation 
     loan under section 455(g) only--

       ``(aa) for the purposes of obtaining an income contingent 
     repayment plan, and only if the loan has been submitted to 
     the guaranty agency for default aversion; or
       ``(bb) for the purposes of using the public service loan 
     forgiveness program under section 455(m).'';
       (B) in the first sentence of subsection (b)(5), by 
     inserting ``or chooses to obtain a consolidation loan for the 
     purposes of using the public service loan forgiveness program 
     offered under section 455(m),'' after ``from such a 
     lender,''; and
       (C) in the second sentence of such subsection, by inserting 
     before the period the following: ``, except that if a 
     borrower intends to be eligible to use the public service 
     loan forgiveness program under section 455(m), such loan 
     shall be repaid using one of the repayment options described 
     in section 455(m)(1)(A)''.
       (2) Section 428C (20 U.S.C. 1078-3) (as amended by 
     paragraph (1) of this subsection) is amended--
       (A) in subsection (a)(3)(B)(i)(V)(aa)--
       (i) by striking ``an income contingent repayment plan,'' 
     and inserting ``income contingent repayment or income-based 
     repayment,''; and
       (ii) by inserting ``or if the loan is already in default'' 
     before the semicolon;
       (B) in the first sentence of subsection (b)(5), by 
     inserting ``or income-based repayment terms'' after ``income-
     sensitive repayment terms''; and
       (C) in the second sentence of such subsection, by inserting 
     ``, pursuant to income-based repayment under section 493C,'' 
     after ``part D of this title''.
       (3) Section 455(d)(1)(D) (20 U.S.C. 1087e(d)(1)(D)) is 
     amended by inserting ``made on behalf of a dependent 
     student'' after ``PLUS loan''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall be effective on July 1, 
     2009.
       (2) Exception.--The amendments made by subsection (b)(1) 
     shall be effective on July 1, 2008.

[[Page H10171]]

     SEC. 204. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE DUTY.

       Part G of title IV is further amended by adding after 
     section 493C (as added by section 203 of this Act) the 
     following new section:

     ``SEC. 493D. DEFERRAL OF LOAN REPAYMENT FOLLOWING ACTIVE 
                   DUTY.

       ``(a) Deferral of Loan Repayment Following Active Duty.--In 
     addition to any deferral of repayment of a loan made under 
     this title pursuant to section 428(b)(1)(M)(iii), 
     455(f)(2)(C), or 464(c)(2)(A)(iii), a borrower of a loan 
     under this title who is a member of the National Guard or 
     other reserve component of the Armed Forces of the United 
     States, or a member of such Armed Forces in a retired status, 
     is called or ordered to active duty, and is enrolled, or was 
     enrolled within six months prior to the activation, in a 
     program of instruction at an eligible institution, shall be 
     eligible for a deferment during the 13 months following the 
     conclusion of such service, except that a deferment under 
     this subsection shall expire upon the borrower's return to 
     enrolled student status.
       ``(b) Active Duty.--Notwithstanding section 481(d), in this 
     section, the term `active duty' has the meaning given such 
     term in section 101(d)(1) of title 10, United States Code, 
     except that such term--
       ``(1) does not include active duty for training or 
     attendance at a service school; but
       ``(2) includes, in the case of members of the National 
     Guard, active State duty.''.

     SEC. 205. MAXIMUM REPAYMENT PERIOD.

       Section 455(e) (20 U.S.C. 1087e(e)) is amended by adding at 
     the end the following:
       ``(7) Maximum repayment period.--In calculating the 
     extended period of time for which an income contingent 
     repayment plan under this subsection may be in effect for a 
     borrower, the Secretary shall include all time periods during 
     which a borrower of loans under part B, part D, or part E--
       ``(A) is not in default on any loan that is included in the 
     income contingent repayment plan; and
       ``(B)(i) is in deferment due to an economic hardship 
     described in section 435(o);
       ``(ii) makes monthly payments under paragraph (1) or (6) of 
     section 493C(b);
       ``(iii) makes monthly payments of not less than the monthly 
     amount calculated under section 428(b)(9)(A)(i) or subsection 
     (d)(1)(A), based on a 10-year repayment period, when the 
     borrower first made the election described in section 
     493C(b)(1);
       ``(iv) makes payments of not less than the payments 
     required under a standard repayment plan under section 
     428(b)(9)(A)(i) or subsection (d)(1)(A) with a repayment 
     period of 10 years; or
       ``(v) makes payments under an income contingent repayment 
     plan under subsection (d)(1)(D).''.
            TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM

     SEC. 301. GUARANTY AGENCY COLLECTION RETENTION.

       Clause (ii) of section 428(c)(6)(A) (20 U.S.C. 
     1078(c)(6)(A)(ii)) is amended to read as follows:
       ``(ii) an amount equal to 24 percent of such payments for 
     use in accordance with section 422B, except that--

       ``(I) beginning October 1, 2003 and ending September 30, 
     2007, this clause shall be applied by substituting `23 
     percent' for `24 percent'; and
       ``(II) beginning October 1, 2007, this clause shall be 
     applied by substituting `16 percent' for `24 percent'.''.

     SEC. 302. ELIMINATION OF EXCEPTIONAL PERFORMER STATUS FOR 
                   LENDERS.

       (a) Elimination of Status.--Part B of title IV (20 U.S.C. 
     1071 et seq.) is amended by striking section 428I (20 U.S.C. 
     1078-9).
       (b) Conforming Amendments.--Part B of title IV is further 
     amended--
       (1) in section 428(c)(1) (20 U.S.C. 1078(c)(1))--
       (A) by striking subparagraph (D); and
       (B) by redesignating subparagraphs (E) through (H) as 
     subparagraphs (D) through (G), respectively; and
       (2) in section 438(b)(5) (20 U.S.C. 1087-1(b)(5)), by 
     striking the matter following subparagraph (B).
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall be effective on October 1, 2007, except that 
     section 428I of the Higher Education Act of 1965 (as in 
     effect on the day before the date of enactment of this Act) 
     shall apply to eligible lenders that received a designation 
     under subsection (a) of such section prior to October 1, 
     2007, for the remainder of the year for which the designation 
     was made.

     SEC. 303. REDUCTION OF LENDER INSURANCE PERCENTAGE.

       (a) Amendment.--Subparagraph (G) of section 428(b)(1) (20 
     U.S.C. 1078(b)(1)(G)) is amended to read as follows:
       ``(G) insures 95 percent of the unpaid principal of loans 
     insured under the program, except that--
       ``(i) such program shall insure 100 percent of the unpaid 
     principal of loans made with funds advanced pursuant to 
     section 428(j) or 439(q); and
       ``(ii) notwithstanding the preceding provisions of this 
     subparagraph, such program shall insure 100 percent of the 
     unpaid principal amount of exempt claims as defined in 
     subsection (c)(1)(G);''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall be effective on October 1, 2012, and shall apply with 
     respect to loans made on or after such date.

     SEC. 304. DEFINITIONS.

       Section 435 (20 U.S.C. 1085) is amended--
       (1) in subsection (o)(1)--
       (A) in subparagraph (A)(ii)--
       (i) by striking ``100 percent of the poverty line for a 
     family of 2'' and inserting ``150 percent of the poverty line 
     applicable to the borrower's family size''; and
       (ii) by inserting ``or'' after the semicolon;
       (B) by striking subparagraph (B); and
       (C) by redesignating subparagraph (C) as subparagraph (B);
       (2) in subsection (o)(2), by striking ``(1)(C)'' and 
     inserting ``(1)(B)''; and
       (3) by adding at the end the following:
       ``(p) Eligible Not-for-Profit Holder.--
       ``(1) Definition.--Subject to the limitations in paragraph 
     (2) and the prohibition in paragraph (3), the term `eligible 
     not-for-profit holder' means an eligible lender under 
     subsection (d) (except for an eligible lender described in 
     subsection (d)(1)(E)) that requests a special allowance 
     payment under section 438(b)(2)(I)(vi)(II) or a payment under 
     section 771 and that is--
       ``(A) a State, or a political subdivision, authority, 
     agency, or other instrumentality thereof, including such 
     entities that are eligible to issue bonds described in 
     section 1.103-1 of title 26, Code of Federal Regulations, or 
     section 144(b) of the Internal Revenue Code of 1986;
       ``(B) an entity described in section 150(d)(2) of such Code 
     that has not made the election described in section 150(d)(3) 
     of such Code;
       ``(C) an entity described in section 501(c)(3) of such 
     Code; or
       ``(D) a trustee acting as an eligible lender on behalf of a 
     State, political subdivision, authority, agency, 
     instrumentality, or other entity described in subparagraph 
     (A), (B), or (C).
       ``(2) Limitations.--
       ``(A) Existing on date of enactment.--
       ``(i) In general.--An eligible lender shall not be an 
     eligible not-for-profit holder under this Act unless such 
     lender--

       ``(I) was a State, political subdivision, authority, 
     agency, instrumentality, or other entity described in 
     paragraph (1)(A), (B), or (C) that was, on the date of the 
     enactment of the College Cost Reduction and Access Act, 
     acting as an eligible lender under subsection (d) (other than 
     an eligible lender described in subsection (d)(1)(E)); or
       ``(II) is a trustee acting as an eligible lender under this 
     Act on behalf of such a State, political subdivision, 
     authority, agency, instrumentality, or other entity described 
     in subclause (I) of this clause.

       ``(ii) Exception.--Notwithstanding clause (i), a State may 
     elect, in accordance with regulations of the Secretary, to 
     waive the requirements this subparagraph for a new not-for-
     profit holder determined by the State to be necessary to 
     carry out a public purpose of such State, except that a State 
     may not make such election with respect the requirements of 
     clause (i)(II).
       ``(B) No for-profit ownership or control.--No political 
     subdivision, authority, agency, instrumentality, or other 
     entity described in paragraph (1)(A), (B), or (C) shall be an 
     eligible not-for-profit holder under this Act if such entity 
     is owned or controlled, in whole or in part, by a for-profit 
     entity.
       ``(C) Sole ownership of loans and income.--No State, 
     political subdivision, authority, agency, instrumentality, or 
     other entity described in paragraph (1)(A), (B), or (C) shall 
     be an eligible not-for-profit holder under this Act with 
     respect to any loan, or income from any loan, unless the 
     State, political subdivision, authority, agency, 
     instrumentality, or other entity described in paragraph 
     (1)(A), (B), or (C) is the sole owner of the beneficial 
     interest in such loan and the income from such loan.
       ``(D) Trustee compensation limitations.--A trustee 
     described in paragraph (1)(D) shall not receive compensation 
     as consideration for acting as an eligible lender on behalf 
     of an entity described in described in paragraph (1)(A), (B), 
     or (C) in excess of reasonable and customary fees.
       ``(E) Rule of construction.--For purposes of subparagraphs 
     (B), (C), and (D) of this paragraph, a State, political 
     subdivision, authority, agency, instrumentality, or other 
     entity described in paragraph (1)(A), (B), or (C) shall not--
       ``(i) be deemed to be owned or controlled, in whole or in 
     part, by a for-profit entity, or
       ``(ii) lose its status as the sole owner of a beneficial 
     interest in a loan and the income from a loan by that 
     political subdivision, authority, agency, instrumentality, or 
     other entity,
     by granting a security interest in, or otherwise pledging as 
     collateral, such loan, or the income from such loan, to 
     secure a debt obligation in the operation of an arrangement 
     described in paragraph (1)(D).
       ``(3) Prohibition.--In the case of a loan for which the 
     special allowance payment is calculated under section 
     438(b)(2)(I)(vi)(II) and that is sold by the eligible not-
     for-profit holder holding the loan to an entity that is not 
     an eligible not-for-profit holder under this Act, the special 
     allowance payment for such loan shall, beginning on the date 
     of the sale, no longer be calculated under section 
     438(b)(2)(I)(vi)(II) and shall be calculated under section 
     438(b)(2)(I)(vi)(I) instead.
       ``(4) Regulations.--Not later than 1 year after the date of 
     enactment of the College Cost Reduction and Access Act, the 
     Secretary shall promulgate regulations in accordance with the 
     provisions of this subsection.''.

     SEC. 305. SPECIAL ALLOWANCES.

       (a) Reduction of Lender Special Allowance Payments.--
     Section 438(b)(2)(I) (20 U.S.C. 1087-1(b)(2)(I)) is amended--
       (1) in clause (i), by striking ``clauses (ii), (iii), and 
     (iv)'' and inserting ``the following clauses'';
       (2) in clause (v)(III), by striking ``clauses (ii), (iii), 
     and (iv)'' and inserting ``clauses (ii), (iii), (iv), and 
     (vi)''; and
       (3) by adding at the end the following:
       ``(vi) Reduction for loans disbursed on or after october 1, 
     2007.--With respect to a loan on which the applicable 
     interest rate is determined under section 427A(l) and for 
     which the first disbursement of principal is made on or after 
     October 1, 2007, the special allowance payment computed 
     pursuant to this subparagraph shall be computed--

[[Page H10172]]

       ``(I) for loans held by an eligible lender not described in 
     subclause (II)--

       ``(aa) by substituting `1.79 percent' for `2.34 percent' 
     each place the term appears in this subparagraph;
       ``(bb) by substituting `1.19 percent' for `1.74 percent' in 
     clause (ii);
       ``(cc) by substituting `1.79 percent' for `2.64 percent' in 
     clause (iii); and
       ``(dd) by substituting `2.09 percent' for `2.64 percent' in 
     clause (iv); and

       ``(II) for loans held by an eligible not-for-profit 
     holder--

       ``(aa) by substituting `1.94 percent' for `2.34 percent' 
     each place the term appears in this subparagraph;
       ``(bb) by substituting `1.34 percent' for `1.74 percent' in 
     clause (ii);
       ``(cc) by substituting `1.94 percent' for `2.64 percent' in 
     clause (iii); and
       ``(dd) by substituting `2.24 percent' for `2.64 percent' in 
     clause (iv).''.
       (b) Increased Loan Fees From Lenders.--Paragraph (2) of 
     section 438(d) (20 U.S.C. 1087-1(d)(2)) is amended to read as 
     follows:
       ``(2) Amount of loan fees.--The amount of the loan fee 
     which shall be deducted under paragraph (1), but which may 
     not be collected from the borrower, shall be equal to--
       ``(A) except as provided in subparagraph (B), 0.50 percent 
     of the principal amount of the loan with respect to any loan 
     under this part for which the first disbursement was made on 
     or after October 1, 1993; and
       ``(B) 1.0 percent of the principal amount of the loan with 
     respect to any loan under this part for which the first 
     disbursement was made on or after October 1, 2007.''.

     SEC. 306. ACCOUNT MAINTENANCE FEES.

       Section 458(b) (20 U.S.C. 1087h(b)) is amended by striking 
     ``0.10 percent'' and inserting ``0.06 percent''.
                       TITLE IV--LOAN FORGIVENESS

     SEC. 401. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

       Section 455 (20 U.S.C. 1087e) is further amended by adding 
     at the end the following:
       ``(m) Repayment Plan for Public Service Employees.--
       ``(1) In general.--The Secretary shall cancel the balance 
     of interest and principal due, in accordance with paragraph 
     (2), on any eligible Federal Direct Loan not in default for a 
     borrower who--
       ``(A) has made 120 monthly payments on the eligible Federal 
     Direct Loan after October 1, 2007, pursuant to any one or a 
     combination of the following:
       ``(i) payments under an income-based repayment plan under 
     section 493C;
       ``(ii) payments under a standard repayment plan under 
     subsection (d)(1)(A), based on a 10-year repayment period;
       ``(iii) monthly payments under a repayment plan under 
     subsection (d)(1) or (g) of not less than the monthly amount 
     calculated under subsection (d)(1)(A), based on a 10-year 
     repayment period;
       ``(iv) payments under an income contingent repayment plan 
     under subsection (d)(1)(D); and
       ``(B)(i) is employed in a public service job at the time of 
     such forgiveness; and
       ``(ii) has been employed in a public service job during the 
     period in which the borrower makes each of the 120 payments 
     described in subparagraph (A).
       ``(2) Loan cancellation amount.--After the conclusion of 
     the employment period described in paragraph (1), the 
     Secretary shall cancel the obligation to repay the balance of 
     principal and interest due as of the time of such 
     cancellation, on the eligible Federal Direct Loans made to 
     the borrower under this part.
       ``(3) Definitions.--In this subsection:
       ``(A) Eligible federal direct loan.--The term `eligible 
     Federal Direct Loan' means a Federal Direct Stafford Loan, 
     Federal Direct PLUS Loan, or Federal Direct Unsubsidized 
     Stafford Loan, or a Federal Direct Consolidation Loan.
       ``(B) Public service job.--The term `public service job' 
     means--
       ``(i) a full-time job in emergency management, government, 
     military service, public safety, law enforcement, public 
     health, public education (including early childhood 
     education), social work in a public child or family service 
     agency, public interest law services (including prosecution 
     or public defense or legal advocacy in low-income communities 
     at a nonprofit organization), public child care, public 
     service for individuals with disabilities, public service for 
     the elderly, public library sciences, school-based library 
     sciences and other school-based services, or at an 
     organization that is described in section 501(c)(3) of the 
     Internal Revenue Code of 1986 and exempt from taxation under 
     section 501(a) of such Code; or
       ``(ii) teaching as a full-time faculty member at a Tribal 
     College or University as defined in section 316(b) and other 
     faculty teaching in high-needs areas, as determined by the 
     Secretary.''.
                     TITLE V--FEDERAL PERKINS LOANS

     SEC. 501. DISTRIBUTION OF LATE COLLECTIONS.

       Section 466(b) (20 U.S.C. 1087ff(b)) is amended by striking 
     ``March 31, 2012'' and inserting ``October 1, 2012''.
                        TITLE VI--NEED ANALYSIS

     SEC. 601. SUPPORT FOR WORKING STUDENTS.

       (a) Dependent Students.--Subparagraph (D) of section 
     475(g)(2) (20 U.S.C. 1087oo(g)(2)(D)) is amended to read as 
     follows:
       ``(D) an income protection allowance of the following 
     amount (or a successor amount prescribed by the Secretary 
     under section 478):
       ``(i) for academic year 2009-2010, $3,750;
       ``(ii) for academic year 2010-2011, $4,500;
       ``(iii) for academic year 2011-2012, $5,250; and
       ``(iv) for academic year 2012-2013, $6,000;''.
       (b) Independent Students Without Dependents Other Than a 
     Spouse.--Clause (iv) of section 476(b)(1)(A) (20 U.S.C. 
     1087pp(b)(1)(A)) is amended to read as follows:
       ``(iv) an income protection allowance of the following 
     amount (or a successor amount prescribed by the Secretary 
     under section 478):

       ``(I) for single or separated students, or married students 
     where both are enrolled pursuant to subsection (a)(2)--

       ``(aa) for academic year 2009-2010, $7,000;
       ``(bb) for academic year 2010-2011, $7,780;
       ``(cc) for academic year 2011-2012, $8,550; and
       ``(dd) for academic year 2012-2013, $9,330; and

       ``(II) for married students where 1 is enrolled pursuant to 
     subsection (a)(2)--

       ``(aa) for academic year 2009-2010, $11,220;
       ``(bb) for academic year 2010-2011, $12,460;
       ``(cc) for academic year 2011-2012, $13,710; and
       ``(dd) for academic year 2012-2013, $14,960;''.
       (c) Independent Students With Dependents Other Than a 
     Spouse.--Paragraph (4) of section 477(b) (20 U.S.C. 
     1087qq(b)) is amended to read as follows:
       ``(4) Income protection allowance.--The income protection 
     allowance is determined by the tables described in 
     subparagraphs (A) through (D) (or a successor table 
     prescribed by the Secretary under section 478).
       ``(A) Academic year 2009-2010.--For academic year 2009-
     2010, the income protection allowance is determined by the 
     following table:

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
               Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
                                                                                                       For each
           (including student)                  1          2          3           4           5       additional
                                                                                                      subtract:
----------------------------------------------------------------------------------------------------------------
                    2                         $17,720    $14,690
                    3                          22,060     19,050    $16,020
                    4                          27,250     24,220     21,210     $18,170
                    5                          32,150     29,120     26,100      23,070     $20,060
                    6                          37,600     34,570     31,570      28,520      25,520       $3,020
For each
additional
  add:                                          4,240      4,240      4,240       4,240       4,240
----------------------------------------------------------------------------------------------------------------

       ``(B) Academic year 2010-2011.--For academic year 2010-
     2011, the income protection allowance is determined by the 
     following table:

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
               Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
                                                                                                       For each
           (including student)                  1          2          3           4           5       additional
                                                                                                      subtract:
----------------------------------------------------------------------------------------------------------------
                    2                         $19,690    $16,330
                    3                          24,510     21,160    $17,800
                    4                          30,280     26,910     23,560     $20,190
                    5                          35,730     32,350     29,000      25,640     $22,290
                    6                          41,780     38,410     35,080      31,690      28,350       $3,350

[[Page H10173]]

 
For each
additional
  add:                                          4,710      4,710      4,710       4,710       4,710
----------------------------------------------------------------------------------------------------------------

       ``(C) Academic year 2011-2012.--For academic year 2011-
     2012, the income protection allowance is determined by the 
     following table:

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
               Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
                                                                                                       For each
           (including student)                  1          2          3           4           5       additional
                                                                                                      subtract:
----------------------------------------------------------------------------------------------------------------
                    2                         $21,660    $17,960
                    3                          26,960     23,280    $19,580
                    4                          33,300     29,600     25,920     $22,210
                    5                          39,300     35,590     31,900      28,200     $24,520
                    6                          45,950     42,250     38,580      34,860      31,190       $3,690
For each
additional
  add:                                          5,180      5,180      5,180       5,180       5,180
----------------------------------------------------------------------------------------------------------------

       ``(D) Academic year 2012-2013.--For academic year 2012-
     2013, the income protection allowance is determined by the 
     following table:

                                          ``Income Protection Allowance
----------------------------------------------------------------------------------------------------------------
               Family Size                                           Number in College
----------------------------------------------------------------------------------------------------------------
                                                                                                       For each
           (including student)                  1          2          3           4           5       additional
                                                                                                      subtract:
----------------------------------------------------------------------------------------------------------------
                    2                         $23,630    $19,590
                    3                          29,420     25,400    $21,360
                    4                          36,330     32,300     28,280     $24,230
                    5                          42,870     38,820     34,800      30,770     $26,750
                    6                          50,130     46,100     42,090      38,030      34,020       $4,020
For each
additional
  add:                                          5,660      5,660      5,660       5,660       5,660          ''.
----------------------------------------------------------------------------------------------------------------

       (d) Updated Tables and Amounts.--Section 478(b) (20 U.S.C. 
     1087rr(b)) is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1) Revised tables.--
       ``(A) In general.--For each academic year after academic 
     year 2008-2009, the Secretary shall publish in the Federal 
     Register a revised table of income protection allowances for 
     the purpose of sections 475(c)(4) and 477(b)(4), subject to 
     subparagraphs (B) and (C).
       ``(B) Table for independent students.--
       ``(i) Academic years 2009-2010 through 2012-2013.--For each 
     of the academic years 2009-2010 through 2012-2013, the 
     Secretary shall not develop a revised table of income 
     protection allowances under section 477(b)(4) and the table 
     specified for such academic year under subparagraphs (A) 
     through (D) of such section shall apply.
       ``(ii) Other academic years.--For each academic year after 
     academic year 2012-2013, the Secretary shall develop the 
     revised table of income protection allowances by increasing 
     each of the dollar amounts contained in the table of income 
     protection allowances under section 477(b)(4)(D) by a 
     percentage equal to the estimated percentage increase in the 
     Consumer Price Index (as determined by the Secretary) between 
     December 2011 and the December next preceding the beginning 
     of such academic year, and rounding the result to the nearest 
     $10.
       ``(C) Table for parents.--For each academic year after 
     academic year 2008-2009, the Secretary shall develop the 
     revised table of income protection allowances under section 
     475(c)(4) by increasing each of the dollar amounts contained 
     in the table 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 paragraph (2), by striking ``shall be developed'' 
     and all that follows through the period at the end and 
     inserting ``shall be developed for each academic year after 
     academic year 2012-2013, by increasing each of the dollar 
     amounts contained in such section for academic year 2012-2013 
     by a percentage equal to the estimated percentage increase in 
     the Consumer Price Index (as determined by the Secretary) 
     between December 2011 and the December next preceding the 
     beginning of such academic year, and rounding the result to 
     the nearest $10.''.
       (e) Effective Date.--The amendments made by this section 
     shall be effective on July 1, 2009.

     SEC. 602. SIMPLIFIED NEEDS TEST AND AUTOMATIC ZERO 
                   IMPROVEMENTS.

       (a) Simplified Needs Test.--Section 479 (20 U.S.C. 1087ss) 
     is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)(A)(i)--
       (i) in subclause (II), by striking ``or'' after the 
     semicolon;
       (ii) by redesignating subclause (III) as subclause (IV);
       (iii) by inserting after subclause (II) the following:

       ``(III) 1 of whom is a dislocated worker; or''; and

       (iv) in subclause (IV) (as redesignated by clause (ii)), by 
     striking ``12-month'' and inserting ``24-month''; and
       (B) in paragraph (1)(B)(i)--
       (i) in subclause (II), by striking ``or'' after the 
     semicolon;
       (ii) by redesignating subclause (III) as subclause (IV);
       (iii) by inserting after subclause (II) the following:

       ``(III) 1 of whom is a dislocated worker; or''; and

       (iv) in subclause (IV) (as redesignated by clause (ii)), by 
     striking ``12-month'' and inserting ``24-month'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) in subparagraph (A)--

       (I) in clause (ii), by striking ``or'' after the semicolon;
       (II) by redesignating clause (iii) as clause (iv);
       (III) by inserting after clause (ii) the following:

       ``(iii) 1 of whom is a dislocated worker; or''; and

       (IV) in clause (iv) (as redesignated by subclause (II)), by 
     striking ``12-month'' and inserting ``24-month''; and

       (ii) in subparagraph (B), by striking ``$20,000'' and 
     inserting ``$30,000''; and
       (B) in paragraph (2)--
       (i) in subparagraph (A)--

       (I) in clause (ii), by striking ``or'' after the semicolon;
       (II) by redesignating clause (iii) as clause (iv);
       (III) by inserting after clause (ii) the following:

[[Page H10174]]

       ``(iii) 1 of whom is a dislocated worker; or''; and

       (IV) in clause (iv) (as redesignated by subclause (II)), by 
     striking ``12-month'' and inserting ``24-month''; and

       (ii) in subparagraph (B), by striking ``$20,000'' and 
     inserting ``$30,000''; and
       (C) in the flush matter following paragraph (2)(B), by 
     adding at the end the following: ``The Secretary shall 
     annually adjust the income level necessary to qualify an 
     applicant for the zero expected family contribution. The 
     income level shall be adjusted according to increases in the 
     Consumer Price Index, as defined in section 478(f).''; and
       (3) in subsection (d)--
       (A) by redesignating paragraphs (1) through (6) as 
     subparagraphs (A) through (F), respectively and moving the 
     margins of such subparagraphs 2 ems to the right;
       (B) by striking ``(d) Definition'' and all that follows 
     through ``the term'' and inserting the following:
       ``(d) Definitions.--In this section:
       ``(1) Dislocated worker.--The term `dislocated worker' has 
     the meaning given the term in section 101 of the Workforce 
     Investment Act of 1998 (29 U.S.C. 2801).
       ``(2) Means-tested federal benefit program.--The term''.
       (b) Effective Date.--The amendments made by this section 
     shall be effective on July 1, 2009.

     SEC. 603. DISCRETION OF STUDENT FINANCIAL AID ADMINISTRATORS.

       (a) Amendments.--The third sentence of section 479A(a) (20 
     U.S.C. 1087tt(a)) is amended--
       (1) by inserting ``or an independent student'' after 
     ``family member'';
       (2) by inserting ``a family member who is a dislocated 
     worker (as defined in section 101 of the Workforce Investment 
     Act of 1998),'' before ``the number of parents''; and
       (3) by inserting ``a change in housing status that results 
     in an individual being homeless (as defined in section 103 of 
     the McKinney-Vento Homeless Assistance Act),'' after ``under 
     section 487,''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on July 1, 2009.

     SEC. 604. DEFINITIONS.

       (a) In General.--Section 480 (20 U.S.C. 1087vv) is 
     amended--
       (1) in subsection (a)(2)--
       (A) by striking ``and no portion'' and inserting ``no 
     portion''; and
       (B) by inserting ``and no distribution from any qualified 
     education benefit described in subsection (f)(3) that is not 
     subject to Federal income tax,'' after ``1986,'';
       (2) by striking subsection (b) and inserting the following:
       ``(b) Untaxed Income and Benefits.--
       ``(1) The term `untaxed income and benefits' means--
       ``(A) child support received;
       ``(B) workman's compensation;
       ``(C) veteran's benefits such as death pension, dependency, 
     and indemnity compensation, but excluding veterans' education 
     benefits as defined in subsection (c);
       ``(D) interest on tax-free bonds;
       ``(E) housing, food, and other allowances (excluding rent 
     subsidies for low-income housing) for military, clergy, and 
     others (including cash payments and cash value of benefits);
       ``(F) cash support or any money paid on the student`s 
     behalf, except, for dependent students, funds provided by the 
     student's parents;
       ``(G) untaxed portion of pensions;
       ``(H) payments to individual retirement accounts and Keogh 
     accounts excluded from income for Federal income tax 
     purposes; and
       ``(I) any other untaxed income and benefits, such as Black 
     Lung Benefits, Refugee Assistance, or railroad retirement 
     benefits, or benefits received through participation in 
     employment and training activities under title I of the 
     Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.).
       ``(2) The term `untaxed income and benefits' shall not 
     include the amount of additional child tax credit claimed for 
     Federal income tax purposes.'';
       (3) in subsection (d)--
       (A) by redesignating paragraphs (1), (2), (3) through (6), 
     and (7) as subparagraphs (A), (B), (D) through (G), and (I), 
     respectively, and indenting appropriately;
       (B) by striking ``The term'' and inserting the following:
       ``(1) Definition.--The term'';
       (C) by striking subparagraph (B) (as redesignated by 
     subparagraph (A)) and inserting the following:
       ``(B) is an orphan, in foster care, or a ward of the court, 
     at any time when the individual is 13 years of age or older;
       ``(C) is an emancipated minor or is in legal guardianship 
     as determined by a court of competent jurisdiction in the 
     individual's State of legal residence;'';
       (D) in subparagraph (G) (as redesignated by subparagraph 
     (A)), by striking ``or'' after the semicolon;
       (E) by inserting after subparagraph (G) (as redesignated by 
     subparagraph (A)) the following:
       ``(H) has been verified during the school year in which the 
     application is submitted as either an unaccompanied youth who 
     is a homeless child or youth (as such terms are defined in 
     section 725 of the McKinney-Vento Homeless Assistance Act), 
     or as unaccompanied, at risk of homelessness, and self-
     supporting, by--
       ``(i) a local educational agency homeless liaison, 
     designated pursuant to section 722(g)(1)(J)(ii) of the 
     McKinney-Vento Homeless Assistance Act;
       ``(ii) the director of a program funded under the Runaway 
     and Homeless Youth Act or a designee of the director;
       ``(iii) the director of a program funded under subtitle B 
     of title IV of the McKinney-Vento Homeless Assistance Act 
     (relating to emergency shelter grants) or a designee of the 
     director; or
       ``(iv) a financial aid administrator; or''; and
       (F) by adding at the end the following:
       ``(2) Simplifying the dependency override process.--A 
     financial aid administrator may make a determination of 
     independence under paragraph (1)(I) based upon a documented 
     determination of independence that was previously made by 
     another financial aid administrator under such paragraph in 
     the same award year.'';
       (4) in subsection (e)--
       (A) in paragraph (3), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (4), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(5) special combat pay.'';
       (5) in subsection (f), by striking paragraph (3) and 
     inserting the following:
       ``(3) A qualified education benefit shall be considered an 
     asset of--
       ``(A) the student if the student is an independent student; 
     or
       ``(B) the parent if the student is a dependent student, 
     regardless of whether the owner of the account is the student 
     or the parent.'';
       (6) in subsection (j)--
       (A) in paragraph (2), by inserting ``, or a distribution 
     that is not includable in gross income under section 529 of 
     such Code, under another prepaid tuition plan offered by a 
     State, or under a Coverdell education savings account under 
     section 530 of such Code,'' after ``1986''; and
       (B) by adding at the end the following:
       ``(4) Notwithstanding paragraph (1), special combat pay 
     shall not be treated as estimated financial assistance for 
     purposes of section 471(3).''; and
       (7) by adding at the end the following:
       ``(n) Special Combat Pay.--The term `special combat pay' 
     means pay received by a member of the Armed Forces because of 
     exposure to a hazardous situation.''.
       (b) Effective Date.--The amendments made by this section 
     shall be effective on July 1, 2009.
           TITLE VII--COMPETITIVE LOAN AUCTION PILOT PROGRAM

     SEC. 701. COMPETITIVE LOAN AUCTION PILOT PROGRAM.

       Title IV (20 U.S.C. 1070 et seq.) is further amended by 
     adding at the end the following:

            ``PART I--COMPETITIVE LOAN AUCTION PILOT PROGRAM

     ``SEC. 499. COMPETITIVE LOAN AUCTION PILOT PROGRAM.

       ``(a) Definitions.--In this section:
       ``(1) Eligible federal plus loan.--The term `eligible 
     Federal PLUS Loan' means a loan described in section 428B 
     made to a parent of a dependent student who is a new borrower 
     on or after July 1, 2009.
       ``(2) Eligible lender.--The term `eligible lender' has the 
     meaning given the term in section 435.
       ``(b) Pilot Program.--The Secretary shall carry out a pilot 
     program under which the Secretary establishes a mechanism for 
     an auction of eligible Federal PLUS Loans in accordance with 
     this subsection. The pilot program shall meet the following 
     requirements:
       ``(1) Planning and implementation.--During the period 
     beginning on the date of enactment of this section and ending 
     on June 30, 2009, the Secretary shall plan and implement the 
     pilot program under this subsection. During the planning and 
     implementation, the Secretary shall consult with other 
     Federal agencies with knowledge of, and experience with, 
     auction programs, including the Federal Communication 
     Commission and the Department of the Treasury.
       ``(2) Origination and disbursement; applicability of 
     section 428b.--Beginning on July 1, 2009, the Secretary shall 
     arrange for the origination and disbursement of all eligible 
     Federal PLUS Loans in accordance with the provisions of this 
     subsection and the provisions of section 428B that are not 
     inconsistent with this subsection.
       ``(3) Loan origination mechanism.--The Secretary shall 
     establish a loan origination auction mechanism that meets the 
     following requirements:
       ``(A) Auction for each state.--The Secretary administers an 
     auction under this paragraph for each State, under which 
     eligible lenders compete to originate eligible Federal PLUS 
     Loans under this paragraph at all institutions of higher 
     education within such State.
       ``(B) Prequalification process.--The Secretary establishes 
     a prequalification process for eligible lenders desiring to 
     participate in an auction under this paragraph that contains, 
     at a minimum--
       ``(i) a set of borrower benefits and servicing requirements 
     each eligible lender shall meet in order to participate in 
     such an auction; and
       ``(ii) an assessment of each such eligible lender's 
     capacity, including capital capacity, to participate 
     effectively.
       ``(C) Timing and origination.--Each State auction takes 
     place every 2 years, and the eligible lenders with the 
     winning bids for the State are the only eligible lenders 
     permitted to originate eligible Federal PLUS Loans made under 
     this paragraph for the cohort of students at the institutions 
     of higher education within the State until the students 
     graduate from or leave the institutions of higher education.
       ``(D) Bids.--Each eligible lender's bid consists of the 
     amount of the special allowance payment (after the 
     application of section 438(b)(2)(I)(v)) the eligible lender 
     proposes to accept from the Secretary with respect to the 
     eligible Federal PLUS Loans made under this paragraph in lieu 
     of the amount determined under section 438(b)(2)(I).
       ``(E) Maximum bid.--The maximum bid allowable under this 
     paragraph shall not exceed the

[[Page H10175]]

     amount of the special allowance payable on eligible Federal 
     PLUS Loans made under this paragraph computed under section 
     438(b)(2)(I) (other than clauses (ii), (iii), (iv), and (vi) 
     of such section), except that for purposes of the computation 
     under this subparagraph, section 438(b)(2)(I)(i)(III) shall 
     be applied by substituting `1.79 percent' for `2.34 percent'.
       ``(F) Winning bids.--The winning bids for each State 
     auction shall be the 2 bids containing the lowest and the 
     second lowest proposed special allowance payments, subject to 
     subparagraph (E).
       ``(G) Agreement with secretary.--Each eligible lender 
     having a winning bid under subparagraph (F) enters into an 
     agreement with the Secretary under which the eligible 
     lender--
       ``(i) agrees to originate eligible Federal PLUS Loans under 
     this paragraph to each borrower who--

       ``(I) seeks an eligible Federal PLUS Loan under this 
     paragraph to enable a dependent student to attend an 
     institution of higher education within the State;
       ``(II) is eligible for an eligible Federal PLUS Loan; and
       ``(III) elects to borrow from the eligible lender; and

       ``(ii) agrees to accept a special allowance payment (after 
     the application of section 438(b)(2)(I)(v)) from the 
     Secretary with respect to the eligible Federal PLUS Loans 
     originated under clause (i) in the amount proposed in the 
     second lowest winning bid described in subparagraph (F) for 
     the applicable State auction.
       ``(H) Sealed bids; confidentiality.--All bids are sealed 
     and the Secretary keeps the bids confidential, including 
     following the announcement of the winning bids.
       ``(I) Eligible lender of last resort.--
       ``(i) In general.--In the event that there is no winning 
     bid under subparagraph (F), the students at the institutions 
     of higher education within the State that was the subject of 
     the auction shall be served by an eligible lender of last 
     resort, as determined by the Secretary.
       ``(ii) Determination of eligible lender of last resort.--
     Prior to the start of any auction under this paragraph, 
     eligible lenders that desire to serve as an eligible lender 
     of last resort shall submit an application to the Secretary 
     at such time and in such manner as the Secretary may 
     determine. Such application shall include an assurance that 
     the eligible lender will meet the prequalification 
     requirements described in subparagraph (B).
       ``(iii) Geographic location.--The Secretary shall identify 
     an eligible lender of last resort for each State.
       ``(iv) Notification timing.--The Secretary shall not 
     identify any eligible lender of last resort until after the 
     announcement of all the winning bids for a State auction for 
     any year.
       ``(v) Maximum special allowance.--The Secretary is 
     authorized to set a special allowance payment that shall be 
     payable to a lender of last resort for a State under this 
     subparagraph, which special allowance payment shall be kept 
     confidential, including following the announcement of winning 
     bids. The Secretary shall set such special allowance payment 
     so that it incurs the lowest possible cost to the Federal 
     Government, taking into consideration the lowest bid that was 
     submitted in an auction for such State and the lowest bid 
     submitted in a similar State, as determined by the Secretary.
       ``(J) Guarantee against losses.--The Secretary guarantees 
     the eligible Federal PLUS Loans made under this paragraph 
     against losses resulting from the default of a parent 
     borrower in an amount equal to 99 percent of the unpaid 
     principal and interest due on the loan.
       ``(K) Loan fees.--The Secretary shall not collect a loan 
     fee under section 438(d) with respect to an eligible Federal 
     Plus Loan originated under this paragraph.
       ``(L) Consolidation.--
       ``(i) In general.--An eligible lender who is permitted to 
     originate eligible Federal PLUS Loans for a borrower under 
     this paragraph shall have the option to consolidate such 
     loans into 1 loan.
       ``(ii) Notification.--In the event a borrower with eligible 
     Federal PLUS Loans made under this paragraph wishes to 
     consolidate the loans, the borrower shall notify the eligible 
     lender who originated the loans under this paragraph.
       ``(iii) Limitation on eligible lender option to 
     consolidate.--The option described in clause (i) shall not 
     apply if--

       ``(I) the borrower includes in the notification in clause 
     (ii) verification of consolidation terms and conditions 
     offered by an eligible lender other than the eligible lender 
     described in clause (i); and
       ``(II) not later than 10 days after receiving such 
     notification from the borrower, the eligible lender described 
     in clause (i) does not agree to match such terms and 
     conditions, or provide more favorable terms and conditions to 
     such borrower than the offered terms and conditions described 
     in subclause (I).

       ``(iv) Consolidation of additional loans.--If a borrower 
     has a Federal Direct PLUS Loan or a loan made on behalf of a 
     dependent student under section 428B and seeks to consolidate 
     such loan with an eligible Federal PLUS Loan made under this 
     paragraph, then the eligible lender that originated the 
     borrower's loan under this paragraph may include in the 
     consolidation under this subparagraph a Federal Direct PLUS 
     Loan or a loan made on behalf of a dependent student under 
     section 428B, but only if--

       ``(I) in the case of a Federal Direct PLUS Loan, the 
     eligible lender agrees, not later than 10 days after the 
     borrower requests such consolidation from the lender, to 
     match the consolidation terms and conditions that would 
     otherwise be available to the borrower if the borrower 
     consolidated such loans in the loan program under part D; or
       ``(II) in the case of a loan made on behalf of a dependent 
     student under section 428B, the eligible lender agrees, not 
     later than 10 days after the borrower requests such 
     consolidation from the lender, to match the consolidation 
     terms and conditions offered by an eligible lender other than 
     the eligible lender that originated the borrower's loans 
     under this paragraph.

       ``(v) Special allowance on consolidation loans that include 
     loans made under this paragraph.--The applicable special 
     allowance payment for loans consolidated under this paragraph 
     shall be equal to the lesser of--

       ``(I) the weighted average of the special allowance payment 
     on such loans, except that in calculating such weighted 
     average the Secretary shall exclude any Federal Direct PLUS 
     Loan included in the consolidation; or
       ``(II) the result of--

       ``(aa) the average of the bond equivalent rates of the 
     quotes of the 3-month commercial paper (financial) rates in 
     effect for each of the days in such quarter as reported by 
     the Federal Reserve in Publication H-15 (or its successor) 
     for such 3-month period; plus
       ``(bb) 1.59 percent.
       ``(vi) Interest payment rebate fee.--Any loan under section 
     428C consolidated under this paragraph shall not be subject 
     to the interest payment rebate fee under section 428C(f).''.
                     TITLE VIII--PARTNERSHIP GRANTS

     SEC. 801. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.

       Title VII (20 U.S.C. 1133 et seq.) is amended by adding at 
     the end the following new part:

            ``PART E--COLLEGE ACCESS CHALLENGE GRANT PROGRAM

     ``SEC. 771. COLLEGE ACCESS CHALLENGE GRANT PROGRAM.

       ``(a) Authorization and Appropriation.--There are 
     authorized to be appropriated, and there are appropriated, to 
     carry out this section $66,000,000 for each of the fiscal 
     years 2008 and 2009. The authority to award grants under this 
     section shall expire at the end of fiscal year 2009.
       ``(b) Program Authorized.--
       ``(1) Grants authorized.--From amounts appropriated under 
     subsection (a), the Secretary shall award grants, from 
     allotments under subsection (c), to States (and to 
     philanthropic organization, as appropriate under paragraph 
     (3)) having applications approved under subsection (d), to 
     enable the State (or philanthropic organization) to pay the 
     Federal share of the costs of carrying out the activities and 
     services described in subsection (f).
       ``(2) Federal share; non-federal share.--
       ``(A) Federal share.--The amount of the Federal share under 
     this section for a fiscal year shall be equal to \2/3\ of the 
     costs of the activities and services described in subsection 
     (f) that are carried out under the grant.
       ``(B) Non-federal share.--The amount of the non-Federal 
     share under this section shall be equal to \1/3\ of the costs 
     of the activities and services described in subsection (f). 
     The non-Federal share may be in cash or in-kind, and may be 
     provided from State resources, contributions from private 
     organizations, or both.
       ``(3) Reduction for failure to pay non-federal share.--If a 
     State fails to provide the full non-Federal share required 
     under this subsection, the Secretary shall reduce the amount 
     of the grant payment under this section proportionately, and 
     may award the proportionate reduction amount of the grant 
     directly to a philanthropic organization, as defined in 
     subsection (i), to carry out this section.
       ``(4) Temporary ineligibility for subsequent payments.--
       ``(A) In general.--The Secretary shall determine a grantee 
     to be temporarily ineligible to receive a grant payment under 
     this section for a fiscal year if--
       ``(i) the grantee fails to submit an annual report pursuant 
     to subsection (h) for the preceding fiscal year; or
       ``(ii) the Secretary determines, based on information in 
     such annual report, that the grantee is not effectively 
     meeting the conditions described under subsection (g) and the 
     goals of the application under subsection (d).
       ``(B) Reinstatement.--If the Secretary determines that a 
     grantee is ineligible under subparagraph (A), the Secretary 
     may enter into an agreement with the grantee setting forth 
     the terms and conditions under which the grantee may regain 
     eligibility to receive payments under this section.
       ``(c) Determination of Allotment.--
       ``(1) Amount of allotment.--Subject to paragraph (2), in 
     making grant payments to grantees under this section, the 
     allotment to each grantee for a fiscal year shall be equal to 
     the sum of--
       ``(A) the amount that bears the same relation to 50 percent 
     of the amount appropriated under subsection (a) for such 
     fiscal year as the number of residents in the State aged 5 
     through 17 who are living below the poverty line applicable 
     to the resident's family size (as determined under section 
     673(2) of the Community Service Block Grant Act) bears to the 
     total number of such residents in all States; and
       ``(B) the amount that bears the same relation to 50 percent 
     of the amount appropriated under subsection (a) for such 
     fiscal year as the number of residents in the State aged 15 
     through 44 who are living below the poverty line applicable 
     to the individual's family size (as determined under section 
     673(2) of the Community Service Block Grant Act) bears to the 
     total number of such residents in all States.
       ``(2) Minimum amount.--The allotment for each State under 
     this section for a fiscal year shall not be an amount that is 
     less than 0.5 percent of the total amount appropriated under 
     subsection (a) for such fiscal year.
       ``(d) Submission and Contents of Application.--
       ``(1) In general.--For each fiscal year for which a grantee 
     desires a grant payment under subsection (b), the State 
     agency with jurisdiction over higher education, or another 
     agency

[[Page H10176]]

     designated by the Governor or chief executive of the State to 
     administer the program under this section, or a philanthropic 
     organization, in accordance with subsection (b)(3), shall 
     submit an application to the Secretary at such time, in such 
     manner, and containing the information described in paragraph 
     (2).
       ``(2) Application.--An application submitted under 
     paragraph (1) shall include the following:
       ``(A) A description of the grantee's capacity to administer 
     the grant under this section and report annually to the 
     Secretary on the activities and services described in 
     subsection (f).
       ``(B) A description of the grantee's plan for using the 
     grant funds to meet the requirements of subsections (f) and 
     (g), including plans for how the grantee will make special 
     efforts to--
       ``(i) provide such benefits to students in the State that 
     are underrepresented in postsecondary education; or
       ``(ii) in the case of a philanthropic organization that 
     operates in more than one State, provide benefits to such 
     students in each such State for which the philanthropic 
     organization is receiving grant funds under this section.
       ``(C) A description of how the grantee will provide or 
     coordinate the provision of the non-Federal share from State 
     resources or private contributions.
       ``(D) A description of--
       ``(i) the structure that the grantee has in place to 
     administer the activities and services described in 
     subsection (f); or
       ``(ii) the plan to develop such administrative capacity.
       ``(e) Subgrants to Nonprofit Organizations.--A State 
     receiving a payment under this section may elect to make a 
     subgrant to one or more nonprofit organizations in the State, 
     including an eligible not-for-profit holder (as defined in 
     section 435(p) of the Higher Education Act of 1965, as 
     amended by section 303 of this Act), or a partnership of such 
     organizations, to carry out activities or services described 
     in subsection (f), if the nonprofit organization or 
     partnership--
       ``(1) was in existence on the day before the date of the 
     enactment of this Act; and
       ``(2) as of such day, was participating in activities and 
     services related to increasing access to higher education, 
     such as those activities and services described in subsection 
     (f).
       ``(f) Allowable Uses.--
       ``(1) In general.--Subject to paragraph (3), a grantee may 
     use a grant payment under this section only for the following 
     activities and services, pursuant to the conditions under 
     subsection (g):
       ``(A) Information for students and families regarding--
       ``(i) the benefits of a postsecondary education;
       ``(ii) postsecondary education opportunities;
       ``(iii) planning for postsecondary education; and
       ``(iv) career preparation.
       ``(B) Information on financing options for postsecondary 
     education and activities that promote financial literacy and 
     debt management among students and families.
       ``(C) Outreach activities for students who may be at risk 
     of not enrolling in or completing postsecondary education.
       ``(D) Assistance in completion of the Free Application for 
     Federal Student Aid or other common financial reporting form 
     under section 483(a) of the Higher Education Act of 1965.
       ``(E) Need-based grant aid for students.
       ``(F) Professional development for guidance counselors at 
     middle schools and secondary schools, and financial aid 
     administrators and college admissions counselors at 
     institutions of higher education, to improve such 
     individuals' capacity to assist students and parents with--
       ``(i) understanding--

       ``(I) entrance requirements for admission to institutions 
     of higher education; and
       ``(II) State eligibility requirements for Academic 
     Competitiveness Grants or National SMART Grants under section 
     401A, and other financial assistance that is dependent upon a 
     student's coursework;

       ``(ii) applying to institutions of higher education;
       ``(iii) applying for Federal student financial assistance 
     and other State, local, and private student financial 
     assistance and scholarships;
       ``(iv) activities that increase students' ability to 
     successfully complete the coursework required for a 
     postsecondary degree, including activities such as tutoring 
     or mentoring; and
       ``(v) activities to improve secondary school students' 
     preparedness for postsecondary entrance examinations.
       ``(G) Student loan cancellation or repayment (as 
     applicable), or interest rate reductions, for borrowers who 
     are employed in a high-need geographical area or a high-need 
     profession in the State, as determined by the State.
       ``(2) Prohibited uses.--Funds made available under this 
     section shall not be used to promote any lender's loans.
       ``(3) Use of funds for administrative purposes.--A grantee 
     may use not more than 6 percent of the total amount of the 
     sum of the Federal share provided under this section and the 
     non-Federal share required under this section for 
     administrative purposes relating to the grant under this 
     section.
       ``(g) Special Conditions.--
       ``(1) Availability to students and families.--A grantee 
     receiving a grant payment under this section shall--
       ``(A) make the activities and services described in 
     subparagraphs (A) through (F) of subsection (f)(1) that are 
     funded under the payment available to all qualifying students 
     and families in the State;
       ``(B) allow students and families to participate in the 
     activities and services without regard to--
       ``(i) the postsecondary institution in which the student 
     enrolls;
       ``(ii) the type of student loan the student receives;
       ``(iii) the servicer of such loan; or
       ``(iv) the student's academic performance;
       ``(C) not charge any student or parent a fee or additional 
     charge to participate in the activities or services; and
       ``(D) in the case of an activity providing grant aid, not 
     require a student to meet any condition other than 
     eligibility for Federal financial assistance under title IV 
     of the Higher Education Act of 1965, except as provided for 
     in the loan cancellation or repayment or interest rate 
     reductions described in subsection (f)(1)(G).
       ``(2) Priority.--A grantee receiving a grant payment under 
     this section shall, in carrying out any activity or service 
     described in subsection (f)(1) with the grant funds, 
     prioritize students and families who are living below the 
     poverty line applicable to the individual's family size (as 
     determined under section 673(2) of the Community Service 
     Block Grant Act).
       ``(3) Disclosures.--
       ``(A) Organizational disclosures.--In the case of a State 
     that has chosen to make a payment to an eligible not-for-
     profit holder in the State in accordance with subsection (e), 
     the holder shall clearly and prominently indicate the name of 
     the holder and the nature of the holder's work in connection 
     with any of the activities carried out, or any information or 
     services provided, with such funds.
       ``(B) Informational disclosures.--Any information about 
     financing options for higher education provided through an 
     activity or service funded under this section shall--
       ``(i) include information to students and the students' 
     parents of the availability of Federal, State, local, 
     institutional, and other grants and loans for postsecondary 
     education; and
       ``(ii) present information on financial assistance for 
     postsecondary education that is not provided under title IV 
     of the Higher Education Act of 1965 in a manner that is 
     clearly distinct from information on student financial 
     assistance under such title.
       ``(4) Coordination.--A grantee receiving a grant payment 
     under this section shall attempt to coordinate the activities 
     carried out with the grant payment with any existing 
     activities that are similar to such activities, and with any 
     other entities that support the existing activities in the 
     State.
       ``(h) Report.--A grantee receiving a payment under this 
     section shall prepare and submit an annual report to the 
     Secretary on the activities and services carried out under 
     this section, and on the implementation of such activities 
     and services. The report shall include--
       ``(1) each activity or service that was provided to 
     students and families over the course of the year;
       ``(2) the cost of providing each activity or service;
       ``(3) the number, and percentage, if feasible and 
     applicable, of students who received each activity or 
     service; and
       ``(4) the total contributions from private organizations 
     included in the grantee's non-Federal share for the fiscal 
     year.
       ``(i) Definitions.--In this section:
       ``(1) Philanthropic organization.--The term `philanthropic 
     organization' means a non-profit organization--
       ``(A) that does not receive funds under title IV of the 
     Higher Education Act of 1965 or under the Elementary and 
     Secondary Education Act of 1965;
       ``(B) that is not a local educational agency or an 
     institution of higher education;
       ``(C) that has a demonstrated record of dispersing grant 
     aid to underserved populations to ensure access to, and 
     participation in, higher education;
       ``(D) that is affiliated with an eligible consortia (as 
     defined in paragraph (2)) to carry out this section; and
       ``(E) the primary purpose of which is to provide financial 
     aid and support services to students from underrepresented 
     populations to increase the number of such students who enter 
     and remain in college.
       ``(2) Eligible consortia.--The term `eligible consortia' 
     means a partnership of 2 or more entities that have agreed to 
     work together to carry out this section that--
       ``(A) includes--
       ``(i) a philanthropic organization, which serves as the 
     manager of the consortia;
       ``(ii) a State that demonstrates a commitment to ensuring 
     the creation of a Statewide system to address the issues of 
     early intervention and financial support for eligible 
     students to enter and remain in college; and
       ``(iii) at the discretion of the philanthropic organization 
     described in clause (i), additional partners, including other 
     non-profit organizations, government entities (including 
     local municipalities, school districts, cities, and 
     counties), institutions of higher education, and other public 
     or private programs that provide mentoring or outreach 
     programs; and
       ``(B) conducts activities to assist students with entering 
     and remaining in college, which may include--
       ``(i) providing need-based grants to students;
       ``(ii) providing early notification to low-income students 
     of their potential eligibility for Federal financial aid 
     (which may include assisting students and families with 
     filling out FAFSA forms), as well as other financial aid and 
     other support available from the eligible consortia;
       ``(iii) encouraging increased student participation in 
     higher education through mentoring or outreach programs; and
       ``(iv) conducting marketing and outreach efforts that are 
     designed to--

       ``(I) encourage full participation of students in the 
     activities of the consortia that carry out this section; and
       ``(II) provide the communities impacted by the activities 
     of the consortia with a general knowledge about the efforts 
     of the consortia.

[[Page H10177]]

       ``(3) Grantee.--The term `grantee' means--
       ``(A) a State awarded a grant under this section; or
       ``(B) with respect to such a State that has failed to meet 
     the non-Federal share requirement of subsection (b), a 
     philanthropic organization awarded the proportionate 
     reduction amount of such a grant under subsection (b)(3).''.

     SEC. 802. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND 
                   UNIVERSITIES AND MINORITY-SERVING INSTITUTIONS.

       Title IV (20 U.S.C. 1070 et seq.) is further amended by 
     adding after part I (as added by section 701 of this Act) the 
     following new part:

 ``PART J--STRENGTHENING HISTORICALLY BLACK COLLEGES AND UNIVERSITIES 
                AND OTHER MINORITY-SERVING INSTITUTIONS

     ``SEC. 499A. INVESTMENT IN HISTORICALLY BLACK COLLEGES AND 
                   UNIVERSITIES AND OTHER MINORITY-SERVING 
                   INSTITUTIONS.

       ``(a) Eligible Institution.--An institution of higher 
     education is eligible to receive funds from the amounts made 
     available under this section if such institution is--
       ``(1) a part B institution (as defined in section 322 (20 
     U.S.C. 1061));
       ``(2) a Hispanic-serving institution (as defined in section 
     502 (20 U.S.C. 1101a));
       ``(3) a Tribal College or University (as defined in section 
     316 (20 U.S.C. 1059c));
       ``(4) an Alaska Native-serving institution or a Native 
     Hawaiian-serving institution (as defined in section 317(b) 
     (20 U.S.C. 1059d(b)));
       ``(5) a Predominantly Black Institution (as defined in 
     subsection (c));
       ``(6) an Asian American and Native American Pacific 
     Islander-serving institution (as defined in subsection (c)); 
     or
       ``(7) a Native American-serving nontribal institution (as 
     defined in subsection (c)).
       ``(b) New Investment of Funds.--
       ``(1) In general.--There shall be available to the 
     Secretary to carry out this section, from funds not otherwise 
     appropriated, $255,000,000 for each of the fiscal years 2008 
     and 2009. The authority to award grants under this section 
     shall expire at the end of fiscal year 2009.
       ``(2) Allocation and allotment.--
       ``(A) In general.--Of the amounts made available under 
     paragraph (1) for each fiscal year--
       ``(i) $100,000,000 shall be available for allocation under 
     subparagraph (B);
       ``(ii) $100,000,000 shall be available for allocation under 
     subparagraph (C); and
       ``(iii) $55,000,000 shall be available for allocation under 
     subparagraph (D).
       ``(B) HSI stem and articulation programs.--The amount made 
     available for allocation under this subparagraph by 
     subparagraph (A)(i) for any fiscal year shall be available 
     for Hispanic-serving Institutions for activities described in 
     section 503, with a priority given to applications that 
     propose--
       ``(i) to increase the number of Hispanic and other low 
     income students attaining degrees in the fields of science, 
     technology, engineering, or mathematics; and
       ``(ii) to develop model transfer and articulation 
     agreements between 2-year Hispanic-serving institutions and 
     4-year institutions in such fields.
       ``(C) Allocation and allotment hbcus and pbis.--From the 
     amount made available for allocation under this subparagraph 
     by subparagraph (A)(ii) for any fiscal year--
       ``(i) 85 percent shall be available to eligible 
     institutions described in subsection (a)(1) and shall be made 
     available as grants under section 323 and allotted among such 
     institutions under section 324, treating such amount, plus 
     the amount appropriated for such fiscal year in a regular or 
     supplemental appropriation Act to carry out part B of title 
     III, as the amount appropriated to carry out part B of title 
     III for purposes of allotments under section 324, for use by 
     such institutions with a priority for--

       ``(I) activities described in paragraphs (1), (2), (4), 
     (5), and (10) of section 323(a); and
       ``(II) other activities, consistent with the institution's 
     comprehensive plan and designed to increase the institution's 
     capacity to prepare students for careers in the physical or 
     natural sciences, mathematics, computer science or 
     information technology or sciences, engineering, language 
     instruction in the less-commonly taught languages or 
     international affairs, or nursing or allied health 
     professions; and

       ``(ii) 15 percent shall be available to eligible 
     institutions described in subsection (a)(5) and shall be 
     available for a competitive grant program to award 25 grants 
     of $600,000 annually for programs in any of the following 
     areas:

       ``(I) science, technology, engineering, or mathematics 
     (STEM);
       ``(II) health education;
       ``(III) internationalization or globalization;
       ``(IV) teacher preparation; or
       ``(V) improving educational outcomes of African American 
     males.

       ``(D) Allocation and allotment to other minority-serving 
     institutions.--From the amount made available for allocation 
     under this subparagraph by subparagraph (A)(iii) for any 
     fiscal year--
       ``(i) $30,000,000 for such fiscal year shall be available 
     to eligible institutions described in subsection (a)(3) and 
     shall be made available as grants under section 316, treating 
     such $30,000,000 as part of the amount appropriated for such 
     fiscal year in a regular or supplemental appropriation Act to 
     carry out such section, and using such $30,000,000 for 
     purposes described in subsection (c) of such section;
       ``(ii) $15,000,000 for such fiscal year shall be available 
     to eligible institutions described in subsection (a)(4) and 
     shall be made available as grants under section 317, treating 
     such $15,000,000 as part of the amount appropriated for such 
     fiscal year in a regular or supplemental appropriation Act to 
     carry out such section and using such $15,000,000 for 
     purposes described in subsection (c) of such section;
       ``(iii) $5,000,000 for such fiscal year shall be available 
     to eligible institutions described in subsection (a)(6) for 
     activities described in section 311(c); and
       ``(iv) $5,000,000 for such fiscal year shall be available 
     to eligible institutions described in subsection (a)(7)--

       ``(I) to plan, develop, undertake, and carry out activities 
     to improve and expand such institutions' capacity to serve 
     Native Americans, which may include--

       ``(aa) the purchase, rental, or lease of scientific or 
     laboratory equipment for educational purposes, including 
     instructional and research purposes;
       ``(bb) renovation and improvement in classroom, library, 
     laboratory, and other instructional facilities;
       ``(cc) support of faculty exchanges, faculty development, 
     and faculty fellowships to assist faculty in attaining 
     advanced degrees in the faculty's field of instruction;
       ``(dd) curriculum development and academic instruction;
       ``(ee) the purchase of library books, periodicals, 
     microfilm, and other educational materials;
       ``(ff) funds and administrative management, and acquisition 
     of equipment for use in strengthening funds management;
       ``(gg) the joint use of facilities such as laboratories and 
     libraries; and
       ``(hh) academic tutoring and counseling programs and 
     student support services; and

       ``(II) to which the Secretary, to the extent possible and 
     consistent with a competitive process under which such grants 
     are awarded, allocates funds under this clause to ensure 
     maximum and equitable distribution among all such eligible 
     institutions.

       ``(c) Definitions.--
       ``(1) Asian american.--The term `Asian American' has the 
     meaning given the term `Asian' in the Office of Management 
     and Budget's Standards for Maintaining, Collecting, and 
     Presenting Federal Data on Race and Ethnicity as published on 
     October 30, 1997 (62 Fed. Reg. 58789).
       ``(2) Asian american and native american pacific islander-
     serving institution.--The term `Asian American and Native 
     American Pacific Islander-serving institution' means an 
     institution of higher education that--
       ``(A) is an eligible institution under section 312(b); and
       ``(B) at the time of application, has an enrollment of 
     undergraduate students that is at least 10 percent Asian 
     American and Native American Pacific Islander students.
       ``(3) Enrollment of needy students.--The term `enrollment 
     of needy students' means the enrollment at an institution of 
     higher education with respect to which not less than 50 
     percent of the undergraduate students enrolled in an academic 
     program leading to a degree--
       ``(A) in the second fiscal year preceding the fiscal year 
     for which the determination is made, were Federal Pell Grant 
     recipients for such year;
       ``(B) come from families that receive benefits under a 
     means-tested Federal benefit program (as defined in paragraph 
     (5));
       ``(C) attended a public or nonprofit private secondary 
     school--
       ``(i) that is in the school district of a local educational 
     agency that was eligible for assistance under part A of title 
     I of the Elementary and Secondary Education Act of 1965 for 
     any year during which the student attended such secondary 
     school; and
       ``(ii) which for the purpose of this paragraph and for that 
     year was determined by the Secretary (pursuant to regulations 
     and after consultation with the State educational agency of 
     the State in which the school is located) to be a school in 
     which the enrollment of children counted under a measure of 
     poverty described in section 1113(a)(5) of such Act exceeds 
     30 percent of the total enrollment of such school; or
       ``(D) are first-generation college students (as that term 
     is defined in section 402A(g)), and a majority of such first-
     generation college students are low-income individuals.
       ``(4) Low-income individual.--The term `low-income 
     individual' has the meaning given such term in section 
     402A(g).
       ``(5) Means-tested federal benefit program.--The term 
     `means-tested Federal benefit program' means a program of the 
     Federal Government, other than a program under title IV, in 
     which eligibility for the programs' benefits or the amount of 
     such benefits are determined on the basis of income or 
     resources of the individual or family seeking the benefit.
       ``(6) Native american.--The term `Native American' means an 
     individual who is of a tribe, people, or culture that is 
     indigenous to the United States.
       ``(7) Native american pacific islander.--The term `Native 
     American Pacific Islander' means any descendant of the 
     aboriginal people of any island in the Pacific Ocean that is 
     a territory or possession of the United States
       ``(8) Native american-serving nontribal institution.--The 
     term `Native American-serving nontribal institution' means an 
     institution of higher education that--
       ``(A) at the time of application--
       ``(i) has an enrollment of undergraduate students that is 
     not less than 10 percent Native American students; and
       ``(ii) is not a Tribal College or University (as defined in 
     section 316); and
       ``(B) submits to the Secretary such enrollment data as may 
     be necessary to demonstrate that the institution is described 
     in subparagraph (A), along with such other information and 
     data as the Secretary may by regulation require.

[[Page H10178]]

       ``(9) Predominantly black institution.--The term 
     `Predominantly Black institution' means an institution of 
     higher education that--
       ``(A) has an enrollment of needy students as defined by 
     paragraph (3);
       ``(B) has an average educational and general expenditure 
     which is low, per full-time equivalent undergraduate student 
     in comparison with the average educational and general 
     expenditure per full-time equivalent undergraduate student of 
     institutions of higher education that offer similar 
     instruction, except that the Secretary may apply the waiver 
     requirements described in section 392(b) to this subparagraph 
     in the same manner as the Secretary applies the waiver 
     requirements to section 312(b)(1)(B);
       ``(C) has an enrollment of undergraduate students--
       ``(i) that is at least 40 percent Black American students;
       ``(ii) that is at least 1,000 undergraduate students;
       ``(iii) of which not less than 50 percent of the 
     undergraduate students enrolled at the institution are low-
     income individuals or first-generation college students (as 
     that term is defined in section 402A(g)); and
       ``(iv) of which not less than 50 percent of the 
     undergraduate students are enrolled in an educational program 
     leading to a bachelor's or associate's degree that the 
     institution is licensed to award by the State in which the 
     institution is located;
       ``(D) is legally authorized to provide, and provides within 
     the State, an educational program for which the institution 
     of higher education awards a bachelor's degree, or in the 
     case of a junior or community college, an associate's degree;
       ``(E) is accredited by a nationally recognized accrediting 
     agency or association determined by the Secretary to be a 
     reliable authority as to the quality of training offered, or 
     is, according to such an agency or association, making 
     reasonable progress toward accreditation; and
       ``(F) is not receiving assistance under part B of title 
     III.''.
       And the Senate agree to the same.

      George Miller,
      Robert E. Andrews,
      Bobby Scott,
      Ruben Hinojosa,
      John F. Tierney,
      David Wu,
      Susan A. Davis,
      Danny K. Davis,
      Timothy Bishop,
      Mazie K. Hirono,
      Jason Altmire,
      John Yarmuth,
      Joe Courtney,
                                Managers on the Part of the House.

      Ted Kennedy,
      Chris Dodd,
      Tom Harkin,
      Barbara A. Mikulski,
      Jeff Bingaman,
      Patty Murray,
      Jack Reed,
      Hillary Rodham Clinton,
      Barack Obama,
      Bernard Sanders,
      Sherrod Brown,
      Michael B. Enzi,
      Lamar Alexander,
      Orrin G. Hatch,
                               Managers on the Part of the Senate.

       Joint Explanatory Statement of the Committee of Conference

       The managers on the part of the House and the Senate at the 
     conference on the disagreeing votes of the two Houses on the 
     amendment of the Senate to the bill (H.R. 2669), to provide 
     for reconciliation pursuant to section 601 of the concurrent 
     resolution on the budget for fiscal year 2008, submit the 
     following joint statement to the House and the Senate in 
     explanation of the effect of the action agreed upon by the 
     managers and recommended in the accompanying conference 
     report:
       The Senate amendment struck all of the House bill after the 
     enacting clause and inserted a substitute text.
       The House recedes from its disagreement to the amendment of 
     the Senate with an amendment that is a substitute for the 
     House bill and the Senate amendment. The differences between 
     the House bill, the Senate amendment, and the substitute 
     agreed to in conference are noted below, except for clerical 
     corrections, conforming changes made necessary by agreements 
     reached by the conferees, and minor drafting and clarifying 
     changes.


                         Section 1. Short Title

       The House bill's short title is the ``College Cost 
     Reduction Act.''
       The Senate amendment provides that the Act may be cited as 
     the ``Higher Education Access Act of 2007'' and that, unless 
     otherwise indicated, references in the bill are made to the 
     Higher Education Act of 1965.
       The House recedes with an amendment to provide a new short 
     title of the ``College Cost Reduction and Access Act.'' The 
     Conferees adopt the Senate amendment as amended by the House.

  TITLE I--GRANTS TO STUDENTS IN ATTENDANCE AT INSTITUTIONS OF HIGHER 
                               EDUCATION


                    Section 101. Tuition Sensitivity

       The House bill (Sec. 101) eliminates the Pell grant 
     ``tuition sensitivity'' provision that prevents low-income 
     students attending low-cost institutions, such as community 
     colleges, to benefit fully from the Pell Grant. Authorizes 
     and appropriates $5,000,000 for fiscal year 2008.
       The Senate amendment (Sec. 101) also eliminates the Pell 
     grant ``tuition sensitivity'' provision and authorizes and 
     appropriates $5,000,000 for fiscal year 2008.
       The House and the Senate recede with an amendment to 
     authorize and appropriate $11,000,000 for fiscal year 2008 to 
     ensure that all eligible students in award year 2007-2008 
     receive funding. The Conferees concur and adopt the 
     amendment.


              Section 102. Mandatory Pell Grant Increases

       The House bill (Sec. 101) authorizes and appropriates new 
     mandatory funding to increase the maximum Pell grant award, 
     above the appropriated level, by: $200 in 2008-09; $200 in 
     2009-10; $300 in 2010-11; $500 in 2011-12; and $500 in 2012 
     and each subsequent award year.
       The Senate amendment (Sec. 102) creates ``Promise 
     grants''--a new grant program for low-income, Pell-eligible 
     students to be established in addition to the Pell grant 
     program. Promise grants shall be awarded in the same way Pell 
     grants are awarded, except that they shall be awarded only to 
     students who are already eligible for Pell grants. Grants 
     shall be awarded to those students with the greatest need, as 
     determined under Section 471. Grants awarded under this 
     subsection shall be used to supplement and not supplant other 
     Federal, State and institutional grant funds. The Senate 
     amendment authorizes and appropriates new mandatory funding 
     to increase the maximum Pell grant award, above the 
     appropriated level, by: $790 in 2008-09; $890 in 2009-10; 
     $990 in 2010-11; $1,090 in 2011-12; and $1,090 in 2012.
       The House and Senate recede with an amendment that provides 
     new mandatory funding for Pell grants and makes the following 
     increases in the Pell maximum under current law:
       $490 in 2008-2009 and 2009-2010;
       $690 in 2010-2011 and 2011-2012; and
       $1,090 in 2012-2013.
       The Conferees concur and adopt the amendment as proposed by 
     both the House and the Senate. Combined with an appropriated 
     level of $4,310, as it is in current law, the maximum Pell 
     Grant award will reach $4,800 in the 2008-2009 academic year, 
     $4,800 in the 2009-2010 academic year, $5,000 in the 2010-
     2011 academic year, $5,000 in the 2011-2012 academic year, 
     and $5,400 in the 2012-2013 academic year.
       The Conferees intend that in awarding the funds under this 
     section, the Secretary shall determine the universe of 
     students who are eligible to receive a Pell grant, without 
     regard to this section, and award grants under this section 
     only to such students. The Conferees further intend that the 
     allocated funds for all academic years be distributed in the 
     same manner as funds are awarded under the Pell grant 
     program, in accordance with the eligibility determination, 
     needs analysis formula and regulations used for the 
     distribution of Pell grant awards from discretionary funds. 
     The Conferees intend that students who receive a maximum Pell 
     grant under the discretionary maximum award level will be 
     eligible to receive the maximum award allowed under this 
     section, and students who receive Pell grants that are less 
     than the maximum under the discretionary funding would be 
     eligible to receive grants under this section proportionate 
     to the size of the Pell grant the student received under the 
     discretionary funding level, in accordance with the Pell 
     grant formula.
       The Conferees intend that the funding provided in this 
     section be used to supplement, and in no way supplant, 
     current or future discretionary funding for the Pell grant 
     program or increases in such funding.


                       Section 103. Upward Bound

       The House bill (Sec. 412) restricts the Secretary's use of 
     funds for the purposes of evaluating and selecting 
     participants of the Upward Bound program. The bill also 
     provides an additional $228 million to restore Upward Bound 
     funding to unfunded programs from the FY07 competition.
       The Senate amendment contains no similar provision.
       The Senate recedes with an amendment to strike the 
     provision that restricts the Secretary's use of funds for the 
     purposes of evaluating and selecting participants of the 
     Upward Bound Program. The Conferees adopt the provision in 
     the House bill as amended by the Senate.


                       Section 104. TEACH Grants

       The House bill (Sec. 301) creates new TEACH Grants that 
     provide up-front pre-paid tuition assistance of $4,000/year 
     (with a maximum of $16,000) for high-achieving graduate and 
     undergraduate students who commit to teaching a high-need 
     subject in a high-need school for four years. Bonus grants 
     are provided to students who are enrolled in a qualified 
     teacher education program and teach in a science or 
     mathematics field.
       The Senate amendment contains no similar provision.
       The Senate recedes with an amendment striking the bonus 
     grants in the House proposal. The Conferees adopt the 
     provision in the House bill as amended by the Senate.
       The Conferees intend that the Department of Education may 
     operate this program through a pre-existing office, and does 
     not require the creation of a new office.

         TITLE II--STUDENT LOAN BENEFITS, TERMS, AND CONDITIONS


                 Section 201. Interest Rate Reductions

       The House bill (Sec. 111) reduces interest rates on 
     subsidized Stafford loans for undergraduates to 6.12 percent 
     on July 1, 2008; 5.44

[[Page H10179]]

     percent on July 1, 2009; 4.76 percent on July 1, 2010; 4.08 
     percent on July 1, 2011 and 3.4 percent on July 1, 2012.
       The Senate amendment contains no similar provision.
       The Senate recedes with an amendment, to reduce interest 
     rates on subsidized Stafford loans for undergraduates to 6.0 
     percent on July 1, 2008; 5.6 percent on July 1, 2009; 4.5 
     percent on July 1, 2010; and 3.4 percent on July 1, 2011. The 
     Conferees adopt the provision in the House bill as amended by 
     the Senate.


 Section 202. Student Loan Deferment for Certain Members of the Armed 
                                 Forces

       The Senate amendment (Sec. 202) eliminates a three-year 
     limitation on the period for which certain members of the 
     armed forces may receive deferments on their student loan 
     payments. It allows deferments until 180 days after such 
     member is demobilized. It also provides that such benefits 
     are available regardless of when the student loan was 
     originated. As in current law, members of the armed forces 
     who qualify for this deferment are limited to those who are 
     serving on active duty or performing qualifying National 
     Guard duty during a war or other military operation in a 
     national emergency.
       The House bill contains no similar provision.
       The House recedes.


                  Section 203. Income-Based Repayment

       The House bill (Sec. 133) builds on the tenets of the 
     Income Contingent Repayment program by guaranteeing that all 
     borrowers' loan payments will be limited to 15 percent of 
     their discretionary income, or 15 percent of the amount by 
     which a borrower's adjusted gross income exceeds 150 percent 
     of the poverty line, divided by 12. Under this section, 
     unpaid interest and principal are capitalized and any 
     outstanding loan balance is forgiven after 20 years of 
     repayment.
       In the Senate amendment, unpaid interest on subsidized 
     loans is paid or forgiven by the Secretary and outstanding 
     loan balance is forgiven after 25 years of repayment. The 
     amendment provides that borrowers repaying loans according to 
     income-contingent repayment or income-sensitive repayment 
     plans prior to enactment of this Act shall have the option of 
     continuing to repay under the terms and conditions of those 
     programs as they existed prior to enactment of this Act or 
     may elect to use the income-based repayment plan created by 
     this section.
       The House and Senate recede with an amendment adopting the 
     structure of the House proposal, and requiring the Secretary 
     to pay any unpaid interest on subsidized loans for up to 
     three years. The amendment also provides for loan forgiveness 
     of unpaid principal balances after 25 years of repayment in 
     the income-based repayment program. The Conferees adopt the 
     provision as proposed by both the House and the Senate.


     Section 204. Deferral of Loan Repayment Following Active Duty

       The House bill (Sec. 137) allows active duty members of the 
     armed services, including members of the National Guard or 
     other reserve component of the armed forces who were enrolled 
     in college or left college within six months of deployment to 
     receive extended repayment on loan terms of up to 13 months 
     upon return from active duty.
       The Senate amendment contains no similar provision.
       The Senate recedes.


                 Section 205. Maximum Repayment Period

       The House bill (Sec. 136) amends provisions concerning the 
     maximum repayment period in the income-contingent repayment 
     program.
       The Senate amendment contains no similar provision.
       The Senate recedes.

            TITLE III--FEDERAL FAMILY EDUCATION LOAN PROGRAM


           Section 301. Guaranty Agency Collection Retention

       The House bill (Sec. 116) reduces the percentage which 
     guaranty agencies shall be allowed to retain from payments 
     made through collections on defaulted loans from 23 percent 
     to 16 percent.
       The Senate amendment (Sec. 302) contains the same 
     provision.
       The Conferees adopt the language of the identical 
     provisions in both the House and Senate.


  Section 302. Elimination of Exceptional Performer Status for Lenders

       The House bill (Sec. 114) eliminates the provision that 
     allows lenders designated as ``exceptional performers'' to 
     receive 99 percent insurance on defaulted loans if they are 
     in full compliance with due diligence requirements.
       The Senate amendment (Sec. 303) also eliminates the 
     provision that allows lenders designated as ``exceptional 
     performers.'' The Senate amendment makes the change effective 
     October 1, 2007, except that lenders designated as 
     exceptional performers as of that date shall be allowed to 
     continue such designation for the remainder of the year for 
     which the designation was made.
       The House recedes.
       In a July 26, 2007 report concerning the exceptional 
     performer designation, the Government Accountability Office 
     (GAO) found that the designation has not materially affected 
     loan servicing, and that default claims have not declined as 
     a result. In addition, GAO found that providing an extra 2 
     percent reimbursement rate for default claims serviced by 
     exceptional performers is not in the fiscal interest of the 
     federal government, because lenders are being paid a premium 
     to perform due diligence activities that are already required 
     of all lenders. Accordingly, GAO recommended that the 
     exceptional performer designation be eliminated. The 
     Conferees concur with the GAO recommendation and adopt the 
     Senate amendment.


           Sec. 303. Reduction of Lender Insurance Percentage

       The House bill (Sec. 115) reduces the insurance rate from 
     97 percent to 95 percent of the unpaid principal of such 
     loans.
       The Senate amendment (Sec. 301) maintains the level of 
     insurance paid by the Federal government on defaulted loans 
     guaranteed under title IV, currently set at 97 percent.
       The House recedes with an amendment to reduce the lender 
     insurance rate in 2013 to 95 percent. The Conferees adopt the 
     Senate amendment as amended by the House.


                        Section 304. Definitions

     Economic hardship
       The House bill (Sec. 134) changes the definition of 
     economic hardship to create a uniform definition that applies 
     to all borrowers, based on income less than 150 percent of 
     the poverty level for the borrower's family size.
       The Senate amendment (Sec. 304) changes part of the 
     definition of economic hardship to income less than 150 
     percent of the poverty level for the borrower's family size.
       The Senate recedes.
     Eligible not-for-profit holder
       The House bill (Sec. 118) defines a not-for-profit holder 
     for the purposes of determining which lenders qualify for the 
     elimination of the origination fee. As such not-for-profit 
     holders are defined as any holder that is a unit of a state 
     or local government or a nonprofit private entity; and is not 
     owned in whole or in part by, or controlled, by a for-profit 
     entity.
       The Senate amendment (Sec. 304) establishes a definition of 
     eligible not-for-profit holder for the purposes of 
     determining the special allowance payment for which a lender 
     is eligible. Eligible not-for-profit holder means an eligible 
     lender that is a State, or a political subdivision, 
     authority, agency or other instrumentality thereof, or an 
     entity with not-for-profit status under the tax code, or a 
     trustee acting as an eligible lender on behalf of one of 
     these entities; The amendment establishes that no eligible 
     not-for-profit holder shall be owned or controlled, in whole 
     or in part, by a for-profit entity, and that if an eligible 
     not-for-profit holder sells loans on which the Secretary is 
     paying the higher special allowance payment designated for 
     eligible not-for-profit holders described in Section 305 of 
     the Senate amendment, to a for-profit entity or an entity 
     that is not an eligible not-for-profit holder, such loans 
     shall from the date of sale instead receive the special 
     allowance payment designated for other such lenders, as 
     described in Section 305. The Senate amendment requires that 
     the Secretary promulgate regulations implementing this 
     provision no later than one year after the date of enactment.
       The House recedes with an amendment (1) clarifying that an 
     eligible not-for-profit holder will not be considered to be 
     owned or controlled by a for-profit entity if an eligible 
     lender trustee merely holds the loan in trust for the 
     eligible not-for-profit holder and does not receive any 
     benefit from the loan beyond reasonable and customary fees; 
     and (2) specifying that a not-for-profit entity on whose 
     behalf a trustee is acting as an eligible lender will not be 
     deemed owned or controlled by a for-profit entity, as a 
     result of granting a security interest in, or otherwise 
     pledging as collateral, loans or the income from a loan to 
     secure a debt obligation in the operation of the trustee 
     relationship. The amendment also specifies that an eligible 
     not-for-profit holder must have been in operation and serving 
     as an eligible lender on the date of enactment of the College 
     Cost Reduction and Access Act, and that a trustee, in 
     order to be an eligible not-for-profit lender, must be a 
     trustee acting on behalf of such an eligible lender. The 
     amendment specifies that a state may elect to waive this 
     requirement for a new eligible not-for-profit holder 
     determined by the State to be necessary to fill a public 
     purpose, except that a State may not waive any of the 
     requirements related to trustees.
       The Conferees adopt the Senate amendment as amended by the 
     House.


                    Section 305. Special Allowances

     Reduction of lender special allowance payments
       The House bill (Sec. 113) reduces the special allowance 
     payment rate for lenders, which is currently set for student 
     loans at the Commercial Paper (CP) lending rate plus 1.74 
     percent while borrowers are in school or in a grace period, 
     and CP plus 2.34 percent while borrowers are in repayment, 
     and is currently set for PLUS loans at CP plus 2.64 percent, 
     and for consolidation loans at CP plus 2.64 percent (less the 
     1.05 percent annual rebate fee). The House bill reduces these 
     payment rates by 0.55 percentage points (or 55 basis points) 
     for loans held by all lenders and equalizes the special 
     allowance payment rate for Stafford and PLUS loans.
       The Senate amendment (Sec. 305) reduces these payments for 
     loans held by for-profit lenders by 0.50 percentage points 
     (or 50 basis points), and by 0.35 percentage points (35 basis 
     points) for loans held by not-for-profit lenders and 
     equalizes the SAP rate for Stafford and PLUS loans.
       The House recedes with an amendment that reduces the SAP 
     payments by 40 basis points for non-profit lenders and by 55 
     basis points for all other lenders. The amendment

[[Page H10180]]

     also equalizes the SAP rate for Stafford and PLUS loans. The 
     Conferees adopt the Senate amendment as amended by the House.
     Increased loan fees from lenders
       The House bill (Sec. 118) increases the fee the Secretary 
     shall collect under Section 438(d) of title IV on each loan 
     disbursed from 0.50 percent to 1 percent for certain for-
     profit lenders. The fee is eliminated for non-profit lenders 
     and small lenders, defined as those that collectively hold 
     the lowest 15 percent of total loan volume.
       The Senate amendment (Sec. 305) increases the fee the 
     Secretary shall collect from all lenders under Section 438(d) 
     of title IV on each loan disbursed from 0.50 percent to 1 
     percent.
       The House recedes.


                 Section 306. Account Maintenance Fees

       The House bill (Sec. 117) reduces account maintenance fees 
     from 0.1 percent to 0.06 percent.
       The Senate amendment (Sec. 402) changes the method by which 
     account maintenance fees are calculated from a calculation 
     based on the total amount of loan principal to a per-loan 
     basis.
       The Senate recedes.

                       TITLE IV--LOAN FORGIVENESS


       Section 401. Loan Forgiveness for Public Service Employees

       The House bill (Sec. 132) amends the current Income-
     Contingent Repayment program in the Direct Loan program to 
     provide loan forgiveness for public sector employees. The 
     change provides that the Secretary shall forgive the 
     remaining loan balance on a loan under part D of title IV for 
     a borrower who has been employed in a public sector job and 
     has made payments on such loan for a period of ten years.
       The Senate amendment (Sec. 401) creates a new loan 
     forgiveness plan for public service employees. The plan 
     provides that the Secretary shall forgive the remaining loan 
     balance for a borrower who has been employed in a public 
     sector job and has made payments on such loan for a period of 
     ten years (which need not be consecutive). Such borrowers 
     shall be eligible to have \1/10\ of the remaining loan 
     balance forgiven for each of the ten years in which the 
     borrower earned $65,000 or less.
       The House recedes with an amendment to modify the 
     definition of public service employees and eliminate the 
     $65,000 income cap.
       The Conferees adopt the Senate amendment as amended by the 
     House.

                     TITLE V--FEDERAL PERKINS LOANS


             Section 501. Distribution of Late Collections

       The House bill (Sec. 141) provides $100 million per year 
     for the Perkins Loan Federal Contribution program for fiscal 
     years 2008-2012.
       The Senate amendment (Sec. 501) postpones the date on which 
     institutions must return late collections on Perkins loans to 
     the Secretary to September 30, 2012.
       The House recedes.

                        TITLE VI--NEED ANALYSIS


               Section 601. Support for Working Students

       The House bill (Sec. 102) includes provisions to increase 
     students' eligibility for student aid, including the Pell 
     grant, through phased-in increases in the Income Protection 
     Allowance for all students. The protected income for 
     unmarried independent students without dependents will 
     be $6,690 by 2009. For dependent students the protected 
     income will be $3,750 by 2009. These amounts will increase 
     by 10 percent each year until 2012.
       The Senate amendment (Sec. 601) also increases the Income 
     Protection Allowance in the following ways: (1) for dependent 
     students, it increases the amount of the income protection 
     allowance to $3,750 for the 2009-2010 academic year; $4,500 
     for the 2010-2011 academic year; $5,250 for the 2011-2012 
     academic year; and $6,000 for the 2012-2013 academic year; 
     (2) for independent students without dependents other than a 
     spouse, who are single, separated, or married with both 
     spouses enrolled, it increases the amount of the income 
     protection allowance to $7,000 for the 2009-2010 academic 
     year; $7,780 for the 2010-2011 academic year; $8,550 for the 
     2011-2012 academic year; and $9,330 for the 2012-2013 
     academic year. For independent students without dependents 
     other than a spouse, who are married and whose spouse is not 
     enrolled, it increases the amount of the income protection 
     allowance to $11,220 for the 2009-2010 academic year; $12,460 
     for the 2010-2011 academic year; $13,710 for the 2011-2012 
     academic year; and $14,690 for the 2012-2013 academic year. 
     For independent students with dependents other than a spouse, 
     it increases the amount of the income protection allowance as 
     specified by the tables contained in this section, for a 
     total increase of 50 percent over four years. Under this 
     section, for all students, the income protection allowance 
     reverts to current law after the 2012-2013 academic year.
       The House recedes with an amendment to continue the changes 
     beyond the 2012-2013 academic year. The Conferees adopt the 
     Senate amendment as amended by the House.


   Section 602. Simplified Needs Test and Automatic Zero Improvements

     Simplified needs test
       The House bill (Sec. 103) extends the time that an 
     individual who has participated in a federal means-tested 
     benefit program can qualify for a simplified needs test to 24 
     months from 12 months, and allows dislocated workers to be 
     eligible for the simplified application form.
       The Senate amendment contains no similar provision.
       The Senate recedes.
     Automatic zero
       The House bill (Sec. 103) increases the family income level 
     under which a student is automatically eligible for the 
     maximum Pell grant, or the ``auto-zero,'' from the current 
     level of $20,000 to $30,000 and indexes this level to the 
     Consumer Price Index (CPI).
       The Senate amendment (Sec. 602) also increases the family 
     income level under which a student is automatically eligible 
     for the maximum Pell grant to $30,000.
       The Senate recedes.


    Section 603. Discretion of Student Financial Aid Administrators

       The House bill (Sec. 104) allows financial aid 
     administrators to use discretion in calculating the expected 
     student or family contribution in cases where a family member 
     is a dislocated worker (as defined in section 101 of the 
     Workforce Investment Act of 1998).
       The Senate amendment (Sec. 603) clarifies and expands the 
     conditions under which financial aid administrators may use 
     discretion in calculating the expected student or family 
     contribution to include an independent student's loss of 
     employment or a change in a student's housing status that 
     results in homelessness. The Senate amendment (Sec. 605) 
     authorizes and appropriates $10,000,000 for fiscal year 2008 
     to pay for the estimated increased cost in the Pell program 
     for award year 2007-2008 resulting from the amendments made 
     by sections 603 and 604.
       Both the House and Senate recede with an amendment to 
     change the effective date to July 1, 2009. The Conferees 
     concur and adopt the amendment as proposed by the House and 
     Senate.


                        Section 604. Definitions

       The House bill (Sec. 104) clarifies definitions for 
     dislocated workers and means-tested federal benefits. The 
     House bill amends the provisions concerning untaxed income 
     and benefits in current law. Specifically, the bill excludes 
     TANF (welfare benefits), Earned Income Tax Credits, and 
     Social Security from the income calculation in the needs 
     analysis. The House bill clarifies the asset calculation in 
     this section of the bill to ensure that 529 plans are counted 
     as the asset of the parent for independent students.
       The Senate amendment (Sec. 604) makes changes to the 
     definition of independent student. It expands the definition 
     of independent students to include: individuals in foster 
     care anytime after age 13; emancipated minors or individuals 
     in legal guardianships as determined by an appropriate court 
     in such an individual's State of legal residence; and any 
     individual who has been adequately verified as an 
     unaccompanied youth who is a homeless child or youth, as 
     defined in the McKinney-Vento Homeless Assistance Act. It 
     clarifies that financial aid administrators may make 
     determinations regarding a student's independent status based 
     on a documented determination of independence by another 
     financial aid administrator in the same year.
       Both the House and Senate recede with an amendment 
     clarifying that foster students do not lose their independent 
     student status during non-school terms with regard to housing 
     and other benefits. The Conferees concur and adopt the 
     amendment as proposed by the House and Senate.

           TITLE VII--COMPETITIVE LOAN AUCTION PILOT PROGRAM


            Sec. 701. Competitive Loan Auction Pilot Program

       The House bill (Sec. 119) requires a study by the 
     Secretaries of Education and Treasury with the Congressional 
     Budget Office, the Office of Management and Budget, and the 
     Government Accountability Office to identify and select among 
     the best mechanisms for a loan auction.
       Based on the information from the study, a pilot program 
     shall be implemented by the Secretary of Education using 10 
     percent of loan volume under Part B in the first year of the 
     pilot study and 20 percent the second year of the pilot 
     study.
       The Senate amendment (Sec. 801) establishes a new 
     competitive loan auction pilot program. The Secretary is 
     directed to carry out a pilot program to establish a 
     mechanism for the auction of all eligible PLUS loans. Such 
     loans are loans made to parents of dependent students. The 
     Secretary shall administer one auction for each state, in 
     which eligible lenders shall compete to originate all 
     eligible PLUS loans at institutions of higher education 
     within the state.
       The House recedes.
       The Conferees believe this loan auction pilot should be 
     closely evaluated by the Secretary of Education in 
     consultation with the Secretary of Treasury, the Office of 
     Management and Budget, the Congressional Budget Office, and 
     the Comptroller General. Additionally, the Conferees believe 
     the evaluation should consider the extent of the savings 
     generated through the pilot program; the number of lenders 
     participating in the pilot program and the extent to which 
     the pilot program generated competition among lenders; and 
     the effect of transition to and operation of the pilot 
     program on the feasibility of using other market mechanisms 
     to operate the loan programs.
       The Conferees intend to include an evaluation of the loan 
     auction and other market mechanisms during reauthorization of 
     the Higher Education Act which we are committed to moving 
     forward in this session.

[[Page H10181]]

                     TITLE VIII--PARTNERSHIP GRANTS


              Section 801. College Access Challenge Grants

       The House bill (Sec. 411) establishes ``College Access 
     Challenge Grants,'' which leverage federal funds to increase 
     the number of students from underserved populations who enter 
     and complete college through matching grants to philanthropic 
     organizations. The federal government will provide a 2 to 1 
     match for private and other public funds for these purposes. 
     The philanthropic organizations will work with states, 
     institutions of higher education, and local education 
     agencies and other organizations to raise funds and provide 
     outreach and student support programs.
       The Senate amendment (Sec. 801) establishes a College 
     Access Partnership Grant program, to make payments to States 
     to assist them in carrying out specified activities to 
     increase college access for low-income students in the state. 
     The federal share of the matching grant is \2/3\ and the 
     state share is \1/3\. Activities may be carried out under 
     this grant by state agencies or not-for-profit organizations 
     that the state designates, including not-for-profit lenders, 
     and must be made available to all qualifying students in the 
     state, with priority given to students and families living 
     below the poverty line. The amendment provides that authority 
     to carry out this section shall expire on September 30, 2009.
       The House recedes with an amendment changing the name of 
     the program to ``College Access Challenge Grants'' and 
     incorporating a House provision allowing philanthropic 
     organizations to apply to the Secretary for a grant in the 
     case where a state does not meet the matching requirements or 
     chooses not to apply for a grant. The Conferees adopt the 
     Senate amendment as amended by the House.
       The Conferees intend that states, entities, or 
     organizations providing activities under the College Access 
     Challenge Grants program created by this Act coordinate such 
     activities with existing state partnership programs designed 
     to increase college access, particularly the state's 
     Leveraging Educational Assistance Partnership program (LEAP) 
     under title IV, Part A, Subpart 4, if a state has such a 
     program.


Section 802. Investment in Historically Black Colleges and Universities 
                   and Minority Serving Institutions

       The House bill (Sec. 401) provides a total $500 million 
     over the next five years to the following designated 
     institutions with the following amounts:
       $200 million to Hispanic-Serving Institutions to be 
     distributed to the institutions in the same competitive 
     manner as is done under title V of the Higher Education Act, 
     and for uses under title V with priority to those 
     applications that will increase the number of low-income 
     students attaining degrees in the fields of science, 
     technology, engineering, or math and to applications that 
     develop model transfer articulation agreements.
       $170 million to Historically Black Colleges and 
     Universities to be distributed for use through some of the 
     activities described in section 323(a) of the Higher 
     Education Act including the purchase of laboratory equipment, 
     the funding of instruction, the purchase of materials, and 
     the establishment or enhancement of a teacher education 
     program. Additionally, funds may be used in a manner 
     consistent with the institution's comprehensive plan and 
     designed to increase the institution's capacity to prepare 
     students for careers in the physical and natural sciences, 
     math, computer science, information technology, engineering, 
     language instruction and other specified areas.
       $30 million to Predominately Black Institutions to award 50 
     grants of $600,000 for programs in the fields of science, 
     technology, engineering, health education, teacher education, 
     or programs that improve the educational outcomes of African 
     American males.
       $60 million to Tribal Colleges and Universities to be 
     distributed in the manner that the funds are used under 
     current law in section 316 of the Higher Education Act 
     including the purchase of laboratory equipment, the funding 
     of instruction, the purchase of materials, or the 
     establishment or enhancement of teacher education and 
     outreach programs.
       $30 million to Alaska/Hawaiian Native Institutions to be 
     distributed in the manner that the funds are used under 
     current law in section 317 of the Higher Education Act 
     including the purchase of laboratory equipment, the funding 
     of instruction, the purchase of materials, and the creation 
     of academic tutoring programs.
       $10 million to Asian American and Pacific Islander 
     Institutions to be distributed to institutions as defined in 
     this section, and used in a manner that may include the 
     purchase of laboratory equipment, the funding of instruction, 
     the purchase of materials, and the creation of tutoring 
     programs.
       The House bill defines the following for the purposes of 
     distributing funds:
       Predominately Black Institutions as institutions that have 
     an enrollment of financially needy undergraduate students; an 
     enrollment of undergraduate students at least 40% of whom are 
     Black; and, that has at least 1,000 undergraduate students of 
     whom not less than 50% enrolled at the institution are low-
     income or first generation and registered in a BA or AA 
     program leading to a degree.
       Asian and Pacific Islander-serving institution as 
     institutions that have an enrollment of undergraduate 
     students that is at least 10% Asian American and Pacific 
     Islander and has a significant enrollment of financially 
     needy students.
       The Senate amendment contains no similar provision.
       The Senate recedes with an amendment that $255 million 
     shall be authorized in each of 2008 and 2009, for a total 
     investment of $510 million. The amendment adds $10 million 
     for Native American Serving, Nontribal Institutions to be 
     distributed to institutions as defined in this section, and 
     used in a manner that may include the purchase of laboratory 
     equipment, the funding of instruction, the purchase of 
     materials, and the creation of tutoring programs. The 
     Conferees agree to the House bill as amended by the Senate.
       The amendment defines Native American Serving, Nontribal 
     Institutions for the purposes of distributing funds at 
     institutions that have an enrollment of undergraduate 
     students that is at least 10% Native American and is not a 
     Tribal College or University.
       These institutions, which serve groups who were 
     historically denied access to postsecondary education because 
     of discrimination, have an important role in higher 
     education. They help to preserve cultural traditions and to 
     ensure a diverse pool of qualified professionals in the 
     nation's economy. At the same time, they offer affordable, 
     high quality college education to thousands of students as 
     well as provide much needed job training. These institutions 
     also provide crucial support services and add hope to 
     communities that have high rates of poverty and unemployment. 
     Today, a high quality education greatly depends on the 
     technology and resources available to students. The Conferees 
     recognize that HBCUs, HSIs, and other Minority Serving 
     Institutions (MSIs) do not have sufficient financial ability 
     to provide these opportunities and satisfy the unique needs 
     of these schools without Federal assistance.
       MSIs have an important role in providing equal educational 
     opportunities to qualified minority students. According to 
     the Institute for Higher Education Policy, approximately 2.3 
     million students, or about one-third of all African 
     Americans, American Indians/Alaska Natives, and Hispanics in 
     all higher education institutions in the United States and 
     Puerto Rico, were enrolled at HBCUs, HSIs, TCUs, Alaska and 
     Hawaiian Native institutions. These numbers have grown 
     rapidly in recent years--in fact, enrollment at these 
     institutions accelerated by 66 percent from 1995 to 2003, 
     compared to only 20 percent at all postsecondary 
     institutions.
       The importance of these unique institutions is underscored 
     by the fact that they provide postsecondary educational 
     opportunities specifically tailored to students who 
     traditionally have been denied access to adequately funded 
     elementary and secondary schools, especially low-income, 
     educationally disadvantaged students. The Conferees believe 
     that this section offers an opportunity to help these 
     institutions fulfill their missions to assist students to 
     meet their educational goals.

                     COMPLIANCE WITH HOUSE RULE XXI

       Pursuant to clause 9 of rule XXI of the Rules of the House 
     of Representatives, this conference report contains no 
     congressional earmarks, limited tax benefits, or limited 
     tariff benefits as defined in clause 9(d), 9(e), or 9(f) of 
     rule XXI.

      George Miller,
      Robert E. Andrews,
      Bobby Scott,
      Ruben Hinojosa,
      John F. Tierney,
      David Wu,
      Susan A. Davis,
      Danny K. Davis,
      Timothy Bishop,
      Mazie K. Hirono,
      Jason Altmire,
      John Yarmuth,
      Joe Courtney,
                                Managers on the Part of the House.

      Ted Kennedy,
      Chris Dodd,
      Tom Harkin,
      Barbara A. Mikulski,
      Jeff Bingaman,
      Patty Murray,
      Jack Reed,
      Hillary Rodham Clinton,
      Barack Obama,
      Bernard Sanders,
      Sherrod Brown,
      Michael B. Enzi,
      Lamar Alexander,
      Orrin G. Hatch,
      Managers on the Part of the Senate.

                          ____________________